Takeda and Seattle Genetics Publish Positive Results on T-cell lymphoma

ADCETRIS is an antibody-drug conjugate directed to CD30 which is expressed on CTCL lesions in approximately 50 percent of patients with the disease

Based on the study results, Takeda plans to begin to submit data from the ALCANZA trial to regulatory agencies in its territories in 2017.

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#Takeda (TKPYY) and #SeattleGenetics (SGEN) announced that data from the randomized Phase 3 ALCANZA clinical trial evaluating ADCETRIS in patients with cutaneous T-cell #lymphoma were published in the journal #Lancet.

Lymphoma is the most common blood cancer. The two main forms of lymphoma are Hodgkin lymphoma and non-Hodgkin lymphoma (NHL). Lymphoma occurs when cells of the immune system called lymphocytes, a type of white blood cell, grow and multiply uncontrollably. Cancerous lymphocytes can travel to many parts of the body, including the lymph nodes, spleen, bone marrow, blood, or other organs, and form a mass called a tumor. The body has two main types of lymphocytes that can develop into lymphomas: B-lymphocytes (B-cells) and T-lymphocytes (T-cells).

Data were previously presented in an oral session at the 58th American Society of Hematology annual meeting in December 2016.

#ADCETRIS is an antibody-drug conjugate directed to CD30 which is expressed on CTCL lesions in approximately 50 percent of patients with the disease.

ADCETRIS is currently not approved for the treatment of CTCL.

ALCANZA is a randomized, open-label Phase 3 study designed to evaluate single-agent ADCETRIS versus a control arm of investigator’s choice of the standard of care therapies methotrexate or bexarotene, in patients with CD30-positive CTCL.

The manuscript highlights data from the trial which achieved its primary endpoint with the ADCETRIS treatment arm demonstrating a highly statistically significant improvement in the rate of objective response lasting at least four months (ORR4) versus the control arm as assessed by an independent review facility.

#ORR4, as assessed by Global Response Score, was 56.3 percent in the ADCETRIS arm compared to 12.5 percent in the control arm.

Key secondary endpoints specified in the protocol, including complete response rate, progression-free survival and reduction in the burden of symptoms during treatment (Skindex-29), were all highly statistically significant in favor of the ADCETRIS arm.

The safety profile associated with ADCETRIS from the ALCANZA trial was generally consistent with the existing prescribing information.

The most common adverse events of any grade include: peripheral neuropathy, nausea, diarrhea, fatigue, vomiting, alopecia, pruritis, pyrexia, decreased appetite and hypertriglyceridemia.

Based on the study results, Takeda plans to begin to submit data from the ALCANZA trial to regulatory agencies in its territories in 2017. The U.S. FDA granted Breakthrough Therapy Designation to ADCETRIS for the treatment of the most common subtypes of CTCL, mycosis fungoides and primary cutaneous anaplastic large cell lymphoma .

Seattle Genetics plans to submit these data as part of a supplemental Biologics License Application to the FDA in mid-2017. The ALCANZA trial received a Special Protocol Assessment agreement from the FDA and scientific advice from the European Medicines Agency.

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Rig Counts Continue to Rise

Domestic Rig Count now Exceeds that of International Rigs

The worldwide rig count for May 2017 was 1,935, up 18 from the 1,917 counted in April 2017, and up 530 from the 1,405 counted in May 2016

 

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Baker Hughes Incorporated ($BHI) announced today that the international rig count for May 2017 was 957, up 1 from the 956 counted in April 2017, and up 2 from the 955 counted in May 2016.

The international offshore rig count for May 2017 was 202, up 1 from the 201 counted in April 2017, and down 27 from the 229 counted in May 2016.

The average U.S. rig count for May 2017 was 893, up 40 from the 853 counted in April 2017, and up 485 from the 408 counted in May 2016.

The average Canadian rig count for May 2017 was 85, down 23 from the 108 counted in April 2017, and up 43 from the 42 counted in May 2016.

The worldwide rig count for May 2017 was 1,935, up 18 from the 1,917 counted in April 2017, and up 530 from the 1,405 counted in May 2016.

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West Texas Intermediate #WTI is down 29 cents to $47.91 per barrel. Brent is down 37 cents to $49.75 per barrel.

