Category: Israel Stocks

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Intel to spin off MobilEye

Intel confirms intent to take Mobileye public

The company (INTC) states: “Intel announced its intention to take Mobileye public in the United States in mid-2022 via an initial public offering of newly issued Mobileye stock.

The move will unlock the value of Mobileye for Intel shareholders by creating a separate publicly traded company and will build on Mobileye’s successful track record and serve its expanded market.

Intel will remain the majority owner of Mobileye, and the two companies will continue as strategic partners, collaborating on projects as they pursue the growth of computing in the automotive sector.

The share of semiconductors is expected to be 20% of a premium vehicle’s total bill-of-materials (BOM) by 20301.

The Mobileye executive team will remain, with Prof. Amnon Shashua continuing as the company’s CEO.

Amnon Shashua

Recently acquired Moovit as well as Intel teams working on lidar and radar development and other Mobileye projects will be aligned as part of Mobileye.

In the four years since Mobileye was acquired by Intel, Mobileye has experienced substantial revenue growth, achieved numerous technical innovations and made significant investments directed to solving the most difficult scientific and technology problems to prepare the deployment of autonomous driving at scale.

A final decision on the IPO and its conditions and ultimate timing is pending and subject to market conditions. Intel, as majority shareholder, will continue to fully consolidate Mobileye. The transaction is not expected to have an impact on Intel’s 2021 financial targets.”

INTC is up $1.34 to $52.30.

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Inphi Corp. sold for about $155 per share

Marvell to acquire Inphi in cash and stock deal

Marvell Technology Group (MRVL) and Inphi Corporation (IPHI) announced a definitive agreement, unanimously approved by the boards of directors of both companies, under which Marvell will acquire Inphi in a cash and stock transaction.

Israel’s Marvell buys rival Inphi Corp.

In conjunction with the transaction, Marvell intends to reorganize so that the combined company will be domiciled in the United States, creating a U.S. semiconductor powerhouse with an enterprise value of approximately $40B.

Under the terms of the definitive agreement, the transaction consideration will consist of $66 in cash and 2.323 shares of stock of the combined company for each Inphi share.

Inphi sold to Marvell

Upon closing of the transaction, Marvell shareholders will own approximately 83% of the combined company and Inphi stockholders will own approximately 17% of the combined company.

Marvell intends to finance the transaction with cash on hand, and additional financing. Marvell has obtained debt financing commitments from JPMorgan Chase Bank, N.A.

The transaction is not subject to any financing condition and is expected to close by the second half of calendar 2021, subject to the approval of Marvell shareholders and Inphi stockholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

“Our acquisition of Inphi will fuel Marvell’s leadership in the cloud and extend our 5G position over the next decade,” said Matt Murphy, president and CEO of Marvell.

“Inphi’s technologies are at the heart of cloud data center networks and they continue to extend their leadership with innovative new products, including 400G data center interconnect optical modules, which leverage their unique silicon photonics and DSP technologies.

We believe that Inphi’s growing presence with cloud customers will also lead to additional opportunities for Marvell’s DPU and ASIC products.”

“Our acquisition of Inphi will fuel Marvell’s leadership in the cloud and extend our 5G position over the next decade,” said Matt Murphy, president and CEO of Marvell.

“Inphi’s technologies are at the heart of cloud data center networks and they continue to extend their leadership with innovative new products, including 400G data center interconnect optical modules, which leverage their unique silicon photonics and DSP technologies. We believe that Inphi’s growing presence with cloud customers will also lead to additional opportunities for Marvell’s DPU and ASIC products.”

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Gilat Satellite Networks sold for $532M

Comtech to acquire Gilat Satellite Networks for $10.25 per share

Comtech Telecommunications Corp. (CMTL) and Gilat Satellite Networks Ltd. (GILT) jointly announced that Comtech has agreed to acquire Gilat in a cash and stock transaction for $10.25 per Gilat ordinary share of which 70% will be paid in cash and 30% in Comtech common stock, resulting in an enterprise value of approximately $532.5 million.

Gilat sold for $522M, Stockwinners

Founded in 1987 with its headquarters in Israel, Gilat is a worldwide leader in satellite networking technology, solutions and services with market leading positions in the satellite ground station and in-flight connectivity solutions markets and deep expertise in operating large network infrastructures.

Comtech goes shopping by buying Gilat, Stockwinners

Based on Comtech’s fiscal year 2019 actual results and Gilat’s trailing twelve-month results through June 30, 2019, on a pro-forma basis, Comtech would have reported approximately $926.1M of revenue with Adjusted EBITDA of approximately $130.2M.

