April 2, 2012, 1:46 p.m. ET
Article from The Wall Street Journal
U.S. stocks traded higher Monday as the Dow Jones Industrial Average recently rose 69 points to 13281, the Standard & Poor's 500-stock index moved up 12 points to 1420, and the Nasdaq Composite gained 26 points to 3118. Among the companies whose shares are actively trading in the session are Avon Products Inc. (AVP), Groupon Inc. (GRPN) and Global Payments Inc. (GPN).
Fragrance maker Coty Inc. offered to acquire Avon Products ($22.53, +$3.17, +16.37%) in a cash deal that values the struggling door-to-door beauty-products seller at roughly $10 billion. Coty is offering $23.25 a share to Avon shareholders, a 20% premium to Friday's closing price. Avon immediately rejected the offer, saying it was opportunistic and substantially undervalues the company, adding it remains confident in its stand-alone prospects and is committed to its previously announced CEO search.
Groupon ($16.28, -$2.10, -11.43%) lowered its reported fourth-quarter results after the online daily-deals service discovered it had to set aside more money for customer refunds. Auditor Ernst & Young also discovered a "material weakness in its internal controls" for the year.
Global Payments ($45.96, -$1.54, -3.24%), the credit-card processor that reported a significant security breach Friday, said hackers stole account numbers and other key information from up to 1.5 million accounts in North America. The news, released Sunday night in a statement, came after the company received a fresh blow over the weekend when Visa Inc. (V, $119.76, +$1.76, +1.49%) yanked its seal of approval from the company. Shares continued to fall Monday, after ending down more than 9% on Friday. Separately, the payment-processing company said Monday that its fiscal third-quarter earnings rose 21% as its stronger-than-expected revenue improved margins and offset rising costs.
Keryx Biopharmaceuticals Inc. (KERX, $1.69, -$3.30, -66.16%) and Aeterna Zentaris Inc. (AEZS, $0.75, -$1.39, -65.01%) reported the combined use of perifosine and the chemotherapy-drug capecitabine as a treatment for refractory advanced colorectal cancer didn't meet a Phase 3 clinical trial's primary endpoint. The companies said the study of 468 patients at 65 U.S. sites found perifosine with capecitabine didn't improve the overall survival rate when compared with capecitabine alone.
Express Scripts Inc. (ESRX, $56.17, +$1.99, +3.67%) said it completed its $29.1 billion acquisition of Medco Health Solutions Inc. (MHS, $71.71, +$1.41, +2.01%) following the Federal Trade Commission's decision that the combination of the two largest pharmacy-benefits management companies in the U.S. wouldn't change the competitive landscape in the sector.
Other Stocks In Focus:
Saying the stock value is now "compelling" and the "worst appears over," Brean Murray gives the first upgrade on Abercrombie & Fitch Co. (ANF, $51.82, +$2.21, +4.45%) by the Street in months. It moves the teen-apparel retailer to buy while setting a $65 price target and boosts earnings-per-share targets for the next two years. Among other reasons to be bullish, Brean Murray notes, "After entering 1Q with materially too much inventory, we believe a warmer March has allowed the company to become more right-sized in terms of product exposure and should position [ANF] to be more strategic going forward."
JPMorgan upgraded Alliant Techsystems Inc. (ATK, $52.55, +$2.43, +4.85%) to overweight, saying the defense contractor's reduced earnings outlook is more than fully priced into the stock. Last month, Alliant predicted fiscal 2013 results would fall short of Wall Street expectations due to near-term growth challenges. Its stock had dropped steeply since then.
Amazon.com Inc. (AMZN, $198.95, -$3.56, -1.76%) slid on Bank of America Merrill Lynch's downgrade of the ecommerce giant to neutral. After an 18% rise in 1Q, the ratings cut comes as the investment bank believes consensus estimates on Amazon are too high, starting with this quarter, while "increasing competitive pressures in digital media" from Apple (AAPL, $615.24, +$15.69, +2.62%) and Google (GOOG, $645.12, +$3.88, +0.61%) should keep AMZN's "valuation multiple in check." Bank of America is keeping its price target at $235.
Apollo Investment Corp. (AINV, $7.49, +$0.32, +4.46%) said Apollo Global Management LLC (APO, $14.30, +$0.02, +0.14%) purchased about $50 million, or about 5.9 million shares, of newly issued Apollo Investment stock amid plans to expand its focus. Apollo Investment also said it is beginning a search for a new chief financial officer after its earlier choice was unable to join the company due to a scheduling conflict.
AVI BioPharma Inc. (AVII, $1.10, -$0.44, -28.64%) said a 24-week study showed that eteplirsen had a statistically significant effect in raising the level of a key protein, dystrophin, in boys with Duchenne muscular dystrophy. But patients given the drug for only 12 weeks showed no significant increase in dystrophin, despite the administration of the drug at a higher dose, suggesting that a longer duration of treatment is required.
Bank of the Ozarks Inc.'s (OZRK, $31.92, +$0.66, +2.11%) board approved a penny increase in its quarterly dividend, allowing the regional bank to raise its payout for the seventh straight quarter. The bank said Monday it will now pay shareholders 12 cents a share, a 9.1% increase over its prior payout, which will cost an additional $345,500 a quarter.
