Stock Market Predictions

Momenta shares rise on biosimilars deal with Baxter

Stock Market Predictions

Momenta will receive an upfront payment of $33 million from Baxter for developing up to six biosimilars, and is entitled to additional milestone payments.

The deal also includes Momenta receiving royalties with a profit-share option on four drugs, for which Baxter will cover clinical trials, manufacturing and commercialization, according to Canaccord Genuity analyst Ritu Baral.

The analyst, who has a price target of $23 on Momenta stock, reiterated her "buy" rating.

Momenta and Baxter's deal comes just days after Amgen Inc (AMGN.O) and generic drugmaker Watson Pharmaceuticals Inc (WPI.N) announced a partnership to develop and sell biosimilars of cancer drugs.

Earlier in the month, Samsung announced an agreement with biotechnology company Biogen Idec (BIIB.O) to set up a joint venture for developing, manufacturing and marketing biosimilars.

Biosimilars are copies of existing biotechnology products developed from organic compounds. However, due to the complex nature of these compounds, biosimilars have come under the regulatory scanner.

Companies hoping to cash in on a potential multi-billion dollar market for biosimilars have long awaited guidelines from the U.S. Food and Drug Administration on the development of such drugs.

Analyst Baral said the slew of deals on biosimilars follows increased FDA clarity on the regulatory path.

Shares of Cambridge, Massachusetts-based Momenta were up 4 percent at $17.63 on Friday morning on Nasdaq.

(Reporting by Zeba Siddiqui in Bangalore; Editing by Roshni Menon)

United Continental shares off on revenue concerns

Stock Market Predictions

United Continental said in a U.S. regulatory filing late on Thursday that it expects consolidated passenger revenue per available seat mile, an important measure called unit revenue, to rise 8.5 percent to 9.5 percent in the fourth quarter.

Helane Becker, an analyst with Dahlman Rose & Co, said her firm had estimated 10 percent growth in quarterly unit revenue.

"We think there are concerns about a recession in Europe," Becker said in an email. Dahlman Rose cut its fourth-quarter profit estimate for United Continental to 25 cents a share from 50 cents a share to account for lower capacity and traffic.

Becker said United would likely benefit in Chicago, Los Angeles and the Atlantic from the restructuring of AMR Corp's (AMR.N) American Airlines, which filed for Chapter 11 protection last month.

James Higgins, an analyst with Ticonderoga Securities, reduced his fourth-quarter profit estimate on United Continental to 16 cents a share from 43 cents a share. Analysts on average, currently expect 46 cents a share, according to Thomson Global Markets I/B/E/S.

In a note to clients, Higgins said exposure to mainland Asia revenue could be creating more revenue uncertainty for United than for other airlines.

"We like the carrier's longer-term prospects but are a bit wary of near-term revenue trends," Higgins wrote.

Most U.S. airlines have posted profits this year, aided by service cuts, higher fares and retirement of less fuel-efficient planes. Still, economic woes loom as a threat to overall demand for air travel.

Last week, Delta Air Lines Inc (DAL.N) said it expects recessionary effects from the euro-zone crisis to weigh on 2012 and said it would cut capacity in Europe by 7 percent.

Shares of United Continental were off 6.7 percent at $18.91 in morning trading as Delta and US Airways Group (LCC.N) also fell. The Arca Airline index .XAL was down 2 percent. AMR Corp was up 4.3 percent to about 60 cents and Southwest Airlines (LUV.N) rose 0.4 percent to $8.43.

(Reporting by Karen Jacobs, editing by Dave Zimmerman)

American Greetings shares plummet as Q3 profit drops

Stock Market Predictions

Shares of the company slumped 25 percent to $12.85 on Thursday in heavy trading, making it one of the top percentage losers on the New York Stock Exchange.

S&P Capital said it expects margin pressure for the company to continue and cut its price target on the stock to $14 from $21.

American Greetings third-quarter net income fell to $20.2 million, or 50 cents per share, from $32.2 million, or 78 cents per share, a year ago.

