Movers & Shakers: Wednesday’s biggest gaining and declining stocks

Mar.19, 2008 in Market Outlook

Gasoline refiners, Adobe, Campbell Soup, Visa

By MarketWatch

Last Update: 7:53 AM ET Mar 19, 2008

TEL AVIV (MarketWatch) — Among the companies whose shares are expected to see
active trade in Wednesday’s session are the gasoline refiners, Adobe Systems,
Amerigroup, Campbell Soup, Fremont General, Kosan Biosciences, Misys, Morgan
Stanley, and Visa.

AAR Corp. (AIR) third-quarter net income rose to $20.1 million, or 47 cents a
share, from $15.3 million, or 36 cents a share, in the year-earlier period.
Revenue climbed to $376.6 million from $271 million, the provider of products and
services for aerospace and defense said. Analysts had forecast earnings of 46
cents on revenue of $328.4 million.

Adobe Systems Inc. (ADBE) first-quarter net income rose to $219.4 million, or 38
cents a share, from $143.9 million, or 24 cents, in the year-earlier period.
Revenue rose to $890.4 million from $649.4 million. Excluding special items, the
latest earnings were 48 cents a share. See full story
Click for Detail

Amerigroup Corp., (AGP) the Virginia Beach, Va., health-care-services provider,
reduced the top and bottom ends of its estimated earnings range for 2008. The
company said the move reflects the Federal Reserve’s 0.75-percentage-point
reduction in the benchmark interest rate. Amerigroup now expects to earn $2.46 to
$2.61 a share, compared with its prevous forecast of $2.58 to $2.73. A survey of
analysts by FactSet Research produced a consensus estimate of $2.61 for 2008. In
the first quarter, the company said, medical costs have been “within the range of
historical seasonal patterns. Based on paid-claims data for the first two months
of 2008, the company’s December 2007 reserves appear to be adequate.”

Apple Inc. (AAPL) is mulling a radical new business model that would give
customers free access to its entire iTune music library in exchange for paying a
premium for its iPod digital music players and iPhones, the Financial Times
reported on Wednesday, citing executives familiar with the company’s negotiations
with big music publishers. The “all-you-can-eat” model would closely replicate
Nokia Corp.’s (NOK) “comes with music” offer. The report said Apple and the music
companies are discussing the price that the computer and music-player producer
would be willing to pay to access their catalogues. According to the FT, research
has shown that consumers would pay a premium of up to $100 for unlimited access
to music for the lifetime of the device or a monthly fee of $7 to $8 for a
subscription model.

Campbell Soup Co. (CPB) backed its 2008 sales and earnings growth forecasts and
completed its sale of Godiva Chocolatier to Yildiz Holding for $850 million. The
food maker projects 2008 sales growth will exceed its long-term outlook of 3% to
4% and predicts earnings from continuing operations to increase 5% to 7% from
2007.

Carlyle Capital Corp. (CARYF) was granted a court order to be placed into
compulsory liquidation on March 17. Four liquidators will be responsible for
assessing Carlyle’s assets and establishing its liabilities.

Darden Restaurants (DRI) earned $126 million, or 88 cents a share in its third
quarter, up from $106.4 million, or 72 cents a share, in the year-ago quarter.
Adjusted to exclude discontinued operations, Darden earned 80 cents a share, up
from 79 cents. Revenue rose 25% to $1.81 billion. Analysts had expected the
company to earn 81 cents a share on revenue of $1.8 billion. While Darden said it
faces “a difficult consumer and food cost environment,” it expects earnings per
share growth on a continuing operations basis of 7% to 9% for the full fiscal
year. See full story
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Fremont General Corp.: (FMT) Standard & Poor’s Ratings Services lowered the
long-term counterparty credit and senior debt ratings to D from CC. “The
downgrades are based on Fremont’s announcement that it has ‘determined to delay’
payment on its senior notes,” said S&P credit analyst Adom Rosengarten. The
rating companysaid the delayed payment is likely to result in a default of all of
the company’s financial obligations given the amount of financial stress the
company is under.