The combined companies would employ approximately 3,000 people and offer best-in-class satellite technology, public safety and location technology and secure wireless solutions to commercial and government customers around the world.

Fred Kornberg, Chairman of the Board and CEO of Comtech, said,

“I am excited to have reached this agreement with Gilat and believe this combination is beneficial to the stakeholders of both companies. The acquisition better positions Comtech to take advantage of key marketplace trends, particularly the growing demand for satellite connectivity and the enormous long-term opportunity set that is emerging in the secure wireless communications market.

I believe that the combination of accelerating satellite connectivity demand and the increasing availability of low-cost satellite bandwidth, makes this a perfect time to unify Comtech and Gilat’s solutions and offer our combined customers best-in-class platform-agnostic satellite ground station technologies.

Gilat is an exceptional business that has developed extraordinary technology and has a well-respected product portfolio supported by strong research and development capabilities. I welcome Gilat’s entire talented workforce to the Comtech family.”

Dov Baharav, Chairman of the Board of Gilat, said, “The Gilat Board of Directors and management believe this highly strategic combination is compelling.

Gilat equipment allows reliable communication, Stockwinners

It is an excellent outcome for our shareholders who receive both cash and an equity interest in a strong company with a broader range of products and the benefits of combined expertise and resources that is well positioned to create future value against a highly favorable industry backdrop.

I have long admired Comtech’s commitment to technology leadership and I firmly believe that employees will have expanded opportunities for career development. No doubt, the future will be very bright for Comtech and Gilat and all of our stakeholders.”

In light of the agreement between Comtech (CMTL) and Gilat (GILT), Gilat has cancelled its fourth quarter and fiscal 2019 year-end conference call and webcast previously scheduled for February 19, 2020. Once the transaction closes, Comtech will provide combined revenue, Adjusted EBITDA and diluted earnings per share guidance in a future announcement.

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SodaStream sold for $3.2 billion

PepsiCo agrees to acquire SodaStream for $144 per share in cash

SodaStream sold for $3.2 billion, Stockwinners
SodaStream sold for $3.2 billion, Stockwinners

PepsiCo (PEP) and SodaStream (SODA) announced that they have entered into an agreement under which PepsiCo has agreed to acquire all outstanding shares of SodaStream for $144.00 per share in cash, which represents a 32% premium to the 30-day volume weighted average price.

PepsiCo’s strong distribution capabilities, global reach, R&D, design and marketing expertise, combined with SodaStream’s differentiated and unique product range will position SodaStream for further expansion and breakthrough innovation.

Under the terms of the agreement between PepsiCo and SodaStream, PepsiCo has agreed to acquire all of the outstanding shares of SodaStream International for $144.00 per share, in a transaction valued at $3.2B.

The transaction will be funded with PepsiCo’s cash on hand.

The acquisition has been unanimously approved by the boards of both companies.

The transaction is subject to a SodaStream shareholder vote, certain regulatory approvals and other customary conditions, and closing is expected by January 2019.

“SodaStream is highly complementary and incremental to our business, adding to our growing water portfolio, while catalyzing our ability to offer personalized in-home beverage solutions around the world,” said Ramon Laguarta, CEO-Elect and President, PepsiCo.

“From breakthrough innovations like Drinkfinity to beverage dispensing technologies like Spire for foodservice and Aquafina water stations for workplaces and colleges, PepsiCo is finding new ways to reach consumers beyond the bottle, and today’s announcement is fully in line with that strategy.”

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Compugen Higher as FDA lifts clinical hold on its cancer treatment 

Compugen Higher as FDA lifts clinical hold on its cancer treatment 

Compugen Higher as FDA lifts clinical hold on its cancer treatment , Stockwinners
Compugen Higher as FDA lifts clinical hold on its cancer treatment , Stockwinners

Shares of Compugen (CGEN) surged in pre-market trading after the Israeli biotech company said that the clinical hold on its investigational new drug application for COM701 was lifted by the U.S. Food and Drug Administration.

Separately, Compugen said the FDA cleared Bayer’s (BAYRY) IND application for BAY 1905254.

CLINICAL HOLD LIFTED

Compugen said this morning that the FDA has lifted the clinical hold on its IND for COM701, an immuno-oncology therapeutic antibody targeting PVRIG in patients with advanced solid tumors.

