stocks to watch

July 25, 2017

China’s Growth Forecast Boosts Miners and Basic Materials

Shares of industrial metal makers, miners surge on IMF’s China comments

Shares of industrial metal makers, miners surge on IMF's China comments. See Stockwinners.com for stocks to buy, stocks to watch, stocks to trade

Shares of industrial metal makers and miners are surging after the latest International Monetary Fund, or #IMF, update.

GLOBAL RECOVERY

The global economic recovery is on solid ground, said the IMF in a report out Monday. “As in our April forecast, the World Economic Outlook Update projects 3.5% growth in global output for this year and 3.6% for next,” the IMF predicted.

CHINA GROWTH CONTINUES

Government policies in China have been the foundation for the recent high growth rates in the country. The IMF has raised its China growth view for 2017 and 2018 by 0.1% and 0.2% points, respectively, to 6.7 % and 6.4%. “But higher growth is coming at the cost of continuing rapid credit expansion and the resulting financial stability risks. China’s recent moves to address nonperforming loans and to coordinate financial oversight, therefore, are welcome,” added the agency.

MUTED EXPECTATIONS FOR US GROWTH

The IMF said the said globally speaking, the critical hindrance to global growth will come from the United States. “Over the next two years, U.S. growth should remain above its longer-run potential growth rate. But we have reduced our forecasts for both 2017 and 2018 to 2.1 percent because near-term U.S. fiscal policy looks less likely to be expansionary than we believed in April,” argued the IMF.

COPPER SURGES

Copper prices jumped to the highest levels since this past February. According to a Citi research note,”Sentiment towards copper from the physical market has improved as fabricators in China have replenished their inventories,” said Reuters.

Shares of metal makers and miners are all higher in afternoon trading, with copper miners Freeport-McMoRan (FCX) and Southern Copper Corporation (SCCO) up 14% and 3%, respectively. Iron ore miners Cliffs Natural Resources (CLF) is up 5%, with peers Vale S.A. (VALE) and Rio Tinto plc (RIO) both up over 4%. Aluminum makers are also jumping, with Alcoa up almost 2%, with peers Century Aluminum (CENX) up 4% and Kaiser Aluminum (KALU) up fractionally. Shares of United States Steel Corporation (X) are 5% higher.

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

July 25, 2017

Michael Kors Buys Jimmy Choo for $1.35B

Michael Kors to acquire Jimmy Choo PLC for $1.35B

Michael Kors to acquire Jimmy Choo PLC for $1.35B. See Stockwinners.com for stocks to buy, stocks to watch, stocks to follow

Michael Kors (KORS) announced that it has reached an agreement to acquire Jimmy Choo PLC, a global luxury footwear and accessories brand.

Under the terms of the transaction, Jimmy Choo shareholders will receive 230 pence per share, with an enterprise value of approximately $1.35B.

The transaction has been approved by the boards of both Michael Kors and Jimmy Choo.

The transaction is not subject to a financing condition. Michael Kors has committed bridge financing from JPMorgan Chase Bank and Goldman Sachs Bank USA to satisfy the certain funds requirement of the U.K. Takeover Code to complete the transaction.

The transaction is intended to be effected by a U.K. court-approved Scheme of Arrangement and is expected to close in Q4, subject to customary closing conditions, including the receipt of required regulatory approvals as well as the approval of the Scheme by Jimmy Choo shareholders, who together hold at least 75% of the issued share capital of Jimmy Choo and represent a majority of the shareholders voting at the meeting.

Michael Kors has received irrevocable undertakings from JAB Luxury GmbH, Jimmy Choo directors and Sandra Choi, who collectively represent 69.21% of the issued and outstanding Jimmy Choo shares in support of the transaction.

Michael Kors Holdings Limited believes that the acquisition enhances the company’s economic value and will drive improved long-term shareholder value. The acquisition is expected to be accretive on a GAAP basis in fiscal 2020.

