Regular Session Movers
Piper Jaffray upgraded its investment rating on shares of Big 5 Sporting Goods Corp. (BGFV, $9.03, +$0.51, +5.99%) to overweight and boosted its price target by 50% to $12, a level last seen in April 2011. The investment bank contends improving sales trends "and a depressed margin structure set the stage for accelerated earnings growth" in the second half of the year and into next year for Big Five.
Raymond James raised its rating on telecommunications firm Cincinnati Bell Inc. (CBB, $5.06, +$0.37, +7.89%) to strong buy from outperform, noting expected upside from the company's planned initial public offering of its CyrusOne data-center unit.
A handful of companies filed plans late Friday to offer common stock and other securities. Specialty-pharmaceutical and medical-device maker Delcath Systems Inc. (DCTH, $1.87, -$0.11, -5.56%) said it may offer securities and selling stockholders may offer shares of common stock for up to $100 million. Biopharmaceutical company MannKind Corp. (MNKD, $2.53, -$0.17, -6.30%) filed plans to offer up to $500 million of mixed securities.
Goldman Sachs has changed its tune on GameStop Corp. (GME, $20.41, +$1.33, +6.97%), raising earnings estimates for the next 2 1/2 years while upgrading the company to buy and boosting its price target by 25% to $25. The move could be seen as late in coming considering the videogame retailer's 19% rebound in August after slumping the prior four months. But Goldman says new software and hardware on the horizon leave shares with even more room to run.
BB&T cut its rating on telecom contractor Dycom Industries Inc. (DY, $13.40, -$1.12, -7.71%) to hold from buy, writing after the company's disappointing revenue forecast and lack of earnings growth last week it has become "too difficult to recommend putting new money to work in the shares until the outlook for telecom capital spending improves." The stock has shed over 30% this year on customer-spending concerns, leaving BB&T to conclude "much of the damage has already been done." Still, it also notes the stock was range-bound for nearly two years the last time Dycom was in a similar spending situation.
Greenhill & Co. (GHL, $46.17, +$2.52, +5.77%) Chief Executive Scott Bok's recent guidance that the investment bank's 2012 revenue will match that of 2011 implies the strongest second half of merger-and-acquisition revenue for the investment bank since 2007, Credit Suisse said. Despite a roughly 10% runup in the company's shares, Credit Suisse sees further potential gains in the coming months, with a "4% dividend to provide investor margin of safety." It also raised the company's price target to $48 from $36.
Heckmann Corp. (HEK, $3.71, +$1.02, +37.92%) struck a deal to buy privately held environmental-services company Power Fuels Inc. for roughly $380 million in cash and stock, as well as the assumption of $150 million in debt. Heckmann, a provider of water-treatment services for shale or unconventional oil-and-gas exploration, expects the deal to be "highly accretive" to its earnings, according to a statement from the company.
Morgan Stanley (MS, $15.51, +$0.51, +3.40%) was the best-performing financial stock in the S&P 500 after a pair of upgrades. CLSA's Mike Mayo raised the investment bank to buy and raised his price target on the stock to $23 from $16. Pressure is mounting on Morgan Stanley after "dismal" second-quarter results and CLSA "senses a consensus among investors for more-aggressive restructuring." As such, "we are further convinced that either management realizes more of the franchise value or investors will increasingly pressure management for improved results." Earlier, J.P. Morgan raised Morgan Stanley to overweight, highlighting the company's "strong capital position" and "very attractive" valuation.
Montreal drug maker Valeant Pharmaceuticals International Inc. (VRX, $58.78, +$7.51, +14.65%) agreed to acquire Medicis Pharmaceutical Corp. (MRX, $43.65, +$12.09, +38.31%) for $2.6 billion, the latest in a string of acquisitions for the Canadian drug maker. Valeant will pay $44 a share for Medicis, a 39% premium to the stock's Friday closing price. Analysts at RBC cheered the deal, noting Valeant should generate an additional 60 cents a share next year--and more than double that in 2014--from the purchase.
