U.S. stocks were mixed Friday, as the Dow Jones Industrial Average fell 4 points to 7974 and the S&P 500 rose 2 points to 836. The Nasdaq Composite inched up 9 points to 1611. Among the companies whose shares are actively trading in the session are Research In Motion (RIMM), Novo Nordisk A/S (NVO) and RC2 Corp. (RCRC).
Research In Motion ($59.16, +$10.07, +20.51%) said its fourth-quarter earnings rose nearly 26% and predicted fiscal first-quarter earnings between 88 cents and 97 cents a share, well above the 82 cents that analysts had estimated. At least three analysts have boosted their stock rates on RIM following the release with BMO Capital pointing to an improving gross margin outlook and Credit Suisse adding the company's BlackBerry smartphones were gaining more market share than they had expected.
Shares in Danish pharmaceutical company Novo Nordisk ($44.68, -$3.24, -6.76%) slumped Friday on fears that U.S. regulators would delay the launch of its potential blockbuster diabetes drug Liraglutide. Late Thursday, an expert panel of the U.S. Food and Drug Administration came to a split vote on whether data on a type of thyroid tumors seen in rodent studies permitted marketing of the drug. The company believes the drug will still be approved.
Debate over whether Novo Nordisk diabetes drug liraglutide will be approved cast more uncertainty on a similar drug, Byetta, which is being developed by Amylin Pharmaceuticals Inc. (AMLN, $9.38, -$0.94, -9.11%), Alkermes Inc. (ALKS, $9.48, -$1.93, -16.92%) and Eli Lilly & Co. (LLY, $32.81, -$1.09, -3.23%) Though the news may delay a key competitor, the FDA concern about thyroid cancer risk could add a hurdle to a longer-acting Byetta that will be filed for approval in the second quarter. Byetta already suffers from an overhang related to its potential relation to pancreatic side effects.
Toy maker RC2's ($5.90, -$1.20, -16.90%) 2009 earnings may be at risk from inventory cuts at retailers, said Caris, which cut the rating to average from buy. Caris said RC2 told it the toy market is "not improving yet, but also not getting significantly worse." Caris added that RC2 is losing its Take Along Thomas license to Fisher Price next year and could be in danger of losing the whole caboose of the Thomas Wooden Railway franchise in 2012, which would be a major blow.
Kimco Realty Corp. (KIM, $8.59, +$1.10, +14.69%) said it will cut its dividend 86% to 6 cents a share in the third and fourth quarters, as the shopping-center owner plans to sell 70 million common shares in a secondary offering. The real estate investment trust also reduced the top end of its projected range for 2009 funds from operations, a key measure of REIT profitability.
Ireland's three largest banks, Irish Life & Permanent PLC (IPM.DB), Bank of Ireland PLC (IRE, $4.34, +$0.94, +27.68%) and Allied Irish Banks PLC (AIB, $2.85, +$0.65, +29.55%), said Thursday they will pass on the full European Central Bank 25 basis points interest rate cut to variable and tracker owner-occupier mortgage customers. Economists had expected Ireland's major banks to promptly announce that they will pass on the rate cut, as they are all included in the government's EUR420 billion-plus bank deposit guarantee scheme.
Other Stocks In Focus:
A. Schulman Inc.'s (SHLM, $13.60, -$1.19, -8.05%) fiscal second-quarter loss widened on charges and lower sales amid weak demand. The supplier of raw materials for plastics said "unprecedented demand weakness drove significant volume reductions," which were partially offset by cost cutting.
Citi downgraded its investment rating on Akamai Technologies Inc. (AKAM, $19.78, -$1.77, -8.21%) to hold from buy based on valuation. The firm in a research note said the Internet service provider's stock price has moved within 2% of the firm's $22 price target, as a result, it believes the stock's risk-reward as less compelling.
D.A. Davidson cut the investment rating on ATMI Inc. (ATMI, $17.01, -$0.98, -5.45%) saying the semiconductor equipment company to neutral from buy saying there is little upside left for shares, though the analysts also raised their earnings estimate for this year.
Shares of biotech companies ArQule Inc. (ARQL, $4.13, -$0.38, -8.43%) and ZymoGenetics Inc. (ZGEN, $3.68, -$0.52, -12.38%) fell after UBS downgraded the stocks to neutral from buy, saying ArQule is on fundamentally solid ground, but the most meaningful clinical data updates for the company are beyond the 12-month investment horizon. On ZymoGenetics, UBS said beyond a recent agreement with Bristol-Myers Squibb, the company's pipeline is relatively early-stage and "lacks obvious near-term value-driving news flow."
Moody's Investors Service cut its credit ratings late Thursday on Capital One Financial Corp. (COF, $12.84, -$0.30, -2.28%) to indicate below-average credit quality, saying the company still faces elevated credit costs and profitability pressures amid the weak U.S. economy.