The FDA said the company may now begin a clinical study of the antibody. PVRIG is an investigational monoclonal antibody, a molecule that has the ability to bind with high specificity to a given target, being developed by Compugen to treat various types of cancer.

“We believe the COM701 preclinical data suggest that targeting PVRIG may effectively stimulate an anti-tumor immune response in certain cancers such as breast, endometrial, ovarian and lung, and specifically in patient populations that are unresponsive to current checkpoint inhibitors,” Compugen President and Chief Executive Officer Anat Cohen-Dayag stated.

Looking ahead, Compugen said it plans to initiate a first-in-human Phase 1 study in the U.S. in patients with advanced solid tumors and for whom standard of care therapies are currently ineffective.

In April, Compugen said the FDA requested additional CMC information from the company in support of the COM701 IND application.

At the time, the FDA recommended a lower starting dose of COM701 for the trial.

BAYER IND APPLICATION CLEARANCE

Additionally this morning, Computgen said that the FDA approved Bayer’s (BAYRY) IND application for BAY 1905254, a a first-in-class immuno-oncology therapeutic antibody targeting the ILDR2 protein in patients with advanced solid tumors.

Compugen is entitled to receive a milestone payment upon the first patient dosing with BAY 1905254 in the Phase 1 clinical trial expected in 2018.

PRICE ACTION

In pre-market trading, Compugen is up 45c, or 13.6% to $3.75 per share.

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Corcept sinks after Teva submits application to sell Korlym

Corcept sinks after Teva submits application to sell Korlym in U.S. 

Corcept sinks after Teva submits application to sell Korlym. Stockwinners.com
Corcept sinks after Teva submits application to sell Korlym

Corcept Therapeutics (CORT) announced in a regulatory filing that it received a Paragraph IV Notice Letter advising that Teva Pharmaceuticals (TEVA) submitted an Abbreviated New Drug Application to the FDA seeking authorization to manufacture, use or sell a generic version of Korlym in the United States.

KORLYM is a prescription medicine used to treat high blood sugar (hyperglycemia) caused by high cortisol levels in the blood (hypercortisolism) in adults with endogenous Cushing’s syndrome who have type 2 diabetes mellitus or glucose intolerance and have failed surgery or cannot have surgery.

Korlym is a glucocorticoid receptor antagonist that is indicated to control hyperglycemia associated with Cushing’s syndrome, a rare, debilitating endocrine disorder. Cushing’s syndrome is caused by prolonged exposure to elevated levels of glucocorticoids (hypercortisolism). The potent metabolic effects of excess cortisol influence many tissues and body systems, and patients often have many problems, including diabetes, obesity, muscle wasting, depression, cognitive difficulties, and psychosis.

The Notice Letter contains Paragraph IV certifications against certain of Corcept’s patents related to Korlym, the company points out. The Notice Letter also alleges that the Korlym patents, the ‘348 patent with an expiration date in August 2028 and the ‘495 patent with an expiration date in August 2036, will not be infringed by Teva’s proposed product, are invalid and/or are unenforceable.

“The Company intends to vigorously defend its extensive intellectual property rights related to Korlym,” Corcept stated.

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Teva Pharmaceutical suspends its dividend

Teva to cut over 25% of workforce, suspends dividend 

14,000 people will lose their jobs

Teva suspends its dividend

Teva Pharmaceutical Industries (TEVA) announced a restructuring plan intended to “significantly reduce its cost base, unify and simplify its organization and improve business performance, profitability, cash flow generation and productivity.”

The two year restructuring plan is intended to reduce Teva’s total cost base by $3B by the end of 2019, out of an estimated cost base for 2017 of $16.1B.

More than half of the reduction is expected to be achieved by the end of 2018.

The company expects to record a restructuring charge as a result of the implementation of the plan in 2018 of at least $700M, mainly related to severance costs, with additional charges possible following decisions on closures or divestments of manufacturing plants, R&D facilities, headquarters and other office locations.

These steps are expected to result in the reduction of 14,000 positions globally – excluding the impact of any future divestments – over 25% of Teva’s total workforce – over the next two years.

The majority of the reductions are expected to occur in 2018, with most of the affected employees being notified within the next 90 days.

Restructuring efforts will be done in accordance with applicable local requirements.

Consultations with the relevant employee representatives will begin in the near term.