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Crude Oil Higher on Mixed Data

This week’s draw is the seventh week of draws in the last 10 weeks, with a total draw of almost 27 million over the last ten weeks

For the 2017 summer driving season (April–September), U.S. regular gasoline retail prices are forecast to average $2.46/gallon (gal), compared with $2.23/gal last summer

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Crude oil is higher following release of #API weekly inventory data. The American Petroleum Institute (API) reported a draw of 4.62 million barrels in United States crude oil inventories, compared to analyst expectations of a draw of 3.5 million barrels for the week ending June 2.

This week’s draw is the seventh week of draws in the last 10 weeks, with a total draw of almost 27 million over the last ten weeks.

Gasoline inventories rose 4.08 million barrels last week, according to the API report. Distillate inventories also rose by 1.75 million barrels, while inventories at the Cushing, Oklahoma, site fell by 1.56 million barrels.

The U.S. Energy Information Administration report on oil inventories is due on Wednesday at 10:30 a.m. EDT. Please check Stockwinners Market Radar for the data.

EIA Lowers Brent Forecast

Energy Department’s the Energy Information Administration (EIA) released its latest forecast for oil prices:

Reports Highlights
  • North Sea Brent crude oil spot prices averaged $50 per barrel in May, $2/b lower than the April average. EIA forecasts Brent spot prices to average $53/b in 2017 and $56/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018. NYMEX contract values for September 2017 delivery that traded during the five-day period ending June 1 suggest that a range of $39/b to $64/b encompasses the market expectation for WTI prices in September 2017 at the 95% confidence level.
  • The Organization of the Petroleum Exporting Countries (OPEC) met on May 25 and announced an extension to voluntary production cuts through March 2018 that were originally set to end in June 2017. EIA forecasts OPEC crude oil production will average 32.3 million barrels per day (b/d) in 2017 and 32.8 million b/d in 2018.
  • U.S. crude oil production averaged an estimated 8.9 million b/d in 2016. U.S. crude oil production is forecast to average 9.3 million b/d in 2017 and 10.0 million b/d in 2018. The 2018 forecast exceeds the previous record level of 9.6 million b/d set in 1970.
  • For the 2017 summer driving season (April–September), U.S. regular gasoline retail prices are forecast to average $2.46/gallon (gal), compared with $2.23/gal last summer. The higher forecast gasoline price is primarily the result of a higher forecast crude oil price. The forecast annual average price for regular gasoline in 2017 is $2.38/gal.
  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas to fall from an average of 34% in 2016 to less than 32% in both 2017 and 2018 as a result of higher expected natural gas prices. Coal’s forecast generation share rises from 30% in 2016 to 31% in 2017 and 2018. Non-hydropower renewables are forecast to provide 9% of electricity generation in 2017 and nearly 10% in 2018. The generation share of hydropower is forecast to be nearly 8% in 2017 and 7% in 2018. The nuclear share of generation remains just under 20% in both 2017 and 2018.
  • Coal exports for the first quarter of 2017 were 58% higher than in the same quarter last year, with steam coal exports increasing by 6 million short tons (MMst). Coal producers that have completed bankruptcy reorganizations and companies that purchased bankrupt assets have increased both exports and production in 2017. EIA expects growth in coal exports to slow in the coming months, with exports for all of 2017 forecast at 72 MMst, 11 MMst (19%) above the 2016 level. The increase in coal exports contributes to an expected 8% increase in coal production in 2017.

WTI is up 60 cents to $48 per barrel, Brent is up 50 cents to $49.97 per barrel.

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Signet Problems Continue

COO resigned on June 2 due to violations of company policy “unrelated to financial matters”

Signet last month reached an agreement with the EEOC to resolve claims related to pay and promotion of female retail sales workers

 

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Shares of #Signet Jewelers (SIG) are in focus  after the company said in a regulatory filing that its chief operations officer had resigned due to violations of company policy.
Signet, the owner of #Zale and Kay Jewelers, last month reported quarterly earnings below expectations and announced plans to outsource its credit portfolio.

