WHAT'S HOT AND WHAT'S NOT at 1.45 p.m.
USA Compression Partners (NYSE:USAC), up 20.9%. The company announced a fourth quarter pay-out of US$0.525.
Starbucks (NASDAQ:SBUX), little changed. The overpriced coffee seller's shares are not participating in the market's advance after wishy-washy results overnight. The shares are the second most widely traded after Apple today.
American Express (NYSE:AXP), down 12.3%. The charge card company reported a 38% decline in fourth quarter earnings, and even the usual Wall Street-pleasing ploy of announcing a massive cost-cutting campaign failed to save its shares from a shellacking.
Composites company Hexcel (NYSE:HXL) was up 10.5% in lunchtime trading after a well-received set of fourth quarter earnings.
Earnings per share of 56 cents was a penny ahead of consensus.
RBC Capital Markets said Hexcel's 2016 guidance – for sales of US$1.97-US$2.07bn and earnings per share of US$2.44-US$2.56 – were not a million miles away from its own forecasts.
“We think investors will generally be relieved, given the recent fragility of aerospace sentiment and the related performance of the stock – we now have the company projecting a healthy pick up in free cash flow for 2016, the A350 ramp remains on track, and Hexcel has stuck with its 2020 targets,” the broker said.
Over in Canada it looks like a happy ending for Mart Resources (CVE:MMT), which has found a partner after two previous courtships foundered.
Midwestern Oil & Gas (OTCMKTS:MWOG) is offering 25 Canadian cents for each Mart share, sending Mart's shares to 17 cents, double their overnight value.
Social media leviathan Facebook (NASDAQ:FB) reports fourth quarter results next week.
RBC Capital Markets said that, based on “intra-quarter data points, channel checks, and our model sensitivity work, we view current Street December quarter ests as reasonable”.
RBC is going for revenue of US$5.44bn and underlying earnings per share of 69 cents, which is just above market consensus (US$5.37bn and 68 cents, respectively).
It has a price target of US$130, versus a current share price of around US$97.
WHAT'S HOT AND WHAT'S NOT at 11.15a.m.
Nephrogenex (NASDAQ:NRX), up 69%. A panel has observed a continued acceptable safety and tolerability profile of the company's Pyridorin candidate in patients with overt diabetic nephropathy.
Ceres (NASDAQ:CERE), up 21%. The agricultural biotechnology company has been awarded an Australian patent for a trait that allows growers to increase yields without increasing crop inputs like fertilizer.
Great Basin Scientific (NASDAQ:GBSN), up 28%. A bit esoteric this one, but shareholders won't mind: a massive stock overhang has disappeared after the molecular diagnostics company converted all outstanding Series C warrants into shares of its common stock.
Cardiovascular Systems (NASDAQ:CSII), down 34%. The medtech firm's results for the second quarter of its financial year disappointed, with revenues of US$41.4mln 3% below the guidance range.
Tutor Perini (NYSE:TPC), down 11.6%. The civil and building construction company issued a profit warning, with the shortfall largely blamed on significant project charges at Five Star Electric (FSE) recorded in the third and fourth quarters of 2015 and the previously disclosed adverse appellate court decision in the third quarter of 2015.
First Financial Bancorp (NASDAQ:FFBC), down 2%. Fourth quarter net income of US$19.8mln, up from US$187mln in the preceding quarter, failed to ignite investors' enthusiasm.
Broker nibbles
Buy “Starbucks (NASDAQ:SBUX) – the stock, not the coffee – recommends Jefferies.
Like-for-like sales in the fiscal first quarter ended 27 December were up 5%, some way below the 6.1% expected by analysts, which has blown some of the froth off the share price this morning.
Nevertheless, Jefferies says strong global trends remain in place, though performance did slow in Europe, Middle East and Africa (EMEA) after the terrorist attacks in Paris.
“We remain convinced of continued growth opportunity with mobile/digital and CPG [consumer packaged goods] increasingly becoming incremental contributors of late,” Jefferies said, as it reiterated its US$70 price target, 12 (star)bucks above the current share price.
Nevsun Resources (TSE:NSU) provided an update this week on its Bisha zinc expansion project.
The project is on track for commissioning in the second quarter with construction over 90% complete to date, prompting Dundee Capital Markets to declare the mine development company is outperforming in a tough market.
The company is “an undervalued, steady performer that still makes money at $2.00/lb copper,” according to Dundee, which rates the shares as a “high risk” pick, albeit its top one in the sector.
The target price is C$5.10, versus the current price in Toronto of C$3.48.
RBC Capital Markets has weighed in on EIG Pacific Holdings' pending tender offers for the outstanding senior notes of Pacific Exploration & Production (TSE:PRE).
EIG believes Pacific is on the verge of insolvency with debt rating agency S&P downgrading the company's rating to 'D', and claims the upcoming interest payments on all their bond will not be made.
EIG's offer now includes this unpaid interest, increasing the offer to $0.20 on the dollar with the bonds trading at half this amount, RBC notes.
“We are still to hear from PREs three major, declared, shareholders ALFA (~20%), O'Hara (~20%) both hold two board seats each and Trafigura (~10%). We anticipate some of these constituents could have influence in longer term outcomes for the company,” said RBC's Nathan Piper, who has an 'under-perform' rating for the shares and a 50 cent price target, 11 cents below the current trading level.
Piper's colleague, Al Stanton, flagged up an interesting situation on Thursday regarding Africa Oil (TSE:AOI).
“We note with interest this morning that at C$1.63 (and C$1.45/US$) Africa Oil’s market cap has slipped to US$513mln, which puts its equity value on an equal footing to the ~US$500mln cheque that it is due to receive shortly from Maersk. Therefore its ~25% stake in the 600mmbbl+ Lokichar Basin oil discoveries effectively comes ‘free’,” Stanton calculates.
Having agreed to sell half of its circa 50% stake in the Lokichar Basin it is set to be cash-rich and asset-rich, and given it has few commitments in 2016-17, the company looks to be on solid ground in Stanton's view.
The stock price of Spectra7 Microsystems (TSE:SEV) is not reflecting potential share price catalysts in 2016, according to Mackie Research Capital.
The company recently reported it expects revenue in the fourth quarter will clock in at around C$1.6mln when the numbers are totted up.
The loss-making firm delivers “bandwidth, speed and resolution” to enable industrial design for consumer electronics manufacturers in virtual reality, wearable computing and ultra-high-definition displays.
“SEV stock had a good start to the year on Oculus pre-orders, but since then, the stock has pulled back with the broader market, which provides upside potential if 2016 catalysts play out as expected,” assert Nikhil Thadani and Matthew Jennings.
“SEV chips’ presence in major consumer headsets is a very widely anticipated 2016 driver for SEV stock. To that end, 1) Commercial availability of consumer headsets, 2) SEV confirmation in a tear-down (on an actual consumer headset) and 3) 2016 shipments are major 2016 catalysts,” the analysts believe.