In addition to the restructuring plan, Teva is announcing the following measures to address the company’s financial situation: The company will immediately suspend dividends on ordinary shares and ADSs, while dividends on mandatory convertible preferred shares will be evaluated on a quarterly basis per current practice; Teva’s annual bonus for 2017 will not be paid due to the fact that the company’s financial results are significantly below our original guidance for the year; The company will continue to review the potential for additional divestment of non-core assets;

Teva will provide full guidance for 2018 in February with the annual results and will share a longer-term strategic direction for the company later in 2018.

TEVA closed at $15.70. It last traded at $17.65.

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Cavium sold for $6 billion

Marvell to acquire Cavium for $40.00 per share in cash plus 2.1757 MRVL stock

Cavium sold for $6 billion. See Stockwinners.com

Marvell Technology Group (MRVL) and Cavium (CAVM) announced a definitive agreement, unanimously approved by the boards of directors of both companies, under which Marvell will acquire all outstanding shares of Cavium common stock in exchange for consideration of $40.00 per share in cash and 2.1757 Marvell common shares for each Cavium share.

Upon completion of the transaction, Marvell will become a leader in infrastructure solutions with approximately $3.4B in annual revenue.

The transaction combines Marvell’s portfolio of leading HDD and SSD storage controllers, networking solutions and high-performance wireless connectivity products with Cavium’s portfolio of leading multi-core processing, networking communications, storage connectivity and security solutions.

The combined product portfolios provide the scale and breadth to deliver comprehensive end-to-end solutions for customers across the cloud data center, enterprise and service provider markets, and expands Marvell’s serviceable addressable market to more than $16B.

This transaction also creates an R&D innovation engine to accelerate product development, positioning the company to meet today’s massive and growing demand for data storage, heterogeneous computing and high-speed connectivity.

The transaction is expected to generate at least $150M-$175M of annual run-rate synergies within 18 months post close and to be significantly accretive to revenue growth, margins and non-GAAP EPS. Under the terms of the definitive agreement, Marvell will pay Cavium shareholders $40.00 in cash and 2.1757 Marvell common shares for each share of Cavium common stock.

The exchange ratio was based on a purchase price of $80 per share, using Marvell’s undisturbed price prior to November 3, when media reports of the transaction first surfaced.

This represents a transaction value of approximately $6B.

Cavium shareholders are expected to own approximately 25% of the combined company on a pro forma basis. Marvell intends to fund the cash consideration with a combination of cash on hand from the combined companies and $1.75B in debt financing.

Marvell has obtained commitments consisting of an $850M bridge loan commitment and a $900M committed term loan from Goldman Sachs Bank USA and Bank of America Merrill Lynch, in each case, subject to customary terms and conditions. The transaction is not subject to any financing condition.

The transaction is expected to close in mid-calendar 2018, subject to regulatory approval as well as other customary closing conditions, including the adoption by Cavium shareholders of the merger agreement and the approval by Marvell shareholders of the issuance of Marvell common shares in the transaction.

Matt Murphy will lead the combined company, and the leadership team will have strong representation from both companies, including Marvell’s current CFO Jean Hu, Cavium’s Co-founder and COO Raghib Hussain and Cavium’s Vice President of IC Engineering Anil Jain.

In addition, Cavium’s Co-founder and CEO, Syed Ali, will continue with the combined company as a strategic advisor and will join Marvell’s Board of Directors, along with two additional board members from Cavium’s Board of Directors, effective upon closing of the transaction.

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Rockwell Automation receives $29 billion takeover offer

