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10:53 am Healthcare Sector -0.6% in line with the S&P

General Commentary: Thinly traded BIOLASE (BIOL) is higher by 8.3% this morning following the announcement of an offering of 6.25 million shares of common stock to institutional and individual investors. The offering was priced at $1.92 per share and will raise $12 million prior to fees. Paul N. Clark, Chairman of the Board of Directors of BIOLASE, said, "We are very pleased to have completed this important private placement financing at market with a number of veteran institutional and individual biotechnology investors, and we expect the proceeds raised to fuel the Company's growth and innovation efforts." Despite the potential for dilution, successful offerings at prices in-line with the most recent closing price often bring a boost of confidence and lead to gains in the underlying stock.

Gainers on news:

  • ERBA Diagnostics (ERB +10.81%) Co appointed William Creech as Vice President Sales and Marketing; Creech most recently was Vice President Sales and Marketing at Vermillion Inc.
  • BIOLASE (BIOL +8.33%) To raise $12 mln from intitutional and individual investors in a private placement
  • CTI BioPharma (CTIC +4.25%) Announced that it has received approval from the Israeli Ministry of Health for PIXUVRI for the treatment of adult patients with multiply relapsed or refractory aggressive B-cell non-Hodgkin lymphoma
Decliners on news: No notable decliners on news

Gainers on earnings:
  • Allergan (AGN +1.88%) Beat quarterly EPS by $0.07 ($1.51 ex items vs $1.44 estimate), revs rose 16.7% yoy to $1.86 bln vs $1.77 bln estimate; sees Q3 EPS of $1.44-1.47 ex items vs $1.45 estimate; sees FY14 EPS of $5.74-5.80 ex items (raised from $5.64-5.73) vs $5.71 estimate; sees FY15 EPS of $8.20-8.40 ex items vs $6.86 estimate; sees FY16 EPS of ~$10.00
Decliners on earnings: No notable decliners on earnings

Upgrades/Downgrades:
  • Laboratory Corp (LH -0.18%) Target raised to $130 from $120 at Maxim Group
  • Regeneron (REGN -0.48%) Initiated with a Buy at Argus, target $375
  • Shire (SHPG -1.05%) Downgraded to Market Perform from Outperform at Leerink Partners; downgraded to Neutral from Buy at Sun Trust Robinson Humphrey; downgraded to Neutral at Buckingham; target raised to $269 from $240 at RBC Capital Markets
  • Amphastar Pharmaceuticals (AMPH -3.35%) Initiated with a Buy at Jefferies (target $14), an Outperform at BMO Capital Markets (target $17), an Overweight at Piper Jaffray (target $16), a Buy at Needham (target $17)
  • DaVita (DVA -3.75%) Downgraded to Market Perform from Outperform at Raymond James
  • Adeptus Health (ADPT -5.39%) Initiated with an Overweight at Piper Jaffray (target $32), a Buy at Goldman, a Hold at Deutsche Bank, an Equal-Weight at Morgan Stanley

7:13 am Halliburton shares rise 1% following beat on revenues

  • Halliburton (HAL $71.60 +0.67) reported second quarter earnings of $0.91 per share, which is line with estimates, while revenues rose 10.0% year/year to $8.05 billion which is higher than expected. Operating income was $1.2 billion in the second quarter of 2014, 23% higher than operating income of $970 million in the first quarter of 2014 resulting from significant activity improvements in North America and the Eastern Hemisphere. "In North America, second quarter revenue increased 11% and operating income was up 31% compared to the first quarter of 2014, outpacing a 4% increase in the United States land rig count. Service intensity levels continued to expand, as completion volumes per well were up more than 35% compared to the second quarter of last year.
  • "We expect North America activity levels to continue to improve, with margins approaching 20% in the third quarter. We have concluded based on the strength of this outlook that we will immediately accelerate additions to our hydraulic fracturing fleet and logistics capabilities, with new crews available for service beginning later this year. "In the Eastern Hemisphere, we are successfully executing our growth strategy. Relative to the first quarter of 2014, we grew Eastern Hemisphere revenue by 9% and operating income by 26%. We continue to forecast full-year Eastern Hemisphere revenue growth in the low double digits, with average full year margins in the upper teens. "In the Middle East/Asia region, revenue increased 11% and operating income increased 25% sequentially. Saudi Arabia continued to lead the growth, and we expect this region to have the highest growth rate for the full-year 2014, despite the potential for activity disruptions or project delays in Iraq later this year. 
  • "In Europe/Africa/CIS, sequential revenue and operating income increased 6% and 27%, respectively. The growth resulted from seasonal recovery in the North Sea and in Russia, as well as activity gains in sub-Saharan Africa. "In Latin America, revenue increased 4% sequentially, while operating income declined 39%. While we are very encouraged about the prospects for Energy Reform in Mexico, the land rig count was near historic low levels during the second quarter. Our results for the second quarter of 2014 were also negatively impacted by the late receipt of our blanket order for consulting and project management work, which impacted our ability to book revenue and offset costs. In addition, margins were impacted by mobilization costs for our integrated projects in Mexico. Both of these issues are expected to turn around in the second half of the year. We believe full year Latin America margins should improve sufficiently to be in line with 2013 assuming the timely approval of our billings under the blanket order in Mexico, as well as a swift resolution of the retender of our Brazil drilling contract."