Revenue rose 8 percent to $463.6 million.

Selling, distribution and marketing expenses rose 19 percent to $140.1 million.

The Cleveland, Ohio-based company plans to spend more on selling and marketing its greeting cards.

For the fiscal year ending February 29, 2012, the company expects cash flow from operating activities to be about $90-$110 million, compared with its prior estimate of $125-$145 million.

(Reporting by Chris Jonathan Peters in Bangalore; Editing by Roshni Menon)

Keppel shares jump on $809 million Brazil contract win

Stock Market Predictions

At 0111 GMT (8:11 p.m. EST), Keppel shares were traded at S$9.46 with 886,000 shares changing hands.

Keppel said on Thursday it had secured the contract to design and build a semi-submersible rig for Urca Drilling BV, a unit of Sete Brasil Participações.

The contract win brings Keppel's total order wins so far this year to S$9.8 billion, DMG & Partners said.

(Reporting by Charmian Kok; Editing by Kevin Lim)

Oracle miss sparks Wall St fears of spending cuts

Stock Market Predictions

The first earnings miss in a decade from Oracle, whose fiscal second quarter ended on November 30, drove its shares down more than 11 percent on Wednesday, destroying about $20 billion of market value. The shortfall from the No. 3 software maker also hit shares of many other technology companies, with VMware Inc, NetSuite Inc, and SAP among those suffering the biggest losses.

"Is this a preliminary example of what we could expect in January from Microsoft and other players? It raises an eyebrow that things may not be as hunky dory as we've been led to believe in terms of IT spending," said Daniel Morgan, a portfolio manager at Synovus Securities in Atlanta.

The troubles at Oracle follow ominous reports from big tech names including Hewlett-Packard Co, Intel Corp and Texas Instruments Inc.

The disconcerting news on Tuesday was not limited to Silicon Valley, with U.S. industrial conglomerate Emerson Electric Co reporting a drop in orders for equipment used in big data centers. Emerson shares fell 5.4 percent to $46.97.

"Overall, we have seen in the last 60 days ... a significant weakness in this whole electronics space," said Emerson Chief Executive David Farr. "I don't see that changing for the time being."

The fourth quarter is the crucial period of the year for many technology companies because corporations tend to spend most heavily on information technology during that time in what is known as a year-end "budget flush."

Oracle's disappointing results could signal that companies won't spend all the money that they still have budgeted for 2011 technology projects, said Howard Anderson, a lecturer at MIT's Sloan School of Business, who regularly talks to CEOs of top-tier corporations.

"Confidence is not there," he said. "We have a kind of rolling recession."

Oracle's quarter ended in November, but investors worried that the decline in business confidence could signal more troubles for peers whose quarters end in December. That includes arch rival SAP AG.

"The majority of deals in the fourth quarter are traditionally closed in the last two weeks of the quarter, so the delay of Oracle's deals is a negative cross read for SAP," said Silvia Quandt analyst Michael Busse.

SAP CEO Bill McDermott declined to comment on his business, saying the company was in a quiet period.

A slowing in tech spending would be troubling for the U.S. economy, which has had few bright spots in recent years.

"Since the technical end of the recession (in June 2009) we've been seeing double-digit growth in investment in technology. If Oracle is the canary in the coalmine, that would be something to worry about," said Michael Goodman, director of economic and public policy research at the University of Massachusetts at Dartmouth.

"There's a lot of concern about what the immediate future holds, so this may just be customers putting off investments they want to make until they feel like they have a better handle on what the future looks like," Goodman said.

MIXED SIGNALS

U.S. companies have been sending mixed signals about their spending plans for 2012. A survey released last week by the Business Roundtable found that 16 percent of CEOs of large U.S. companies planned to cut their capital spending over the next six months, up from 13 percent who had planned cuts in the third quarter.

But other data released on Wednesday by the Equipment Leasing and Finance Association showed U.S. businesses signed up for $6.2 billion in loans, leases and lines of credit to fund capital expenditures in November, a 38 percent increase from the month a year ago.