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July 24, 2017

India Approves Anika Therapeutics’ Treatment for Osteoarthritis Pain

Anika Therapeutics says Monovisc approved in India

Anika Therapeutics says Monovisc approved in India. See Stockwinners.com Market Radar for Stock Upgrades, stock downgrades, stock earnings, stocks to watch

Anika Therapeutics (ANIK) announced that regulatory authorities in India granted approval to MONOVISC, its single injection viscosupplement for the treatment of pain associated with osteoarthritis of all human synovial joints.

#MONOVISC is commercially available in the United States, Canada and Europe, and Anika plans to expand into India, Australia, New Zealand and additional international markets over the next six to nine months.

“Expanding our global commercial footprint is one of our key strategic pillars of growth, and the approval of MONOVISC in India is a proof point for our ability to execute against the benchmarks we define each year,” said Charles H. Sherwood, Ph.D., President and Chief Executive Officer of Anika Therapeutics.

“There is a growing demand for non-invasive, long-acting treatments for osteoarthritis in emerging countries such as India where knee replacement surgery is often the last option or not an option at all, due to limited medical resources outside major cities and high costs of surgery and postsurgical care.

With its ability to safely relieve pain for up to six months with fewer office visits, lower treatment costs and no downtime after treatment, MONOVISC is poised to be well-received by physicians and patients in India.”

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July 24, 2017

Nektar Gets $150 Million from Eli Lilly

Eli Lilly and Nektar announce collaboration to develop NKTR-358

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Eli Lilly and Company (LLY) and Nektar Therapeutics (NKTR) have announced a strategic collaboration to co-develop NKTR-358, a novel immunological therapy discovered by Nektar.

NKTR-358, which achieved first human dose in Phase 1 clinical development in March, has the potential to treat a number of autoimmune and other chronic inflammatory conditions.

Under the terms of the agreement, Nektar will receive an initial payment of $150M and is eligible for up to $250M in additional development and regulatory milestones.

The parties will share Phase 2 development costs 75% Lilly and 25% Nektar.

Nektar will have the option to participate in Phase 3 development on an indication-by-indication basis.

Nektar has the opportunity to receive double-digit royalties that increase commensurate with their Phase 3 investment and product sales. Lilly will be responsible for all costs of global commercialization.

Nektar will have an option to co-promote in the U.S. under certain conditions. This transaction is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.

Lilly expects to incur an acquired in-process research and development charge to earnings in 2017 of approximately 9c per share. The company’s reported EPS guidance in 2017 is expected to be reduced by the amount of the charge. There will be no change to the company’s non-GAAP EPS guidance as a result of this transaction.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

July 23, 2017July 23, 2017

British Open Should Bode Well for Under Armour

Watch Under Armour after Spieth wins British open

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Jordan #Spieth beat fellow American Matt #Kuchar by three strokes in a thrilling duel at Royal Birkdale on Sunday.

This was his third major title, with the 23-year-old going to the U.S. #PGA Championship needing only that title to complete the Grand Slam.

Spieth, who won the Masters and the U.S. Open in 2015, will turn 24 on Thursday, and therefore has become the second player to win three legs of golf’s Grand Slam before turning 24.

UNDER ARMOUR

Jordan Spieth is sponsored by Under Armour (UA, UAA), having first signed with the company in January 2013.

Two years later, the golf phenom and the sports apparel and footwear maker renegotiated a new, 10-year deal that assured no logos from Nike (NKE), Adidas (ADDYY) or any other competitor would appear on Spieth’s shoes or clothing until after the 2025 season, according to #ESPN.

The athlete’s Masters victory back in 2015 sent shares of Under Armour higher.

PRICE ACTION

Under Armour shares closed at $83.75 on April 10, 2015 and then closed at $85.11 on April 13, 2015, giving it a gain of $1.36, or 1.6%, on the day after that his Master’s win.

OTHERS TO WATCH

Golf goods retailers include Dick’s Sporting (DKS), which owns the Golf Galaxy brand, and Callaway Golf (ELY).

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July 21, 2017

Amazon Investigated by FTC for Deceptive Pricing

FTC exploring possible deceptive discounting by Amazon

The FTC is exploring allegations of potential deceptive discounting by Amazon (AMZN), Reuters reports, citing a source close to the investigation.

