Tesla’s going private is questioned by analysts

Tesla consolidates as analysts debate if Musk should take carmaker private

Shares of Tesla (TSLA) jumped yesterday after CEO Elon Musk said he would like to see the company go private, but have since stepped into negative territory as analysts debate the idea.

 

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Tesla’s going private is questioned by analysts, Stockwinners
While Jefferies analyst Philippe Houchois believes going private “feels like the right thing to do,” his peer at Morgan Stanley questions the feasibility of Musk actually being able to achieve that goal.

TAKING TESLA PRIVATE

Yesterday, Tesla CEO Elon Musk tweeted that he is considering taking the electric carmaker private.

 

In an email to the company’s employees, the executive explained: “Earlier today, I announced that I’m considering taking Tesla private at a price of $420/share. […] As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.”
Tesla gets a boost from Bud. See Stockwinners.com
Tesla’s going private is questioned by analysts

Meanwhile, members of Tesla’s board said on Wednesday that they have “met several times over the last week” and are “taking the appropriate next steps to evaluate” Musk’s desire to take the company private. Their talks with Musk, which started last week, included “discussions as to how being private could better serve Tesla’s long-term interests, and also addressed the funding for this to occur,” the board members stated in a press release.

‘RIGHT THING TO DO’:

Commenting on the news, Jefferies’ Houchois told investors in a research note that the move “feels right” even if Musk is downplaying how supportive public markets have been. With Tesla unable to take on more debt, the analyst wonders who may fund the potential deal and end up as a new large shareholder. While the second quarter de-stressed the near-term outlook, Houchois pointed out that Tesla did not reassure about sustained demand for Model 3 at high prices and that profitability can support organic funding of investments in future products and manufacturing capacity.

He continues to think Tesla will need additional capital to fund these or risk being caught with a narrow and ageing product range within 2 years. Noting that his discounted cash flow fair value points to $300 per share, the analyst raised his price target on the stock to $360 from $250, “bridging the gap” to the $420 potential going private bid. The analyst reiterated a Hold rating on Tesla.

BUT WILL IT BE FEASIBLE?:

While Morgan Stanley analyst Adam Jonas sympathizes with Elon Musk’s argument that Tesla could be better off as a private company, he questions the feasibility of the CEO actually being able to achieve that goal.
Taking the company private would assume either that the company is on the verge of generating self-sustaining cash flows or that it can tap into a range of strategic sources of capital not previously at its disposal, said Jonas, who sees strategic value at Tesla, but thinks the “LBO math required to support [a price of] $420 is extremely aggressive.”
Tesla Model 3 named Popular Mechanics' Car of the Year
Tesla Model 3 named Popular Mechanics’ Car of the Year
The benefits of being private are outweighed by the risks of added financial leverage, which could be even more strategically limiting, added Jonas, who reiterated an Equal Weight rating and a $291 price target on Tesla shares.
Meanwhile, his peer at JPMorgan raised his price target for Tesla to $308 from $195 to reflect the possibility of the company going private. However, analyst Ryan Brinkman told investors that he still believes that Tesla’s valuation based on fundamentals alone “is worth no more than $195” per share.
The analyst added that he is not as certain as CEO Elon Musk on Tesla going private, and assigns only a 50% probability to such a scenario, while reiterating an Underweight rating on the shares.

PRICE ACTION:

In Wednesday afternoon trading, shares of Tesla have dropped 1.6% to $373.63.


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Spark Therapeutics tumbles on hemophilia study

Spark says Phase 1/2 data for SPK-8011 shows a 97% reduction in ABR

Spark tumbles on hemophilia study , Stockwinners
Spark tumbles on hemophilia study , Stockwinners

 

Shares of Spark Therapeutics (ONCE) are sinking after the company announced preliminary Phase 1/2 data for its investigational gene therapy candidate SPK-8011 for hemophilia A. A dose response as demonstrated by FVIII expression ranged from 16% to 49%, with a mean of 30% post 12 weeks in five of the participants in the 2×1012 vg/kg cohort, Spark announced in its Q2 earnings release.

As of the July 13, 2018, data cutoff, 12 participants in the Phase 1/2 trial have received a single administration of investigational SPK-8011, including two at a dose of 5×1011 vector genomes /kg body weight, three at a dose of 1×1012 vg/kg and seven at a dose of 2×1012 vg/kg.

Across all participants, at all three doses, beginning four weeks after vector infusion, there has been a 97-percent reduction in annualized bleeding rate and a 97-percent reduction in annualized infusion rate.

The first two trial participants, who have been followed for greater than one year, have shown stable FVIII activity levels since reaching plateau for up to 66 weeks, with follow up ongoing.

Additionally, there is evidence of a dose-dependent increase in mean FVIII activity levels across the three dose cohorts.

