MOST NOTEWORTHY: DaVita, Dr. Pepper Snapple Group and Ascent Solar were today's noteworthy initiations:
Suntrust expects DaVita's (NYSE: DVA) dominant market share to help in commercial contract negotiations and they view potential Medicare reimbursement changes as more of an opportunity than a risk. The firm started shares with a Buy rating and $62 target.
JP Morgan initiated Dr. Pepper Snapple (NYSE: DPS) with an Underweight rating and expects declining free cash flow in 2008, which they note would be the third straight year.
Ascent Solar (NASDAQ: ASTI) was assumed with a Hold rating and $14 target at Jefferies. The firm sees high development risk with the company just beginning to operate its pilot line and commencing initial planning for its first 30 MW commercial line.
OTHER INITIATIONS:
Stanford initiated ViroPharma (NASDAQ: VPHM) with a Buy rating and $13 target.
Goldman assumed Research in Motion (NASDAQ: RIMM) and Qualcomm (NASDAQ: QCOM) with Buy ratings and targets of $163 and $55, respectively.
Blue Nile (NASDAQ: NILE) was initiated at Thomas Weisel with an Underweight rating and $44 target.
MOST NOTEWORTHY: Full House Resorts, Starent Networks and Capital Trust were today's noteworthy initiations:
Morgan Joseph said Full House Resorts Inc.'s (AMEX: FLL) valuation does not reflect the present value of its tribal management contract with the FireKeepers Casino. Shares were initiated with a Buy rating and $3.50 target.
Starent Networks Corporation (NASDAQ: STAR) was assumed with an Overweight rating at Thomas Weisel. The firm said STAR offers a compelling risk/reward profile given strong gross margins and expanding operating margins.
Keefe Bruyette initiated Capital Trust Inc. (NYSE: CT) with a Market Perform rating and $30 target, and believes the expected deterioration of commercial real estate fundamentals is likely to remain a headwind for valuations of the shares.
FactSet Research Systems (NYSE: FDS) provides economic and financial information on tens of thousands of companies worldwide. The firm offers data from hundreds of databases, focusing on such areas as broker research, financial summaries and newswires. The company also provides software for use in downloading, manipulating and presenting financial data for investment analysis. Clients include investment managers, bankers, lawyers and corporations at all levels. The firm employs over 1,000 people in North America, Europe and the Pacific Rim. Reuters Group (NASDAQ: RTRSY) is a major competitor.
FactSet pleased investors last week, when it reported fiscal Q2 EPS of 62 cents and revenues of $140.2 million. Analysts had been looking for 60 cents and $139.6 million. Management also predicted Q3 revenues of $145-$149 million, versus Street consensus of $143.58 million.
The identification of new business trends and the subsequent implementation of strategies based on those trends is vital to corporate growth. When firms need help along those lines, they often turn to a Hamilton, Bermuda consultant that currently works with two-thirds of the Fortune Global 500.
Accenture (NYSE: ACN) is the world's largest management and technology consulting firm. It offers clients enterprise integration, human resources, strategic planning and supply chain management services, across 18 industry groups. The company operates from more than 100 offices in 49 countries. It has established business alliances with a variety of sector leaders, including Hewlett-Packard (NYSE: HPQ), Oracle (NASDAQ: ORCL) and Reuters Group (NASDAQ: RTRSY).
Last week, the firm reported fiscal Q1 EPS of 60 cents and revenues of $5.67 billion. The Street had been expecting 56 cents and $5.46 billion. Management also guided Q2 revenues to $5.50-$5.70 billion ($5.31B consensus) and FY08 EPS to $2.36-2.41 ($2.26 consensus).
In a step toward expanding its reach into China, UCBH Holdings Inc (NASDAQ: UCBH) has acquired a full stake in Shanghai-based Business Development Bank in a deal valued at $205M, the Wall Street Journal reported.
According to "people familiar with the plan," Amgen Inc. (NASDAQ: AMGN) may sell its Japanese unit in an effort to help cut global costs due to a slump in sales and lower earnings forecast, Bloomberg reported.
Media programming and advertising are developing industries in China, suggesting that investments in that arena offer intriguing growth possibilities. Among the more successful competitors so far is an outfit that is headquartered in Beijing.
