Stock Market Predictions

Spectrum says bladder cancer drug fails, buys Allos

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Separately, the biotechnology company said it agreed to buy Allos Therapeutics (ALTH.O) for about $206 million to gain access to its anti-cancer drug Folotyn.

Spectrum was testing the drug apaziquone in two late-stage trials for non-muscle invasive bladder tumors (NMIBC), which are currently removed through surgery.

NMIBC is a form of bladder cancer localized in the surface layers of the bladder. About 70 percent of all patients diagnosed with bladder cancer have NMIBC.

Patients in the late-stage trials either received a single dose of apaziquone or a placebo into the bladder after the surgery.

Spectrum, which is developing the drug with medical device maker Allergan Inc (AGN.N), said the drug failed to show a statistically significant difference in the rate of tumor recurrence at two years against a placebo.

The company, however, said the pooled data from both studies showed a statistically significant treatment effect.

Spectrum said it plans to meet the U.S. Food and Drug Administration to discuss further steps.

"It is unusual for the FDA to review the NDA (new drug application) with the pooled data, but it is possible," said MLV & Co analyst George Zavoico.

Zavoico said in an email that MLV expects to receive or intends to seek compensation for investment banking services from Spectrum in the next three months.

DEAL TERMS

Allos shareholders will get $1.82 in cash for each share, which represents a premium of 27 percent to Allos' Wednesday close, plus a contingent value right that gives shareholders 11 cents, if certain regulatory and sales milestones are met in Europe.

Allos' lead drug Folotyn, which is used to treat relapsed or refractory peripheral T-cell lymphoma, raked in sales of about $50 million last year. The drug had been rejected by an European advisory committee and the company had submitted a request to re-examine its application.

The committee is expected to issue its decision in the second quarter of this year.

On a conference call with analysts, Spectrum's Chief Executive Rajesh Shrotriya said Folotyn annual sales could cross $100 million.

MLV's Zavoico said the drug could reach $100 million sales, especially if they get European approval.

Spectrum, which also makes lymphoma drug Zevalin, expects the deal to save about $40 million to $50 million in 2013.

"Folotyn is prescribed by the same physicians who prescribe Zevalin," said Shrotriya. A salesman selling two products would bring down expenses.

Last year, AMAG Pharmaceuticals Inc (AMAG.O) had dropped its plan to buy Allos after AMAG shareholders opposed the deal.

Spectrum expects to close the deal in the second quarter and add to its fourth-quarter earnings. The company expects to finance the acquisition with a combination of cash on hand and a revolving credit line from Bank of America.

Spectrum is advised by RBC Capital Markets and Allos by J.P. Morgan Securities.

Spectrum shares were down 10 percent at $11.03 in morning trade on Nasdaq, while Allos rose to $1.82.

(Reporting by Anand Basu in Bangalore; Editing by Don Sebastian)

Great Wolf Resorts shares jump on higher PE bid

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Late Wednesday, KSL Capital, which focuses on travel and leisure businesses, offered to buy the operator of indoor water park resorts for $6.25 a share in cash, beating Apollo's bid of $5 a share.

Great Wolf shares were trading above the offer price at $6.59, indicating some investors possibly expect a higher bid. The shares last traded at these levels four years ago.

Great Wolf said its board would evaluate KSL's offer, but did not comment further.

Last month, Great Wolf shareholder PWK Partners raised serious concerns about the company's deal with Apollo, calling the $5 bid 'woefully inadequate' and some shareholders filed lawsuits against the company.

In response to shareholder lawsuits following the deal, Great Wolf said it had been looking at strategic alternatives for more than 9 months and had reached out to 38 prospective bidders and that Apollo's bid had been accepted as the best.

"I would not be surprised if someone else stepped up as well, because clearly with KSL's offer not everyone has looked at Great Wolf," JMP Securities analyst William Marks told Global Markets.

Earlier this month, PWK Partners, which says it owns about 4 percent of Great Wolf, said the company had an intrinsic value of about $10 per share.