Five of the participants in the 2×1012 vg/kg cohort have FVIII activity levels between 16 and 49 percent, with follow-up ranging from 12 to 30 weeks.

The mean FVIII activity for these five participants is 30 percent, based on average FVIII levels post-12 weeks after vector infusion. These five participants have reduced their overall ABR by 100 percent and reduced their overall AIR by 100 percent.

The other two participants in the 2×1012 vg/kg cohort had an immune response that caused their FVIII levels to decline to less than 5 percent. Clinically, both participants have moved from prophylactic to on-demand treatment and have seen meaningful reductions in their bleeding and infusion rates.

One of these participants did not rapidly respond to oral steroids and he elected to be admitted to the hospital to receive two intravenous methylprednisolone infusions rather than have the infusions on an outpatient basis.

The event was subsequently resolved. The admission to hospital for these infusions met the criteria for a serious adverse event.

Of note, across the study, seven of the 12 participants received a tapering course of oral steroids in response to an alanine aminotransferase elevation above patient baseline, declining FVIII levels and/or positive IFN-g enzyme-linked immunospots.

For these seven participants, steroids led to normalization of ALT and ELISPOTs.

For all but the two above mentioned 2×1012 vg/kg cohort participants, oral steroids led to stabilization of target FVIII levels. Based on the totality of the results to date, Spark Therapeutics intends to initiate a Phase 3 run-in study in the fourth quarter of 2018. Following completion of the run-in study, Phase 3 participants are expected to receive 2×1012 vg/kg of SPK-8011.

Additional details on the Phase 3 trial design will be determined following continued discussions with FDA and EMA, which are expected in the fourth quarter.

Finally, the company has successfully scaled-up its mammalian-based manufacturing process in suspension to a capacity level of 200 liters and amended its agreement with Brammer Bio to secure a dedicated manufacturing suite, both of which will enable Spark Therapeutics to meet supply needs for Phase 3 clinical development as well as expected commercial requirements.

ONCE closed at $77.61, it last traded at $56.00.


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Duo Security sold for $2.35B

Cisco confirms intent to acquire Duo Security for $2.35B

 

Duo Security sold for $2.35B, Stockwinners
Duo Security sold for $2.35B, Stockwinners

Cisco (CSCO) announced its intent to acquire privately-held Duo Security, headquartered in Ann Arbor, MI.

Duo Security’s solution verifies the identity of users and the health of their devices before granting them access to applications – helping prevent cybersecurity breaches.

Integration of Cisco’s network, device and cloud security platforms with Duo Security’s zero-trust authentication and access products will enable Cisco customers to easily and securely connect users to any application on any networked device.

Under the terms of the agreement, Cisco will pay $2.35 billion in cash and assumed equity awards for Duo Security’s outstanding shares, warrants and equity incentives on a fully-diluted basis.

The acquisition of Duo Security will: Extend intent-based networking into multi-cloud environments.

Cisco currently provides on-premises network access control via its Identity Services Engine product. Duo’s software as a service-based model will be integrated with Cisco ISE to extend ISE to provide cloud-delivered application access control. Simplify policy for cloud security.

By verifying user and device trust, Duo will add trusted identity awareness into Cisco’s Secure Internet Gateway, Cloud Access Security Broker, Enterprise Mobility Management, and several other cloud-delivered products.

Expands endpoint visibility coverage. Cisco’s in-depth visibility of over 180 million managed devices will be augmented by Duo’s broad visibility of mobile and unmanaged devices.

The acquisition is expected to close during the first quarter of Cisco’s fiscal year 2019, subject to customary closing conditions and required regulatory approvals.

Duo Security, which will continue to be led by CEO Dug Song, will join Cisco’s Networking and Security business led by EVP and GM David Goeckeler.

CSCO closed at $41.86.


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PTC Therapeutics higher after acquiring Agilis Biotherapeutics

 PTC Therapeutics to acquire Agilis Biotherapeutics

PTC Therapeutics to acquire Agilis Biotherapeutics

PTC Therapeutics (PTCT)  announced that it has entered into an agreement to acquire Agilis Biotherapeutics.

The transaction was approved by the Boards of both companies. The transaction is expected to close in the third quarter of 2018, pending successful fulfillment of all customary closing conditions.

On completion, PTC plans a smooth transition of operations and the integration of Agilis’ talented and dedicated employees to continue the mission of bringing the pipeline of gene therapies for CNS disorders to patients worldwide.

Under the terms of the merger agreement, PTC will pay an upfront consideration of $50M in cash and approximately $150M in PTC common stock, subject to an estimated maximum 9.34M share limit (with any shortfall to be made whole with additional cash consideration). In addition to the upfront payments, potential future consideration includes $60M in development milestones to be paid over the next two years which includes the acceptance of a BLA.