COO RESIGNATION:

Signet Jewelers said yesterday in a regulatory filing that COO Bryan Morgan resigned on June 2 due to violations of company policy “unrelated to financial matters.” The filing did not contain further details about the circumstances of Morgan’s resignation. In January, Signet announced several senior organizational changes to drive growth, including promoting Morgan to COO from executive vice president, Supply Chain Management and Repair.

WHAT’S NOTABLE

Last month, Signet reported first quarter earnings that fell below analysts’ expectations. CEO Mark Light said the company had a “very slow start” to the year as headwinds in the overall retail environment were exacerbated by a slowdown in jewelry spending and company-specific challenges.

Light said same-store sales improved sequentially when normalized for Mother’s Day and backed fiscal 2018 EPS guidance of $7.00-$7.40 and comp sales down low-to-mid single digits.

In conjunction with its earnings report, Signet said it would sell $1B of prime only credit quality accounts receivable to Alliance Data (ADS) and form a seven-year partnership with Progressive Leasing, a subsidiary of Aaron’s, Inc. (AAN). As part of the second phase of the strategic outsourcing of the in-house credit program, Signet said it plans to fully outsource its secondary credit programs, including the sale of the remaining receivables on its balance sheet, as well as funding for new non-prime account originations.

Light said the moves are expected to unlock “significant value.”

Signet shares are down about 44% year-to-date as the jeweler deals with declining sales.

The company has said it would step up efforts to restore its reputation following allegations of sexual harassment at its Sterling Jewelers unit and diamond swapping allegations.

Signet last month said it reached an agreement with the #EEOC to resolve claims related to pay and promotion of female retail sales workers. Signet has said allegations of sexual harassment have no merit, calling them “distorted and inaccurate.”

PRICE ACTION: Signet Jewelers is down about 1% in pre-market trading. The stock has a 52-week trading range of $46.09 – $101.46. We expect shares to revisit their lows of the year.

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DexCom Rallies on Apple Decision

Apple begins supporting Dexom’s glucose monitoring sensor

Previously Apple Watch only supported 3rd party Apps through iPhone

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#DexCom $DXCM is a medical device company. It focuses on the design, development, and commercialization of continuous glucose monitoring (CGM) systems in the United States and internationally. The company offers its systems for ambulatory use by people with diabetes; and for use by healthcare providers in the hospital for the treatment of patients with and without diabetes.

The company reported a loss of $0.49 per share in Q1 of 2017,  six cents better than the Consensus Estimate. Total revenue grew to $142 million, reflecting an increase of 22.4% from $116 million in the year-ago quarter. However, the figure was two million below the estimates. Since the report, shares have been under pressure due to the mixed report. To add to its woes, market chatter had it that Apple will offer its glucose monitoring system.

At Apple’s annual developer conference currently underway, the company’s vice-president of technology Kevin Lynch said that Apple $AAPL will release a new bluetooth API for Apple Watch, its fitness-tracking gadget. Users would be able to link their Apple watch to a glucose sensor from DexCom. Previously, developers building health sensors would need to communicate with the iPhone over Bluetooth — but not with Apple Watch.

Health developers say this is a promising sign that Apple will open up new pathways for them to create their own interchangeable watch bands laden with health sensors. Health startups are already building watch bands, which use sophisticated sensors to track health conditions.

PRICE ACTION:

DXCM last traded at $71.15, up more than 5 percentage points on the day. It has a 52-weeks trading range of $57.68 to $96.38.

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Athenahealh Could Be in Play!

Citi says can’t rule out athenahealth sale with Elliott involved

potential acquirers of athenahealth include tech companies aiming to build a healthcare presence

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#Citi analyst Garen #Sarafia raised his price target on #athenahealh $ATHN saying Elliot Associates’ recently disclosed stake in the company reinforces his favorable view and likely provides a support level for shares.

Additionally, a sale of the company “cannot be ruled out” given the activist investor’s track record, Sarafia argues.

BACKGROUND:

On May 18, Elliott Associates, Elliott International and #EICA disclosed in a regulatory filing that they collectively have combined economic exposure in athenahealth of approximately 9.2% of the common stock outstanding.

Elliott said it may “consider, explore and/or develop plans and/or make proposals” to athenahealth and intends to communicate with the company’s management and board “about a broad range of operational and strategic matters.”