"I think (the $10 a share) is a little bit optimistic but even then that would only be 9 times EBITDA, which is still not expensive compared to other hotel companies. I think a $7 price is more likely," Marks added.

Earlier on Thursday, Great Wolf said that affiliates of Apollo Global would extend their tender offer for its stock to April 20. They did not disclose what percentage of shares were tendered in the offer so far.

As part of the deal with Apollo, Great Wolf was required to adopt a shareholders' rights plan to thwart hostile acquirers.

Great Wolf will also have to pay Apollo $5.3 million, and up to $1.7 million in expenses, if it accepts a higher offer.

The first Great Wolf Lodge resort opened in 1997 in Wisconsin Dells, Wisconsin and the company now operates 11 properties throughout North America.

(Reporting by Jochelle Mendonca in Bangalore; Editing by Gopakumar Warrier)

Constellation Brands forecast weak; shares slump

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The world's largest branded wine maker said it expects sales this year to grow in line with the U.S. wine and spirits industry, which is thawing out as the economy recovers and more people go to bars and restaurants.

But profit growth will be tempered by marketing and sales investments, said the company, which has added wines like Simply Naked, Primal Roots and The Dreaming Tree to a portfolio that already includes Robert Mondavi and Ravenswood.

The company also cited a sharp drop in free cash flow this year due to the absence of tax benefits that boosted cash flow in fiscal 2012.

Constellation said on Thursday that it expected earnings of $1.93 to $2.03 per share, excluding one-time items, for fiscal 2013, which began March 1.

That compares with analysts' average estimate of $2.23 per share, according to Thomson Global Markets I/B/E/S. Constellation earned $2.34 per share in fiscal 2012.

Constellation also said it expected to complete half of a new $1 billion share buyback authorization this year. Coupled with its existing buyback authorization, Constellation said it expects to spend $550 million to $600 million this year buying back shares, which is more than some analysts expected.

UBS analyst Kaumil Gajrawala said the greater-than-expected share buybacks made the 2013 forecast "even more disappointing."

Still, Gajrawala said he was encouraged by Constellation's sales trends and reiterated his "buy" rating on the stock.

BY THE NUMBERS

For the fourth quarter of fiscal 2012, ended February 29, Constellation reported net income of $103 million, or 51 cents per share, down from $279.8 million or $1.32 per share a year earlier.

Excluding restructuring and other charges, earnings were 69 cents per share, which blew past analysts' average estimate of 39 cents, according to Thomson Global Markets I/B/E/S.

Sales fell 12 percent to $628 million. The decline largely stemmed from Constellation's sale of its Australian and British wine business. North American sales rose 5 percent, helped by volume growth and a better mix of products.

Equity income from the company's half of a joint venture with Mexico's Grupo Modelo (GMODELOC.MX) that imports Corona beer into the United States rose 2 percent.

Constellation shares were down $3.14 or 12.7 percent at $21.55 in morning trading, off an earlier low at $21.27.

(Reporting by Martinne Geller in New York and Jessica Wohl in Chicago; Editing by Gerald E. McCormick, Lisa Von Ahn and Matthew Lewis)

Software firm Kewill warns on profit; shares fall

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"These deals would have accounted for about 4.4 percent of sales," Charles Stanley Securities analyst Peter McNally said.

In January Kewill, which provides software to freight forwarders, distribution firms and express parcel groups, said it hoped to complete three large contracts and was confident of meeting its full-year expectations.

The company, whose clients include FedEx Corp (FDX.N), DHL DHL.UL and UPS (UPS.N), said it expected to report revenue and adjusted operating profit below market estimates due to longer sales cycles and tough economic conditions across its markets.

Analysts on average were expecting revenue of 61 million pounds and operating profit of 10 million pounds, according to Thomson Global Markets I/B/E/S/.

The company posted revenue of 60 million pounds ($95.2 million) and adjusted operating profit 9.6 million pounds for the previous fiscal year.

Kewill also said it signed a large licence contract in its logistics business in the fourth quarter, which had made a significant contribution to the full year results.

