Majestic Research

The Wall Street Journal

US HOT STOCKS: Men's Wearhouse Active In Late Trading

Published: December 08, 2009

Kroger Co. (KR, $20.13, -$2.72, -11.90%) swung to a loss in its fiscal third quarter on $1.05 billion in asset write-downs, primarily at its Ralphs division in southern California. Results missed analysts’ expectations. As a result, the supermarket giant again lowered its fiscal-year earnings forecast. Safeway Inc. (SWY, $20.91, -$1.52, -6.78%), Whole Foods Market Inc. (WFMI, $25.30, -$0.59, -2.28%) and Supervalu Inc. (SVU, $13.18, -$1.26, -8.73%) also traded lower.

Talbots Inc. (TLB, $8.23, +$1.02, +14.15%) announced plans to shed its Asian majority owner through a deal with a special purpose acquisition vehicle as the women’s retailer also swung to a surprise profit in its fiscal third quarter. Shares jumped as the company gave an upbeat view, and separately announced a pact to retire the 54% stake held by Japan’s Aeon Co. (AONNY, $8.45, +$0.24, +2.92%).

Citigroup Inc. (C, $3.91, -$0.12, -2.98%) and Wells Fargo & Co. (WFC, $26.03, -$0.33, -1.25%) are wrestling with the U.S. government over how much capital the banks will be required to raise to exit the Troubled Asset Relief Program, people familiar with the situation told The Wall Street Journal.

Newspaper publisher McClatchy Co. (MNI, $3.00, +$0.39, +14.94%) expects advertising revenue to continue to improve through the end of the year, building on a trend it said started during the third quarter. Belo Corp. (BLC, $5.42, +$0.26, +5.04%) said a decline in its fourth-quarter revenue won’t be as bad as analysts are predicting, while New York Times Co. (NYT, $9.01, +$0.11, +1.24%) said its print-advertising sales will continue to decline, though digital ads are strengthening. Shares of Gannett Co. (GCI, $11.80, +$0.71, +6.40%) also rose.

Greek bank shares including National Bank of Greece SA (NBG, $5.45, -$0.56, -9.32%) fell Tuesday, extending recent losses as worries about the country’s ability to deal with its economic and financial woes continued to weigh on sentiment.

Shares of vaccine maker PharmAthene Inc. (PIP, $1.55, -$1.71, -52.45%) fell a day after the Department of Health and Human Services changed its approach in requesting anthrax vaccines. HHS canceled a request for proposals on recombinant protective antigen anthrax vaccine because it didn’t believe vaccine developers submitting proposals could have product ready for licensure by the U.S. Food and Drug Administration within eight years.

Emergent BioSolutions Inc. (EBS, $13.25, -$1.15, -7.99%) also declined on the anthrax vaccine news, though it said the decision has no impact on its $400 million procurement contract with the Centers for Disease Control and Prevention for the delivery of 14.5 million doses of BioThrax the only vaccine licensed by the FDA for the prevention of anthrax into the Strategic National Stockpile.

Standpoint Research started coverage of Aeropostale Inc. (ARO, $31.06, +$0.86, +2.85%) at buy, and suggests the stock is oversold after falling 28% in past six weeks. The firm expects the retailer to return to its all-time high of $45 within 12 to 18 months, more than 40% upside from current level.

Drug company Ariad Pharmaceuticals Inc. (ARIA, $2.62, +$0.15, +6.07%) announced positive data from an ongoing Phase I study of AP24534, a treatment for patients with advanced hematological cancers. The study showed evidence of clinical anti-tumor activity in resistant refractory patients.

AutoZone Inc.’s (AZO, $156.90, +$3.54, +2.31%) fiscal first-quarter earnings rose 9.1%, topping Wall Street’s expectations, as the company again saw sales increase.