Xinhua Finance Media Limited (NASDAQ: XFML) is a diversified financial and entertainment media company in China. The firm produces and distributes television and radio programming; sells, creates and places advertising for television and print media; and provides market research services. Its productions reach approximately 210 million television viewers, 125 million radio listeners, over 480 million potential newspaper readers and mobile phone users. The target audience is China's growing population of well-educated, high net worth individuals. Reuters Group (NASDAQ: RTRSY) is a competitor.
MasTec Incorporated (NYSE: MTZ) was upgraded to Buy from Accumulate at Think Equity and to Buy from Hold at SMH Capital on valuation following yesterday's sell-off.
JP Morgan upgraded shares of Cognos Incorporated (NASDAQ: COGN) to Overweight from Neutral citing solid end demand, expanded sales capacity, indications that C8 adoption should see an uptick, and the Applix Inc (NASDAQ: APLX) acquisition.
Forest Laboratories Inc (NYSE: FRX) was upgraded to Buy from Hold at Jefferies, as the firm believes Forest's victory in the Lexapro patent case eliminates a major overhang and returns the focus to the company's pipeline.
Lehman upgraded shares of Reuters Group (NASDAQ: RTRSY) to Overweight from Equal Weight to reflect benefits from the company's merger with Thomson Corporation (NYSE: TOC).
Thornburg Mortgage (NYSE: TMA) was upgraded to Sector Perform from Underperform at RBC Capital Markets.
CIBC World Markets upgraded EDO Corporation (NYSE: EDO) to Sector Outperformer from Sector Performer.
Bernstein upgraded shares of Rio Tinto (NYSE: RTP) to Outperform from Market Perform and shares of Anglo American (NASDAQ: AAUK) to Market Perform from Underperform.
MOST NOTEWORTHY: Lowe's (LOW), Cooper Tire & Rubber (CTB), Campbell Soup (CPB), Reuters Group (RTRSY) and Netease.com (NTES) were today's noteworthy upgrades:
JP Morgan upgraded Lowe's (NYSE: LOW) to Overweight from Neutral based on improved risk/return and conservative near-term estimates. UBS upgraded Lowe's to Buy from sell on valuation.
Cooper Tire & Rubber (NYSE: CTB) was upgraded to Buy from Sell, as the firm thinks Copper is benefiting from surging demand for tires in Asia and considers the recent weakness a buying opportunity.
UBS upgraded shares of Campbell Soup (NYSE: CPB) to Buy from Neutral, citing expected growth acceleration, productivity savings, and attractive valuation.
Deutsche Bank is positive on the Thomson (TOC)-Reuters combination and expected synergies, upgrading Reuters Group (NASDAQ: RTRSY) to Buy from Hold.
Netease.com (NASDAQ: NTES) was upgraded to Positive from Neutral at Susquehanna based on valuation and checks that indicate better than expected performance of Westward Journey Online III...
In a sign of the increasing importance of high-end financial blogs, Reuters Group Plc (NASDAQ: RTRSY) is starting a new network of the sites. Or, it could be that the Reuters business development people have down time because of its upcoming purchase by Thomson Corp. (NYSE: TOC).
The offer that Reuters is making to a number of high-end blogs is that it will link to the participating sites from Reuters.com, offer free access to selected Reuters Headlines (RSS or Headline Wizard) and Reuters Video Player to publish Reuters News, and get 30% of an advertising program that the big financial services company will manage.
In return, each blog agrees to execute contracts with comScore and NetRatings to assign its traffic to Reuters.com. NetRatings ranks Reuters.com as the No.7 financial website with unique visitors of 6.1 million in May.
Reuters may be trying to match blog initiatives at media outlets including FT.com, WSJ.com, and AOL.com.
Either Reuters has a very high regard for financial blogs or it needs to pump up its audience ratings.
Disclosure: 24/7 Wall St. was approached by Reuters about this opportunity.
Douglas A. McIntyre is a principal at 24/7 Wall St.
Every week, there seems to be yet another mega M&A deal. It's not just in the US but across the world. Yes, everyone is going ga-ga for M&A.
And, according to a recent report from Bloomberg, the stats are off the charts. So far this year, M&A volume has surged 60% to $2 trillion. Keep in mind that the same period last year was also a record.
So who is the leader in the space right now? It's the pioneer of leveraged buyouts, KKR. The firm has racked up about $118 billion in deals.
