Archive for February 15th, 2008
Filed under: Analyst upgrades and downgrades, Whole Foods Market (WFMI)
.gif) MOST NOTEWORTHY: The coal sector, independent refiners and Alexion Pharmaceuticals were today’s noteworthy downgrades:
- Goldman downgraded the coal sector to Cautious from Neutral, citing valuations and expectations for lower coal prices. The firm downgraded CONSOL Energy (NYSE: CNX) Peabody Energy (NYSE: BTU) to Neutral from Buy and Arch Coal (NYSE: ACI) to Sell from Neutral.
- Lehman downgraded independent refiners, including Alon USA Energy (NYSE: ALJ), to Negative from Neutral and continues to believe that 2H07 marked an inflection point for U.S. refiners, which are transitioning from a multiyear up-cycle into a new downtrend.
- Alexion Pharmaceuticals (NASDAQ: ALXN) was lowered to Market Perform from Outperform at Wachovia following the company’s Q4 results, as they believe management’s revenue guidance represents a best-case scenario.
OTHER DOWNGRADES:
- Lehman lowered Bayer (OTC: BAYRY) to Equal Weight from Overweight and Whole Foods (NASDAQ: WFMI) to Underweight from Equal Weight.
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Filed under: Analyst upgrades and downgrades, Chipotle Mexican Grill’A’ (CMG)
MOST NOTEWORTHY: BioScrip, Chipotle Mexican Grill and CoStar Group were today’s noteworthy upgrades:
- BioScrip (NASDAQ: BIOS) was raised to Buy from Neutral at Broadpoint, as they believe the company’s specialty business is worth more than the current price implies.
- Baird upgraded Chipotle Mexican Grill (NYSE: CMG) to Outperform from Neutral following Q4 results, citing valuation and a positive view on fundamentals.
- CoStar Group (NASDAQ: CSGP) was upgraded to Outperform from Market Perform at JMP Securities, as they expect the company to report a solid quarter next Thursday.
OTHER UPGRADES:
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Filed under: Earnings reports, Bad news, Products and services, Best Buy (BBY), Circuit City Stores (CC)
Best Buy Inc. (NYSE: BBY), the consumer electronics retailer whose shares have slumped more than 12% this year, confirmed Wall Street’s growing fears about consumer spending and cut its earnings outlook.
The Richfield, MN company expects fiscal 2008 earnings of $3.05 to $3.10, down from previous guidance of $3.10 to $3.20. Analysts expected profit of $3.17. Comparable stores sales are expected to rise 2.5 to 3%, below the company’s previous forecast of a 4% increase. Fourth quarter same-store sales are expect to “decline modestly” in the fiscal fourth quarter, reflecting broader economy.
“Our December revenue results were in line with our expectations. Soft domestic customer traffic in January, coupled with our near-term outlook, now indicate that our fourth-quarter revenue will fall short of our planned targets,” Brad Anderson, vice chairman and chief executive officer of Best Buy, said in a press release.
The company plans to open 130 to 160 new stores during its 2009 fiscal year, increasing its total retail square footage by about 10% to 51 million square feet. In addition, it plans “to bring more than 12,000 new retail management, sales and services positions to communities in its markets.” Last year, rival Circuit City Stores Inc. (NYSE: CC) came under fire for firing 3,400 workers who were “paid well above the market-based salary range for their role.”
Look for both Best Buy and Circuit City to discount like demons to lure consumers back into their stores. Maybe I’ll pick up the plasma screen I’ve been eying.
Freelance writer Jonathan Berr edits the blog Ketchup and Eggs.
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Filed under: Deals, Management, Microsoft (MSFT), Yahoo! (YHOO)
Microsoft (NASDAQ: MSFT) is sick of losing money at its online unit. It has replaced the head of the operation, Steve Berkowitz, with the head of the aQuantive ad company that the software company bought last year. Brian McAndrews will take over all responsibilities for the unit as it prepares to possibly merge with Yahoo! (NASDAQ: YHOO).
According to Reuters, “McAndrews will likely be in a top leadership position in the combined Microsoft-Yahoo, should the Web pioneer accept Microsoft’s $41.8 billion buyout offer.”
It is telling that an ad executive, who did not begin his career in Redmond, will take over. Microsoft hopes that an outsider may win over employees from Yahoo! if that deal goes though. There is bitterness between Yahoo! and current Microsoft staff after years of fighting one another.
But that action could be short-sighted. Programmers and management from within Microsoft’s online operation may feel that Yahoo! is being treated with kid gloves. The executives and programmers at Microsoft’s unit have spent years trying to turn it around.
Now they get to play second fiddle.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Deals, Contl Airlines’B’ (CAL), UAL Corp (UAUA), Options, Delta Air Lines (DAL)
 Continental (NYSE: CAL) closed at $28.70 Thursday.
CAL and United Airlines (NYSE: UAUA) are in advanced negotiations and could complete a combination quickly if Delta (NYSE: DAL) and Northwest Airlines (NYSE: NWA) strike a deal, says Dow Jones.
WTI Crude oil is recently up .12% to $95.57 according to Bloomberg.
CAL March option implied volatility of 71 is above its 26-week average of 58 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
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Filed under: Deals, Industry
 Pay the break-up fee. Don’t make that next LBO loan. That is what many legal advisers are telling the largest banks. Better to pay out the fee than take on loans which could lose a significant portion of their value and could lead to more big write-offs.
A partner at a large private equity firm told the FT, “The banks have so many issues with their balance sheets that they are considering a new policy.”