Emerson raises bid for Rockwell Automation to $225 per share in cash and stock

Rockwell receives $29B takeover offer. See Stockwinners.com for details
Emerson (EMR) announced that its Chairman and CEO, David Farr, has sent a letter to Rockwell Automation (ROK) President and CEO, Blake Moret, proposing to acquire all outstanding shares of Rockwell for $225 per share, consisting of $135 per share in cash and $90 per share in Emerson shares.
The total enterprise value of the transaction is approximately $29B.
Farr’s letter states in part: “Over the past several months, we have attempted to engage with you privately regarding a business combination of Emerson Electric and Rockwell Automation. We remain convinced there is compelling strategic, operational, and financial merit to bringing together our two companies – and that such a combination would benefit our respective customers, employees and shareholders…Given our continued conviction in the significant value creation opportunity this combination represents, I am sending you an enhanced proposal for Emerson to acquire Rockwell in a transaction that would provide Rockwell shareholders with immediate and long-term value that we believe is well in excess of what Rockwell could achieve on a standalone basis…The portion of the consideration to be paid in Emerson stock would result in Rockwell shareholders owning approximately 22% of the combined company, allowing them to participate in the significant value creation from synergies generated by a combination.
Based on public information only, we estimate the total capitalized value of synergies to be in excess of $6 billion, which equates to over $1.3 billion or $10 per share of additional value to Rockwell shareholders through their continuing ownership.
Including the value of synergies, Rockwell shareholders would receive $235 per share in total value, representing aggregate value creation of 36% compared to Rockwell’s undisturbed 90-day volume weighted average share price as of October 30…We and our advisors have conducted extensive analysis of the regulatory approvals that would be required in connection with the proposed transaction, and we are confident that the transaction would receive all necessary approvals in a timely manner. We do not anticipate any material antitrust or other regulatory issues that would extend the normal timetable for closing a transaction of this nature.
We strongly believe the combined company would be able to do more for our customers than either of us could do separately…Our proposal is not subject to any financing contingency. We have had in-depth discussions with J.P. Morgan, which is highly confident Emerson can finance the cash portion of the transaction with a combination of cash on our balance sheet and newly issued debt. We sincerely hope you and your Board will objectively evaluate the strategic, financial and operational benefits of this transaction and agree to meet with Emerson to negotiate a mutually beneficial transaction.”

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Applebee’s sales continue to suffer

DineEquity revises FY17 outlook

DineEquity Revises its guidance. See Stockwinners.com for details

DineEquity (DIN) revises expectations for Applebee’s domestic system-wide comparable same-restaurant sales performance to range between negative 5.5% and negative 6.5%.

This compares to previous expectations of between negative 6.0% and negative 8.0%.

Reiterates expectations for IHOP’s domestic system-wide comparable same-restaurant sales performance to range between negative 1.0% and negative 3.0%.

Reiterates expectations for Applebee’s franchisees to develop between 20 and 30 new restaurants globally, the majority of which are expected to be international openings.

Reiterates expectations for Applebee’s closures to range between approximately 105 and 135 restaurants.

Reiterates expectations for IHOP franchisees and its area licensee to develop between 80 and 95 restaurants globally, the majority of which are expected to be domestic openings.

Revised expectations for IHOP closures to range between 25 and 30 restaurants. This compares to previous expectations of between 20 and 25 restaurants.

Revised expectations for Franchise segment profit to be between $297 million and $303 million. This compares to previous expectations of between $302 million and $314 million. This downward revision is primarily due to additional expected reserves related to the collectability of Applebee’s royalties.

Reiterates expectations for the Rental and Financing segments to generate approximately $38 million in combined profit.

Reiterates expectations for general and administrative expenses to range between $166 million and $172 million, including non-cash stock-based compensation expense and depreciation of approximately $22 million.

Reiterates expectations for interest expense to be approximately $62 million. Approximately $3 million is projected to be non-cash interest expense.

Reiterates expectations for weighted average diluted shares outstanding to be approximately 18 million shares.

Reiterates expectation for the income tax rate to be approximately 40%. Revised expectations for cash flows provided by operating activities to range between $64 million and $74 million. This compares to previous expectations of between $80 million and $90 million.

The decline is primarily due to the timing of fourth quarter 2017 marketing spend and projections for lower Franchise segment profit as discussed above.

Reiterates expectations for capital expenditures to be approximately $14 million. Revised expectations for adjusted free cash flow (See “Non-GAAP Financial Measures” below) to range between $60 million and $70 million. This compares to previous expectations of between $76 million and $86 million.

DIN closed at $42.96.

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Oprah lifts Weight Watchers!

Weight Watchers hit 52-week high as ‘Oprah Effect’ boosts results

stokwinners.com/blog

Shares of Weight Watchers International (WTW) surged in Tuesday’s trading after the company’s quarterly report beat expectations on both the top and bottom line.

In addition to announcing an increase in subscribers, the weight management services provider again raised its fiscal year guidance.

EARNINGS BEAT AND RAISE

After the market close on Monday, Weight Watchers reported third quarter earnings per share of 65c on revenue of $323.7M, handily beating analysts’ estimates of 51c and $319.4M, respectively.

Weight Watchers said end of period subscribers were up 18.4% from last year to 3.4M, driven by growth in all major geographic markets.

End of period meeting subscribers were up 10.6% and online subscribers at the end of the quarter were up 24.4% vs. last year, the company said.

