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MARCH NEWSLETTER 6
Weinstein Co. said late Monday that it would file for chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del., following failed attempts by management and its board to avoid bankruptcy. The studio faces several lawsuits over allegations of sexual misconduct against Weinstein, who was fired by the board in October. Weinstein has admitted mistakes but denied allegations of nonconsensual sex.
An Uber self-driving car killed a pedestrian. According to Reuters:
An Uber self-driving car hit and killed a woman crossing the street in Arizona, police said on Monday, marking the first fatality involving an autonomous vehicle and a potential blow to the technology expected to transform transportation.
The ride services company said it was suspending North American tests of its self-driving vehicles, which are currently going on in Arizona, Pittsburgh and Toronto.
Oil company Aramco continues to struggle with its initial public offering. According to The Wall Street Journal:
Saudi Arabia is scaling back its ambitions for a public offering for oil giant Aramco, moving ahead with a listing next year solely on the Saudi stock exchange while taking more time to decide if an international venue is worth it, government officials and others close to the process say.
The decision has come in part because of concerns about legal risks and also because the need for a bigger listing has been negated by rising oil prices.
Aramco’s listing was expected to raise as much as $100 billion on an international arena like New York—a move that also got the support of President Donald Trump, who publicly called for Aramco to list in the U.S.
The rise of streaming media has made it part of the mainstream of American media consumption. According to CNBC:
Media companies can keep worrying about cord cutting.
Deloitte found in its 12th annual digital media trends survey that the percentage of American households that subscribe to a streaming service has grown to 55 percent. Last year, the firm reported that 49 percent of households reported at least one video subscription service.
Tronc Inc. (NASDAQ: TRNC) Chair Michael Ferro stepped down just hours before reports of sexual harassment. According to Variety:
Michael Ferro, the former Tronc chairman, stepped down from the company’s board on Monday, effective immediately, just hours before a report from Fortune outlined allegations of sexual advances by two women who were doing business with him.
Ferro, a Chicago businessman and largest Tronc shareholder, will be replaced by Tronc CEO Justin Dearborn. The company’s announcement that he would step down made no mention of the allegations, but instead praised Ferro for “having created considerable shareholder value for the company in just two years as chairman of the board,” according to a statement by Dearborn.
Vienna is the world’s most livable city, based on a new study. The Mercer report said:
Vienna remains the highest ranking city in Europe and globally, providing resident and expatriates with high security, well-structured public transportation and a variety of cultural and recreation facilities.
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Micron Technology Inc. (NASDAQ: MU) released fiscal second-quarter financial results after markets closed Thursday. Ahead of the report, the stock was up massively this year and analysts had been chasing Micron even higher. Despite a setback with this latest report, analysts still seemed overly positive on the stock.
24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying about the semiconductor giant after the fact.
The company said that it had $2.82 in earnings per share (EPS) on $7.35 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $2.74 in EPS on revenue of $7.28 billion. The same period of last year had EPS of $0.90 and $4.65 billion in revenue.
What stands out here is that gross margin for the quarter was 58.4%, which rose dramatically from 38.5% in the same period of last year.
Merrill Lynch reiterated a Buy rating with an $85 price objective. The brokerage firm gave its investment rationale as follows:
Our Buy rating is based on a favorable memory chip environment (less competition with Samsung, Toshiba’s restructuring, diversified demand, content increase per box, ASP strength). We believe high margin profile will be more notable through FY18, then a soft landing in FY19-20. Upcycle fair value with record high margin/ROE is applied to derive PO, and implied P/B is 30-40% higher than historical average.
Credit Suisse reiterated an Outperform rating with a $70 price target. The firm pointed out that while NAND pricing was down 15% quarter over quarter in the fiscal second quarter on mix, NAND gross margin increased 140 basis points quarter over quarter adjusted for about a 350-basis-point impact for underutilization of XPoint capacity, indicating that the NAND cost improvement story is still very much intact. Credit Suisse expects underutilization charges to continue for the next several quarters, masking true profitability.
A few other analysts weighed in on Micron after the report:
Bernstein has a Market Perform rating and raised its price target to $60 from $48.