Bank holding company Banner Corp. (BANR, $2.40, -$0.29, -10.78%) said it would offer up to $75 million in stock as it looks to use the proceeds to provide capital to Banner Bank, to support its growth and take advantage of opportunities in its market area. The company’s market capitalization is currently about $48.5 million.

BE Aerospace Inc.’s (BEAV, $22.21, -$1.12, -4.80%) upside potential is already priced into shares and lacks fresh catalysts to move the stock higher, Stifel said in cutting the maker of aircraft cabin interior pieces’ stock to hold. The firm noted its primary concern in next 12 months is the lack of discretionary spending by airlines, especially on higher margin premium seats.

Casey’s General Stores Inc.’s (CASY, $30.18, -$0.92, -2.96%) fiscal second-quarter profit climbed 23% on higher margins as commodity costs and gasoline prices fell from a year earlier. But shares fell as the convenience-store operator’s revenue fell short of Wall Street’s expectations.

Conseco Inc. (CNO, $4.84, -$0.32, -6.20%) projected 2010 earnings well below Wall Street’s expectations and also said it’s seeking an amendment to one of its lines of credit. Other insurers also slipped, including Genworth Financial Inc. (GNW, $11.02, -$0.24, -2.13%).

Crimson Exploration Inc. (CXPO, $6.10, -$0.40, -6.15%) detailed estimated terms for its planned stock sale, proceeds from which will go to debt repayment. The independent oil and gas company said Tuesday it will sell at least 18 million shares at an estimated price of $6 to $8 each.

Shares of DaVita Inc. (DVA, $58.12, -$1.64, -2.74%) slid on reports the U.S. Senate is discussing opening Medicare to people ages 55 to 64, which could hurt reimbursement rates at the operator of dialysis centers. Germany-based rival Fresenius Medical Care AG & Co. (FMS, $52.76, -$1.83, -3.35%) also declined.

DeVry Inc. (DV, $54.29, +$1.71, +3.25%) said new student enrollment at its DeVry University was up 19% in the fall, while total student enrollment rose 23%. President and Chief Executive Daniel Hamburger said the company was pleased with the enrollment growth and retention for all its schools, and saw strong demand across all programs.

Package-delivery giant FedEx Corp. (FDX, $89.88, +$2.36, +2.70%) sharply boosted its fiscal second-quarter earnings estimate, citing better-than-expected growth in its international priority and ground shipping volumes, along with continued cost-cutting efforts.

Biopharmaceutical company Geron Corp. (GERN, $5.90, +$0.12, +2.08%) presented interim data from its Phase II study on GRNVAC1, a vaccine that targets telomerase, an enzyme expressed in a wide range of malignant tumors, and the company said it has met its endpoints of safety and tolerability. Fourteen out of 20 patients in the study remain in complete remission, the company said.

Shares of Hoku Scientific Inc. (HOKU, $2.85, +$0.50, +21.28%) soared as much as 30% Tuesday after the clean-energy technology company amended a polysilicon purchase agreement with Solarfun Power Holdings Co. Ltd. (SOLF, $7.14, -$0.33, -4.42%).

Hospitality Properties Trust (HPT, $21.37, +$0.56, +2.69%) will resume paying a quarterly dividend in February, 10 months after the owner of hotels and travel centers suspended the payouts.

Real-estate investment trust Kimco Realty Corp. (KIM, $12.51, -$0.57, -4.36%) priced an offering of 25 million shares at $12.50 a piece. The proceeds are expected to be about $300 million.

McDonald’s Corp. (MCD, $60.61, -$1.32, -2.13%) said global same-store sales rose 0.7% in November as the fast-food giant reported a 0.6% decline in the U.S. and a 1% drop in Asia, the Middle East and Africa. More than offsetting that weakness was a 2.5% increase in Europe, driven by sales in the U.K. and France, as the company continued to focus on menu development.

