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Tuesday, July 7, 2009

US HOT STOCKS: Ruby Tuesday, Amylin Active In Late Trading

U.S. stocks were lower Tuesday as the Dow Jones Industrial Average fell 1.9% to 8164, the S&P 500 dropped 2% to 881 and the Nasdaq Composite lost 2.3% to 1746. Among the companies whose shares are actively trading in the after-hours session are Ruby Tuesday Inc. (RT), Amylin Pharmaceuticals Inc. (AMLN) and Alkermes Inc. (ALKS).

 

Ruby Tuesday's fiscal fourth-quarter earnings rose 3.7% as the company continued to keep a lid on costs and slowed the pace of same-store sales declines. The company also offered fiscal 2010 earnings guidance roughly in line with Wall Street expectations, but the restaurateur warned operating margins may tighten. Shares climbed 9.6% to $8.11 in late trading as results topped analysts' projections.

 

Amylin, Eli Lilly & Co. (LLY) and Alkermes said the Food and Drug Administration agreed to review its application for potential blockbuster diabetes drug exenatide once weekly. The three companies are developing the treatment for type 2 diabetes that is injected once a week. Exenatide is the active ingredient in Byetta, which is injected twice a day and has been on the market since June 2005. Amylin shares rose 4.3% to $13 in late trading, while Alkermes gained 3.8% to $10.65. Eli Lilly increased 0.39% to $33.62.

   Regular Session Movers

Hansen Medical Inc. (HNSN, $3.15, -$1.58, -33.40%) projected second-quarter revenue well below Wall Street estimates, saying its sales were hurt by "general macroeconomic conditions" that affected potential customers' capital spending. As such, the robotic technology maker also withdrew its guidance for system placements for the year.

 

Discover Financial Services (DFS, $9.37, -$1.13, -10.76%) has launched a $500 million stock offering and is planning to offer senior notes in the near future. Some of the stock-offering proceeds may go toward buying back preferred stock issued under the U.S. Treasury's Capital Purchase Program. In March, the credit-card company got $1.2 billion in funds under the Troubled Asset Relief Program.

 

Shares of Jazz Pharmaceutical Inc. (JAZZ, $4.21, +$0.58, +15.98%) soared Tuesday after the drug company said it made a back payment of $14.6 million in interest and believes it will be in compliance on future payments, including the principal of $119.5 million due in 2011. Jazz also announced it raised $7 million from Longitude Capital with the sale of 1.9 million shares and warrants to purchase another nearly 950,000 shares.

 

Littelfuse Inc. (LFUS, $22.63, +$2.50, +12.42%), which makes circuit-protection devices, boosted its second-quarter revenue outlook and expects a profit excluding restructuring charges for the period, saying automotive and electronics sales improved more than expected.

 

Auto-parts supplier Lear Corp. (LEAR, $0.28, -$0.01, -2.09%) filed for Chapter 11 bankruptcy protection Tuesday, days after the maker of seats and electronic equipment announced a plan with creditors to restructure some $3.6 billion in loans and notes. American Axle & Manufacturing Holdings Inc. (AXL, $2.38, -$0.46, -16.20%) continued its slump amid concerns it could be the next to go under, although its lenders agreed to an amendment and waiver on a loan facility, giving the company until the end of the month to meet terms on the debt. Also falling were ArvinMeritor Inc. (ARM, $3.62, -$0.33, -8.35%), Titan International Inc. (TWI, $6.05, -$0.28, -4.42%) and TRW Automotive Holdings Corp. (TRW, $11.34, -$0.29, -2.49%).

 

GenCorp Inc. (GY, $2.11, +$0.27, +14.67%) reported its second-quarter profit leapt 59% as the diversified manufacturing company cut costs, particularly retirement spending, to offset a drop in sales and volumes in its aerospace and defense segment.