There has also been a surge in strategic buyouts. For example, Thomson is buying Reuters (NASDAQ: RTRSY), HeidelbergCement is making a bid for Hanson Plc, and Barclays (NYSE: BCS) is trying to acquire ABN Amro Holding NV.
Although, as we go into the summer months, things will probably slow down. But, I'm sure things will rev up quickly by the last part of the year. Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
The Thomson Corp. (NYSE: TOC) locked up its deal to buy Reuters (NASDAQ: RTRSY) for $17.2 billion. The combination gives the new entity 34% of the global financial services information market. Bloomberg has 33%.
The Wall Street Journal said that the deal may face regulatory problems [subscription required]: "The agreement sets the stage for a long battle with regulators to win clearance for a combination that would unite the second- and third-largest providers of financial news and data, behind Bloomberg LP, of New York." Assuming that those can be overcome, one of the losers may be Dow Jones & Co., Inc. (NYSE: DJ). While it still has a tremendous presence in print with The Wall Street Journal, its Dow Jones Newswire terminals may have greater competition. So might the online WSJ.com, which already vies with Reuters online news service. Thomson has products that could improve a Reuters offerings.
Because Dow Jones is nowhere near as large as the new entity, it might find it difficult to match the resources of its competitors, including the number of journalists, sales forces, and completeness of content. Dow Jones had a financial terminal business in Telerate, but it sold that business a decade ago.
If Dow Jones does not take an offer from Rupert Murdoch, it is left with an operation that has relatively small margins that may get even smaller as the print business shrinks.
Money & Ethics: How Do You Stack Up? Do you pocket bank errors? Tell a clerk in a store of an error in your favor? 20 questions in all. Find out what respondents said in Money Magazine's nationwide survey - and whether your responses cut it with our ethicists. Money and Ethics: How you stack up - Money Magazine
How Safe Is Your Food? The hamstrung FDA may be unable to prevent a contamination crisis. That powder keg hasn't exploded--yet. But every month there are a surprising number of near misses. In the past few weeks alone, the FDA has issued warnings or recalls for brands of milk, olives, bottled water, bread, prepared fruit trays, melons, oysters, and peanut butter. What can be done? How Safe Is The Food Supply? - Businessweek Also: Food Scares
Misbehaving Executives Time Warner's decision to request the resignation of HBO's chief highlights the pressure public companies are under to respond rapidly when an executive gets into trouble. This follows other recent quick actions by Citigroup, Wal-Mart, CBS and other companies. One Misstep and They're Out the Door - New York Times
Getting a Discount on Plastic Surgery Cosmetic surgeries cost thousands of dollars that health insurance doesn't cover. But some health plans are now offering a new type of benefit -- access to a list of plastic surgeons who have agreed to reduce their fees. Getting a Discount on Plastic Surgery - WSJ.com
10 Pesky Airline Fees to Watch Out For These days airlines are desperate to raise revenues -- without raising fares. Competition from low-cost carriers is making it tougher for major airlines to increase fares so they make up the difference in fine-print fees. Here are 10 to watch out for. Prepare (your bill) for takeoff. 10 Pesky Airline Fees - SmartMoney.com
Lenders Get Tougher Lenders have been tightening their standards for issuing loans. Now, some are probing more intently into would-be borrowers' finances, and it's making qualifying for a mortgage difficult -- even if potential buyers have good credit. Lenders Get Tougher - WSJ.com
Remote Order Taking at Drive-Thru Windows In an accommodation to evaporating profit margins and demanding consumers, some fast-food stores are outsourcing drive-through order-taking to distant call centers. So the next time you order that burger and fries you may be speaking to someone in another state or country. 'Want fries with that?' could be asked from afar - USATODAY.com
Gaming Web Sites 'Most Viewed' Lists Popularity contests increasingly decide what people see on the Web. Are Web sites with features like most-popular lists are grappling with how to draw the line between input and manipulation. Web Sites' Lists Of 'Most Viewed' Too Easy to Game? - WSJ.com
Forbes 2008 Political Candidate Tracker Since the dawn of the age of the political advertisement, successful presidential candidates have largely been those who've most effectively sold themselves like soap powder or toothpaste. That's no secret. But now, Forbes.com has decided to put those traits to a test. Forbes '08 Tracker - Forbes.com Gallery: Most Trustworthy Candidates Gallery: Most Boring Candidates
Stock futures are indicating a lower start for stocks today, falling ahead of the CPI report and after weak earnings from Dow components and retails giants Wal-Mart and Home Depot.
