Submitted By Optiondragon
Imagine- John Lennon
From Briefing.com
Periodicals Wrap-Up for Wednesday, July 2nd
WALL STREET JOURNAL: According to people familiar with the discussions, the Wall Street Journal reported that Microsoft (MSFT) has held discussions with Time Warner (TWX) and News Corp (NWS), among others, about joining it in a deal that could lead to the breakup of Yahoo! (YHOO). Some of the sources said the preliminary talks are unlikely to result in a deal with Yahoo!…Johnson & Johnson (JNJ) is reportedly in exclusive talks to sell its wound-care business Ethicon to the private-equity arm of JP Morgan (JPM), according to the Wall Street Journal. Terms of the potential deal were not disclosed…WASHINGTON POST: Sources familiar with the inquiry said that the Justice Department has opened a formal antitrust investigation into a deal that would allow Google (GOOG) to provide some search advertising for Yahoo!. The Washington Post reported that investigators will demand documents from Google and Yahoo!, as well as other large companies in the media and Internet industries…REUTERS: Reuters reported that regulators in the European Union are looking at the long-term effects of BHP Billiton’s (BHP) $170B bid for Rio Tinto (RTP). Sources familiar with the EU questionnaire said regulators have asked competitors and customers about effects of the deal on their businesses through 2015…
Feds reportedly open investigation into Google, Yahoo ad deal-Washington Post
The Justice Department has launched a formal antitrust investigation into the deal reached between Google (GOOG) and Yahoo (YHOO) last month, inside sources say. Under the deal, Google agreed to provide some search advertising services for Yahoo.
Is Iran ready to negotiate about its nuclear program?-WSJ
Manouchehr Mottaki, a top Iranian diplomat, says negotiations about it nuclear program could begin and that it’s reviewing a series of economic incentives presented to it in June by the U.S. and others, according to the Wall Street Journal. “We see the potential for a new round of talks,” he said. “The two sides are trying to see if they can arrive at a new modality.” The U.S. reaction was one of caution as Iran has not addressed suspension of its uranium enrichment program.
Houston turns to wind power to cut energy costs-WSJ
Even in Houston, Texas, the heart of America’s oil and gas business, wind power is front and center, reports the Wall Street Journal. The city is using wind generated electricity for about 25% of its municipal power needs because it’s cheaper than coal or natural gas. About half of the wind power is provided through Goldman Sachs (GS) and the rest is from Reliant Energy (RRI). Home residents and businesses are not users. Houston is one of the top purchasers of renewable energy in the U.S.
Pre-Market Movers: Ahead of the Bell
The session is once again broadly busy, much more so than we saw through the entire month of June. There are a few issues moving aggressively on earnings news today as well as renewed take-over speculation. The volume leader this morning is Yahoo (YHOO) trading up +8.21% after the WSJ reported that Microsoft (MSFT) was attempting to go after the company again with a group of partners. The Washington Post wrote that the DOJ was beginning a formal investigation into the Yahoo/Google ad sale deal. UnitedHealth (UNH) is trading up +7.41% after it lowered its FY08 EPS (see notes here for details). Volume is heavy. Circuit City (CC) is trading down (-14.5%) after Blockbuster announced it was withdrawing its takeover offer. Chesapeake (CHK) is trading up +4.88% after Deutsche Bank upped its price target to $91. Starbucks (SBUX) is trading up +4.99% after it announced a more aggressive round of under-performing store closings last night after market close. Apollo Group (APOL) is trading up +16.73% after a much better than expected earnings report after market close last night. In a rare bit of good news for the battered financials, Fifth Third Bancorp (FITB) is trading up +4.14% after being upgraded to Outperform from Neutral at Robert W Baird.
U.S equity futures weaken after release of the ADP employment report
U.S. equity futures have weakened after the release of the ADP employment change report. It was expected to show a decline of -20,000 service jobs but instead showed a decline of -79,000. The larger than expected drop in jobs came after last month’s surprising increase in service jobs. Investors will now turn their attention to the factory orders report for the month of May due out at 10:00 am, and the Department of Energy Inventory report due out at 10:30 am.
Yahoo-YHOO: MicroHoo Redux? Factors to Consider
There was an article in the WSJ suggesting that Microsoft (MSFT) may employ partners to go after and split up Yahoo (YHOO). This would seem odd given that Microsoft purchased Powerset, a “semantic web” technology company that would allow it to compete against Yahoo’s SearchMonkey. Digging around Microsoft Research, it does seem SearchMonkey was something the company had been concerned about. The acquisition of Powerset suggests the company is prepared to roll their own solution. For those bullish on Yahoo (YHOO) one might think the focus would be on the DOJ’s inquiry into the ad sale partnership with Google (GOOG).
Chesapeake-CHK & Plains Ex & Prod-PXP host a conference call at 9am on 7/2
Chesapeake and Plains EX & Prod will host a conference call to discuss the Haynesville Shale joint venture at 9am on 7/2.
Great article on this CHK deal and Haynesville Shale plays here at Zman’s Blog!
Solar: Recommend stocks with little exposure to Spain@DBAB
Deutsche Bank believes potential changes to Spain’s solar PV incentive structure remain a wildcard and prefers stocks with minimal exposure to the country. The firm recommends First Solar (FSLR) and MEMC Electronics (WFR). Deutsche is positive on the long term prospects for companies like SunPower (SPWR), but thinks exposure to Spain and the U.S. will drive significant near term volatility.
