Friedman Billings believes Aeropostale (NYSE:ARO) has an impressive back-to-school floorset and that momentum should carry into the fall. Additionally, the firm, which initiated shares with an Outperform rating and $38 target, expects the company to buyback shares.
Thomas Weisel believes ImClone (NASDAQ:IMCL) is attractively valued as Erbitux is positioned to capitalize on a number of label-expanding opportunities and that concerns of KRAS-related revenue loss in colorectal cancer and the clinical utility of FLEX lung cancer data are overstated. Shares were assumed with an Overweight rating and $50 target.
Short selling often tells much about what is going on in a sector, particularly when there is a common trend across the major players in that sector.
The end of May short selling can now be accessed from NASDAQ. Interestingly enough, short sellers at the end of May lightened up almost across the board on major NASDAQ biotech stocks from May 15 to May 30:
From the major names, a change in the overall trend can be spotted.
You can see the full short selling report for biotechs at BioHealthinvestor.com to see which other biotechs had an increase in short selling and to also see what the more active biotechs with lower market caps saw in their short selling activity.
After quite a positive week, U.S. stocks indicated a lower opening Monday morning as investors heard of trouble from the biggest U.K. lender to landlords, as well as awaited data on U.S. manufacturing, anticipating a contraction.
U.S. stocks finished with gains last week as oil prices dropped from highs of over $135 a barrel. On Friday, too, stocks were mostly higher with the exception of the Dow industrial, which dropped nearly 8 points, or 0.06%. The S&P 500 and the Nasdaq composite finished 2 points, or 0.15%, and 14 points, or 0.57%, higher respectively.
This morning, two indicators are due for release, but investors will keep their eye mostly on one. April construction spending will be reported at 10:00 a.m. EDT, and will likely show further decline in spending. At the same time, the Institute for Supply Management will issue its monthly report for May. Wall Street gives much weight to the results of this indicator, which shows manufacturing activity and is thus a better gauge for economic activity than many other indicators. Already the index is below 50, and this month is expected to decline slightly more.
ImClone (NASDAQ: IMCL), an oncology care company, is recently trading at $43.36. IMCL's Erbutux Phase 3 FLEX study results, K-Ras mutation analysis from the Phase 3 CRYSTAL study and Phase 3 CAIRO two study are expected to be presented during the American Society of Clinical Oncology (ASCO) Annual Meeting from May 30-June 2, 2008. Leerink Swann says "the risks of a major disappointment for upcoming FLEX data as ASCO are low." IMCL call option volume of 17,199 contracts compares to put volume of 5,669 contracts. IMCL June option implied volatility is at 53; July is at 45, near its 26-week average of 48 according to Track Data, suggesting larger June price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Almost everyone these days has encountered cancer in one way or another. While the rate of cancer incidence has stabilized to declined since the early 1990s and, with newer and better treatments as well as early detection, cancer death rates have also declined, the war on cancer is still far from won.
It is no surprise, then, that a few days ago, IMS Health (NYSE: RX) -- a provider of market intelligence to the pharmaceutical and healthcare industries -- said that cancer drugs sales will nearly double by the year 2012. Assuming a compound growth rate of 12-15% a year, sales will grow from $48 billion in 2008 to $80 billion by 2012.
The main contributors to growth, according to the study, are an increasing number of patients on chemotherapy, not just in major markets but in emerging markets, too, as well as longer treatment periods for growing numbers of patients. Also fueling growth are the increased use of targeted therapeutic agents, along with first-time innovations coming to the market. Expensive new biotechnology drugs, and the increasing use of combination therapies that contribute to the exploding cost of treatment will also fuel cancer drugs sales growth.
The overall pharmaceutical market grew at a 6.4% pace in 2007, meaning that with its double-digit growth rate, the cancer drug market -- today contributing 17% to global pharmaceutical sales -- will only represent a greater proportion and emphasis. Of course, there will be factors moderating growth, such as drugs losing exclusivity and financial constraints of payers.
Cancer-fighting drugs can reach the market twice as fast as the average medicine, and companies can charge as much as $50,000 for a single course of treatment. It is no surprise then that with more and more drugs coming off patent many pharma companies are turning their attention to cancer. But can it save them?