The FTC is investigating a complaint brought by Consumer Watchdog, an advocacy group which looked at around 1,000 products on Amazon’s website last month and found that Amazon put reference prices on about 46% of them; an analysis by Consumer Watchdog found that in more than half of products with reference prices, Amazon’s reference prices were higher than it had sold the same product in the previous three months, Reuters says.

The FTC is looking into the allegations as part of its review of Amazon’s proposed acquisition of Whole Foods (WFM).

Amazon said in a statement that Consumer Watchdog’s study was “deeply flawed,” calling the conclusions “flat out wrong.”

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July 21, 2017July 21, 2017

RLJ Lodging Trust Says No to $3 Billion Purchase Offer

Blackstone made $3B offer to buy RLJ Lodging Trust, WSJ says

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Blackstone Group (BX) made an approximately $3B offer to purchase RLJ Lodging Trust (RLH), which if successful would end the real estate investment trust’s plans to acquire FelCor Lodging Trust (FCH), the Wall Street Journal reports, citing people familiar with the matter.

RLJ disclosed that it had received an unsolicited proposal on June 12 from a private-equity firm but the company rejected the offer as “not reasonably likely” to be superior to its acquisition of FelCor, resulting in the private-equity firm twice raising its offer, which reached $25.50 a share on June 23, but then dropping its offer on July 6 to the original price of $24 following a review of RLJ, which rejected that offer.

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July 20, 2017July 20, 2017

Zynerba is Worth Watching

Watch Zynerba ahead of trial data on its its ZYN002 for in adult epilepsy patients

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With #Zynerba Pharmaceuticals (ZYNE) expected to release data from a Phase 2 trial over the next several weeks,#Jefferies analyst Biren #Amin recently argued that a positive update could lead the shares north of $65-$75. However, a lack of treatment effect could drop the stock to $4-$5.

CANNABIDIOL GEL

Over the coming weeks, Zynerba is expected to announce data from its ZYN002 #cannabidiol, or #CBD, gel Phase 2 STAR 1 trial in adult epilepsy patients with refractory focal seizures.

ZYN002 is a synthetic CBD formulated as a permeation-enhanced gel for transdermal delivery.

BINARY EVENT

In a research note to investors, Jefferies’ Amin pointed out that the STAR-1 trial represents a “critical catalyst” for Zynerba as it provides the first proof of concept for transdermally delivered CBD.

Given investors naturally compare the program to GW Pharmaceuticals’ (GWPH) #Epidiolex, and oral CBD, the analyst believes a better comparison would be to therapies tested in patients with partial-onset seizures who are uncontrolled on their current therapy.

Additionally, Amin noted that while the study is designed for a 20% treatment effect over a placebo, an effect greater than 15% could be considered clinically relevant. A key question that remains unanswerable is the extent of activity observed with ZYN002 given this is the first study evaluating efficacy in epilepsy patients, he contended.

He told investors that positive data could lead to shares north of $65-$75, but a lack of treatment effect could drop shares to $4-$5. The analyst assumes ZYN002 is successfully developed and launched for refractory epilepsy in 2019.

Amin reiterated a Buy rating and a $32 price target on the shares.

PRICE ACTION

In Thursday’s trading, shares of Zynerba dropped 2% to $18.81. Over the last month the stock is up 10%, but over the last three months it has declined nearly 24%.

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July 20, 2017July 20, 2017

BankMutual Sold for $482 Milion

Associated Banc-Corp to acquire BankMutual for $10.38 per share

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Associated Banc-Corp (ASB) and Bank Mutual (BKMU) (“Bank Mutual”) announced that they have entered into a definitive agreement under which Bank Mutual will merge with and into Associated. Bank Mutual’s bank subsidiary will also merge with and into Associated’s bank subsidiary, Associated Bank, N.A.

The all stock transaction is valued at approximately $482M, based on Associated’s July 19 closing stock price of $24.60 per share.

Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, Bank Mutual shareholders will receive 0.422 shares of Associated common stock for each share of Bank Mutual common stock.

The per common share consideration is valued at $10.38 per share based on the closing price of Associated common stock on July 19.