Additionally, the transaction includes up to $535M in success-based milestones in connection with regulatory approvals on the three most advanced programs and receipt of a priority review voucher, as well as tiered commercial milestones of $150M, and 2-6 % of annual net sales for Friedreich ataxia and Angelman syndrome.

PTCT closed at $36.55, it last traded at $39.38.


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Market higher at midday

Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800 for the first time since the middle of March.

Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800, Stockwinners
Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800, Stockwinners

The Dow has also been strong, though not much of that outperformance is due to JPMorgan (JPM) after the bank and several of its large peers kicked off earnings season with their reports this morning.

ECONOMIC EVENTS:

In the U.S., the June trade price report was mixed, with a weaker than expected 0.4% import price decline and a stronger than expected 0.3% increase in export prices.

The University of Michigan consumer sentiment survey was weaker than expected, falling 1.1 points to a 6-month low of 97.1 in the preliminary print for July. In Asia, China’s exports were strong in June, rising 11.3%, while imports fell a bit short of expectations with an increase of 14.1%.

COMPANY NEWS:

Shares of JPMorgan advanced fractionally after it started off this summer’s earnings season by reporting better than expected earnings for the second quarter. Of note, the bank’s CEO Jamie Dimon said he sees “good global economic growth, particularly in the U.S.”

Meanwhile, Wells Fargo (WFC) slipped 2% after reporting downbeat results for Q2, with the company noting in presentation slides that the third party review of customer accounts is “ongoing.”

Citi (C) shares also fell about 2% after its quarterly report, though the bank’s headline earnings for the quarter beat analysts’ estimates.

In addition, PNC Financial (PNC) reported better than expected results for the quarter and guided for third quarter net interest income to be up low-single digits…

Meanwhile, AT&T (T) was in focus after the U.S. Department of Justice said it plans to appeal the approval of the merger between AT&T and Time Warner. In an interview on CNBC this morning, AT&T CEO Randall Stephenson said that he doesn’t know exactly what the government basis will be for an appeal and that the move by the DOJ “changes nothing”.

Johnson & Johnson (JNJ) dipped about 1% after a Missouri jury awarded $4.69B to 22 women who alleged that use of J&J’s talcum powder products caused their ovarian cancer. The jury award includes $550M in compensatory damages and $4.14B in punitive damages against the company. J&J responded by saying it “intends to pursue all available appellate remedies.”

MAJOR MOVERS:

Among the noteworthy gainers was Biocept (BIOC), which surged 58% after it announced a provider agreement with Alliance Global FZ.

Also higher was Achillion (ACHN), which gained 13% after it said it began dosing in its Phase 1 trial of ACH-5548. Among the notable losers was Gogo (GOGO), which fell 11%, reversing last night’s afterhours gains following the company’s announcement of a strategic review.

Also lower was Ingredion (INGR), which dropped 11% after it announced a $125M cost savings program, provided lower than expected Q2 guidance, and cut its outlook for fiscal 2018.

INDEXES:

Near midday, the Dow was up 93.18, or 0.37%, to 25,018.07, the Nasdaq was up 13.35, or 0.17%, to 7,837.26, and the S&P 500 was up 4.74, or 0.17%, to 2,803.03.


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Zogenix sharply higher on data

Zogenix says primary endpoint achieved in second Phase 3 clinical trial of ZX008

Zogenix sharply higher on data, Stockwinners
Zogenix sharply higher on data, Stockwinners

Zogenix (ZGNX) reported positive top-line results from its second confirmatory Phase 3 study for its investigational drug, ZX008, for the treatment of children and young adults with Dravet syndrome.

Dravet syndrome is a rare, catastrophic, lifelong form of epilepsy that begins in the first year of life with frequent and/or prolonged seizures. Previously known as Severe Myoclonic Epilepsy of Infancy (SMEI), it affects one out of 15,700 individuals, 80% of whom have a mutation in their SCN1A gene.

The study results, which are consistent with those reported in Study 1, Zogenix’s first pivotal Phase 3 study, successfully met the primary endpoint and all key secondary endpoints, demonstrating that ZX008, at a dose of 0.5 mg/kg/day, is superior to placebo when added to a stiripentol regimen. Key Findings: Patients taking ZX008 achieved a 54.7% greater reduction in mean monthly convulsive seizures compared to placebo.

The median reduction in monthly convulsive seizure frequency was 62.7% in the ZX008 group compared to 1.2% in placebo patients. ZX008 also demonstrated statistically significant improvement versus placebo in both key secondary measures, including patients with clinically meaningful reductions in seizure frequency and longest seizure-free interval.

ZX008 was generally well-tolerated in this study with the adverse events consistent with those observed in Study 1 and the known safety profile of fenfluramine.

No patient exhibited cardiac valvulopathy or pulmonary hypertension at any time in the study.