6:52 am Hasbro shares little changed following in line earnings, miss on revenues

  • Hasbro (HAS $53.21 +0.00) reported second quarter earnings of $0.36 per share, excluding non-recurring items, which is line with estimates, while revenues rose 8.2% year/year to $829.3 million which is lower than expected. U.S. and Canada segment net revenues of $383.0 million decreased 2% compared to $389.2 million in 2013. The segment's results reflect growth in the Boys and Girls product categories offset by declines in the Games and Preschool categories. The U.S. and Canada segment reported operating profit of $46.9 million versus $59.0 million in 2013.International segment net revenues increased 17% YoY to $396.8 mln. 
  • Revenues in the International segment reflect double-digit growth in Europe, Latin America and Asia Pacific as well as growth in the Boys, Girls and Preschool product categories. The International segment reported operating profit of $29.2 million, up 98% YoY. Entertainment and Licensing segment net revenues increased 35% to $47.7 million compared to $35.3 million in 2013. The segment benefited from growth in lifestyle licensing, digital gaming and the addition of Backflip Studios. The Entertainment and Licensing segment reported 295% growth in operating profit to $14.6 mln. Repurchased 2.5 million shares of common stock at a total cost of $136.3 million and an average price of $54.06 per share.

6:51 am SunTrust shares rise 3% following beat on EPS

SunTrust Banks (STI $40.75 +1.03) reported second quarter earnings of $0.81 per share, which is higher than expected, while revenues (FTE, excluding gain on sale of asset management subsidiary) fell 0.2% year/year to $2.1 billion which is line with estimates. Average performing loans increased $2.3 bln, or 2%, sequentially, and $9.8 bln, or 8%, compared to the second quarter of 2013, driven primarily by growth in the C&I, commercial real estate, and consumer portfolios. Estimated capital ratios continued to be well above regulatory requirements. The Basel I Tier 1 common and Basel III Common Equity Tier 1 ratios were both estimated to be 9.7%. Net interest income was $1.2 bln for the current quarter, an increase of $5 mln from the prior quarter. The increase was primarily due to one additional day and higher average loan balances, partially offset by a 7 basis point decline in loan yields. Compared to the second quarter of 2013, net interest income increased $2 mln primarily due to higher average loan balances, partially offset by a 15 basis point decline in earning asset yields. Net interest margin for the current quarter was 3.11%, a decline of 8 basis points from the prior quarter. This decline was primarily driven by a 7 basis point decline in loan yields while interest-bearing deposit costs remained stable.

6:49 am TAL Education shares little changed following miss on earnings

  • TAL Education (XRS $27.50 +0.04) reported first quarter earnings of $0.22 per share, excluding share-based compensation expenses, which is worse than expected, while revenues rose 45.0% year/year to $89 million which is higher than expected. Enrollment: Total student enrollments increased by 44.9% year-over-year to approximately 279,200 from approximately 192,650 in the same period of the prior year Total physical network consisted of 285 learning centers as of May 31, 2014, increased from 274 as of February 28, 2014. Deferred Revenue 
  • As of May 31, 2014, the Company's deferred revenue balance was $235.8 million, as compared to $154.2 million as of May 31, 2013, representing an increase of 52.9%, which was mainly contributed by the tuition revenue collected in advance for the Xueersi Peiyou small class summer and fall semesters. Guidance: The company issued guidance for the second quarter with revenues of $120.5-123.2 million which is worse than expected.

6:48 am BBT Corp shares fall 1.5% following miss on earnings

  • BB&T Corp (BBT $38.30 -0.60) reported second quarter earnings of $0.70 per share, excluding non-recurring items, which is worse than expected, while revenues fell 7.9% year/year to $2.3 billion which is line with estimates. Q2 results excluded after-tax adjustments totaling $88 million, or $0.12 per diluted share, that were recorded in connection with the identification of potential exposures related to residential mortgage loans originated by BB&T and insured by the FHA, and in connection with certain new information that impacted a previously recorded income tax reserve. NIM Net interest margin was 3.43% for the second quarter, a decrease of nine basis points compared to the prior quarter. 
  • Average earning assets increased $2.8 billion, or 7.0% annualized, while average interest-bearing liabilities increased $1.1 billion, or 3.6% annualized. Key Metrics: Average total loans and leases held for investment increased 7.2% on an annualized basis compared to the first quarter of 2014 Net interest margin was 3.43%, down nine basis points compared with the prior quarter due to lower rates on new loans and securities, and covered loan runoff Mortgage banking income was $12 million higher than the prior quarter driven by an increase in residential mortgage loan production and sales Bankcard fees and merchant discounts increased $8 million to a record $70 million. 
  • Average deposits increased $3.9 billion, or 12.4% annualized, compared to the prior quarter Asset Quality Nonperforming assets, excluding covered assets, decreased $70 million, or 7.1% Net charge-offs, excluding covered, were 0.40% of average loans for the quarter, the lowest level since 2007 The allowance for loan loss coverage ratio, excluding covered loans, increased to 1.78 times nonperforming loans held for investment in the second quarter compared to 1.70 times in the first quarterCapital levels Tier 1 common equity to risk-weighted assets was 10.2% Tier 1 risk-based capital was 12.0% Total capital was 14.3% Basel III common equity tier 1 was 10.0% Leverage capital remained strong at 9.5% Tangible common equity to tangible assets was 7.7%.

6:46 am Semi Manufacturing shares little changed following raised guidance

  • Semi Manufacturing (SMI) announced an upward revision of its Q2 gross margin guidance for the three months ended June 30, 2014, which was originally released by the Company in its results for the three months ended March 31, 2014 on April 28, 2014. Gross margin for the three months ended June 30, 2014 is guided to be 27% to 29% compared to the original guidance of 22% to 24%. As originally guided, revenue in the second quarter of 2014 was expected to increase 12% to 15% quarter over quarter, and non-GAAP operating expenses (excluding the effect of employee bonus accrual, funding of R&D contracts from the government and gain from the disposal of living quarters) were expected to range from $89 million to $93 million.

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