Subject to customary closing conditions, including regulatory approvals and approval by the Bank Mutual shareholders, the transaction is expected to close in the first quarter of 2018.

Associated expects this acquisition to be accretive to earnings per common share in 2019, excluding one-time charges, and expects the transaction to deliver strong returns on capital.

The transaction is expected to produce less than 1% tangible book value per share dilution at closing.

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July 19, 2017

Avista Sold for $5.3 Billion Cash

Avista acquired by Hydro One for $53 per share

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Hydro One Limited and and Avista Corp. (AVA) dustry-leading regulated utilities with over 230 years of collective operational experience as well as shared corporate cultures and values.

The combined entity will safely and reliably serve more than two million retail and industrial customers and hold assets throughout North America including Ontario, Washington, Oregon, Idaho, Montana and Alaska.

“This marks a proud moment for Canadian champions as we grow our business into a North American leader,” said Mayo Schmidt, President and CEO, Hydro One Limited.

“This transaction demonstrates the power and value of the transition into an investor-owned utility, by allowing for healthy expansion into new lines of regulated utility business and new jurisdictions, such as the U.S. Pacific Northwest which is experiencing customer and economic growth.”

“With a focus on operational excellence and building our earnings streams, we are positioned for long-term, sustainable growth,” said Schmidt.

“We are further accomplishing this goal by bringing together two companies with shared cultures and industry expertise to create a North American regulated utility leader. This combination means greater scale, diversity and financial flexibility.”

Hydro One has a uniquely strong track record consolidating electricity utilities. Since the IPO, Hydro One has also delivered on cost savings and efficiencies for shareholders and customers.

Through the company’s energy conservation programs, Hydro One has helped customers and municipalities save 700 GWh year-to-date.

“Since our initial public offering, we have significantly enhanced our current operations while exploring opportunities that extend and diversify our regulated assets,” said #MayoSchmidt.

“We constantly seek to deliver exceptional value to shareholders, customers, and the communities we serve through stable, increasing regulated returns, exceptional service, and community engagement.”

This strategic combination demonstrates the value of consolidation by bringing together two highly complementary platforms to create one of North America’s largest regulated utilities, meaningfully enhancing both shareholder and customer value.

In addition, over time, non-headcount efficiencies will be realized through collaboration and sharing of best practices on IT, innovation and supply chain purchasing, all of which will further enhance cost savings.

No workforce reductions are anticipated as a result of this transaction for either Avista or #HydroOne.

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July 19, 2017

Stocks to Watch – Changes to S&P Indices

ResMed, Packaging Corp., A.O. Smith, Duke set to join S&P 500 at open on 7/26

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S&P MidCap 400 constituents ResMed (RMD), Packaging Corporation of America (PKG), A.O. Smith Corp. (AOS) and Duke Realty Corp. (DRE) will replace Mallinckrodt (MNK), Murphy Oil (MUR), Bed Bath & Beyond (BBBY) and Transocean (RIG) respectively, in the S&P 500 effective prior to the open of trading on Wednesday, July 26.

MGM Resorts Int’l. (MGM) will replace Reynolds American Inc. (RAI) in the S&P 500. British American Tobacco plc is acquiring Reynolds American in a deal expected to be completed on July 25, pending final conditions.

Mallinckrodt, Murphy Oil, Bed Bath & Beyond and Transocean will replace ResMed, Packaging Corporation of America, A.O. Smith and Duke Realty, respectively in the S&P MidCap 400.

All stocks moving to the S&P 500 have total market capitalizations above $10B making them more representative of the large-cap market space.

All stocks moving to the S&P MidCap 400 have total market capitalizations below $4.5B making them more representative of the mid-cap market space.

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July 19, 2017

Vertex Higher on its Cystic Fibrosis Drug

Vertex jumps after ‘wowing’ analysts with cystic fibrosis data

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Shares of Vertex (VRTX) are on the rise after the company reported positive data from Phase 1 and Phase 2 studies of three different triple combination regimens in people with cystic fibrosis who have one #F508del mutation and one minimal function mutation.

Reacting to the news, several Wall Street analysts upgraded the stock to buy-equivalent ratings and raised their price targets on the shares.

