U.S. stocks were rising Monday as the Dow Jones Industrial Average climbed 0.6% to 8798, the S&P 500 rose 0.6% to 946 and the Nasdaq Composite gained 0.8% to 1901. Among the companies whose shares are actively trading in the session are Human Genome Sciences Inc. (HGSI), CIT Group Inc. (CIT) and Orexigen Threapeutics Inc. (OREX)
CIT Group ($1.26, +$0.56, +80.00%) was close to securing $3 billion in last-minute rescue financing from its bondholders Sunday in a deal that should keep the struggling lender out of bankruptcy court, people familiar with the matter told the Wall Street Journal.
Human Genome Sciences ($10.26, +$6.94, +209.04%) said its experimental drug Benlysta met the goals of a late-stage study in treating lupus, a notoriously hard-to-treat autoimmune disease that hasn't seen a new therapy in decades. The success surprised many analysts and investors who were expecting the drug to fail, as it did in an earlier mid-stage study. Citigroup believes the trial's success makes the company a takeover target of partner GlaxoSmithKline PLC (GSK, $37.57, +$1.21, +3.33%). The companies split Benlysta, which the firm sees having $1.3 billion in 2013 U.S. sales, and Human Genome has potential for royalties on two other Phase III drugs from Glaxo
Orexigen Therapeutics ($6.75, +$1.06, +18.63%) said its Contrave drug showed strong results in three large late-stage studies in treating obesity, a potential multibillion-dollar market.
BMO Capital markets downgraded its investment rating on Tyson Foods Inc. (TSN, $11.44, -$1.20, -9.41%) to market perform from outperform. The firm said the company's "near-term stock upside has become somewhat limited as its stock price reflects improved chicken margins, the company's internal improvements, and lower feed prices." Meanwhile, Sanderson Farms Inc. (SAFM, $41.42, -$4.28, -9.37%) was cut to market perform from outperform by BMO Capital Markets. The firm said in a note to clients that it's cautious on further chicken margin expansion as chicken demand has weakened and the effects from hot weather in the South were more muted than expected.
Wabash National Corp. (WNC, $0.72, +$0.18, +33.31%) announced it was getting a $35 million investment from a division of private-equity firm Lincolnshire Management Inc., which created a new entity Trailer Investments LLC, to buy a series of preferred stocks and warrants for new common stock. Trailer Investments will also get to put five board members on Wabash's 12-person board. "This capital infusion will fortify our balance sheet, allowing us to put in place a capital structure that meets the needs of the Company during this economic downturn, including to obtain needed accommodations under our existing credit agreement," Chief Executive Dick Giromini said in a statement.
Other Stocks In Focus:
California-based East West Bancorp Inc. (EWBC, $6.84, -$0.15, -2.15%) announced plans to sell at least 11 million shares as the company said it has completed a capital-raising effort that so far has generated $168.9 million.
Construction machinery reached a cyclical bottom during the second quarter, Bank of America-Merrill Lynch said while upgrading Caterpillar Inc. (CAT, $36.42, +$2.43, +7.15%) to buy. Caterpillar's results Tuesday are likely to be weak and potentially come with lower guidance for future quarters, "but we don't think that matters," BofA-Merrill said, as there's limited downside to the stock given low expectations. BofA-Merrill's dealer channel checks show reduced machinery inventories setting the stage for restocking going into 2010, and the firm predicts Caterpillar's multiple will expand to historical levels after its operations stabilize in the second half of this year.
Bank of America Corp.'s (BAC, $12.62, -$0.27, -2.09%) "normalized" earnings picture got cloudier after its second-quarter earnings, Fox-Pitt said, downgrading Bank of America to in line from outperform and sharply cutting earnings estimates. The firm had forecast normalized earnings per share of $2.80, or about 1% return on assets, but now says BofA will continue to struggle to generate positive EPS due to credit and revenue headwinds. Fox-Pitt swings its 2009 EPS view to loss of 46 cents a share from previous view of a 48-cent profit, and cut its 2010 view to 55 cents a share from $1.32 a share. Bank of America is unlikely to repay its Troubled Asset Relief Program loans soon, Fox-Pitt also added.
Eaton Corp.'s (ETN, $49.00, +$4.05, +9.01%) second-quarter profit plunged 91% on slumping sales and margins as results missed expectations.
Extreme Networks Inc. (EXTR, $2.07, +$0.07, +3.50%) signed an alliance with Internet-security giant McAfee Inc. (MFE, $43.06, +$0.07, +0.16%) to work on network security for customers for both McAfee and Extreme Networks, which works in Ethernet based networks.
Halliburton Co.'s (HAL, $21.98, +$0.60, +2.81%) second-quarter earnings fell 48% on weak demand and lower prices, but results were better than feared.
Hasbro Inc.'s (HAS, $26.28, +$0.90, +3.55%) second-quarter earnings rose 4.8% amid strong sales of most of its toy brands, including those related to the Transformers movie sequel, but revenue fell just short of Wall Street's expectations while profit topped estimates.
Johnson Controls Inc. (JCI, $23.42, +$1.90, +8.83%) posted its first profitable quarter since last autumn as the auto-parts and heating-systems maker saw cost cuts partially take the sting out of tumbling demand, which fell more than expected.
M&T Bank Corp.'s (MTB, $56.48, +$2.04, +3.75%) second-quarter profit plunged 75%, reflecting charges from its acquisition of Provident Bankshares and special payment toward the Federal Deposit Insurance Corp.'s deposit-insurance fund.
Investors should buy Peabody Energy Corp. (BTU, $34.99, +$1.83, +5.52%) ahead of earnings Tuesday, FBR analysts said in a note, as Peabody will be supported by long-term steel and energy demand in China and India. China continues to import coking coal to improve its steel quality and conserve its domestic resources, and demand will be sustained by strong real estate construction, the firm says. Meanwhile, India's power generation has been growing every month this year and aggressive economic expansion efforts by India could increase coking coal imports by 75% by 2012.
PetMed Express Inc. (PETS, $17.36, +$0.71, +4.26%) recorded a 23% increase in second-quarter profit as sales jumped 13% and both figures exceeded expectations. The animal pharmacy and operator of the 1-800-petmeds number and Web site said that it added 297,000 new customers and saw online and reorder sales both rise.
Ruby Tuesday Inc. (RT, $7.35, -$0.15, -2.00%) will offer at least 10 million shares as the restaurant operator joins a wave of companies in recent months looking to take advantage of investor appetite for new shares to raise cash. The offering would dilute shares outstanding by about 19%.
Spectrum Pharmaceuticals Inc. (SPPI, $5.81, +$0.26, +4.68%) shares gained Monday following news the U.S. Food and Drug Administration accepted for review the company's resubmission of its application for its cancer drug, Zevalin. The agency accepted the drug as a Class 1 submission and established Sept. 7 as a decision date, the oncology-focused biotechnology company said.
Weatherford International Ltd.'s (WFT, $18.80, -$1.14, -5.69%) second-quarter earnings fell 89%, with results missing analysts' expectations, as international growth failed to offset a steep drop in North American demand.