Oracle's stock fell $3.40 to $25.77, its lowest close since August, making it the biggest loser in the Standard & Poor's 500 index. It was the biggest one-day percentage drop in the stock since March 4, 2002, when Oracle last surprised investors with an earnings warning.

CEO and co-founder Larry Ellison, the company's biggest shareholder, lost more than $3.8 billion on Wednesday as the stock plunged, based on his holdings published in Oracle's annual proxy filing.

The declines accounted for about 16 points of the 27.6 point drop in the S&P 1500 Software index, which suffered a 4.5 percent drop in market cap to about $511 billion. The drop in Oracle shares represents 68 percent of the decline in total market cap for the index.

(Reporting by Sayantani Ghosh in Bangalore, Maria Sheahan, Christoph Steitz and Marilyn Gerlach in Frankfurt and Nicola Leske, David Gaffen, Ryan Vlastelica and Nick Zieminski in New York; Editing by Richard Chang)

Gloucester shares surge as Noble backs Yancoal bid

Stock Market Predictions

Analysts said on face value, the merged group would have an enterprise value of about A$6.8 billion, which included a heavy debt load.

Gloucester's 64 percent shareholder, Hong Kong-based Noble, said it would back the deal, which will leave it with a 14.8 percent stake in the merged group.

"Noble has informed the independent directors of Gloucester that, subject to approval by the Noble board of directors and in the absence of a superior proposal, it intends to vote its shareholding in favor of the merger proposal," Noble said in a statement.

Sydney-based Gloucester will be merged with Yancoal Australia Ltd., and Yanzhou will own 77 percent of the new company.

Gloucester shareholders will own the rest and receive A$700 million ($705.36 million) in cash, the equivalent of A$3.20 in per share, Yancoal said in a statement. Each Gloucester Coal shareholder will receive one share in the merged company.

Shareholders will also be entitled to participate in a pool of "contingent value rights" shares that protect the value of the merged company's shares. Under the terms of the deal, the shares will be protected at a value of $6.96 each.

This puts the total value of the deal at A$10.16 per share, or A$2.1 billion, a 45 percent premium to Gloucester's last trade before the deal was announced.

Gloucester shares surged 29 percent to a high of A$9.04, but that was well below the ostensible value of the deal, which analysts said reflected investors' uncertainty over the value of Yancoal's assets.

"You can't really value the deal without knowing the value of the Yancoal assets," said CLSA analyst James Stewart.

Yanzhou (1171.HK) shares were trading up 5.1 pct.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Australia coal M&A graphic: r.reuters.com/neq65s

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

FLOAT REQUIREMENT

The deal helps Yancoal meet a requirement to float 30 percent of its Australian assets by the end of 2012, a condition of its A$3.3 billion takeover of Felix Resources in 2009, but does not go far enough.

With Yancoal owning 77 percent of the merged group, it would need to dilute its stake down to 70 percent at some point later in 2012 to fully meet the requirement.

A lawyer not involved in the deal said he expected Australia's Foreign Investment Review Board to approve the deal.

"There's nothing that really leaps off the page as being of concern. It's not a supersensitive asset. There are no national security issues attached to it," said the lawyer, who declined to be named due to the sensitivity of the review process.

Noble Group (NOBG.SI) said it would make a one-time gain of about $200 million from the deal. Its shares rose 0.4 percent to S$1.195.

In a filing to the Singapore stock exchange Noble said it will receive about 130.9 million Yancoal Australia shares and A$420 million ($416 million) under the terms of the proposed merger.

Gloucester and Yancoal spokesmen said none of the parties involved were likely to release further details pending the outcome of an independent expert's report valuing the offer and other due diligence work expected to take until February.

The merger is conditional on the new entity obtaining a listing on the ASX, Gloucester said. It is also subject to approval by at least 75 percent of Gloucester shareholders.

Yancoal and Gloucester both have mines and projects in the Australian states of New South Wales and Queensland. Gloucester aims to expand production to 10 million tonnes a year by 2016, while Yancoal expects to produce 20 million tonnes a year by 2015.