Secondary endpoints assessed ZX008 compared to placebo in terms of the proportions of patients who achieved greater than or equal to 50% reductions and greater than or equal to 75% reductions in monthly convulsive seizures, as well as the median of the longest convulsive seizure-free interval.

ZX008 was generally well-tolerated in this study, with the adverse events consistent with those observed in Study 1 and the known safety profile of fenfluramine.

The incidence of treatment emergent adverse events was similar in both the treatment and placebo groups, with 97.7% of patients receiving ZX008 experiencing at least one treatment emergent adverse event compared to 95.5% of patients in the placebo group.

The most common adverse events in the ZX008 group were decreased appetite, diarrhea, pyrexia, fatigue, and nasopharyngitis.

The incidence of serious adverse events was similar in both the treatment and placebo groups, with 14% of patients in the ZX008 group experiencing at least one treatment emergent serious adverse event compared to 15.9% of patients in the placebo group. T

wo patients in the ZX008 group had an adverse event leading to study discontinuation compared to one in the placebo group.

ZGNX closed at $46.30, it last traded at $55.30.


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Celgene announces positive breast cancer data

Celgene announces IMpassion130 study meets co-primary endpoint of PFS

Celgene announces positive breast cancer data, Stockwinners
Celgene announces positive breast cancer data, Stockwinners

Celgene (CELG) announced that the Phase III IMpassion130 study met its co-primary endpoint of progression-free survival, or PFS.

This is the first phase III study to demonstrate a statistically significant PFS improvement in first-line metastatic or unresectable locally advanced triple negative breast cancer, or TNBC, a type of breast cancer with high unmet need.

Results demonstrated that the investigational combination of Tecentriq plus Abraxane compared to Abraxane monotherapy, as an initial treatment, significantly reduced the risk of disease worsening or death in patients with metastatic or unresectable locally advanced TNBC in the intention-to-treat and PD-L1 positive populations.

Overall survival is encouraging in the PD-L1 positive population at this interim analysis, and follow up will continue until the next planned analysis.

Safety in the Tecentriq plus Abraxane arm appeared consistent with the known safety profiles of the individual medicines, and no new safety signals were identified with the combination.

ABRAXANE is a microtubule inhibitor indicated for the treatment of:

Metastatic breast cancer, after failure of combination chemotherapy
for metastatic disease or relapse within 6 months of adjuvant
chemotherapy. Prior therapy should have included an anthracycline
unless clinically contraindicated.
• Locally advanced or metastatic non-small cell lung cancer (NSCLC),
as first-line treatment in combination with carboplatin, in patients who
are not candidates for curative surgery or radiation therapy.
• Metastatic adenocarcinoma of the pancreas as first-line treatment, in
combination with gemcitabine.

TECENTRIQ is a prescription medicine used to treat:

A type of bladder and urinary tract cancer called urothelial carcinoma.

  • TECENTRIQ may be used when your bladder cancer:
    • has spread or cannot be removed by surgery, and
    • you are not able to take chemotherapy that contains a medicine called cisplatin, or
    • you have tried chemotherapy that contains platinum, and it did not work or is no longer working.

CELG closed at $83.85.


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Cara reports positive top-line data from CR845

Cara reports ‘positive’ top-line data from Phase 2/3 trial of I.V. CR845

 

Cara reports positive top-line data from CR845, Stockwinners
Cara reports positive top-line data from CR845, Stockwinners

Cara Therapeutics (CARA) announced positive top-line data from the adaptive Phase 2/3 trial of I.V. CR845 in patients undergoing abdominal surgeries.

At the 1.0 mcg/kg dose, I.V. CR845 demonstrated statistically significant reductions in pain intensity compared to placebo at all pre-specified post-operative periods of 0-6 hours; 0-12 hours; 0-18 hours; and 0-24 hours.

Additionally, I.V. CR845 treatment resulted in statistically significant reductions in the incidence of post-operative nausea and vomiting over the 24-hour period post-surgery for both 0.5 and 1.0 mcg/kg doses.

The adaptive Phase 2/3 trial was a randomized, double-blind, placebo-controlled trial designed to evaluate the analgesic efficacy and safety of two doses of I.V. CR845 versus placebo given at pre-specified intervals pre- and post-surgery in 444 patients undergoing abdominal surgery, composed of 228 patients who underwent ventral hernia surgery and 216 patients who completed a hysterectomy procedure.

Patients received a 2X loading dose of I.V. CR845 pre-surgery and four additional doses given at 0, 6, 12 and 18 hours after surgery. The primary endpoint was pain relief as measured by Area Under the Curve of the Numerical Rating Scale pain intensity scores collected over the first 24-hour period after the baseline dose post-surgery for all combined surgeries.