Petrohawk Energy-HK: Valued improved due to CHK/PXP acreage deal@FBRC
FBRC believes the company’s low-risk shale assets, as well as 2008 production growth of 27% and 37% growth projected for 2009, warrants in FBRC’s E&P covered universe continued upside potential with HK being their favorite growth name. Target price increased to $60 from $45 and Outperform rating reiterated.
Energy/Natural Resources: Weak earnings season is expected; Market Perform@FBRC
A main drag on results for 2Q08 earnings is the fact that raw material and energy costs increased at a rate quicker than produced commodities,despite most commodity prices being up this past quarter. AA, CENX and ZINC are expected to deliver results lower-than-consensus, while FCX is projected to exceed estimates due to its sales pricing.
Pioneer Natural-PXD coverage resumed with a Buy, target $110@UBSW
Target to $110 from $72.
Pioneer Natural-PXD upgraded to Equal Weight from Underweight@MSCO
Target $90.
Google-GOOG: Expect strong Q2 despite challenging economy@JEFF
Jefferies expects 16% year over year growth in U.S. paid clicks for April/May as they believe GOOG’s search business remains robust. The firm reiterates a Buy rating and $600 target on GOOG shares.
SunPower-SPWR: Potential changes to Spain’s solar PV incentive structure@PACS
PacCrest says SPWR has 70% exposure to US & Spain, which both now have no subsidies. The firm believes Street estimates for FY09 growth need to come down to the 17% range from the 40% range. PacCrest would rather own First Solar (FSLR) than SPWR.
Jim Cramer’s “Mad Money”
Cramer said Healthcare stocks, a group hated all year, stand to benefit from the upcoming Medicare spending bill. According to Cramer, the new Medicare spending bill now provides incentives for using electronic prescriptions, as opposed to paper, through 2010, and mandates electronic prescriptions thereafter. The provisions, now in both the House and Senate versions of the bill, will be a windfall for Allscripts (MDRX), a company with a lock in the e-prescription business, he said. Management has proclaimed their electronic healthcare platform is ready for prime time, after recent bugs in the platform. Cramer said now is the time to invest in the company, especially with electronic prescriptions expected to grow 400% in 2008. Allscripts trades at just 18x its earnings, despite a 23.5% long-term growth rate. Cramer expects the company will soon return to a 25 multiple on its 2009 earnings, which translates into a 44% gain in the stock. “Allscripts is the one I want you to own,” he asserted. Another Medicare spending play Cramer recommended was ResMed (RMD), one of the two biggest companies making equipment to treat sleep apnea. With a 40% share of the market, ResMed enjoys a happy duopoly with Respironics, a company recently acquired by Philips Electronics (PHG). Cramer noted that beginning this fall, Medicare will make it easier for patients to obtain sleep apnea equipment. With the sleep apnea market only 10% penetrated, Cramer said the growth potential for ResMed is significant, with or without competitive bidding. Cramer expects ResMed could see $50 to $53 a share, translating into a 30% gain from current levels. He called the shares “way underpriced.” Next, Cramer recommended Bristow Group (BRS) as another play on increased drilling, both on and off-shore, in the U.S. Bristow provides helicopter services to transport manpower to off-shore oil platforms. With more off-shore rigs heading to deeper waters, Cramer says demand for Bristow’s services should increase over time. Cramer said Bristow’s private placement of additional shares on June 19 hurt the common stock, but with money now in hand to purchase 19 additional choppers, the upside of the deal will be realized quickly. MAD MAIL: Watts Water (WTS) Cramer said his recommendation on November 2, 2006 was wrong, adding he needs to see a bottom in residential housing before he can recommend the stock again. Cramer is still bullish on Hornbeck Offshore (HOS), Anadarko (APC), Nabors (NBR) and Transocean (RIG). SUDDEN DEATH: (Bullish) NFX and INTC. (Bearish) SAP. LIGHTNING ROUND: (Bullish) UTX, HON, EXC, DUK, ED, VZ, T, HEV, SQM. (Bearish) PBY, BW, STI, OI, WB, EMKR.
Fast Money position recap- First Moves: Tim likes TSL, Guy likes GM, Karen likes MRK, Pete likes shorting PRU.
Adami Owns (C), (AGU), (BTU), (GS), (INTC), (MSFT), (NUE); Finerman Owns (GS); Finerman’s Firm Owns SPX Index Puts; Finerman’s Firm And Finerman Own (C) And (C) Leaps; Finerman’s Firm Owns (MSFT), (SUN), (TSO), (VLO), (SBUX); Finerman’s Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Pete Najarian Owns (AAPL), (NOK), (TSO), (XLF); Pete Najarian Owns (HBC) Puts, (MER) Puts, (RIMM) Calls, (SLB) Calls, (UBS) Calls, (WM) Calls, (YHOO) Calls; Seymour Owns (AAPL), (CFC), (F), (MER), (MSFT), (TSO), (TSL); Seygem Asset Management Owns (TTM), (PKX), (FMX); Seygem Asset Management Owns Shares Of Grupo Modelo.
Market starting out with a bounce. Let’s see the lasting power of this move before declaring it a rally. We are still in a bear market but I will try to take advantage of the bounce by looking for good longs and shorts. Shale plays getting a big boost this morning on the CHK news. Shale play list is: CLR, XCO, HK, CRK, XTO, GMXR, SD, GDP, WLL, EAC, FST, PQ, PVA, SM, NFX. Shale Drillers: NBR, UNT. These moves should continue higher over time. Looking at tech as well. Great Luck and great trading.
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