Crude surpassed $126.00 before retreating down by $1.85 to $124.11 late in the day. Many are citing that the interest in owning the dollar is also partly to thank for today's gains. Below are the unofficial closing bell prices for major index levels:
AnnTaylor Stores Corp. (NYSE: ANN) rose today after it forecast that first quarter profit will exceed projections. Additionally, the women's apparel store reported its plans to drop its older women fall line but push the opening of its Loft outlets. Shares were up 16% at $28.50 in the final minutes of trading.
ImClone Systems (NASDAQ: IMCL) shares are falling after an analyst at Morgan Stanley downgraded the stock to Underweight from Equal Weight, saying that an upcoming drug study announcement will not please investors. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on IMCL.
After hitting a one-year low of $30.34 in August, the stock hit a one-year high of $49.18 in April. This morning, IMCL opened at $42.66. So far today the stock has hit a low of $41.94 and a high of $43.49. As of 12:40, IMCL is trading at $42.02, down $2.81 (-6.3%). The chart for IMCL looks bullish but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in six weeks as long as IMCL is below $50 at June expiration. Hershey would have to rise by more than 18% before we would start to lose money.
IMCL hasn't been above $50 at all in the past year and has shown resistance around $47.50 recently. This trade could be risky if the company continues its upward climb, but even if that happens, this position could be protected by resistance IMCL might find around $49, where the stock topped over the past month.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in IMCL.
JP Morgan raised El Paso (NYSE:EP) from "neutral" to "over weight", according toBriefing.com. The news agency also reports that RBC upgraded Ericsson (NASDAQ:ERIC) from "sector perform" to "outperform"
20 Most Profitable Tech Companies Among Fortune 1000 techs, Microsoft remains on top, taking in $14.1 billion in earnings last year. IBM, Cisco, Hewlett-Packard and Intel round out the top five most profitable. 20 most profitable tech companies - FORTUNE
Imclone Systems Inc. (NASDAQ: IMCL) shares are rising today after an analyst at Citigroup upgraded the stock to "Buy" from "Hold." Citi posted a $52 price target for IMCL and expects to hear good news at an upcoming conference. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on IMCL.
After hitting a one-year high of $47.94 in October, the stock hit a one-year low of $30.00 last March. IMCL opened this morning at $44.81. So far today the stock has hit a low of $43.61 and a high of $45.20. As of 11:33, IMCL is trading at $43.80, up $0.71 (1.7%). The chart for IMCL looks bullish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $35 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in just two months as long as IMCL is above $35 at May expiration. ImClone would have to fall by more than 20% before we would start to lose money.
Freddie Mac (NYSE: FRE) was downgraded to Sell by Merrill Lynch due to the credit crisis.
More analyst calls from Briefing.com:
Arcelor Mittal (NYSE: MT) was upgraded by Deutsche Securities from Holdto Buy. MT shares are up 3.75% in premarket trading.
Imclone (NASDAQ: IMCL) was upgraded at Cowen & Co from Neutralto Outperform.
Barrick Gold (NYSE: ABX) was downgraded by UBS from Buyto Neutral , and the target price lowered from $55 to $56
Gilead Sciences (NASDAQ: GILD) was downgraded by Bernstein from Outperformto Mkt Perform
Amazon.com, Inc. (NASDAQ: AMZN) shares took quite a hit Thursday, finishing the session down just over 5% "after founder and CEO Jeff Bezos sold more than $135 million worth of shares in his first insider sale in more than three years."
MOST NOTEWORTHY: The U.S. beverage sector, ImClone, Starwood Hotels and Marriott International were today's noteworthy upgrades:
Goldman Sachs upgraded the U.S. beverage sector, including Coca-Cola (NYSE: KO), Molson Coors Brewing Company (NYSE: TAP), Anheuser Busch Companies (NYSE: BUD), PepsiAmericas Inc (NYSE: PAS) and Coca-Cola Enterprises (NYSE: CCE) to Attractive from Neutral. The firm cited expectations for a stronger 2008, benign commodity cost outlook, better than expected US beer demand, and valuations. Goldman upgraded shares of PepsiCo Inc (NYSE: PEP) to Buy from Neutral citing valuation and improving industry fundamentals.
Bear Stearns upgraded ImClone (NASDAQ: IMCL) to Outperform from Peer Perform citing positive Flex trial results and the new market opportunity for Erbitux.
Thomas Weisel upgraded Starwood Hotels (NYSE: HOT) and Marriott International (NYSE: MAR) to Market Weight from Underweight based on healthy August trends, credit market may ease concerns over supply growth, and valuations.
