• J&J to Buy Synthes for $21.3 Billion
    Posted by on April 27th, 2011 at 9:10 am

    This is going to be a busy day for the market. After the close, we’re going to get earnings reports from AFLAC ($AFL) and Fiserv ($FISV). Also, the Federal Reserve will be wrapping up its meeting and Ben Bernanke will hold the Fed’s first-ever news conference.

    Also, it’s now official: Johnson & Johnson ($JNJ) is going to buy Synthes for $21.3 billion.

    Johnson & Johnson will buy Synthes for 159 Swiss francs per share — that’s 103.35 Swiss francs in JNJ stock and 55.65 francs in cash. Considering the size of J&J’s cash balance, I would have preferred they had used as much cash as possible.

    The deal still needs to be approved:

    It’s unclear whether Synthes’s public shareholders, many of whom now are aggressive hedge-fund traders who move in once a company is in play, will be satisfied with the price J&J is offering for market growth. Many have argued privately in recent days that Synthes is worth at least 165 francs a share.

    If completed, the Synthes purchase would be J&J’s largest acquisition to date. In 2006, it bought Pfizer Inc.’s consumer health-care business for $16.6 billion. Since then, the company, which has nearly $28 billion in cash and securities, has typically eschewed large deals in favor of a “string of pearls” approach, shelling out as much as a few billion dollars for companies. At the same time, J&J aims for dominant positions in its main markets of consumer products, pharmaceuticals and medical devices and diagnostics.

  • Morning News: April 27, 2011
    Posted by on April 27th, 2011 at 7:41 am

    Japan Debt Outlook Cut to Negative by S&P as Quake Rebuilding Adds to Debt

    Dollar Slips Before Fed Decision; Stocks Rise, Greek Bonds Drop

    Silver Steadies, Gold Perky Ahead of Fed Decision

    Crude Rises as Europe Economic Data Boost Demand Optimism, Pressure Dollar

    Johnson & Johnson to Buy Synthes for $21.3 Billion

    Barrick Gold to Buy Equinox for $7.66 Billion, Topping Offer by Minmetals

    Credit Suisse Braces For Second Shareholder Revolt

    Amazon.com Forecast Misses Estimates After Spending Growth

    Whirlpool’s First-Quarter Earnings Advance, Boosted by Energy Tax Credit

    Health Insurer WellPoint Raises Full-year View as Profit Beats

    BP’s Net Profit Rises

    Barclays Capital Profit Drops by 33% in ‘Challenging’ Market

    China’s Huawei Sees $100 Billion Revenue in 10 Years

    Paul Kedrosky: Sony: Massive Network Security Lapse

    Joshua Brown: re: Banner Ad Brain Drain

    Aflac Finds Its New Duck on the … Web

  • S&P 500 Earnings Are Tracking at $22.71
    Posted by on April 26th, 2011 at 10:28 pm

    Wendy Soong at Bloomberg has a nice summary of earnings season so far — and things are looking good.

    Of the 500 companies in the S&P 500, 193 have reported so far. Earnings are on track to come in at $22.71. Some context: On March 31st, Wall Street was expecting earnings of $22.13 so we’re ahead of expectations. For Q1 in 2010, the S&P 500 earned $19.38.

    For all of 2011, I’d say $100 is too high, but we might come very close. I think $97 or $98 is within reach.

    Well…unless something unexpected happens.

  • NICK = $13.25
    Posted by on April 26th, 2011 at 4:50 pm

    Earlier today I noted NICK’s volume surge. The stock had been rising all day but suddenly jumped in the last hour of trading. NICK got as high as $13.61 today before closing at $13.25.

    Total volume was 131,638 shares which is the busiest day in nearly three years.

  • Becton, Dickinson Beats and Guides Higher
    Posted by on April 26th, 2011 at 4:20 pm

    Becton, Dickinson ($BDX) just reported fiscal Q2 earnings of $1.38 per share which was eight cents more than expectations.