That would put a combined group ahead of Whitehaven Coal (WHC.AX), which last week announced a $2.5 billion takeover of Aston Resources (AZT.AX) to create a company producing 25 million tonnes a year by 2016.

Since taking over Felix Resources in 2009, Yancoal has bought Syntech Resources for A$203 million and is about to complete the A$297 million acquisition of Premier Coal from Wesfarmers (WES.AX).

Those assets are not included in the deal.

It sought to buy Whitehaven Coal earlier this year but the two were unable to settle on a price.

(Reporting by James Regan, Victoria Thieberger; and Sonali Paul; Editing by Ed Davies)

Micron shares skyrocket, investors bet on 2012 bounce

Stock Market Predictions

Micron on Wednesday posted lower-than-expected results saying flooding in Thailand -- a major production center for hard drives and the components that go in them -- had slashed demand for basic memory chips 10 to 15 percent. But Wall Street analysts foresaw a bounceback next year as hard-drive shortages alleviate.

Wedbush Morgan upgraded Micron stock to "outperform" from "neutral," while Raymond James analyst Hans Mosesmann reiterated his strong "buy" position, arguing the worst of the market doldrums could be behind Micron and the company should ride fatter margins next year.

"We see more reason for optimism in FY12, as the current DRAM pricing dynamic is not sustainable; the worst of the HDD- related shortages are seemingly in the past" and higher-margin flash memory takes up a larger portion of sales, Mosesmann said.

Stock in Micron, the last U.S. DRAM manufacturer, soared as much as 16 percent in early trading, and was up 14.3 percent at $6.33 in the late morning.

(Reporting by Edwin Chan, editing by Maureen Bavdek)

Lockheed in up to $980 million U.S. missile shield deal

Stock Market Predictions

The ordering period under the sole-source contract is from January 1, 2012, through December 31, 2016, the Pentagon said in a digest item, without specifying the overall system at issue.

(Reporting By Jim Wolf)

Baby formula probe widens beyond Enfamil

Stock Market Predictions

An official from the Centers for Disease Control and Prevention (CDC) said the baby, 10-day-old Avery Cornett of Lebanon, Missouri, had consumed a variety of baby formulas before his death but declined to give more details.

Initial results of the probe could be available at the end of next week at the earliest, though the full investigation could take up to a month.

A top investment bank warned that Enfamil sales could be hurt even if health regulators find no link between it and the death.

Shares of Mead Johnson Nutrition Co, the largest U.S. formula maker, closed 5 percent lower on Friday, on top of a 10 percent drop on Thursday when news first emerged that Wal-Mart Stores Inc was pulling cans of Enfamil Newborn formula off its shelves following the death of the infant.

The baby had been fed the formula and tested positive for Cronobacter, a bacterium that has sometimes been linked to rare illnesses in newborns. Cronobacter has been found in milk-based powdered baby formula, and is also a relatively common environmental contaminant.

The CDC official said the infant also consumed other types of baby formula before his death, so the link to Enfamil was still unproven.

He declined to name the other formulas that could be involved, and whether they were also powdered, or liquid.

"At this point, no formula samples have yielded Cronobacter," said Dr. Robert Tauxe, deputy director of the CDC's division of foodborne, waterborne and environmental diseases.

While health officials remained wary of linking Enfamil to the infant's death, Goldman Sachs cut its financial targets for Mead Johnson. And Standard & Poor's said it was assessing the impact of the investigation on the company, including whether it would have to be put on credit watch.

"We see risk that consumers trust in the Enfamil brand is damaged, regardless of the outcome of any investigation," Goldman Sachs analyst Jason English said in a client note.

He lowered his estimates for Mead Johnson's earnings in 2012 through 2014 by 3 percent on average. In particular, he cut his 2012 earnings per share forecast to $3.17 from $3.27. He also trimmed that 2013 forecast by 10 cents to $3.50.