IMCL, an oncology care company, is recently trading up $11.05 to $48.98 in pre-open trading.
Merck KGaA & IMCL announced that Erbitux met the primary endpoint outcomes from the FLEX trial (a phase 3 study of 1000 patients with previously untreated non-small cell lung cancer).
Goldman Sachs says, "Erbitux data in lung cancer positive for IMCL, Minor neg for DNA."
IMCL October option implied volatility of 46 is above its 26-week average of 40 according to Track Data, suggesting larger price risks.
Genentech (NYSE: DNA) September volatility at 21 prior to IMCL's NCSCLC data.
DNA is recently trading at $76 in pre-open trading, below its close of $79.15.
Merck KGaA & IMCL announced that Erbitux met the primary endpoint outcomes from the FLEX trial (a phase 3 study of 1000 patients with previously untreated non-small cell lung cancer (NSCLC).
DNA September option implied volatility is at 21; October is at 25. DNA's average option implied volatility over the last 26-weeks is 24 according to Track Data, suggesting non-directional near term price fluctuations.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
ImClone Systems (NASDAQ: IMCL) shares are up nearly 30% in premarket trading. ImClone Systems and Bristol-Myers Squibb (NYSE: BMY) said that a Phase III study of Erbitux combined with platinum-based chemotherapy improved overall advanced non-small-cell lung cancer patient survival compared with chemotherapy alone. BMY shares are up 3% in premarket trading. German drugs group Merck KGaA (not MRK) conducted the study and its shares also jumped 6% in Frankfurt.
Countrywide Financial Corp (NYSE: CFC) troubles aren't over as yesterday it found out from regulatory filings that its largest shareholder, AllianceBernstein LP, has cut its stakes in the mortgage lender. Another shareholder, Barclays Global Investors, did the same. Meanwhile, according to the New York Post, Countrywide is working to structure another strategic investment similar to the $2 billion deal with Bank of America Corp (NYSE: BAC) last month.
Expect some action in PepsiCo (NYSE: PEP) as it was upgraded to Buy from Hold at Goldman Sachs, citing valuation. Goldman upgraded the beverage sector from Neutral to Attractive due to its defensive nature along with improving fundamentals and reasonable valuation.
After GE's (NYSE: GE) NBC Universal pulled its television shows from sale on Apple Inc.'s (NASDAQ: AAPL) iTunes store, many expected News Corp. (NYSE: NWS) to follow. Well, today News Corp said it will not pull its television shows from iTunes.
Auto industry executives have been speaking that past day: Ford Motor Co's (NYSE: F) John Fleming, the president and chief executive officer of Ford of Europe, said he isn't expecting to make big market share gains in Europe in the near future. General Motors Corp (NYSE: GM) Chief Executive Officer Rick Wagoner blamed the softness in the housing market for weakness in vehicle sales.
MOST NOTEWORTHY: RadioShack Corp (RSH), Visual Sciences (VSCN), Alcan (AL), U.S. Celluar (USM) and Westwood One (WON) were today's noteworthy downgrades:
Banc of America downgraded shares of RadioShack (NYSE: RSH) to Sell from Neutral and lowered their target to $18 from $26 as they believe cuts to labor costs and advertising expenses will make it more difficult to overcome declining wireless trends.
Friedman Billings cut Visual Sciences (NASDAQ: VSCN) to Market Perform from Outperform on valuation. Citigroup downgraded Alcan to Hold from buy on the acquisition news.
Soleil cut U.S. Celluar (AMEX: USM) to Sell from Hold on valuation.
Westwood One (NYSE: WON) was downgraded to Sell from Hold at Citigroup based on management distractions and weak fundamentals...
OTHER DOWNGRADES:
Cowen removed ImClone Systems (NASDAQ: IMCL) from its Focus List, as the firm believes Erbitux is now more in line with consensus but said financials remain uninspiring.
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MOST NOTEWORTHY: The North American Pipeline sector, Aeropostale and ImClone were today's noteworthy initiations: 
After quite a positive week, U.S. stocks indicated a lower opening Monday morning as investors heard of trouble from the biggest U.K. lender to landlords, as well as awaited data on U.S. manufacturing, anticipating a contraction.
ImClone
Almost everyone these days has encountered cancer in one way or another. While the 
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Earnings preview for Ford
Apple shares rise on report Steve Jobs is free of cancer
Toyota whups GM in the first half of 2008