 

Pain Therapeutics Inc. (PTIE, $4.56, -$0.92, -16.79%) shares fell following news that it will take longer than expected for its partner on Remoxy - King Pharmaceuticals Inc. (KG, $9.36, -$0.14, -1.47%) - to resubmit a new drug application for the abuse-resistant painkiller. Following discussions with the U.S. Food and Drug Administration in a July 2 meeting, King said Tuesday that it now expects to resubmit the application to the agency in the middle of next year. Analysts had expected resubmission to occur late this year or early next year.

 

Shares of American International Group Inc. (AIG, $13.75, -$2.44, -15.07%) fell Tuesday, as investors continue to remain concerned about the struggling insurance giant's future, especially given the uncertainty over who will succeed Chief Executive Edward Liddy. Meanwhile, a jury Tuesday found a sister company to AIG, Starr International Co., not liable for breach of trust or improper conversion in a dispute with AIG over millions of shares of the insurer's stock. AIG had been seeking $4.3 billion in damages.

 

Shares of Astec Industries Inc. (ASTE, $24.39, -$2.43, -9.06%) fell Tuesday after an analyst said interest in boosting highway spending has fallen by the wayside as the Obama Administration looks to tackle other issues, including energy and health-care reform. Barrington Research analyst Walter Liptak cut his rating on Astec, which manufactures and markets equipment used for repairing infrastructure, to market perform from outperform, expecting the White House to delay renewing a transportation-spending bill until after the 2010 midterm elections that could bolster demand for Astec products.

 

Investors should take advantage of Callaway Golf Co.'s (ELY, $5.02, +$0.22, +4.58%) low share price, Lazard Capital said as it initiated coverage of the stock at buy. Callaway is an industry leader with earnings power of $1.00/share, and should emerge from recession a "strong, leaner player facing less competition," the firm said.

 

Shares of CEC Entertainment Inc. (CEC, $30.31, +$1.31, +4.52%) rose after a C.L. King analyst said the impact the swine flu outbreak had on traffic doesn't appear to be as bad as many anticipated, signaling the company's second quarter may show strength.

 

Volatile CIT Group Inc. (CIT, $1.98, +$0.22, +12.50%) recovered from losses Monday, when investors worried about the likelihood the company would get access to the FDIC's Temporary Liquidity Guarantee Program.

 

Shares of Dyax Corp. (DYAX, $2.88, +$0.20, +7.46%) extended a rally that started early last month, gaining 23% so far this week, on what Needham's Mark Monane calls continuing excitement surrounding two catalysts: the FDA's setting an action date for ecallantide, the company's treatment for severe attacks of a rare swelling disorder, and bad news for competitor ViroPharma Inc.'s (VPHM, $5.68, -$0.02, -0.35%) treatment Cinryze, which suffered a blow after the FDA requested more clinical studies that could push its OK date well past Dyax's.

 

Greenbrier Cos. (GBX, $6.31, -$0.61, -8.82%) blasted General Electric Co. (GE, $11.01, -$0.47, -4.09%) for breach of contract Tuesday as the rail-car maker swung to a fiscal third-quarter loss on $55.7 million in goodwill write-downs and lower demand. Greenbrier said GE, one of the nation's largest rail-car leasers, has told it to slow production of new cars to a point that "does not allow for efficient operations of our manufacturing facility." GE, which contracted for the cars in 2007 under a $1.2 billion, multiyear deal, currently accounts for about 84% of Greenbrier's rail-car backlog, or 11,800 cars.

 

KBW raised its stock-investment rating on KeyCorp (KEY, $5.29, +$0.21, +4.13%) to outperform from market perform, saying it's one of the more inexpensive names and has one of the strongest tangible common equity ratios among large-cap banks. In addition, its recent capital raise exceeded the Treasury's requirement.

 

Standard & Poor's Ratings Services cut ratings on Key Energy Services Inc. (KEG, $5.17, -$0.26, -4.79%) and Complete Production Services Inc. (CPX, $6.22, -$0.20, -3.12%) deeper into junk territory amid worries that conditions in the U.S. oil and gas industry will remain weak for the rest of the year.

