ANN, THQI, CEPH, DDS, CIEN, NRTLQ Popular Stocks
U.S. stocks rose Monday, as the Dow Jones Industrial Average grew 1.23% to 10445, the S&P 500 rose 1.28% to 1105 and the Nasdaq Composite Index gained 1.27% to 2173.
AnnTaylor Stores Corp. (NYSE:ANN, $14.44, +$0.82, 6.02%) was upgraded to overweight from equal weight by Thomas Weisel, which sees an attractive entry point after Friday’s post-earnings selloff. The firm cited better-than-expected gross margins and earnings per share that was nearly triple Street expectations. The firm also said it isn’t deterred by revenue below expectations and same-store sales down 14%. “The balance sheet is clean with lean inventories and no debt,” the firm observed, and it raised its price target to $18 from $16.
THQ Inc. (NASDAQ:THQI, $4.88, +$0.19, 4.05%) appears “more attractive,” Wedbush said in upgrading the stock to neutral. The firm said “recent weakness adequately reflects investor expectations of a return to modest profitability.” It added investors appear to no longer fear a bankruptcy and they’re expecting THQ will face an uphill challenge to grow revenue and profits. Wedbush noted expectations for a solid first half for fiscal year 2010 and recent issue of $100 million of convertible notes have addressed bankruptcy concerns. It also believes that THQ’s prospects are much improved, and expects the company to deliver modest operating leverage as its revenue grows.
RBC downgraded Cephalon Inc. (NASDAQ:CEPH, $54.50, -$5.11, -8.57%) to sector perform, citing a lack of near-term catalysts after its Cinquil missed one of the main goals of its trial in treating eosinophilic esophagitis, a rare condition that occurs more often in children. RBC said in a note to clients that Cinquil was Cephalon’s most advanced product in development, and it’s expected to file for approval in early 2010. Cephalon is partnered with private Ception for the drug, and has extended its option to buy the company until after the results from a phase II asthma-related study.
Dillard’s Inc. (NYSE:DDS, $16.54, +0.88, 5.62%) shares rose after Deutsche Bank upgraded the stock to buy from hold and more than doubled its price target to $28 from $13.50. The retailer showed “new trajectory” in its third-quarter results that indicate it’s positioned to significantly grow earnings through merchandising and cost controls, improved inventory management and generally more efficient ways of operating, the firm said.
Ciena Corp. (NASDAQ:CIEN, $11.91, -$1.26, -9.53%) agreed to acquire Nortel Networks Corp.’s (NRTLQ, $0.0500, -$0.0001, -0.20%) division that develops networking gear used to transmit data and voice traffic within and between cities, for a total of $769 million, or nearly half again its original bid. Morgan Keegan downgraded the stock to market perform from outperform, saying, “We are disappointed that Ciena felt it necessary to pursue the Nortel assets in what appears as a win at all costs approach.”
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