HealthCare Sector -1.13% and underperforming the S&P 500
General Commentary: CytRx (CYTR) is today's biggest gainer, up over 50%. The company announced highly positive top-line efficacy results from a multicenter, randomized, open-label global Phase 2b clinical trial. The trial investigated the efficacy and safety of aldoxorubicin compared with doxorubicin in subjects with first-line metastatic, locally advanced or unresectable soft tissue sarcomas (STS). Aldoxorubicin combines the chemotherapeutic agent doxorubicin with a novel linker-molecule that binds specifically to albumin in the blood to allow for delivery of higher amounts of doxorubicin (3 to 4 times) without the major dose-limiting toxicities seen with administration of doxorubicin alone. In this study, both investigator assessment and central lab review showed an unambiguous 80-100% improvement in PFS among patients treated with aldoxorubicin. In an intent-to-treat analysis, the investigator-assessed median PFS was 8.4 months for aldoxorubicin patients versus 4.7 months for doxorubicin patients (p=0.0002), while the blinded central lab review indicated that median PFS for aldoxorubicin patients was 5.7 months versus 2.8 months for doxorubicin patients (p=0.018). Per investigators, 67.1% of aldoxorubicin patients had not progressed at 6 months, compared with 36.1% of doxorubicin-treated patients (p=0.005).
Gainers on news:
S&P Consumer discretionary index flat & in line with broader market
The consumer discretionary group is outperforming the broader market in early trade. The retail group is also in the green with the Retail HOLDRS Trust (RTH) 2.33% and the SPDR S&P Retail ETF (XRT) 1.5%. Trading higher following earnings/guidance: SWHC +7%, URBN +3.9% (discloses thus far Q4 comparable retail segment net sales are mid single-digit positive), HD 0.9% (reaffirms 2013 guidance; sees FY14 sales growth of 5%, provides targets for 2014 and 2015), ... Trading lower following earnings/guidance: CENT -7.1%, COST -1.6%
Other notable mentions: CBK flat (BlackRock discloses new 10%+ passive positions in 13G), CHEF flat (acquired substantially all of the assets of Allen Brothers; expected to contribute ~$0.01 to $0.03 to EPS in 2014), ABG flat (announces appointment of Keith R. Style as CFO)... Leaders: ANF 0.9% (Barron's profiles positive view).... Laggards: TRLA -2.7% (intends to offer $150 million aggregate principal amount of its convertible senior notes due 2020), AWAY -2.2% (announces intention to file registration statement for public offering of common stock; Bloomberg discusses that AWAY may be a possible takeover target by Priceline or other travel cos ), RSH -1.4% (receives credit facility of $585 mln from GE Capital; closes new five-year financing totaling $835 mln), BKS -2.9% (Founder Leonard Riggio discloses 26.3% active stake (~15.8 mln shares) in amended 13D filing; last reported owning ~17.8 mln shares on 8/20 ), AVP -3.2% (disclosed global headcount reductions; expected to be largely completed before the end of 2014; also to halt further roll-out of its SMT project), POST -2.3% ( priced its offering of 3 mln shares of a newly created series of convertible preferred stock to be designated as its 2.5% Cumulative Perpetual Convertible Preferred Stock)
Analyst related: Upgrades: PLCE 4.3% (Children's Place upgraded to Outperform at FBR Capital; tgt raised to $62), MMM 1.5% (upgraded to Buy from Neutral at Nomura), GRPN 3.9% (upgraded to Outperform from Market Perform at Wells Fargo), NSRGY 0.5% (upgraded to Buy from Hold at Vontobel).. Misc: HTZ -0.1% ( initiated with a Buy at Deutsche Bank), CAR -0.5% (initiated with a Hold at Deutsche Bank), OSTK 0.4% (initiated with a Neutral at B. Riley & Co), BID 0.3% ( target raised to $37 at Williams Capital Group), FUN 0.5% and GCI -0.7% (added to Top Picks list at FBR Capital yesterday), NFLX 1.4% (tgt to $390 from $355 at Citigroup).
Joy Global shares fall 4% following miss on earnings and downside guidance
Joy Global (JOY $54.00 -2.24) reported fourth quarter earnings of $1.11 per share, excluding non-recurring items, which missed expectations, while revenues fell 25.9% year/year to $1.18 billion which higher than expected.
The company issued guidance for the fiscal year 2014 with EPS of $3.00-3.50 and revenues of $3.6-3.8 billion which are both below estimates.
Total bookings decreased 19 percent from last year to $1.1 bln in the fourth quarter of fiscal 2013. Original equipment orders decreased 38 percent while aftermarket orders declined 3 percent when compared to the prior year period. Bookings for underground mining machinery decreased 6 percent in comparison to last year's fourth quarter.
Original equipment orders decreased 11 percent compared to the fourth quarter of last year, with declines in all regions except Australia in which a longwall system was booked in the current quarter.
Bookings for surface mining equipment were down 32 percent. Original equipment orders were down 62 percent from the fourth quarter of last year, while aftermarket bookings decreased 5 percent.