Bernstein said Motorola Inc. (MOT, $8.62, +$0.49, +6.03%) as a whole looks undervalued. The combined company does deserve the discount in the stock, but with a credible prospect of a break-up next year, the firm is bullish in starting coverage with an outperform rating. Such a deal could generate a 50% increase in the stock price.

B. Riley raised its rating on National Penn Bancshares Inc. (NPBC, $5.42, +$0.22, +4.23%) to buy from neutral based on steeply discounted valuation. “We do not understand the sharp drop off in NPBC’s valuation,” the firm said, adding the company took some important measures in the third quarter to significantly strengthen its balance sheet.

There’s some discontent with New York Community Bancorp Inc.’s (NYB, $12.65, -$0.75, -5.60%) purchase of failed AmTrust Bank. It rallied Monday following Friday’s deal, but some analysts are skeptical about the deal. “On the surface, we can’t argue with the math” of the deal that is immediately accretive to earnings and secures the bank’s dividend, RBC Capital said. But the company’s expansion from New York to Ohio, Arizona, and Florida is tricky. “Now the franchise is a hodgepodge,” the firm added. BMO Capital Market said it has concerns about NYB’s ability to grow deposits.

Shares of OptionsXpress Holdings Inc. (OXPS, $14.03, -$0.77, -5.20%) slide ahead of November trading data due Wednesday. JMP Securities analyst Michael Hecht said November trends have been down for e-brokers about 10% to 15% sequentially, which is a little softer than what’s usually seen in the month. The stock move could be positioning before the news with people getting the sense the data will be soft. Meanwhile, Raymond James analyst Patrick O’Shaughnessy says it’s widely understood Nov volumes have been low in the sector, adding people may be anticipating earnings estimates for the quarter to be revised down. The company couldn’t immediately be reached for comment.

Peet’s Coffee & Tea Inc. (PEET, $31.95, +$0.96, +3.10%) won’t raise its $26-a-share offer for Diedrich Coffee Inc. (DDRX, $34.68, -$0.47, -1.34%) in response to Green Mountain Coffee Roasters Inc.’s (GMCR, $62.82, +$2.43, +4.02%), upping the ante to $35 a share. As such, Diedrich agreed to be acquired by Green Mountain in a deal worth about $290 million.

Pep Boys-Manny Moe & Jack (PBY, $8.78, -$0.49, -5.29%) swung to a fiscal third-quarter profit on stronger service revenue, and reported its first same-store sales increase in almost three years. But shares fell as the company cited continuing problems from consumers’ tightened spending, although the auto-parts and service retailer’s results met or exceeded Wall Street’s expectations.

Drug company Pharmacyclics Inc. (PCYC, $2.62, +$0.27, +11.49%) announced interim data from a Phase I study on its drug PCI-32765 for the treatment of patients with relapsed or refractory B-cell non-Hodgkin’s lymphoma or chronic lymphocytic leukemia. The drug appeared to be well tolerated and the company has evidence of drug activity.

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QuadraMed Corp. (QDHC, $8.31, +$1.90, +29.64%) agreed to be acquired by private-equity firm Francisco Partners in a deal valued at $126 million. Francisco will pay $8.50 a share for the health-care information-technology company, a 33% premium to its Monday close, as well as $13.7097 a share for its mandatory convertible preferred shares.

RELM Wireless Corp. (RWC, $3.90, +$1.47, +60.49%) was named as a contractor under a U.S. government contract for two-way radios and related equipment. The contract’s maximum value is up to $750 million and could last five years. The equipment is for a host of federal agencies, including the departments of Justice, Treasury and Transportation. RELM already has contracts with other agencies and the U.S. Postal Service.

Although Royal Caribbean’s (RCL, $24.62, -$0.94, -3.68%) booking environment seems to have stabilized, cruise ticket prices aren’t “improving meaningfully,” Majestic Research said. “In fact, we have seen first-quarter 2010 pricing trends decline sequentially over the past several months following a short-lived improvement during July and early August,” firm said.