As a result of those lowered expectations, English cut his share price target for Mead Johnson to $74 from $80. The stock fell $3.47 to end at $65.29 on Friday.

Mead Johnson's "Enfa" family of products, which includes Enfamil, accounts for about 79 percent of total sales, according to Standard & Poor's. Mead Johnson reported $3.14 billion in sales in 2010.

The ratings agency retained its "triple-B" rating and "positive" outlook on Mead Johnson's debt, though it said the company could lose sales if consumers switch to another brand of baby formula while waiting for the results of the investigation.

FORMULA WOES

Another baby, in Illinois, got sick from Cronobacter infection earlier this month, but later recovered. Regulators said that infant consumed a number of products and investigators are still looking into what caused the illness. It is unknown whether the baby also used Enfamil formula, and investigators are analyzing the DNA from both infection strains to see if they are similar.

The batch was produced at Mead Johnson's facility in Zeeland, Michigan, company spokesman Chris Perille said. Enfamil Premium Newborn is produced exclusively for use in the United States and is not sold outside of the country, he added.

Abbott Laboratories - maker of Similac, the No. 2 U.S. formula brand - voluntarily recalled millions of containers of Similac powdered formula last year after beetles were found in the products and in a plant where they were made.

D.A. Davidson analyst Tim Ramey said it took about six months for Abbott's Similac business to recover. During that time, Enfamil sales rose.

"They're going to trade share back and forth," Ramey said. "If it turns out there's a problem, that will favor Abbott Labs." Shares of Abbott Labs edged 0.6 percent higher to $56.

Wal-Mart began taking 12.5-ounce cans of Enfamil Newborn from lot number ZP1K7G from shelves late Monday night. Other retailers who carried the same product - including Walgreen Co, Supervalu Inc, Safeway Inc and Kroger Co - followed suit.

Siobhan DeLancey, spokeswoman for the U.S. Food and Drug Administration (FDA), said the agency was analyzing samples of unopened baby formula containers from the infant's home, as well as from several retail stores, to see if other Enfamil lots had problems, and where the lots came from.

She said the Centers for Disease Control and Prevention (CDC) would test the open containers of formula, the water in the home, and the mixture of formula and water.

The results of the investigation could come as early as the middle of next week, DeLancey confirmed.

However, the CDC said DNA samples from the baby's strain of the infection will not be available until the end of next week, making it impossible to link the baby's illness to any kind of formula until then.

(Additional reporting by Brad Dorfman in Chicago; Editing by Richard Chang)

Chico's shares rise on possible PE buyout report

Stock Market Predictions

A dealReporter.com story suggested that Chico's may be an attractive target for private equity firms, Interactive Brokers Group options analyst Caitlin Duffy wrote in a report on Friday.

Global Markets, however, could not access the report.

Tiburon Research Group analyst Rob Wilson said Chico's, which has seen its sales slow down, might be looking to sell itself before more bad news comes out.

Shares of Fort Myers, Florida-based Chico's were trading at $11.12 in Friday afternoon on the New York Stock Exchange. They had hit a high of $11.23 earlier in the day.

Chico's did not respond to an e-mail and calls seeking comment.

Retailers like Chico's have been forced to increase markdowns to attract customers in a heavily competitive environment, eating into their profits.

Three years ago, the company had set a goal to earn $1 a share for fiscal 2012. However, last month it said that the target would not be met.

For fiscal 2013, it expects to earn $1.50 a share.

"I think (Chico's) made a mistake putting up some very aggressive earnings target out there ... They're certainly not on the trajectory on which they'll be able to achieve their target," analyst Wilson, who thinks $14 a share would be a good price for the company, said.

Interactive Brokers Group's Duffy said call options on the specialty retailer were attracting buyers. She said investors traded more than three times as many calls on Friday compared with Thursday.

In November, the retailer had warned that its margins will remain under pressure as it offers higher discounts to draw shoppers in the holiday season.

(Reporting by Arpita Mukherjee and Ranjita Ganesan in Bangalore; Editing by Viraj Nair)