CITI UPS TARGET

Sarafia raised his price target for athenahealth to $163 from $128 citing Elliott’s involvement, pointing out that in the investors’ engagement in nearly 40 campaigns since 2013, slightly over half of which resulted in a sale.

As a result, he believes potential #M&A scenarios “cannot be ruled out.” The analyst said potential acquirers of athenahealth would include tech companies aiming to build a healthcare presence, including #IBM $IBM , which has made several recent acquisitions to bolster its healthcare network. He added that #Aetna $AET ) and #UnitedHealth $UNH , through its Optum business, may also be potential suitors, although UnitedHealth is currently under agreement to use #Allscripts $MDRX software.

Sarafia added more distant possibilities include healthcare tech companies #Cerner $CERN or privately-held Epic. He, however, believes a “collaborative engagement to unlock sustainable value” is a likely scenario over an acquisition, citing the company’s history of engagement with large shareholders.

In addition, Sarafia said the activist stake will make operational improvements at the company a high priority, with a renewed focus on core strengths, potential cost-cutting in general and administrative expenses and possibly research and development, and increased free cash flow. He keeps a Buy rating on the shares.

PRICE ACTION: In Monday trading, athenahealth rose nearly 1% to $139.30. The stock has a 52-week trading range of $90.11 – $142.40.

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Gigamon is For Sale

Gigamon makes software that is installed in large data centers to boost the flow of traffic

Elliott Management owns 15% of shares and has encouraged firm to sell

 

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After activist investor Elliott Associates recently reported a roughly 15% economic exposure in shares of #Gigamon $GIMO and encouraged the company to undertake a strategic review process, the software maker has begun working with Goldman Sachs $GS to talk with companies and private equity firms interested in acquiring it, according to Reuters.

Gigamon Inc. develops and delivers solution that delivers visibility and control of data-in-motion traversing enterprise, federal, and service provider networks in the United States, rest of Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers traffic intelligence applications that provide controls for traffic selection, forwarding, manipulation, modification, de-duplication, SSL decryption, correlation, sampling, and generation of flow records.

Gigamon could attract interest from Hewlett Packard Enterprise (HPE), F5 Networks (FFIV) and PE firm Thoma Bravo, which previously bought Riverbed Technology, according to the report.

Needham analyst Alex Henderson estimated that a fair value for Gigamon is in the $50-$55 range.

Elliott has succeeded in pushing many technology companies to sell themselves in recent years, including Mentor Graphics, LifeLock Inc and Qlik Technologies.

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Wonder Woman does Wonders at the Box Office

‘Wonder Woman’ wins weekend with $100.5M debut

“Captain Underpants: The First Epic Movie,” disappoints with $23.5M debut

 

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#TimeWarner’s ($TWX) “Wonder Woman” earned $100.5M in its U.S. debut over the June 4 weekend, matching expectations for at least $100M. The latest entry in the DC Comics cinematic universe received an A in audience polls from #CinemaScore, holds a critics rating of 93% on #RottenTomatoes — significantly higher than the 27% of its most immediate predecessor, 2016’s “Batman v Superman” — and was produced with a reported budget of $149M. In foreign markets, the Gal Gadot-led film took $122.5M.

BOX OFFICE RUNNERS-UP

“Captain Underpants: The First Epic Movie,” distributed by Fox (FOX) and produced by Comcast’s (CMCSA) DreamWorks, opened at $23.5M versus estimates of $28M. The animated children’s film was scored B+ in audience polls and holds an 86% critics rating.

Taking third place, Disney’s (DIS) “Pirates Of The Caribbean: Dead Men Tell No Tales” grossed $21.6M, representing a second-weekend drop of more than 65%. Internationally, the fifth installment in the fantasy adventure series continued its strong showing with receipts of $74M.

Rounding out the top five, Disney’s “Guardians Of The Galaxy Vol. 2” added $9.7M for a global cumulative total of $817M while Viacom’s (VIA) “Baywatch” earned $8.5M. Other publicly traded companies in filmmaking include Lionsgate (LGF.A) and Sony (SNE).