Piper Jaffray cut chipmaker Monolithic Power Systems Inc. (MPWR, $20.17, -$1.39, -6.45%) to neutral from overweight, saying it believes shares are "fairly valued" at current levels as they near the firm's $23 price target. "Given our belief that the short term bias to estimates is likely lower, we believe investors have better opportunities for growth elsewhere in semis," the firm wrote.
Word of Amazon.com Inc.'s (AMZN, $247.88, -$0.39, -0.16%) multiyear-licensing deal with premium cable channel Epix sent Netflix Inc. (NFLX, $55.93, -$3.79, -6.35%) shares tumbling Tuesday, putting the entertainment company's stock decline over the past 12 months at nearly 75%. The deal comes just after Epix's exclusive streaming agreement with Netflix ended. Epix is owned by Lions Gate Entertainment Corp. (LGF, $15.22, +$0.44, +2.98%), Viacom Inc.'s (VIA, $49.97, -$0.43, -0.85%) Paramount Pictures and Metro-Goldwyn-Mayer Studios.
NTS Realty Holdings L.P. (NLP, $4.70, +$1.63, +53.16%) said it received an offer from its chairman and chief executive to take the company private in a deal valuing the real-estate company at about $58.3 million. Founder and Chairman J.D. Nichols and Chief Executive Brian F. Lavin offered to take the company private for $5.25 a share in cash, a 71% premium over Friday's closing price of $3.07.
Nvidia Corp. (NVDA, $13.28, -$0.76, -5.38%) ended near the bottom of the S&P 500 after a pair of downgrades for the chipmaker, known for its graphics-processing unit that generates visual effects in video games on personal computers and consoles. Citing a slowdown in the PC market, Susquehanna cut Nvidia to neutral and lowered its price target to $15 from $17 while Evercore moved it to underweight and reduced its target by $2, to $13. The latter said a November launch of any new iPad models could weigh on competing tablets, including those that use Nvidia's Tegra system for mobile devices like Google Inc.'s (GOOG, $681.04, -$4.05, -0.59%) Nexus 7 or Acer Inc.'s (2353.TW) Iconia Tab A500.
The U.S. coal industry's big bet on the steel market isn't turning out well. With a key Asian price for steelmaking coal down 28% since June, Dahlman Rose downgraded steel-focused Peabody Energy Corp. (BTU, $20.90, -$0.73, -3.37%), Alpha Natural Resources Inc. (ANR, $5.53, -$0.41, -6.90%) and Walter Energy Inc. (WLT, $30.73, -$1.97, -6.02%). Wary of regulations that could hit U.S. power-plant demand, the miners had focused on steelmaking coal, seen as a safer bet because of growth in Asian economies. But Europe, the traditional export destination for U.S. coals, is in reverse, pushing a glut of global coal toward slowing Asian markets. Coal producer Consol Energy Inc. (CNX, $28.83, -$1.37, -4.54%) separately said it is temporarily idling a mine in southwestern Virginia that produces steelmaking coal at a time of weak market conditions in the company's export markets. Arch Coal Inc. (ACI, $5.79, -$0.32, -5.24%) sank as well.
Questcor Pharmaceuticals Inc. (QCOR, $47.80, +$4.36, +10.03%) said it has been informed by the U.S. government it is eligible for a lower Medicaid rebate amount of its blockbuster drug Acthar. Currently, the company pays a mandatory rebate to state Medicaid programs equaling roughly 100% of the amount it charges its distributors for the drug; the new amount is estimated at roughly 23.1%. Shares surged as the company said in a securities filing the change could have a "materially positive impact" on its financial results.
Santarus Inc. (SNTS, $7.06, +$0.88, +14.16%) said the U.S. Court of Appeals partly reversed a lower court decision, finding certain patent claims related to its Zegerid drug weren't invalid.
StemCells Inc. (STEM, $2.20, +$0.03, +1.38%) reported positive results for the first patient trial of its spinal-cord-injury treatment using neutral stem cells. The trial showed the treatment "continues to demonstrate a favorable safety profile, and shows considerable gains in sensory function in two of the three patients compared to pre-transplant baselines," according to a statement released by the biotechnology company.
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