Raymond James downgraded its stock-investment rating on Buffalo Wild Wings Inc. (BWLD, $88.19, -$2.50, -2.76%) to underperform from market perform, citing the combination of record valuation metrics for the stock, a current chicken-wing shortage that could be of long duration and the beginning of a softer seasonal demand period for sports bars.
JPMorgan cut its stock-investment rating on Exelis Inc. (XLS, $12.13, -$0.40, -3.15%) to neutral after the recent run-up in the stock. Shares of the aerospace and defense stock are up about 34% year-to-date, fueled by pension optics.
After Friday's 16% slump, shares of Finish Line Inc. (FINL, $20.63, -$0.60, -2.80%) are sliding further as analysts continue to weigh in on the retailer's dour per-share earnings news and planned hike in tech spending.
Kohl's Corp. (KSS, $51.48, +$1.45, +2.90%) has missed the rally that other retail stocks have enjoyed this year, but the tide may be ready to turn, says J.P. Morgan at it upgrades the department-store chain to neutral and raised its price target to $55 from $42. The investment bank cites three near-term potential catalysts--Kohl's is seeing more people signing up for its credit cards, a group that tends to spend more; inventory is becoming more balanced with anticipated demand; and recent and new product launches.
After surging 60% since mid-December on turnaround hopes and signs of an improved housing market, Lumber Liquidators (LL, $24.47, -$0.64, -2.55%) moves back from last week's nine-month high as Stifel Nicolaus downgrades the closeout flooring seller to hold in a valuation call. Though the firm said it is bullish over the next five years for a material recovery in consumer-remodeling activity, it said it is concerned that investors have gotten overly excited near-term as flooring sales in the first quarter, while better, are only marginally so.
Bank holding company National Penn Bancshares Inc. (NPBC, $9.21, +$0.36, +4.08%) raised its dividend by 40% to 7 cents a share and unveiled a plan to buy back up to 7.5 million shares of its stock, joining a growing list of firms looking to bolster shareholder value.
Fortis Healthcare, a provider of integrated health-care services in India, and Masimo Corp. (MASI, $24.10, +$0.72, +3.08%) said they reached a multiyear medical-technology supplier agreement that allows Fortis hospitals access to Masimo's full line of pulse oximetry and noninvasive, continuous patient-monitoring services.
After already climbing nearly 40% since late November, Piper Jaffray gives up the bear case on PetMed Express Inc. (PETS, $12.99, +$0.61, +4.93%) and upgrades its stock-investment rating on the company to neutral while raising its price target 20% to $12 and boosting estimates for this year and next. It contends downside risk at current levels is limited, citing among other factors the outlook for the online pet-medicine company isn't "as dire as previously expected heading into seasonally strong part of the year."
Regional carrier Pinnacle Airlines Corp. (PNCL, $0.58, -$0.77, -56.78%) filed for bankruptcy as the company seeks to restructure its agreements with Delta Air Lines Inc. (DAL, $10.02, +$0.10, +1.01%) and cut ties with United Airlines and US Airways Group Inc. (LCC, $7.52, -$0.07, -0.96%). The Memphis, Tenn., carrier filed for Chapter 11 protection Sunday with $1.4 billion worth of debt and $1.5 billion worth of assets, according to papers it filed in U.S. Bankruptcy Court in Manhattan.
Nutritional-supplements company Schiff Nutrition International Inc. (WNI, $13.16, +$0.87, +7.08%) acquired Airborne Inc. for $150 million in cash, giving it control of the well-known maker of cold-fighting tablets and allowing it to expand its position in the immune-support market. Schiff acquired Airborne from the private-equity arm of GF Capital Management & Advisors LLC.
It's time to take a breather on shares of Texas Instruments (TXN, $33.20, -$0.41, -1.22%) and Linear Tech (LLTC, $33.15, -$0.55, -1.63%), UBS says. The firm cuts its stock-investment ratings on both companies to neutral from buy, saying valuation and estimates are ahead of fundamentals. UBS is positive on the chip sector, but says industrial recovery isn't fast enough as weakness in China offsets strength in US. In addition, the wireless infrastructure market remains weak.
GlaxoSmithKline PLC (GSK.LN) Monday underscored how important the experimental drug Relovair is for its future by lifting its stake in the lung treatment's U.S.-developer Theravance Inc. (THRX, $22.73, +$3.23, +16.56%) to 26.8% from just under 19%, at a cost of just under $213 million. Glaxo, Britain's biggest drug maker, is paying $21.2887 a share for 10 million Theravance shares, a 7.5% premium to the five-day average price up to March 30.
Wireless-broadband-network services-provider Towerstream Corp. (TWER, $5.22, +$0.47, +9.89%) signed a Wi-Fi agreement with a national wireless carrier utilizing its current and future rooftop assets, the company said in a filing with the Securities and Exchange Commission late Friday.
Caris & Co. cut its stock-investment rating on Volterra (VLTR, $33.75, -$0.67, -1.93%) to average from above average, citing the stock's recent 55% jump since late November. The firm notes positive estimate revisions are already partially baked into shares as a result of strong March PC order data points.
-Edited by Corrie Driebusch and Ben Fox Rubin; write to corrie.driebusch@dowjones.com
Article from The Wall Street Journal