BUY VERTEX

In a research note to investors this morning, Janney Capital analyst Debjit Chattopadhyay upgraded Vertex to Buy, stating that the Phase 2 data for its three triple combination programs in CF were “significantly above the most optimistic expectations.”

The analyst argued that the quality of the data should allow Vertex to potentially accelerate commercialization under the “New FDA” and importantly sets the bar very high for competition. Citing its “potential dominance of CF,” Chattopadhyay said he thinks Vertex becomes the “most logical large-cap M&A target.”

Chattopadhyay was not the only analyst upgrading the stock this morning.

His peer at Cowen also upgraded Vertex to Outperform, saying efficacy data from its triple regimens showed “breakthrough-quality” results, and will very likely “dramatically” improve the quality of life and extend the life span of 80% of the 75K patients with CF worldwide.

Phil Nadeau pointed out that he expects a launch in 2021 and $10B in franchise sales in 2025. The analyst raised his price target on the shares to $200 as he sees a 10-year path of revenue growth for Vertex.

Meanwhile, Barclays analyst Geoff Meacham told investors that he thought the Phase 2 data in CF was an “unequivocal success and constitutes a major de-risking event.” Citing more confidence in the viability of the triple combo and the likely accelerated development path, the analyst upgraded Vertex to Overweight and raised his price target on the stock to $180.

Also this morning, Raymond James analyst Laura Chico upgraded Vertex to Outperform, with a $181 price target, citing the “compelling” efficacy data for its triple-combo CF regimens.

WOW: JPMorgan analyst Cory Kasimov began his research note with “Wow. Just wow,” following last night’s data release from Vertex.

To say that the initial results for Vertex’s triple combinations beat expectations would be an understatement, Kasimov told investors, adding that the data not only sets up well to reach a large majority of the CF patient population, but also greatly increases the competitive hurdle while also enhancing the scarcity value of the company. He raised his price target on the shares to $175 and reiterated an Overweight rating on the name.

Credit Suisse, Stifel, Citi and Piper Jaffray also raised their price targets on the stock following the data release.

OTHERS TO WATCH

Competitor Galapagos (GLPG) is sliding in morning trading following Vertex’s CF data announcement.

However, commenting on the news, H.C. Wainwright analyst Andrew Fein said the data may also be “encouraging” in a roundabout way for Galapagos and another smaller company exploring an add-on to a CF doublet combo, Proteostasis (PTI).

If increasing the dosing of the Vertex compounds does not differentiate them further in efficacy, then this consistency in benefit “may truly be a class phenomenon,” and similar results should be expected from any competitor add-on agent out there, he suggested.

PRICE ACTION

In Wednesday’s trading, shares of Vertex (VRTX) have gained about 22% to $161.26, while Galapagos and Proteostasis have dropped over 4% and 3%, respectively.

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July 17, 2017July 17, 2017

Stocks to Watch: Paratek Pharmaceuticals Study Meets EndPoint

Paratek study meets primary, secondary FDA, EMA efficacy endpoints

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Paratek Pharmaceuticals (PRTK) announced positive top-line results from a pivotal Phase 3 clinical study comparing its once-daily, oral investigational antibiotic, omadacycline, to twice-daily oral linezolid in the treatment of acute bacterial skin and skin structure infections.

The study met all of its primary and secondary endpoints required to support approval for this indication by the U.S. Food and Drug Administration and the European Medicines Agency.

This represents the third positive Phase 3 registration study of omadacycline.

“This successful study demonstrates the potential of an oral-only dosing regimen of omadacycline, which would enable treatment in the outpatient setting and potentially reduce the need for admission to the hospital,” said Michael Bigham, Chairman and Chief Executive Officer of Paratek.

“The utility of the oral only dosing regimen represents a significant potential benefit to patients and prescribers who are in need of new, effective oral agents to combat serious community-acquired infections.”

The pivotal Phase 3 clinical study known as #OASIS-2 evaluated the efficacy and safety of once-daily, oral-only omadacycline compared to twice-daily, oral-only linezolid in 735 adults with ABSSSI.