Total paid weeks were up 19.8% in Q3 vs. last year. The gains prompted the company to again raise its earnings per share view for fiscal year 2017. Weight Watchers now sees FY17 EPS of $1.77-$1.83, up from its prior view of $1.57-$1.67.

In August, Weight Watchers raised its FY17 EPS view to $1.57-$1.67 from $1.40-$1.50. The company expects to end 2017 with over 400,000 more end of period subscribers than in year-end 2016, which will translate into an EPS tailwind of at least 30c in 2018.

THE OPRAH EFFECT

Weight Watchers has been on a turnaround track since Oprah Winfrey took a stake in the company and agreed to become a company spokesperson in October 2015.

The company said on its earnings conference call that Winfrey, a “strong advocate of our new program,” will play an “essential” role in its upcoming U.S. marketing campaign.

WHAT’S NOTABLE

In addition to “the Oprah Effect,” CFO Nick Hotchkin said the company is retaining customers through technology investments and an improved weight loss program.

Weight Watchers announced in late April that Mindy Grossman, CEO of HSN, Inc (HSNI), would join the company as president and CEO in July.

Weight Watchers noted on its earnings call that in an independent study conducted in the U.K. and recently published in the British Medical Journal, researchers found “considerable” reductions in diabetes risk as well as an average weight loss of 22 pounds within a year of patients being referred to Weight Watchers.

In September, Weight Watchers applied for a patent called “fresh smart portions delivered,” according to a filing with the USPTO.

Others in the home meal delivery business include Blue Apron (APRN).

ANALYST COMMENTARY

Craig-Hallum analyst Alex Fuhrman raised his price target for Weight Watchers to $70 from $50 following the company’s “strong” beat and raise report.

The analyst told clients in a note that momentum is building in 2017 with the potential for significant upside to estimates in 2018. With the post New Year’s “diet season” quickly coming up, Fuhrman said future beats could be even bigger as the company carries a meaningful recruitment tailwind into 2018.

PRICE ACTION

Weight Watchers shares touched a 52-week high and are up about 21% to $54.32 in morning trading.

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Barron’s is bullish on Facebook, bearish on GE

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

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin

 

BULLISH  MENTIONS

Cummins, United Technologies good industrial bets – Cummins (CMI), United Technologies (UTX), Honeywell (HON), Ingersoll-Rand (IR) and Illinois Tool Works (ITW) boast good dividends that should rise, Lawrence Strauss writes in this week’s edition of Barron’s.

Facebook still looks like a buy – In a follow-up story, Barron’s says that Facebook’s  (FB) political-advertising imbroglio has obscured some very good revenue news. Slowing supply growth helped drive up demand and prices for Facebook ads, marking a reacceleration of growth, the report notes, adding that the company is also coming up with innovative ways to cash in on booming interest in video and creating new ad opportunities on its Messenger and Instagram platforms.

Kohl’s updated return policy raises Amazon takeover questions – Following Kohl’s (KSS) announcement that Amazon (AMZN) purchases could be returned at its stores in Chicago and Los Angeles, some have questioned if the e-Commerce giant is planning to buy the retailer, Steven Sears writes in this week’s edition of Barron’s. Citing Madison Global Partners’ Bernard Sosnick, the publication said Amazon may be testing the merits of owning a retailer that can build private-label products to showcase Amazon devices and services, with the holiday season to test the theory further.

May be time to play Mattel – Mattel (MAT) is half the stock it used to be, but the maker of Barbie and Hot Wheels knows it has a problem, Ben Levisohn writes in this week’s edition of Barron’s. Management said it would target $650M in cost cuts through 2019, while also enacting initiatives to reduce unpopular products and create new ones to help boost sales, and if it works, Mattel could be a winner, he adds.

Upside ahead for smaller companies – As tech giants soar and as the rally favors the biggest companies, there may be upside on deserving, smaller companies, such as AMD (AMD), Impinj (PI) and Everspin Technologies (MRAM), Tiernan Ray writes in this week’s edition of Barron’s. Meanwhile, companies such as Finisar (FNSR), Lumentum (LITE), Viavi (VIAV), Oclaro (OCLR), Applied Optoelectronics (AAOI), Inphi (IPHI), and NeoPhotonics (NPTN) are grappling with a slowdown in spending in China, but are “back for real,” he argues.

Intel AI push to boost growth – Artificial intelligence has been perceived to be a threat to Intel’s (INTC) decades-long dominance in computer chips, but its shares are up 30% this year, maybe due to third quarter earnings or maybe due to its plans to release a new line of A.I. chips developed in collaboration with Facebook (FB), and as the company’s purchase of Mobileye makes it an early leader in autonomous driving, Jack Hough writes in this week’s edition of Barron’s, adding that he still sees more upside ahead.