In addition to safety, the secondary endpoints included incidence of vomiting, improvement in impact scores of post-operative nausea and vomiting, reduction in use of rescue analgesic medication, as well as patient global assessment at 24 hours post baseline dose after surgery. I.V. CR845 achieved statistical significance for the primary endpoint of pain relief over 24 hours post-surgery with the 1.0 mcg/kg dose versus placebo and also demonstrated statistical significance across two additional pre-specified sensitivity analyses for pain relief for the same period post-surgery. The 0.5 mcg/kg dose did not achieve statistical significance over the 0-24 hour period.

In addition, improvement in pain AUC was statistically significant for both the 0.5 and 1.0 mcg/kg doses over 0 to 6 hours and 0 to 12 hours periods and also statistically significant for the 1.0 mcg/kg dose over the 0 to 18-hour period post-surgery.

At 6 and 24 hours after baseline dose post-surgery, there were statistically significant improvements in PONV impact scores with both doses of I.V. CR845 compared to placebo: 0.5 mcg/kg and 1.0 mcg/kg. There were statistically significant differences between placebo and both doses of CR845 with respect to the total use of anti-emetic medication over the first 24 hours post-surgery.

The percentage of patients who did not take any anti-emetic medication over 24 hours was 56% for placebo compared to 70% for CR845 0.5 mcg/kg and 81% for CR845 1.0 mcg/kg.

There was a 73% reduction in the incidence of patient-reported vomiting in the group receiving the 1.0 mcg/kg dose versus placebo. Although the 0.5 mcg/kg also showed reduction in vomiting, it did not reach statistical significance.

Both doses of I.V. CR845 exhibited numerical trends toward reduced use of rescue analgesic medication compared to placebo, but did not achieve statistical significance.

There was no significant effect, compared to placebo, on patient’s global assessment of medication for either dose of I.V. CR845 over the 24-hour period. Common adverse effects reported in the placebo and both I.V. CR845 groups were generally low and similar in incidence, and included nausea, constipation, vomiting, flatulence, headache and dyspepsia.

CARA closed at $16.44, it last traded at $22.25.


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Disney raises its offer for 21st Century Fox to $38 per share

Disney boosts offer for 21st Century Fox assets to $38 per share

Disney raises its offer for 21st Century Fox to $38 per share

Twenty-First Century Fox (FOXA) announced that it has entered into an amended and restated merger agreement with Walt Disney (DIS) pursuant to which Disney has agreed to acquire for a price of $38 per 21CF share the same businesses Disney agreed to acquire under the previously announced merger agreement between 21CF and Disney.

This price represents a “significant increase” over the purchase price of approximately $28 per share included in the Disney merger agreement when it was announced in December 2017.

The amended and restated Disney merger agreement offers a package of consideration, flexibility and deal certainty enhancements that is superior to the proposal made by the Comcast Corporation (CMCSA) on June 13, Fox stated.

Under the amended and restated Disney merger agreement, Disney would acquire those businesses on substantially the same terms, except that, among other things, Disney’s offer allows 21CF stockholders to elect to receive their consideration, on a value equalized basis, in the form of cash or stock, subject to 50/50 proration.

The collar on the stock consideration will ensure that 21st Century Fox shareholders will receive a number of Disney shares equal to $38 in value if the average Disney stock price at closing is between $93.53 and $114.32.

In light of the revised terms contained in the amended and restated Disney Merger Agreement, 21CF’s board, after consultation with its outside legal counsel and financial advisors, has not concluded that the unsolicited proposal it received on June 13, 2018 from Comcast could reasonably be expected to result in a “Company Superior Proposal” under the Disney merger agreement.

However, the amended and restated Disney merger agreement contains no changes to the provisions relating to the company’s directors’ ability to evaluate a competing proposal.

As announced on May 30, 2018, 21CF has established a record date of May 29, 2018 and a meeting date of July 10, 2018, for a special meeting of its stockholders to, among other things, consider and vote on a proposal to adopt the Disney merger agreement.

21CF has determined to postpone its special meeting of stockholders to a future date in order to provide stockholders the opportunity to evaluate the terms of Disney’s revised proposal and other developments to date.

Once 21CF determines the new date for 21CF’s special meeting of stockholders, the date will be communicated to 21CF stockholders.


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Oracle lower after losing business to Amazon, Microsoft

Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft

Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft , Stockwinners
Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft ,

Shares of Oracle (ORCL) are sliding after JPMorgan analyst Mark Murphy downgraded the stock to Neutral, citing negative results from a survey of Chief Information Officers about their spending.

The analyst noted that the survey showed spending contraction ahead as Oracle’s databases are being unplugged in favor of Microsoft (MSFT) and Amazon (AMZN) databases.