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Qdoba Moves Jack In the Box

Jack In the Box would net $223M from the sale of Qdoba

After Qdoba sale, Jack in the Box’s free cash flow would rise to 6%

 

The shares of fast food chain owner Jack in the Box (JACK) are climbing after Wells Fargo upgraded the stock and Oppenheimer said the company’s risk/reward ratio will be “intriguing” if it can sell Qdoba.

Jack in the Box announced on May 17 that it was exploring strategic alternatives for #Qdoba, it’s burrito chain.

UPGRADE:

Wells Fargo analyst Jeff Farmer upgraded Jack in the Box to Outperform from Market Perform, arguing that the stock does not fully reflect the benefits that the company will obtain from selling Qdoba.

Estimating that the company would net $223M from the sale of Qdoba, the analyst predicted that it would repurchase $423M of its stock in the wake of the deal, lowering its share count by 14%.

Moreover, following a deal, $Jack in the Box’s EBITDA margin would increase by 10.5 percentage points and its return on invested capital would rise by over three percentage points, Farmer estimated. He raised his price target on the shares to $125 from $114.

INTRIGUING:

The risk/reward ratio of Jack in the Box’s stock is “intriguing,” assuming the company sells Qdoba, contended analyst Brian #Bittner.

Selling Qdoba would enable Jack in the Box to more effectively lower its costs and debt levels, Bittner believes.

After unloading Qdoba, Jack in the Box’s free cash flow would rise to 6% before share buybacks, versus the average of its peers of 4%-5.5%, the analyst stated.

Additionally, Jack in the Box can benefit from its delivery initiatives and discount deals, as well as commodity inflation that could force its competitors to scale down their discounts, Bittner believes. He kept a $125 price target and an Outperform rating on the shares.

PRICE ACTION: In midday Friday trading, Jack in the Box (JACK) rose 2.3% to $109.32. Note that the quick service restaurant sector has been outperforming other parts of the Restaurant sector.

Other stocks to watch: MCD, QSR, WEN, DPZ, YUM, and SONC.

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May’s Job Report Disappoints!

U.S. nonfarm payrolls rose only 138k in May, disappointing estimates for a near 200k gain

The unemployment rate dropped to 4.3% versus 4.4% previously

 

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U.S. nonfarm payrolls rose only 138k in May, disappointing estimates for a near 200k gain, following a downwardly revised 174k increase in April (was 211k) and a 79k gain in March.

The unemployment rate dropped to 4.3% versus 4.4% previously.

Average hourly earnings rose 0.2% as was the case in April (revised from 0.3%). The workweek was steady at 34.4.

For the internals, the labor force plunged 429k after April’s 12 rise, with household employment tumbling 233k from 156k.

Private payrolls were up 147k compared to the 253k jump in the ADP, while government subtracted 9k.

Jobs in the goods producing sector were up 16k, with construction increasing 11k and manufacturing falling 1k.

The service sector added 131k jobs, led by education/health with a 47k gain, while business services jobs were up 38k.

Declines were registered in trade/transport and information services.

The disappointing report will knock bond yields lower but shouldn’t seriously impact expectations for a Fed rate hike on June 14. The dollar is lower following the job report as some hope that FOMC may not raise interest rates at its next meeting.

Stocks to watch: MAN, RHIKELYATMH, ASGN, KFRC

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Pinnacle Foods Could be Sold

Three years ago, Pinnacle Foods agreed to a takeover of $4.3 billion by Hillshire Brands. That deal was canceled after Hillshire agreed to sell itself to Tyson Foods.

 Hillshire was led at the time by Sean Connolly, who is now chief executive of Conagra. 

Reuters reports that ConAgra Brands (CAG) has approached Pinnacle Foods (PF) for a takeover.

Conagra’s approach to Pinnacle Foods took place in the last few weeks. There is no assurance that Pinnacle Foods will choose to walk down the alter, or that Conagra will pursue a potential deal further, the report said.

Pinnacle Foods operates through four segments: Frozen, Grocery, Boulder, and Specialty. The Frozen segment offers brands such as the Bird’s Eye,  Van de Kamp’s, Mrs. Paul’s, Lender’s, Celeste, Hungry-Man, and Aunt Jemima names. The Grocery segment brands include the Duncan Hines, Vlasic, Wish-Bone, and Mrs. Butterworth’s.