The idea may sound good, but it isn’t.. If banks walk, they could face shareholder suits from owners of the companies which have been stiffed in the LBO process. But, more importantly, the action would drive a wedge between banks and their large corporate clients that could last for years. Corporate banking profits go well beyond providing buyout loans.
Acting in bad faith with one of the biggest customer bases at big banks may save money now, but is the alienation of corporate customers worth it?
Douglas A. McIntyre is an editor a 247wallst.com.
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Filed under: Major movement, Best Buy (BBY), Options
Best Buy (NYSE: BBY) lowered FY08 EPS view to $3.05-3.10 from $3.10-3.20.
BBY is recently trading at $43.80 in pre-open trading, below its close of $45.77 Thursday.
BBY March option implied volatility of 39 is above its 26-week average of 34 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
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Filed under: Money and Finance Today, Best Buy (BBY), Campbell Soup (CPB), Countrywide Financial (CFC), Abercrombie and Fitch (ANF), UAL Corp (UAUA)
In the News:
The Unraveling a New York Real Estate Empire
Thanks to personally guaranteeing a $1.2 billion loan last winter, 70-year old real estate mogul Harry Macklowe may lose billions of dollars in real estate including his prized possession the GM Building, his homes in Manhattan and the Hamptons, his contemporary art collection, and even his beloved yacht. This would be a bitter end to the career of one of New York City real estate’s most polarizing figures.
A Real estate mogul risks it all - FORTUNE
Best & Worst States to Own a Car
Financing in some states can cost consumers an additional $6,000 beyond the price of a car over five years. Insurance can top $13,000. Toss in taxes and fees, rate of depreciation and fuel costs and very quickly, a $30,000 car becomes much more than that. In Hawaii, for example, owning a car for five years will cost the average driver $59,457. Compare that to New Hampshire, where the average car owner pays $47,599.
In Pictures: 10 Best States To Own A Car - Forbes.com In Pictures: 10 Worst States To Own A Car - Forbes.com
Continue reading Real estate mogul risks it all, best/worst states to own a car & time to refinance? - Today in Money 2/15
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Filed under: Cisco Systems (CSCO), General Electric (GE), Wal-Mart (WMT), Intel (INTC), General Motors (GM), Exxon Mobil (XOM), Market matters, McDonald’s (MCD), AT and T (T), 3M Corporation (MMM), Caterpillar (CAT), Halliburton (HAL), Schlumberger Limited (SLB), Citigroup Inc. (C), Johnson and Johnson (JNJ), Altria Group (MO), Bank of America (BAC), Merrill Lynch (MER), Kellogg Co (K), ConocoPhillips (COP), Verizon Communications (VZ), Wachovia Corp (WB), Nucor Corp (NUE), Honeywell Intl (HON), United Technologies (UTX), Freep’t McMoRan Copper (FCX), Wells Fargo (WFC), Cramer on BloggingStocks
 TheStreet.com’s Jim Cramer says balance sheets are strong, so spillover isn’t an issue.
I get emails and postings almost every day from fixed-income specialists, saying that the credit markets’ myriad problems simply aren’t being reflected in the equity markets, and that’s just plain wrong. They warn us equity players that we are dreamers and that it is just a matter of time before the terrible problems in collateralized debt, huge leverage, and now auction rate preferred notes spill over into equities and that any rally in stocks is just a fool’s paradise.
There’s a problem with this inevitability story though, one that eludes these critics and might continue to elude them — it hasn’t happened yet, despite a year’s worth of turmoil. That’s a long time for a big problem like this to be cordoned, so it is worth looking at whether the naysayers are wrong and something else is at work.
When I look around at the vast choices of assets out there for the thousands of fund managers and institutions that have to put their money somewhere — provided it is not dedicated to a particular asset from the get-go — I see one world in chaos and another world in order. The bond market, the credit market, is in total disarray, with every aspect of its existence save Treasuries under fire. We know now that a simple reset market for municipals is failing because, of course, the charade of the bond insurers and their chimerical protection. The CDO market stinks. This is a multibillion dollar market where no one can figure out the prices of anything and the spreads between the bid and the ask are so wide that no one can afford to own or trade them. You don’t know where they are marked. You don’t know what’s in them. You don’t know what they are really rated. They are basically worth nothing right now to anyone. Commercial paper? Hardly worth the pick-up in interest. “Cash reserves”? We have seen the “buck” supported over and over again. There has to be a moment where the buck is broken.
Continue reading Cramer on BloggingStocks: Of course bond turmoil isn’t affecting stocks
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Filed under: Merrill Lynch (MER), Goldman Sachs Group (GS), Lehman Br Holdings (LEH)
 It seems as though every week, the public is forced to learn another one of Wall Street’s strange names for a surefire deal that couldn’t miss. But the reason we’re learning about those strange names is because — contrary to promises — the can’t miss deals are shutting down — taking Wall Street’s credibility down along with them.
The latest of these is auction rate securities (ARSs) — a $330 billion market for long-term bonds that are supposed to pay lower rates because their interest rates are set through auctions. The New York Times reports that municipalities who issued ARSs are suffering because 1,000 of these auctions failed and instead of paying 3% interest rates, they have to pay 20%. And if that wasn’t bad enough, the investment banks that oversee these auctions are refusing to let investors withdraw their money.
Which investment banks are imposing this pain? Goldman Sachs Group (NYSE: GS), Merrill Lynch (NYSE: MER), and Lehman Brothers Holdings (NYSE: LEH) and the problem with ARSs is not limited to municipalities entities such as the Port Authority of New York and New Jersey. Closed-end mutual funds, student loan companies and corporations also issue them.
Continue reading Auction Rate Securities: The latest $330 billion catastrophe
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