Market Outlook: The U.S. coal market began to see some marginal improvements in 2013. Coal consumption has improved, and is expected to grow over 7 percent in 2013 as natural gas prices have averaged $3.70/mm Btu throughout the year facilitating natural gas to coal switching at power plants. Elevated inventories resulting from the production overhang in 2012 have been reduced and are approximately 155 mln tons. This normalization should elicit a production response in 2014 after this year's US coal production is expected to be down 2.0 percent.
Company Outlook: "Looking forward, thermal coal capex will remain under pressure but appears to be near the bottom. Met coal capex will likely slow after several years of investment. Copper should remain high on prospect lists as current prices support most of global production, and iron ore projects will move forward selectively. Although we believe our markets overall will begin to improve in 2014, the timing is difficult to predict. Until a sustained demand catalyst emerges, we expect our customers will continue to be cautious and selective in deploying capex."
Mastercard shares rise 4% following stock split, dividend increase, and $3.5 bln share repurchase
Mastercard (MA $796.00 +32.31) announced that its Board of Directors has approved several capital actions: A 10-for-1 stock split of the Company's common stock to be effected through a stock dividend; An 83% increase in the Company's quarterly cash dividend to $1.10 per share ($0.11 per share after the stock split); and A new share repurchase program authorizing the Company to repurchase up to $3.5 billion of its Class A common stock.
The record date for the 10-for-1 stock split is the close of business on January 9, 2014, with share distribution scheduled for January 21, 2014. As a result of the split, shareholders will receive nine additional shares of MasterCard common stock for each share they hold as of the record date. Total shares of common stock outstanding will increase from approximately 120 million to 1.2 billion based on the Company's share count as of December 5, 2013.
The higher quarterly dividend of $1.10 per share on a pre-split basis, up from $0.60 per share, is to be paid February 10, 2014 to shareholders of record as of January 9, 2014. The new share repurchase program will become effective at the completion of the company's previously announced $2 billion share repurchase program. As of December 5, 2013, the Company had $514 million remaining under the current program authorization.
Echo Therapeutics shares soar 30% following strategic partnership with Medical Tech in Asia
Echo Therapeutics (ECTE $3.80 +0.87) announced that it entered into a strategic collaboration agreement with Medical Technologies Innovation Asia (MTIA), Ltd., Hong Kong, for a license arrangement and equity investment in Echo.
Under the terms of the License, Development and Commercialization Agreement, dated December 9, 2013, between MTIA and Echo, Echo granted MTIA rights to develop, manufacture, market and distribute Echo's Symphony CGM System on an exclusive basis for the Chinese market, including the Peoples' Republic of China, Hong Kong, Macau and Taiwan. Under the terms of the Agreement, MTIA is responsible for development costs, as well as manufacturing and marketing costs, relating to the Symphony CGM System for the Chinese market, and for obtaining regulatory approval for the product in the licensed territories.
Upon the earlier of regulatory approval from the China Food and Drug Administration or upon Echo's termination of the Agreement, MTIA is entitled to reimbursement of development costs up to $1.5 million in the form of shares of Echo's common stock valued at $2.71, which was the NASDAQ closing price on December 9, 2013. The parties will share net sales of the product generated in the territory. The term of the Agreement is ten (10) years, subject to certain rights to earlier termination for breach, change of control and certain performance obligations
Avanir Pharma shares fall 14% as AVP-923 trial says no difference between treatment arms and plecebo
Avanir Pharmaceuticals (AVNR $3.68 -0.61) announced that PRIME, its phase II clinical trial of the investigational drug AVP-923 (dextromethorphan / quinidine) for the treatment of central neuropathic pain in patients with multiple sclerosis did not meet the primary efficacy endpoint.
In the PRIME study, AVP-923 treated patients experienced levels of pain reduction commensurate with those observed in similar studies and the improvement in pain scores from baseline reached statistical significance; however, there was no difference between the treatment arms and placebo. Avanir believes that a higher than expected placebo response negatively impacted the study results. AVP-923 was generally safe and well tolerated.
Avanir plans to review the detailed data from the PRIME study in conjunction with previously generated data in diabetic peripheral neuropathic pain to determine next steps for the development of AVP-923 in neuropathic pain.
The company reported fourth quarter loss of $0.10 per share, while revenues rose 60.7% year/year to $21.7 million which are both in line with expectations.
Smith and Wesson shares rise 6% as earnings shoot past estimates
Smith & Wesson (SWHC $12.84 +0.72) reported second quarter earnings of $0.28 per share, which is higher than expected, while revenues rose 2.0% year/year to $139.3 million which is line with estimates.
The company issued guidance for the third quarter with EPS of $0.28-0.30 which is above estimates and revenues of $140-145 million which is higher than expected. The company reaffirmed guidance for fiscal year 2014 with EPS of $1.30-1.35 which is in line with estimates, with revenues of $610-620 million which is in line with estimates.
"Our results for the second quarter of fiscal 2014 reflected the continued successful execution of our growth strategy. By maintaining a strategic focus on increasing market share of our M&P polymer pistol family of products, we delivered handgun revenue growth of over 27% and a significant expansion of our gross margins. For the first six months of this fiscal year, our gross margins were 42.1%. At the same time, we continued to drive a number of initiatives in the quarter designed to strengthen our business and return increased value to our stockholders."