IBM, Google among potential AI winners – After decades of development, Artificial Intelligence-style computing now works, and its impact will spread far beyond board games such as Go or chess, Bill Alpert writes in this week’s edition of Barron’s. Citing Wells Fargo analyst Ken Sena, the report says the biggest beneficiaries will be the firms pioneering the technology, with machine learning already powering search suggestions of Google (GOOG; GOOGL) and Microsoft (MSFT), chatbots like Amazon’s (AMZN) Alexa, and the recommendations at Facebook (FB), and Netflix (NFLX). Given China’s vast size, the analyst also has similar outperformance expectations for Alibaba (BABA), Baidu (BIDU), JD.com (JD), and Tencent (TCEHY), Barron’s adds.

BEARISH  MENTIONS

Powerful bearish trend in General Electric – Investor’s confidence has eroded and General Electric’s (GE) stock price is at 2012, with a powerful bearish trend, Michael Kahn writes in this week’s edition of Barron’s. But while it may look like a bargain and the stock could be the buy of the decade, Kahn argues that he still needs to see the market give him either an unambiguous selling climax, or a strong upside reversal. If not for inertia, most investors would probably have already sold their shares of General Electric, but they may be persuaded as early as November 13, when its new leader, John Flannery, holds an investor day meeting, Steven Sears writes in this week’s edition of Barron’s. However, he notes that it is difficult to know how investors will react to whatever is announced at the meeting. If GE releases a draconian restructuring plan, shares could rally as investors reason that all of the bad news is out of the way, but if they lack confidence in Flannery’s approach, the stock could trade sharply lower, Barron’s adds.

Sell Under Armour as troubles ‘run deep.’  – In a follow-up story, Barron’s says that despite the skid in Under Armour (UA) shares, the sportswear company faces continuing woes, from a shift to lifestyle garments to the internet. Further, the publication notes that there seems little reason to hold shares through the holidays in hopes of a rebound.

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Advanced Accelerator sold for $3.9 billion

Novartis to acquire Advanced Accelerator for $82 per American Depositary Share

advanced accelerator applications sold for $3.9 billion. See Stockwinners.com for details

Novartis (NVS) announced that it has entered a memorandum of understanding with Advanced Accelerator Applications (AAAP), or AAA, under which Novartis intends to commence a tender offer for 100% of the share capital of AAA subject to certain conditions.

Under the terms of the memorandum of understanding, which has been approved by AAA’s board, Novartis will make a cash offer of $41 per ordinary share of AAA and $82 per American Depositary Share, each representing 2 ordinary shares, subject to certain conditions. This offer values AAA’s equity at $3.9B.

The transaction to acquire AAA is planned to be fully funded through external short- and long-term debt.

Novartis will commence a tender offer upon completion of works council consultation and AAA’s board recommending the tender offer to AAA shareholders.

The senior management and Directors of AAA have, in their capacity as shareholders of AAA, undertaken to tender their shares into the proposed tender offer.

The transaction is additionally subject to the valid tender pursuant to the tender offer of ordinary shares of AAA representing at least 80% of the outstanding ordinary shares on a fully diluted basis and receipt of customary transactional regulatory approvals and other customary closing conditions.

“The transaction would strengthen Novartis’ oncology presence with both near-term product launches as well as a new technology platform with potential applications across a number of oncology early development programs,” the company stated.

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Enzymotec sold for $290 million

Enzymotec enters definitive agreement to be acquired by Frutarom

Enzymotec sold for $290 million. See Stockwinners.com for details

 

Enzymotec (ENZY) has announced that it has signed a definitive agreement under which Frutarom will acquire Enzymotec for $11.90 per share in cash.

The transaction will be completed by way of a merger under the Israeli Companies Law.

The transaction has received unanimous approval by Enzymotec’s Board of Directors and implies an equity value of approximately $290M.

The offer of $11.90 per share in cash represents a premium of 39.8% over the price of Enzymotec’s ordinary shares on the Nasdaq Stock Market on July 31, 2017, the date on which Frutarom first disclosed an ownership position in Enzymotec.

A shareholder meeting to approve the transaction is expected to be held in December 2017.

Assuming typical timeframes, Enzymotec currently anticipates the transaction will close in the first quarter of 2018.