SURVEY SAYS

In a research note this morning, JPMorgan’s Murphy downgraded Oracle to Neutral from Overweight as specific metrics in the firm’s large-scale CIO survey have arced over into negative territory.

The analyst told investors that while Oracle’s shares have risen from the $30s into the high $40s in the last 2 years, the company’s fundamental performance has remained inconsistent. Citing his survey of 154 CIOs, Murphy noted that Oracle received the largest number of indications for planned spending contraction this year, materially more than the second-worst company, which was IBM (IBM) with 25 indications of spending contraction.

Further, while ranking the top 8 or 9 mega-vendors in terms of who will be most critical and indispensable to CIOs’ IT environment in the future, Oracle only received 6.5% of votes, down from 11% in previous surveys, the analyst highlighted.

At the same time, Murphy pointed out that Amazon AWS improved from 9.5% of votes last year to 14.9% of votes this year, creating the appearance of a “sucking sound” out of Oracle and into AWS.

The company also ranked number 8 in terms of association with Digital Transformation projects, disappointing relative to its scale and lagging behind the likes of SAP (SAP), IBM, and Cisco (CSCO), he added, noting that despite Oracle’s efforts to build a Cloud presence, it rated no better than SAP in terms of association with Cloud Computing plans, and is nowhere close to the leaders Microsoft, Amazon, and Google (GOOGL; GOOG) in this respect. Oracle was mentioned by only 2% of the CIOs as the platform that will be “most integral” to their cloud computing plans, Murphy said.

Overall, the analyst questions where Oracle’s business and stock are heading in the next couple of years if the largest-scale CIO survey shows Oracle now has negative spending intentions, is lagging in Digital Transformation projects, is trailing in Cloud Computing plans, its databases are being unplugged in favor of Microsoft and Amazon databases, its applications are being unplugged in favor of Salesforce (CRM) and Workday (WDAY) applications, and customers are weary of its unpopular commercial tactics.

Murphy also lowered his price target on Oracle’s shares to $53 from $55.

WHAT’S NOTABLE

In a research note of his own, Nomura Instinet analyst Christopher Eberle lowered his price target for Oracle to $60 from $64 ahead of the company’s fourth quarter results on June 19.

The analyst trimmed his estimates to account for currency and expectations for more modest revenue acceleration in fiscal 2019. He remains optimistic, however, on Oracle’s transition and model growth reacceleration as the year progresses. Eberle reiterated a Buy rating on the shares.

PRICE ACTION

In Wednesday’s trading, shares of Oracle dropped almost 5% to $46.14.


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Tesla higher on Model 3 production

Tesla jumps after Musk keeps dual role, voices optimism on Model 3 output

https://stockwinners.com/blog/
Tesla jumps after Musk keeps dual role, voices optimism on Model 3 output

Shares of Tesla (TSLA) are higher as much as 4% on Wednesday morning following the company’s annual meeting in California.

At the meeting, shareholders rejected two proposals, including one that would have separated the roles of chairman and chief executive officer. Additionally, Elon Musk said the company will likely reach its goal of producing 5,000 Model 3 sedans “by the end of this month.”

SHAREHOLDERS REJECT SEPARATION OF CHAIRMAN, CEO ROLES

Tesla shareholders rejected two proposals that would have changed the company’s board, including one that would have removed CEO Elon Musk from the chairman role.

According to a CNBC report, Jiang Zhao, a shareholder who owns 12 shares of Tesla stock, brought forward the proposal to have an independent chairman, as he believes it is necessary to prevent conflicts of interest.

In May, proxy advisory firm ISS recommend that investors split the role of chairman and CEO, saying shareholders would “benefit from the strongest form of independent board oversight in the form of an independent chair.”

Shareholders also rejected a proposal to remove three Tesla board members up for re-election this year, which was brought by the CtW Investment Group.

CtW, which works with pension funds for unions, said in a letter last month that board members Antonio Gracias and Elon’s brother Kimbal Musk were too close to the CEO to ensure needed independence, while 21st Century Fox (FOX, FOXA) CEO James Murdoch lacked relevant experience.

According to Bloomberg, which viewed a copy of the letter, CtW said that “instead of recognizing the need for independent and effective board leadership, Tesla has re-nominated three directors who exemplify the company’s failure to evolve.”

‘QUITE LIKELY’ TO MEET MODEL 3 OUTPUT GOAL

At the meeting, Musk said that the carmaker’s goal of making 5,000 Model 3 vehicles per week by the end of June was “quite likely” as the car maker’s production lines were now demonstrating the ability to build 3,500 vehicles a week, Reuters reported. “This is the most excruciating hellish several months I’ve ever had… but I think we’re getting there,” Musk said.