Gasoline Refiners: Higher gasoline inventories and record oil prices have driven
down shares of refiners about 30% this year, and the sell-off appears overdone,
Eitan Bernstein of FBR Capital Markets told clients on Wednesday. “We expect the
supply/demand balance to improve as the summer (peak gasoline demand) driving
season approaches,” Bernstein said. He reiterated outperform ratings on Holly
Corp., (HOC) Frontier Oil (FTO) and Valero. (VLO) “We recommend that investors
use the stocks’ recent weakness to build positions in these names,” he said. He
also reiterated market perform ratings on Sunoco (SUN) and Tesoro (TSO) but said
the two stocks have “the greatest potential downside.”

Healthways Inc. (HWAY) reported its second-quarter net income rose to $12.5
million, or 33 cents a share, from $11 million, or 30 cents a share, in the
year-earlier period. Revenue totaled $179 million, up from $160.3 million.
Analysts had forecast the company to report earnings of 33 cents on revenue of
$183.2 million. Healthways expects earnings of 38 cents to 39 cents a share in
the third quarter and $1.50 to $1.55 in fiscal 2008.

James River Coal Co. (JRCC) agreed to sell 3 million common shares in a public
offering through UBS Investment Bank. The underwriters have an option on as many
as 450,000 more shares if demand for the offer requries. The Richmond, Va.,
company has about 21.9 million shares outstanding. Some of the proceeds will
speed development of “several smaller internal projects that we have delayed for
the past couple of years due to conditions in the capital markets and soft coal
prices,” said Peter Socha, chairman and chief executive.

Kosan Biosciences Inc., (KOSN) the Hayward, Calif., biotechnology company focused
on cancer treatments, said that its president added the post of chief executive
and that it would cut 37% of its workforce to better focus its resources. Helen
S. Kim was named president in late February, succeeding Robert G. Johnson Jr.,
who resigned. She joined Kosan in January as senior vice president and chief
business officer. Before joining Kosan, Kim had been chief program officer for
the Gordon and Betty Moore Foundation of San Francisco. The job cuts will come
largely in research and administration. Kosan said it would take first-quarter
charges of $700,000, largely for severance.

MGIC Investment Corp. (MTG) said it plans a secondary offering of about $350
million in common shares and about $325 million in convertible debentures. The
company said it will offer about $53 million in additional common shares and $65
million in debentures if demand for the offering requires. MGIC said it will use
the funds to increase the capital of Mortgage Guaranty Insurance Co., its
principal insurance subsidiary.

Misys: (MUSJF)(UK:MSY) Credit Suisse Wednesday downgraded the provider of
financial-services and health-care solutions to neutral from outperform after the
company said it would merge its health-care division with U.S. clinical software
provider Allscripts. (MDRX) Misys on Tuesday said it is paying $330 million to
acquire 54.5% of the combined entity but Credit Suisse said the arithmetic
doesn’t add up as Misys Healthcare has a larger revenue base and better
profitability than Allscripts. It said the $330 million payout from Misys to
Allscripts holders outstrips the gain from synergy benefits.

Morgan Stanley (MS) reported fiscal first-quarter net income of $1.56 billion, or
$1.45 a share, compared with $2.67 billion, or $2.51, in the year-earlier period.
Net revenue fell 17% to $8.32 billion. Wall Street analysts had forecast profit
of $1.03 a share on revenue of $7.19 billion.

Odyssey Re Holdings Corp. (ORH) doubled its share-buyback authorization to $400
million, of which the company has used $146.9 million.

Sony Ericsson said first-quarter growth in mobile-phone units would moderate.
Sales “are expected to decline slightly,” the company said. Profit before tax is
expected to range 150 million to 200 million euros ($237 million to $316
million), as operating costs as a percentage of sales rose from the year-earlier
period, the company said. In addition, sales and profit from Ericsson Mobile
Platforms will be hurt by 200 million to 300 million Swedish kronor ($33.3
million to $50 million), the company said. Sony Ericsson is the joint venture of
Sony Corp., (SNE)the Tokyo consumer-electronics giant, and Ericsson, (ERIC) the
Stockholm telecom major.

Visa’s (V) initial public offering priced at $44 a share. The offering raised a
record $17.86 billion with the issue of 406 million shares. The $44 a share price
was above the expected range of $37 to $42 a share.

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