ENZY closed at $11.25. The issue has a 52-weeks trading range of $5.20 – $12.35.

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Barron’s is bullish on biotechs, Target

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

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin

BULLISH  MENTIONS

Local Chinese consumer plays to have significant advantages – China’s 19th Communist Party Congress gave expanded powers to President Xi Jinping to wield in a second five-year term as the country’s leader, endorsing the continued shift of China’s economy toward domestically focused consumer goods and services, which should be bullish for stocks such as Alibaba (BABA) and China Life Insurance (LFC), John Kimelman and Assif Shameen write in this week’s edition of Barron’s. Meanwhile, U.S. companies with footholds in the country’s consumer markets can expect to face regulatory and other roadblocks in the years ahead, they add.

Biotech selloff creates buying opportunity for investors – Biotech companies are not looking that healthy, with Amgen (AMGN), Biogen (BIIB), Celgene (CELG), and Gilead Sciences (GILD) all offering disappointments of one kind or another, but the selloff has created a buying opportunity for investors, Ben Levisohn writes in this week’s edition of Barron’s. Biotech looks like a victim of high expectations and could be ready to run again, he adds.

Tech giants continue to exploit their dominance – The latest earnings, particularly from Amazon.com (AMZN), Alphabet (GOOGL; GOOG), and Microsoft (MSFT), show that tech giants continue to exploit their dominance to Wall Street’s amazement, Tiernan Ray writes in this week’s edition of Barron’s. All three are examples of network effects, the ability of a business to exploit its position in a kind of virtuous cycle, and the payoff continues to astound Wall Street, he adds, noting that Apple (AAPL) is expected to report earnings this Thursday.

Playing double-up strategy with GE worth considering – General Electric (GE) stock is down 34% this year and seems poised to trade even lower amid fears that it may cut its dividend, Steven Sears writes in this week’s edition of Barron’s. While Sears has profitably recommended wagering against the stock since May, and still thinks bearish trades make sense, he recognizes that many investors feel stuck with their GE holdings and are not sure what to do. The “humble double-up strategy” is worth considering for anyone who wants to maintain ownership of the stock, and also realize a tax loss, he argues.

Target shares could return up to 30% amid renovation – Target’s (TGT) missteps have cost the company $15B in stock-market value over the past three years, Vito Racanelli writes in this week’s edition of Barron’s. The retailer is now remodeling stores, cutting costs and ramping up its online business to combat Amazon (AMZN), and store traffic and earnings look poised to rise in coming years, which could lead to an upward revaluation of the shares, he adds.

May be ‘lots to be gained’ from CVS/Aetna possible tie-up – In a follow-up story, Barron’s says that while CVS Health (CVS) shares were under pressure following a report by The Wall Street Journal saying the company and Aetna (AET) were in talks, there is “lots to be gained from a tie-up.” By securing better drug pricing from CVS than it gets now, Aetna stands to win more health-plan customers, and it can send many of them to CVS for drugs but also for care, the report explains, adding that the deal would help transform CVS into a company that also profits from health outcomes. Further, Barron’s argues that it could help protect it from future changes in health-care law, and from losing sales to Amazon (AMZN).

Enterprise Products Partners promises growth, income – Enterprise Product Partners (EPD) is a leader among U.S. energy master limited partnerships but its units are depressed like those of many peers, with investors worrying about slowing growth, competitive pressures, weak energy prices and cuts or moderating gains in distributions, Andre Bary writes in this week’s edition of Barron’s. However, he argues that compared with other MLPs, Enterprise has better corporate governance and a stronger sheet, offering an “enticing yield” of nearly 7% and a good growth outlook that investors should see as a “winning combination.”

Apple iPhone X may be catalyst for Sony – Long ago considered a rival of sorts for Apple (AAPL), Sony (SNE) has instead emerged as one of its key suppliers, but its stock is up just 10% over the past six months, while other suppliers have seen their shares almost double in the same period, Assif Shameen writes in this week’s edition of Barron’s. Sony supplies iPhone X’s12-megapixel camera, as well as state-of-the-art 3-D sensors designed to boost iPhone’s Face ID and augmented-reality capabilities, he adds, noting that Jefferies analyst Atul Goyal believes these attributes merit a re-rating for the shares, which he thinks can rise at least 40%.

Shire bear case may be too extreme – While Shire (SHPG) has struggled against generic pressures and rising competition, the bear case may be too extreme, Victor Reklaitis writes in this week’s edition of Barron’s.

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