Tesla Model 3 named Popular Mechanics' Car of the Year
Tesla Model 3 named Popular Mechanics’ Car of the Year

OTHER ANNOUNCEMENTS

Robin Ren, Tesla’s head of worldwide sales, announced at the meeting that the company intends to build its first factory outside of the U.S. in Shanghai, China, CNBC reported.

Unlike Tesla’s first U.S. factories, the company’s new “Dreadnought” factories should produce both batteries and assemble vehicles in one place.

Additionally, according to Business Insider, Musk said the company plans to reveal the Model Y next March and will likely go into production in early 2020. The report also said that the Semi will go into production in 2020 and that it will be slightly different than what was revealed in 2017 because the company has made improvements.

The Tesla Roadster will follow the same timeline for production and will have a SpaceX option package available, BI also said.

WHAT’S NOTABLE

Musk has said that Tesla plans to be profitable and cash flow positive in Q3 and Q4, tweeting in April that there is “obviously no need to raise money.”

Musk previously said that the company was not planning to raise any capital before the end of 2019. He reiterated that during the shareholder meeting and said he is still confident that Tesla will become profitable in Q3 or Q4, BI reported.

Tesla originally sought to build 5,000 Model 3 vehicles a week by the end of 2017, but later revised its target to making 5,000 Model 3 cars by the end of the second quarter.

ANALYST COMMENTARY

Citi analyst Itay Michaeli told investors this morning that while he appreciates the bull case of ramping Model 3 deliveries and Tesla achieving profitability in the second half of the year, thereby easing cash concerns and cementing the carmaker’s electric vehicle lead, he “can’t get there on risk/reward at this point.” Michaeli cut his price target for Tesla to $313 from $347 and maintained a Neutral rating on the shares.

Baird analyst Ben Kallo, who remains bullish on Tesla, said the body language at the meeting was positive, noted that shareholders approved the board of directors by a significant margin and expects management to achieve positive GAAP net income and positive cash flow in Q3 and Q4. Kallo keeps his Buy rating and $411 price target on Tesla.

PRICE ACTION

Tesla is up about 5% in early trading to $305.76.


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Barron’s is bullish on Apple and Exxon

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

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BULLISH   MENTIONS

Apple reaffirms position as tech’s ‘undisputed’ leader – In a follow-up story, Barron’s says that with its earnings report last week, Apple (AAPL) flexed its financial muscle and reaffirmed its position as “tech’s undisputed leader.” Fiscal second-quarter iPhone sales came in roughly as expected, while the company’s total profit was slightly ahead of estimates, the report notes, adding that Apple’s real surprise came from its updated buyback plans. Investors rewarded the company with its best five-day stretch in the stock market since October 2011, Barron’s says.

Apple raking in profits amid technology impasse – Warren Buffet’s Berkshire Hathaway (BRKA) has bought another 75M shares of Apple (AAPL), Tiernan Ray writes in this week’s edition of Barron’s. While the current impasse for technology is going to continue to reduce new opportunities for Apple, for competitors such as Samsung (SSNLF) and suppliers like Qorvo (QRVO), there is enough wealth in the steady supply of what exists to keep investors like Buffett delighted with the cash flow, he contends. Milking it, at the moment, triumphs over innovation, Barron’s says.

Boeing eyeing ‘air supremacy’  – Boeing  (BA) announced last week that it would acquire KLX, whose products include airplane parts, as part of the aircraft manufacturer’s long-term plan to bolster its presence in parts, components, and services, Lawrence Strauss writes in this week’s edition of Barron’s. This is a trend investors should keep an eye on, he contends.

Sarepta winning over investors – Sarepta Therapeutics (SRPT) has been winning over investors with rising sales of its drug to treat Duchenne muscular dystrophy and a promising pipeline of drugs targeted at the fatal muscle-wasting disease, Andrew Bary writes in this week’s edition of Barron’s. Part of the optimism surrounding Sarepta is that it can bring to market two drugs similar to Exondys 51, which treats about 13% of DMD patients, he notes, adding that these drugs – casimersen and golodirsen – target mutations at other points on the dystrophin gene and could treat another 16% of DMD patients.

Exxon Mobil looks appealing – Demand for oil and natural gas is expected to be strong for decades and to capitalize on this growth, Exxon (XOM) has an ambitious plan to increase the company’s energy output by 25% and more than double earnings by 2025, Andrew Bary writes in this week’s edition of Barron’s. At a share price of $77, Exxon looks “appealing,” he adds.

BEARISH  MENTIONS

Wolverine may face mounting cleanup costs – The Scotchgard chemicals that gave stain resistance to Wolverine’s Hush Puppies shoes have leached into wells and aquifers from rusting barrels of sludge and other factory waste scattered around Michigan’s Kent County, where Wolverine (WWW)  used the chemicals for about 50 years, Bill Alpert writes in this week’s edition of Barron’s. The footwear firm has provided water filters to area homes and last year it set aside $35M to cover expected legal and remediation costs, but the question is whether $35M is enough, Barron’s notes.