"A late deal in Reverse Logistics (business) appears to have saved Kewill from a very large forecast miss, "said Peel Hunt analyst Paul Morland.

Shares of the Surrey, England-based company were trading down 4 percent at 70 pence at 1045 GMT on the London Stock Exchange. It fell as much as 11 percent earlier on Thursday.

($1 = 0.6300 British pounds)

(Reporting by Karen Rebelo in Bangalore; Editing by Maju Samuel and Don Sebastian)

Parametric lowers Q2 outlook, shares plunge

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"Our second-quarter license revenue was impacted by a large transaction in Europe that did not close and lower-than-expected performance in North America," Chief Executive James Heppelmann said in a statement.

The company, which makes software used to create 3-D computer models for aircraft engines, cars and mobile phones, said it ran into problems late in the second quarter, that led to a shortfall in revenue from licenses.

The European customer had completed negotiations with Parametric and won approval from its board, but a management change within the company reversed the approval process and disrupted closure of the transaction, Parametric said on a conference call.

The deal would have contributed more than $10 million in license revenue in the second quarter, it said.

"We will continue to pursue this deal in the 3rd-qtr, but given the dynamics of the situation, we consider the deal to be at risk," Heppelman said on the call.

The company, which competes with Austodesk Inc (ADSK.O) and Ansys Inc (ANSS.O), also said its North American business was weaker than it had expected, but added it was more an execution issue and not an indication of lower demand.

For the second quarter, the company now expects a profit of 26 cents to 28 cents a share, excluding one-time items. It expects an adjusted revenue of $300 million.

In January, it had forecast an adjusted profit of 32 cents to 36 cents a share and revenue of $305 million to $320 million.

Shares of the company fell to $21.02 in morning trade on the Nasdaq. The stock has risen 84 percent since its year low in October. It touched a near-11-year high of $28.95 on Monday.

(Reporting by Sayantani Ghosh in Bangalore; Editing by Sreejiraj Eluvangal, Supriya Kurane)

Himax raises Q1 profit outlook, shares surge

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The company now sees a profit of 6.6 cents per American Depository Share compared with its earlier forecast of between 3 cents and 4 cents per ADS.

"First quarter is traditionally a low season. Our first quarter performance is a good indication that our business has bottomed out from the trough of last year," Chief Executive Jordan Wu said in a statement.

"We experienced (a) strong sale-through, particularly into the China market."

Himax, which makes chips used in flat panel displays and display drivers for LCD panels used in desktop monitors, television and mobile handsets, expects first-quarter revenue of $166.7 million.

Shares of the Taiwan-based company were trading up 21 percent at $2.33 on Thursday morning on the Nasdaq.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Sreejiraj Eluvangal)

Retail Properties of America shares rise in market debut

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The retail real estate market, which suffered as many retailers filed for bankruptcy in the wake of the 2008 financial crisis, is now showing signs of recovery.

Many U.S. mall owners, particularly those with outlet malls, have been able to raise rents and boost occupancy.

"It's a good buy relative to the risk. By buying this stock, it's like betting that the economy will stabilize and become a little bit better," Francis Gaskins, a partner at IPODesktop.com said.

The real estate investment trust, which counts Best Buy (BBY.N), Wal-Mart (WMT.N), Stop & Shop, Bed Bath & Beyond (BBBY.O), Home Depot (HD.N) and Kohl's (KSS.N) among its 1,500 tenants, raised $254.4 million in the IPO.

"A lot of retail stores have closed but I think for the time being that wave is over. It's a broad and diversified company and the economy is not falling off the cliff like people thought it was going to a year and a half ago," Gaskins said.

Retailers reported strong same-store sales on Thursday, as improving job and stock markets have given shoppers more spending power.

Retail Properties of America, which owns and operates shopping centers in 35 U.S. states, said its retail operating portfolio was 90.4 percent leased as of December 31.