 

Shares of Repros Therapeutics Inc. (RPRX, $4.56, +$0.32, +7.55%) rose after the pharmaceutical company released data about its Proellex treatment for uterine fibroids and endometriosis that showed the number of women with clinically significant elevated liver enzymes as a side effect was less than feared. Investors had been concerned about the side effect after Repros last week said it was discontinuing the 50mg dose of the drug, citing an increase in liver enzymes in "a low percentage of women."

 

Sequenom Inc. (SQNM, $3.70, +$0.34, +10.12%) still plans to expand its Grand Rapids laboratory when it begins marketing some of its prenatal tests later this summer, the Grand Rapids Press reported, citing a company official. "I think people are looking at that and saying to themselves 'these guys aren't done yet,'" Soleil said. "If they're expanding the Grand Rapids facility possibly there's some life left to the story." The firm noted Sequenom - which is under SEC and internal investigations into mishandled Down Syndrome test data - has a lot of emotionally driven retail investors, "so any even hints that something positive's coming out of this story is going to make the stock pop."

 

Steel fundamentals in the U.S. have bottomed, Bank of America-Merrill Lynch said, as the inventory destocking process is relatively complete and production capacity utilization rates have recovered from a low of 40% in April. BofA-Merrill said the Street's 2010 and 2011 estimates are still too optimistic, however, raising risk of a correction as 2010 outlooks come down. The firm upgraded Steel Dynamics Inc. (STLD, $13.57, +$0.30, +2.26%) to buy, saying it has a competitive cost position and attractive long-term growth prospects.

 

Suntech Power Holdings Co.'s (STP, $15.69, -$1.42, -8.30%) chief operating officer Johnson Chiang resigned last week, citing personal reasons. Guangchunm Zhang, the company's vice president of manufacturing, technology and quality, will take control of the company's silicon photovoltaic cell manufacturing in China.

 

Tellabs Inc. (TLAB, $5.18, -$0.34, -6.16%) plans to lay off about 150 employees, the telecommunications-equipment maker disclosed in a filing with the U.S. Securities and Exchange Commission. The company said the job cuts will "align our costs with customer spending and market conditions" and are the centerpiece of a restructuring from which it expects to record pretax charges of $5 million to $6 million between this year's second quarter and the first quarter of 2010.

 

Shares of Trex Co. Inc. (TWP, $12.91, +$0.42, +3.36%) climbed Tuesday as an analyst said the deck and railing maker is offsetting the weak macroeconomic environment by gaining market share. Stifel Nicolaus analyst John A. Baugh raised his stock-investment rating on Trex to buy from hold, saying the company can also drive earnings growth in the near term by internally driving margin expansion.

 

Trinity Biotech PLC (TRIB, $4.65, +$0.20, +4.49%), an Ireland-based maker of medical testing and diagnostic equipment, got U.S. Food and Drug Administration approval for its Destiny Max haemostasis, or blood clot, analyzer. The device is already in use in Europe and the company believes the U.S. market could be worth $500 million a year.

 

Managed-care stocks gained Tuesday following indications that the White House is open to a public health-insurance plan that would be introduced only if the marketplace fails to provide sufficient competition on its own. Gainers included UnitedHealth Group Inc. (UNH, $25.17, +$1.08, +4.48%), Cigna Corp. (CI, $25.24, +$1.77, +7.54%), Aetna Inc. (AET, $25.94, +$1.53, +6.27%), Humana Inc. (HUM, $31.98, +$1.04, +3.36%) and Coventry Health Care Inc. (CVH, $18.55, +$0.49, +2.71%). The sector has been volatile in the past few months due to uncertainties over how health-care reforms would affect the industry.

 

Weyerhaeuser Co. (WY, $27.86, -$2.13, -7.10%) slashed its dividend 80% and said it might become a real-estate investment trust as the embattled forest-products company continues to struggle.

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