Conagra Brands, Inc. (CAG) operates as a food company in North America. It operates through five segments: Grocery & Snacks, Refrigerated & Frozen, International, Foodservice, and Commercial.  The company markets its products primarily under the Healthy Choice, Hunt’s, Slim Jim, Reddi-wip, Alexia, Blake’s, Frontera, Bertolli, P.F. Chang’s, and Marie Callender’s brands.

What Goes Around, Comes Around

Three years ago, Pinnacle Foods agreed to a takeover of $4.3 billion by Hillshire Brands. That deal was canceled after Hillshire agreed to sell itself to Tyson Foods Inc for $7.7 billion.  Hillshire was led at the time by Sean #Connolly, who is now chief executive of Conagra.

Connolly’s second attempt at an acquisition of Pinnacle Foods underscores the need for further consolidation in the frozen food and condiments sectors, as sales continue to decline with consumers opting for healthier choices.

Conagra has been seeking to reinvent itself since selling its private label unit for $2.7 billion in 2016 to focus on its branded food business. Last year it spun off its $6.9 billion frozen potato business, Lamb Weston Holdings Inc. This week it agreed to sell its Wesson oil brand to Folgers coffee maker J.M. Smucker for $285 million.

Conagra has a market cap of $17 billion while Pinnacle has a market cap of less than $8 billion.

Price Action

PF shares last traded at $62.31. It has a 52-week trading range of $42.09 – $66.50

CAG last traded at $39.78. CAG has a 52-week trading range of $33.08 – $41.68.

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Palo Alto Results Lift Cyber Security Stocks

The company’s revenue came in at $432M, versus the consensus outlook of $412M

The company provided Q4 EPS guidance of 78c-80c, versus expectations of 74c

 

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The shares of Palo Alto (PANW) are climbing, and lending a boost to some peers, after the IT security company last night reported stronger than expected third quarter results and provided fourth quarter profit guidance that exceeded expectations.

A number of analysts were more upbeat about Palo Alto in the wake of its results.

RESULTS:

Palo Alto reported third quarter earnings per share, excluding certain items, of 61c, versus the consensus outlook of 55c. The company’s revenue came in at $432M, versus the consensus outlook of $412M.

“We reported record revenue…in our fiscal third quarter and added the second highest number of new customers in the company’s history,” said Palo Alto CEO Mark McLaughlin.

The company $PANW provided fourth quarter EPS guidance, excluding some items, of 78c-80c, versus the consensus outlook of 74c.

ANALYST REACTION:

Palo Alto’s business metrics “improved modestly” last quarter compared with the previous quarter, wrote #Jefferies analyst John #DiFucci. The company’s recent slowdown was primarily caused by the stage of its product cycle, the analyst stated. He thinks that the company’s Q4 guidance is “likely prudent” and could be conservative. DiFucci raised his price target on the name to $155 from $150 and kept a Buy rating on the stock.

#Gabelli analyst Hendi #Susanto upgraded Palo Alto Networks to Buy, saying the positive Q3 report increased confidence of its sales reorganization execution trajectory.

Palo Alto’s results were “just what it needed to turn the tide…after a rough couple of quarters,” wrote #JPMorgan analyst Sterling Auty. The fact that the company’s Q3 product revenue beat expectations by about $18M makes it Q4 guidance look more realistic, #Auty believes. The results should be a relief to investors who were worried that the company’s slowdown did not bode well for others in the space, the analyst added. Yesterday’s results indicate that Palo Alto’s previous troubles were caused by sales execution and were “company specific, ” he stated. However, Auty kept a Neutral rating on the stock.

OTHERS TO WATCH:

Other publicly traded companies in the space include Barracuda (CUDA), Check Point (CHKP), F5 Networks (FFIV), FireEye (FEYE), Fortinet (FTNT), Imperva (IMPV), Proofpoint (PFPT), Qualys (QLYS) and Symantec (SYMC).

PRICE ACTION: In Thursday’s trading, Palo Alto jumped 15.6% to $137.09.

Short Squeeze In Progress

Note that some of the price increase in PANW is due its high #short ratio. As of last May 15th, a total of 7,988,200 shares have been sold short which give the stock a short ratio of about 4 days.