#Omadacycline met the FDA-specified primary endpoint of statistical non-inferiority in the modified intent-to-treat population compared to linezolid at the early clinical response 48 to 72 hours after the first dose of study drug.

The ECR rate for omadacycline was 87.5% compared to 82.5% for linezolid.

Additionally, omadacycline met statistical NI compared to linezolid for the EMA-specified co-primary endpoints at the post therapy evaluation, 7 to 14 days after completion of therapy in the mITT and the Clinically Evaluable populations.

Clinical success rates at PTE in the mITT population for the omadacycline and linezolid arms were 84.2% vs. 80.8%, respectively; and in the CE population were 97.9% vs. 95.5%, respectively.

Omadacycline demonstrated high clinical success rates for infections caused by the most common #ABSSSI pathogens, including methicillin-resistant Staphylococcus aureus.

STOCK PRICE

PRTK last traded at $24.95. Stock has a 52-week trading range of $9.80 – $26.10.

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July 17, 2017

Multi-Color on $1.3 Billion Shopping Spree

Multi-Color to acquire Labels Division of Constantia Flexibles for $1.3B

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Multi-Color announces that it has signed a definitive agreement to acquire the Labels Division of Constantia Flexibles from Constantia Flexibles GmbH for approximately $1.3B, payable in cash and stock.

The combined annual revenues and EBITDA of the two businesses will be approximately $1.6B and $300M, respectively.

The combination brings together Constantia Labels’ high performing Food and Beverage business with Multi-Color’s strong Wine and Spirit, and Home and Personal Care platforms, and emerging global position in Healthcare.

Additional growth opportunities for Multi-Color exist in Home and Personal Care by utilizing Constantia Labels’ European operational footprint and assets. Growth opportunities for Constantia Labels exist in Food & Beverage and derive from Multi-Color’s U.S. operational footprint and assets.

The stronger combined footprint in Asia will provide further revenue opportunities. Cost synergies are anticipated to reach $15M by FY20 through a combination of procurement, SG&A, and manufacturing efficiencies.

As an example, Multi-Color will utilize Constantia Labels’ pressure sensitive substrate manufacturing capability in the U.S. and Europe to drive future efficiencies. Both companies currently generate EBITDA margins of approximately 18%.

As part of the transaction, Mike Henry, current EVP and Head of Constantia Labels, is expected to become CEO-elect of Multi-Color Corporation.

Current Multi-Color CEO, Vadis Rodato, is expected to retire in early 2018 after a transition period. Nigel Vinecombe will remain Executive Chairman. Two representatives of Constantia Flexibles will join Multi-Color’s board, and the shares issued as consideration will be subject to customary lock-up provisions.

The transaction is expected to close in Q3 of 2018.

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July 17, 2017July 17, 2017

Dominion Diamond Sold for $1.2 Billion

Dominion Diamond to be acquired by The Washington Cos for $14.25/share in cash

Dominion Diamond (DDC) and The Washington Companies, a group of privately held North American mining, industrial and transportation businesses founded by industrialist and entrepreneur Dennis R. Washington, announced that they have entered into an arrangement agreement under which an entity affiliated with Washington will acquire all of Dominion’s outstanding common shares for $14.25 per share in cash or a total equity value of approximately $1.2B pursuant to a plan of arrangement under the Canada Business Corporations Act.

The transaction represents a 44% premium to Dominion’s unaffected share price of $9.92 on March 17, 2017. The transaction marks the result of Dominion’s review of strategic alternatives as previously announced on March 27, 2017.

The Board of Directors of Dominion, after consultation with financial and legal advisors, and based on the recommendation of a special committee of the Board consisting of four independent directors, has unanimously determined that the Arrangement is in the best interests of the Company, approved the Arrangement and recommends that Dominion’s shareholders vote in favor of the Arrangement.

All directors of the Company have entered into support agreements to vote their common shares in support of the Arrangement.

As part of this acquisition, Washington plans to: Operate Dominion as a standalone business as Washington does with its other successful operating companies; Appoint a new CEO based in Canada to the Dominion management team; Keep Dominion’s headquarters in Canada and maintain a significantly Canadian management team.

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