On Wednesday, it priced its offering of 31.8 million class A shares at $8 each. The Oak Brook, Illinois-based real estate investment trust, formerly known as Inland Western Retail Real Estate Trust, was looking to sell its shares at between $10 and $12 apiece.

For 2011, funds from operations -- a key measure of profitability for real estate companies -- was 195.1 million, a jump of 16 percent over the previous year.

A REIT is a real estate-linked company that can avoid paying U.S. corporate income taxes if it distributes at least 90 percent of its taxable income to shareholders.

JP Morgan, Citigroup, Deutsche Bank and KeyBanc Capital acted as lead underwriters for the offering.

Shares of the company closed up 9 percent at $8.75 on Thursday on the New York Stock Exchange.

(Reporting by Tanya Agrawal in Bangalore; Editing by Supriya Kurane)

WD-40 second quarter beats, sees strong fiscal year

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WD-40, which makes household lubricants and cleaning products, forecast full-year 2012 earnings of $2.33 per share to $2.45 per share on net sales of $353 million to $370 million.

Analysts, on average, were expecting earnings of $2.30 a share on revenue of $357.4 million, according to Thomson Global Markets I/B/E/S.

Second-quarter net income rose to $10.6 million, or 65 cents a share, from $9.1 million, or 53 cents a share, last year.

Net sales rose 9 percent to $86 million, with those in the Americas segment growing 21 percent to $46 million.

Analysts, on average, were expecting earnings of 54 cents a share on revenue of $85.3 million.

Shares of the San Diego-based company were up 3 percent in extended trading. They had closed at $44.78 on Thursday on the Nasdaq.

(Reporting by Chris Jonathan Peters in Bangalore; Editing by Viraj Nair)

Boeing first quarter commercial plane deliveries up 32 percent

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The world's second-largest plane-maker, after EADS (EAD.PA) unit Airbus, reported deliveries of 99 narrowbody 737s, up from 87 delivered in the first quarter of 2011.

Boeing also reported deliveries of five 787 Dreamliners, its long-overdue lightweight, carbon-composite airplane that came to market last fall.

Deliveries of the widebody 777 jumped to 20 from 13. Boeing said it delivered six 747s, compared with zero in the year-ago period.

Boeing, which gets paid for airplanes at delivery, is ramping up production on all of its commercial airplane programs to meet increased demand.

"Increase in deliveries is confirmation of the successful execution of increased production rates as well as confirmation of the cycle," said EarlyBirdCapital Managing Director Alex Hamilton, referring to rising aircraft demand.

Boeing is set to report first-quarter earnings on April 25.

Aircraft demand has been rising since 2009 when Boeing booked only 142 new commercial orders. Boeing booked 805 new orders in 2011.

Also on Thursday, Boeing said it took orders in the week ended March 31 for six 777s, potentially worth $1.8 billion at list prices, depending on the model.

The company said earlier this week that Angola carrier TAAG Linhas Aereas de Angola ordered three 777-300ER airplanes. The buyer of the other three 777s was unidentified.

Shares of Boeing were down 34 cents at $73.33 on the New York Stock Exchange.

(Reporting By Kyle Peterson; Editing by Gerald E. McCormick and Carol Bishopric)

Samsung estimates record first quarter profit; beats most bullish view

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The South Korean group, which out-sold global smartphone rivals last year, is set to consolidate its market position with new products, including a revamped Galaxy S, in the next few months.

Samsung, which will release its full quarterly results on April 27, estimated its January-March operating profit at a record 5.8 trillion won ($5.15 billion) versus a consensus forecast of 5.0 trillion won from analysts surveyed by Thomson Global Markets I/B/E/S. It estimated sales at 45 trillion won.

Samsung shares have risen by a quarter so far this year, and hit a life high of 1.351 million won ($1,200) on Wednesday. Over the same period, shares in smartphone rival Apple have soared by more than half, taking the California-based firm's value to above $582 billion - more than three times that of Samsung. ($1 = 1127.2750 Korean won)

(Reporting by Miyoung Kim; Editing by Ian Geoghegan and Jonathan Hopfner)