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Dakota Access Pipeline Begins Carrying Oil

The “Bakken Pipeline” begins carrying oil

The Bakken Pipeline is a 1,872-mile, mostly 30-inch pipeline system that transports domestically produced crude oil from the Bakken/Three Forks productions areas in North Dakota to a storage and terminalling hub outside Patoka, Illinois, and/or down to additional terminals in Nederland, Texas.

 

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Bakken Pipeline is a 1872 mile, 30-inch diameter line

Energy Transfer Partners (ETP) announced that the #DakotaAccess Pipeline and the Energy Transfer Crude Oil Pipeline, collectively the “Bakken Pipeline,” are in commercial service under the Committed Transportation Service Agreements through their respective pipeline systems.

The #Bakken Pipeline, owned by Dakota Access, LLC and Energy Transfer Crude Oil Company LLC, respectively, is a 1,872-mile, mostly 30-inch pipeline system that transports domestically produced crude oil from the Bakken/Three Forks productions areas in North Dakota to a storage and terminalling hub outside Patoka, Illinois, and/or down to additional terminals in Nederland, Texas.

The Bakken Pipeline is a joint venture between Energy Transfer Partners with a 38.25 percent interest, MarEn Bakken Company LLC with a 36.75 percent interest, and Phillips 66 (PSX) with a 25 percent interest.

MarEn is an entity owned by MPLX LP (MPLX) and Enbridge Energy Partners L.P. (EEP).

Dakota Access and ETCO, developed at a combined cost of approximately $4.78 billion have commitments, including shipper flexibility and walk-up, for approximately 520,000 barrels per day. This is up from 470,000 barrels per day due to the successful Supplemental Open Season held earlier this year that committed an additional 50,000 barrels per day.

The combined system is expandable to a capacity of approximately 570,000 barrels per day. The pipeline will transport light, sweet crude oil from North Dakota to major refining markets in a more direct, cost-effective, safer and more environmentally responsible manner than other modes of transportation, including rail or truck.

Energy Transfer Partners approved and announced the pipeline project on June 25, 2014. In October 2014, Phillips 66 acquired 25% stake in the project. Since then, the project has been controversial. The firm had to fight several lawsuits to secure right-of-way for the project. The company was sued by Indian tribes, Iowa farmers, and environmental groups. The U.S. Army Corp of Engineers ( #USACE ) got involved and the entire project became a political issue. On November 1, 2016, President #Obama announced his administration was monitoring the situation and had been in contact with the USACE to examine the possibility of rerouting the pipeline to avoid lands that Native Americans hold sacred.

On January 24, 2017, President Donald #Trump, in contrast to the Obama administration, signed a presidential memorandum to advance the construction of the pipeline under “terms and conditions to be negotiated.”

Energy Transfer Partners began loading the pipeline with crude oil by April 2017. A small, 84-gallon spill of crude oil occurred at a South Dakota pumping station on the route on April 6, 2017. With full operation, East Coast refineries reduced their orders for rail-delivered oil in May and June.

Crude oil last traded at $50.68 per barrel.

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Crude Oil Higher on Supplies Drawdown

API reported a draw of 8.67 million barrels in U.S. crude oil inventories for last week

Gasoline inventories fell by 1.726 million barrels, Distillate inventories rose by 124,000 barrels

 

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Crude oil is higher following inventory data

For the week ending May 26, the American Petroleum Institute ( #API ) reported a draw of 8.67 million barrels in United States crude oil inventories, compared to analyst expectations of a draw of 2.8 million barrels.  Gasoline inventories fell by 1.726 million barrels, according to the API. #Distillate inventories rose this week by 124,000 barrels, while inventories at the Cushing, Oklahoma, site fell by 753,000 barrels.

It appears that refiners have been making gasoline in anticipation of the summer driving season. Whatever the reason for the drawdown, it is welcomed by producers. Oil prices have fallen this week, from WTI at $51.41 last week to $48.24 on Wednesday ahead of the API report. Brent traded at $50.68 ahead of the report—off from $54.11 this time last week.