After shares jumped Thursday on better-than-expected fourth-quarter earnings, CarMax Inc. (KMX, $12.25, -$0.98, -7.41%) receded Friday with analysts, saying the rise may have been overdone. Wachovia downgraded the investment rating to underperform and said the car dealer was at risk from high new vehicle inventories, which will force discounting. Meanwhile, BGB Securities also cut the rating, saying the 50% rise over the past four weeks makes the stock too pricey, though BGB said it remains confident in management and CarMax.
Cascade Corp. (CAE, $18.61, -$1.35, -6.76%) reported fourth-quarter results that fell short of Wall Street's estimates because of "significantly depressed demand for lift trust and our products." Cascade, which makes attachments and fork products for the lift-truck industry, said it has taken steps to adjust operations to reduced business levels, including by cutting its work force by 20% and reducing work schedules.
Charming Shoppes Inc. (CHRS, $2.09, +$0.27, +14.73%) appointed James P. Fogarty to the posts of president and chief executive, ending a nearly nine-month search to fill the company's top position.
Blockbuster Inc. (BBI, $0.89, +$0.06, +7.25%) completed the refinancing of a reduced $250 million revolving credit facility, easing concerns about the video-rental chain's liquidity.
Bernstein Research cut Bristol-Myers Squibb Co.'s (BMY, $20.24, -$1.09, -5.11%) stock rating to market perform from outperform in part due to valuation and that "odds appear lower that BMY will be a takeover candidate anytime soon." Bernstein said that following the recent trend of major pharmaceutical mergers, Bristol-Myers shares have some take-out potential priced in. But those mega-mergers make for fewer companies to pair up with, and some of the remaining giants have disavowed acquisitions, leaving Bristol-Myers out in the cold.
Wachovia cut its stock-investment rating on Gaylord Entertainment Co. (GET, $8.16, -$1.21, -12.91%) to market perform from outperform, saying the entertainment and hospitality company's stock has jumped 91% since March 10. The firm said an agreement with Gaylord's activist shareholders served as the catalyst to lift shares and that an amendment to a rights plan allows for an offer for the company that's fully financed, 25% over the then-current price and the 12-month moving average price. But Wachovia said it is in the potential acquirer's advantage to wait, meaning there isn't much potential upside in the share price in the near term.
Gilead Sciences Inc. (GILD, $46.49, +$1.79, +4.00%) said its hypertension drug, darusentan, was effective in a Phase III clinical trial. The results from the second trial are expected to come in first quarter next year with an expected 2011 launch, assuming approval. Gilead's news could help silence critics of the company's recent $1.4 billion deal for CV Therapeutics Inc. which has an established cardiovascular sales force that'll likely be key in selling darusentan.
Global Payments Inc. (GPN, $32.13, -$1.69, -5.00%) swung to a fiscal third-quarter loss as the company recorded a big goodwill write-down in its money-transfer business. The provider of card-authorization services for merchants backed its fiscal-year guidance.
Hutchinson Technology Inc. (HTCH, $1.79, -$1.16, -39.32%) released preliminary numbers for its fiscal second-quarter, which ended March 29. The firm said its shipments for suspension assemblies, a precision component used in disk drives to keep the reading lense at the proper distance, fell 31% from the first quarter and the average selling price dropped 5 cents a unit. The company now expects net sales for the quarter to be $79 million, when analysts had been looking for $101 million.
Lawson Software Inc.'s (LWSN, $4.85, +$0.17, +3.63%) fiscal third-quarter net income surged despite a double-digit-percent revenue drop from a year earlier, when the company recorded bigger charges and a higher tax rate. The business-software maker reported a drop in new-license revenue, the third-straight quarter of declines, but margins continued to improve, as the company has moved some operations to lower-cost regions and shifted away from consulting services. Lawson forecast fiscal fourth-quarter per-share earnings in line with analysts' estimates, but its revenue view was below Wall Street's expectations.
D.A. Davidson cut the rating on Schnitzer Steel Industries Inc. (SCHN, $35.19, -$2.64, -6.98%) saying the previous optimism about earnings improvements have been pushed back further into 2010, though shares have been pricing in the recovery. The analysts said that there doesn't appear to be any recovery in scrap metal industry.
Whole Foods Market Inc. (WFMI, $18.17, -$0.71, -3.76%) was downgraded to hold from buy at Jefferies & Co. While Whole Foods has been able to stem declines in operating performance, the firm believes the company is poised to expects comparable same-store sales to fall 5% in the second quarter. The firm added tax hikes on the upper-middle class in California, New Jersey and New York leaves key customers with fewer dollars to spend.
-By Dow Jones Newswires; write to hotstocks@dowjones.com
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