Citigroup downgraded to it to Neutral from Buy but raised its target to $60 from $55.
Cowen reiterated an Outperform rating and raised its target price to $65 from $55.
Deutsche Bank reiterated its Buy rating and raised its price target from $65 to $68.
JPMorgan reiterated an Overweight rating and raised its price target to $80 from $60.
KeyBanc Capital Markets reiterated an Overweight rating and raised its target to $72 from $65.
Morgan Stanley reiterated an Overweight rating and raised its target price from $54 to $65.
Morningstar maintained a Sell rating, but it raised its fair value estimate to $34 from $31.
Stifel reiterated a Buy rating and raised its price target to $95 from $85.
Wells Fargo reiterated an Outperform rating and raised its target from $54 to $70.
Shares of Micron were last seen down over 4% at $56.18 on Friday, with a consensus analyst price target of $66.68 and a 52-week range of $26.36 to $63.42.
The market finished higher Friday, finally posting some gains after struggling most of the week with concerns over trade tariffs and the potential for a trade war. The futures are lower Monday morning as investors look for more direction on trade and also are listening closely for any commentary on interest rates, as the Federal Reserve is expected to lift rates later this week.
With the bull market now nine years old, the one trend that has prevailed for more than five years has been for investors to buy all the big pullbacks. Investors also still have to decide how they want to be positioned for the rest of 2018 and beyond.
24/7 Wall St. reviews dozens of analyst research reports each morning to find new trading and investing ideas for its readers. Some analyst calls cover stocks to buy, while others cover stocks to sell or avoid.
Additional color and commentary has also been added on some of these daily analyst calls. The consensus analyst price target data are from the Thomson Reuters sell-side research service.
These are this Monday’s top analyst upgrades, downgrades and initiations.
Amdocs Ltd. (NYSE: DOX) was raised to Buy from Hold at Jefferies. The 52-week trading range is $60.20 to $71.37. The Wall Street consensus price objective is $73.75. The shares closed trading last Friday at $68.25.
AstraZeneca PLC (NYSE: AZN) was raised to Buy from Hold at Jefferies. The 52-week trading range for the pharmaceutical giant is $28.43 to $36.70. The Wall Street consensus price target is set at $30.09. The stock closed trading on Friday at $34.59. There was some chatter recently the company could be a takeover target.
Camden Property Inc. (NYSE: CPT) was raised to Neutral from Sell at UBS. The 52-week trading range is $78.69 to $96.39. The Wall Street consensus price objective is $92.57. The stock ended the day last Friday at $84.76.
ConvergeOne Holdings Inc. (NASDAQ: CVON) was started with Buy rating at both William Blair and Needham. The 52-week trading range is $7.95 to $10.83. The consensus price target was not available. The stock closed Friday at $8.65 a share.
Dr Pepper Snapple Group Inc. (NYSE: DPS) was raised to Outperform from Sector Perform at RBC Capital markets. The 52-week trading range for the stock is $81.70 to $125.65. The Wall Street consensus price target is set at $124.57. The shares closed Friday at $117.60.
Fastenal Co. (NASDAQ: FAST) was started with a Sell rating at Goldman Sachs with a $49 price target. That compares with the Wall Street consensus target of $58.08. The 52-week trading range is $39.79 to $58.74. The shares closed trading last Friday at $58.36.
Fortinet Inc. (NASDAQ: FTNT) was downgraded to Sector Weight from Overweight at KeyBanc Capital Markets. The 52-week trading range is $35.44 to $54.97. The consensus price objective is set at $50.96. The stock closed Friday at $54.
GrubHub Inc. (NYSE: GRUB) was downgraded to Hold from Buy at Stifel The 52-week trading range for the stock is $32.43 to $112.41. The Wall Street consensus price objective is $96.09. With the shares closing Friday at $110.53, this may be a valuation call.
Jazz Pharmaceutical Inc. (NASDAQ: JAZZ) was raised to Overweight from Equal Weight at Morgan Stanley. The 52-week trading range is $128.58 to $163.75. The consensus price target for this volatile biotech company is $181.74. The shares closed Friday at $154.09.