WTI = West Texas Intermediate

The Vienne Group Decision

Last week, the Organization of Petroleum Exporting Countries, #OPEC, ministers meeting in Vienna produced an agreement to maintain production reduction of 1.8 million barrels per day for another nine months. The so-called Vienne Group, which is OPEC nations plus allied oil producing nations, most notably Russia, are hoping the move would support prices.  Saudi Arabia last week announced it would reduce oil exports by 15% to the US to manually adjust the inventory equation, in hopes of lifting prices.

Rig Counts Rise

Prices are pushed lower by continued rise in the domestic production and a rise in rig counts in the U.S. and Canada. The U.S. rig count rose 7 rigs last week to 915, with oil rigs up 2 to 722, gas rigs up 5 to 185, and miscellaneous rigs unchanged at 1. The U.S. Rig Count is up 511 rigs from last year’s count of 404, with oil rigs up 406, gas rigs up 98, and miscellaneous rigs unchanged. The Canadian Rig Count rose 8 rigs last week to 93, with oil rigs up 4 to 40 and gas rigs up 4 to 53. The Canadian Rig Count is up 50 rigs from last year’s count of 43, with oil rigs up 26, gas rigs up 25, and miscellaneous rigs down 1 to 0.

Five Weeks Drawdown

This week inventory number showed a significant draw in itself. The last five reporting weeks has seen a reduction of 19.277 million barrels, according to API data, and 15.9 million barrels using the Energy Department’s Energy Information Agency’s #EIA numbers. While the draw doesn’t offset the builds we saw in Q1 but drawdown trends from Q1 to Q2 cannot be ignored, and should be a positive sign for the industry.

EIA reports its inventory data on Thursday morning, delayed one day due to the Memorial Day holiday.

At last check, WTI was trading at $48.72 per barrel, up 42 cents. WTI has a 52-week trading range of $44.13 – $58.15. Brent last traded at $51.20 per barrel, up 44 cents. Brent has a 52-week trading range of $46.47 – $60.21 per barrel.

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Exact Sciences Higher on UnitedHealth News

Cologuard is a noninvasive, at-home screening test for colon cancer

About 30M more people will be able to be reimbursed for Cologuard tests as a result of UnitedHealth’s decision

 

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UnitedHealth to begin covering Cologuard July 1

 

EXACT Science ( $EXAS ) shares are climbing after health insurance giant UnitedHealth ( $UNH ) agreed to cover the company’s Cologuard test, starting July 1.

Cologuard is a noninvasive, at-home screening test for colon cancer. It is for adults 50 years or older who are at average risk for colon cancer, and it is available by prescription only.  As of March 2017, the list price of Cologuard was $649.

A number of analysts responded to the news by raising their price targets on EXACT Sciences.

TARGET INCREASES:

Canaccord analyst Mark #Massaro raised his price target on EXAS to $40 from $38.

About 30M more people will be able to be reimbursed for Cologuard tests as a result of UnitedHealth’s decision, and a total of more than 227M people will be able to get reimbursed for the test by their insurers as of July 1, the analyst stated. The analyst expects the company’s 2017 revenue to come in at the high end of its 2017 guidance range of $195M-$205M, although he noted that the consensus outlook was $210M before yesterday.

He increased his 2020 earnings per share estimate for the company to 90c from 80c, but he believes that estimate could be conservative. The analyst kept a Buy rating on the stock and continued to identify it as a top pick.

#Benchmark analyst Raymond Myers increased his price target on Exact Sciences to $50 from $34 as he raised his 2018 test volume growth forecast for Cologuard to 55% from 50% and increased his revenue forecast per test to $470 from $440. He kept a Buy rating on the shares.

DEMAND SEEN AS STRONG: “Essentially” all major insurers now cover Cologuard and demand for the test should continue to be strong, according to William Blair analyst Brian Weinstein. By the middle of 2018, most major insurers should have deals with EXACT Sciences to cover the test for at least the $510 that Medicare is paying, the analyst predicted. He kept an Outperform rating on the stock.

Meanwhile, shot-seller site #Citron Research views UnitedHealth’s (UNH) coverage of Cologuard as a negative for Exact Sciences (EXAS), claiming Exact had to lower the price of the test, making it unprofitable.

PRICE ACTION: In morning trading, EXACT Sciences rose nearly 10% to $35.90.

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