Yesterday, news of DaimlerChrysler (NYSE: DCX) selling 80% of Chrysler to a private equity firm Cerberus dominated the headlines. But sentiment seems to become more cautious and some investors may be seeking quality as once again the Dow Jones Industrial Average was up, the Nasdaq and S&P 500 down.
Today, earnings have already affected futures, but there is one very important piece of data coming out at 8:30 a.m., before the market opens -- CPI. Consumer Price Index, or prices at the consumer level, is a measure of inflation and will continue to give investors indications as to the Fed's possible future policy. So far, despite the apparent signs of slowing growth, inflation remained a concern and the Fed kept rates at the same level. Some still hope for a rate cuts by the end of the year as prices at the wholesale level seemed to have moderated, others believe inflationary pressures are still too strong.
For April, CPI is expected to rise 0.5% after a 0.6% in March. Core CPI, which excludes the volatile food and energy prices is forecast to have risen 0.2% compared to a 0.1% increase the month before.
At the same time, the NY Empire State manufacturing survey for May is due.
Also today, the National Association of Home Builders will release its housing market index.
Corporate: Wal-Mart Stores Inc. (NYSE: WMT) reported an 8% first-quarter net income increase to $2.83 billion, or 68 cents a share, with revenue up 8.5% to $86.41 billion. Analysts, on average, were expecting earnings of 68 cents a share on revenue of $86.94 billion, according to Thomson Financial. Going forward, Wal-Mart sees comparable-store sales improving and second-quarter earnings from continuing operations between 75 cents and 79 cents a share. WMT shares declined in Europe.
The Home Depot, Inc. (NYSE: HD) reported a 30% net income drop in first-quarter to $1.05 billion, or 53 cents a share. Sales rose 0.6% to $21.6 billion. Analysts had been expecting earnings of 59 cents a share and revenue of $21.83 billion, according to data complied by Thomson Financial. Home Depot said that the home improvement market is expected to remain soft in 2007 and for earnings to come in at the low end of its guidance range. HD shares are declining 3.9% in pre-market trading (7:25 a.m.).
Financial companies might continue to be under pressure today if the CPI report shows higher inflation and lower possibility of a rate cut this year. The Thomson Corp. (NYSE: TOC) agreed to buyReuters Group Plc (NASDAQ: RTRSY) for 8.7 billion pounds ($17.2 billion), creating the biggest financial news and information company.
Overseas, Asian markets closed lower and European stocks are also lower. Europe's economy expanded 0.6% in the first quarter, more than forecast as corporate investment offseting the effects of higher euro and a German sales- tax increase.
The British newspaper, The Independent, reports that Reuters is a heart beat from being sold to Thomson (NYSE: TOC). According to its report, the "Reuters Founders Share Company, the trust that acts as guardian to the editorial independence of Reuters Group Plc" is prepared to approve the deal. Reuters has been independent since it was founded in 1850.
Thomson's bid sent the Reuters (NYSE: RTRSY) ADRs from below $60 to over $77. While the premium is nowhere near the one that News Corp (NYSE: NWS) has offered for Dow Jones (NYSE: DJ), Thomson is family controlled, and the Reuters CEO would run the combined company.
A combined Thomson/Reuters would have a share of the financial news delivery business that would only be matched by privately-held Bloomberg.
The merger of the two financial news and information giants could put Dow Jones in a bit of a bind. Its revenue would be dwarfed by larger competitors, and a rejection of the News Corp. offer could end up looking short-sighted.
But Dow Jones's management has made mistakes before.
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MOST NOTEWORTHY: DaVita, Dr. Pepper Snapple Group and Ascent Solar were today's noteworthy initiations:.gif){kind=logo}
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Every week, there seems to be yet another mega M&A deal. It's not just in the US but across the world. Yes, everyone is going ga-ga for M&A.
Stock futures are indicating a lower start for stocks today, falling ahead of the CPI report and after weak earnings from Dow components and retails giants Wal-Mart and Home Depot.
Best & Worst in Money 2008: Most shocking financial collapse
Closing Bell: Stocks slump as AMD, AT&T, GM and Merck decline
Global Q&A: A rocky road, but profits ahead