Unilever N.V. (NYSE: UN) was raised to Neutral from Sell at Goldman Sachs. The 52-week trading range for the shares is $49.27 to $61.62. The consensus price objective across Wall Street is $61. The shares ended trading last Friday at $53.03.24/7 Wall St.
Analyst Stays Very Bullish on 5 Top Oilfield Services Stocks
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Other key analysts upgrades and downgrades were seen in the following:
Akcea Therapeutics Inc. (NASDAQ: AKCA) was downgraded to Market Perform from Outperform at Wells Fargo. The 52-week trading range is a stunning $1.05 to $32.47. The consensus price target is $30.00. The shares closed up big on Friday at $31.21.
Amedisys Inc. (NASDAQ: AMED) was raised to Outperform from Sector Perform at RBC Capital Markets. The 52-week trading range is $45.60 to $65.91. The consensus price target is $65.88. The stock closed trading last Friday at $65.88.
AmeriGas Partners L.P. (NYSE: APU) was downgraded to Underweight from Neutral at JPMorgan. The 52-week trading range is $40.95 to $48.37. The consensus price target is posted at $46.29. The shares closed Friday at $42.08
Blackline Inc. (NASDAQ: BL) was downgraded to Hold from Buy at SunTrust Robinson Humphrey. The 52-week trading range is $28.21 to $45.19. The consensus price target is posted at $41.29. The shares closed Friday at $40.40.
Equity Residential (NYSE: EQR) is raised to Buy from Neutral at UBS. The 52-week trading range for the shares is $54.97 to $70.46. The consensus target for the real estate giant is $65.88. The stock closed Friday at $60.23.
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W.W. Grainger Inc. (NYSE: GWW) was resumed with a Neutral rating at Goldman Sachs. The 52-week trading range for the stock is $155 to $298.15. The Wall Street consensus price target is set at $259.07 The stock closed Friday at $288.75
Novavax Inc. (NASDAQ: NVAX) was downgraded to Underweight from Neutral at JPMorgan. The 52-week trading range is $0.73 to $2.75 and the consensus price target is $3.83. The stock closed Friday at $2.16 but was down in premarket trading on Monday.
Spirit Aerosystems Holdings Inc. (NYSE: SPR) is raised to Buy from Hold at Vertical Research. The 52-week trading range is $51.85 to $105.20. The consensus price objective is $106.84. The stock closed Friday at $85.47.
Friday’s top analyst calls included Bank of America, Broadcom, Dominion Energy, Netflix, Pegasystems, 21st Century Fox, Thor Industries and Western Digital.
Progenics Pharmaceuticals Inc. (NASDAQ: PGNX) shares took a big step back on Friday after the firm announced that it received an update from the U.S. Food and Drug Administration (FDA). Whenever the FDA sends companies unexpected updates, this is, generally speaking, not a positive for the company.
According to the FDA, the agency will extend its review of the New Drug Application (NDA) for Azedra (iobenguane I 131) by three months. So now the Prescription Drug User Fee Act (PDUFA) target action date is moved back to July 30, 2018.
For some quick background: Azedra is a later-stage drug candidate being developed for the treatment of malignant pheochromocytoma and paraganglioma. Pheochromocytomas are rare tumors that arise from cells of the sympathetic nervous system. Such tumors are usually found within one or both adrenal glands (85%) but may arise in other areas of sympathetic nerve cells and are then referred to as paragangliomas.
The extension is the result of the submission of additional Chemistry, Manufacturing, and Controls (CMC) information by Progenics, which required additional time for FDA review. The standard three-month extension is not related to the efficacy or safety data of Azedra.
Mark Baker, chief executive officer of Progenics, commented:
We remain confident in our NDA submission and are committed to bringing Azedra forward as an option for patients with malignant pheo and para. We look forward to continuing our dialogue with the Agency as we prepare for a potential approval of Azedra.
Excluding Friday’s move, Progenics has underperformed the markets over the past 52 weeks, with its stock down about 26%. In 2018 alone, however, the stock is up 40%.
Shares of Progenics traded down more than 9% early Friday at $7.56, with a consensus analyst price target of $13.75 and a 52-week trading range of $4.60 to $11.48. Following the announcement, the stock had down about 17% in premarket trading.