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Apple announces new $100B buyback program, boosts dividend by 16%

Apple announces new $100B buyback program, boosts dividend by 16%

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Apple announces new $100B buyback program, boosts dividend by 16%

Apple (AAPL) said it will complete the execution of the previous $210B share repurchase authorization during fiscal Q3 and announced a new $100B buyback program.

Its board has declared a cash dividend of 73c per share of Apple’s common stock payable on May 17, to shareholders of record as of the close of business on May 14.

“Our business performed extremely well during the March quarter, as we grew earnings per share by 30 percent and generated over $15 billion in operating cash flow,” said Luca Maestri, Apple’s CFO.

“With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure.

Given our confidence in Apple’s future, we are very happy to announce that our Board has approved a new $100 billion share repurchase authorization and a 16 percent increase in our quarterly dividend.”

Separately, Apple reported Q2 EPS $2.73, consensus $2.69 – Reported Q2 revenue $61.1B, consensus $60.98B.

Apple reported Q2 iPhone units 52.22M vs. 50.76M last year – Reported Q2 iPad units 9.11M vs. 8.92M last year. Reported Q2 Mac units 4.08M vs. 4.2M last year.

AAPL closed at $169.10.


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Vertex initiates Phase 3 studies of its cystic fibrosis drugs

Vertex initiates Phase 3 studies of VX-445, Tezacaftor, and Ivacaftor

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Vertex initiates Phase 3 studies of VX-445, Tezacaftor, and Ivacaftor

Vertex Pharmaceuticals (VRTX) announced that it is initiating two Phase 3 studies of VX-445, tezacaftor and ivacaftor as an investigational triple combination regimen for people with cystic fibrosis.

The first Phase 3 study will evaluate approximately 360 people with CF who have one copy of the F508del mutation and one minimal function mutation and is designed to support the submission of a New Drug Application in the U.S. using data from the study’s 4-week primary efficacy endpoint together with safety data through 12 weeks of treatment.

The second Phase 3 study will evaluate approximately 100 people with CF who have two copies of the F508del mutation, the most common genetic form of the disease, and is designed to support the submission of an application for approval in patients with two copies of the F508del mutation in the U.S. using data from the study’s 4-week primary efficacy endpoint together with 24-week safety data generated from the Phase 3 study in patients with one F508del mutation and one minimal function mutation.

The initiation of the study in people with two copies of the F508del mutation is supported by data announced today from a Phase 2 study that showed an incremental mean absolute improvement in percent predicted forced expiratory volume in one second of 11.0 percentage points from baseline through week four of treatment when VX-445 was added in people with CF who have two F508del mutations and were already receiving tezacaftor in combination with ivacaftor.

In the Phase 2 study, the VX-445 triple combination regimen was generally well tolerated, and the majority of adverse events were mild to moderate in severity.

VRTX closed at $158.81.


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Ionis Pharmaceuticals is in focus

Biogen, Ionis Pharmaceuticals expand drug development collaboration

Biogen will pay Ionis $1B in cash

Biogen (BIIB) and Ionis Pharmaceuticals (IONS) announced they have expanded their strategic collaboration through a new ten-year collaboration agreement to develop novel antisense drug candidates for a broad range of neurological diseases.

This collaboration capitalizes on Biogen’s expertise in neuroscience research and drug development and Ionis’ leadership in RNA targeted therapies with the goal of developing a broad pipeline of investigational therapies.

Biogen says BAN2401 did not meet primary endpoint. Stockwinners.com
Biogen will pay Ionis $1B in cash

It builds upon a productive collaboration that produced SPINRAZA, the first and only approved treatment for patients with spinal muscular atrophy.

Under the terms of the collaboration, Biogen will pay Ionis $1B in cash, which will include $625M to purchase 11,501,153 shares of Ionis common stock at a price of $54.34 per share, at an approximately 25% cash premium, and a $375M upfront payment.

Biogen will have the option to license therapies arising out of this collaboration and will be responsible for their development and commercialization.

In addition, Biogen may pay milestone payments, license fees and royalties on net sales.

The companies plan to advance programs for a broad range of neurological diseases for which few treatment options exist today.

Disease areas include dementia, neuromuscular diseases, movement disorders, ophthalmology, diseases of the inner ear, and neuropsychiatry.

Biogen will have the first choice of neurology targets on which to exclusively collaborate with Ionis.

In this collaboration, Ionis will be responsible for the identification of antisense drug candidates based on selected targets, while Biogen will be responsible for and pay for non-clinical studies, clinical development, manufacturing, and commercialization. Biogen and Ionis expect the deal to close in the second quarter of 2018.

IONS closed at $45.85. BIIB closed at $266.02.


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