    The company also raised its full-year EPS guidance from the earlier range of $5.45 to $5.55 to a new range of $5.55 to $5.65.

    This revised guidance reflects the anticipated effects of favorable currency and operating efficiencies, partially offset by higher resin costs and the negative impact of the Japan earthquake and tsunami. Diluted earnings per share from continuing operations for fiscal year 2011 are expected to increase 12 to 14 percent over adjusted diluted earnings per share from continuing operations of $4.94, excluding the specified item, for fiscal year 2010. The specified item represents the aforementioned 2010 non-cash charge of $0.04 per share related to healthcare reform. On a currency-neutral basis, the Company expects diluted earnings per share from continuing operations to increase about 10 percent over adjusted diluted earnings per share in the prior-year period.

    If I’m reading the earnings report right, the revised guidance includes a loss of five cents per share due to the impact of the earthquake and tsunami.

    This is a very good report. The stock is up about $1 in the after-hours market.

  • Volume Surge at NICK
    Posted by on April 26th, 2011 at 3:06 pm

    So far, 105,000 shares have traded today. That’s about 10 times normal and it’s happening on no news. Another 53,700 shares traded yesterday.

    Today looks to be the highest volume day in nearly two years. Twice in the last month, the stock didn’t trade a single share all day.

  • Stocks and Bonds Are Both Up Today
    Posted by on April 26th, 2011 at 2:11 pm

    Not only is today a good day for the stock market (the S&P 500 even got into Black Death territory of 1348-49), but the bond market is also doing well. This has been fairly rare recently to have both markets rally on the same day.

    Below I have a chart of the daily changes for the past year of the S&P 500 ETF ($SPY) on the X-axis and the Long Treasury Bond ETF ($TLT) on the Y-axis. As you can see, the returns have been negatively correlated.

    What does a re-convergence mean? It’s hard to say because both can be correlated on the up or down side. I should add that the TLT is the iShares Barclays 20+ Year Treas Bond ETF and that maturity hasn’t been the prime focus of the Federal Reserve’s QE2 policy.

    So what happens when paper assets are doing well on the same day? Hard assets like gold and silver are down.

  • Buy List Breaks 10% for the Year
    Posted by on April 26th, 2011 at 11:54 am

    It’s still early but our Buy List is doing very well today. Right now, we’re up 1.10% which gives us a gain of 10.64% for the year.

    Ford had been the big gainer today but it’s given some back. Fiserv ($FISV), Joey Banks ($JOSB) and Oracle ($ORCL) are all at new 52-week highs.

    I shouldn’t speak too loudly since we’re still in the middle of earnings season. I’m very curious what Becton, Dickinson ($BDX) will have to say after the close. I also think Deluxe ($DLX) is ready for a nice earnings beat on Thursday.

    Today’s report on consumer confidence beat expectations. The index rose to 65.4 which was 0.9 more than consensus. This is important because consumers make up about two-thirds of the economy.

  • Market Hits 34-Month High
    Posted by on April 26th, 2011 at 11:15 am

    Thanks to strong earnings from 3M ($MMM) and Ford ($F), the S&P 500 has broken out to a 34-month high today. The index has gotten as high as 1,345.97 this morning. This is the highest the S&P 500 has been since June 19, 2008.

  • Ford Earns 61 Cents Per Share
    Posted by on April 26th, 2011 at 8:31 am

    Excellent quarter for Ford ($F). The company made 61 cents per share which was 11 cents more than Wall Street’s consensus. This was Ford’s best profit in 13 years. The stock looks to open close to $16 per share this morning.

    Ford earned $2.6 billion in the first three months of 2011, a 22.4% improvement over a year earlier, as U.S. sales increased on the strength of small and midsize cars and cost-cutting in Europe resulted in a modest operating profit.

    The Dearborn automaker’s net income of 61 cents per share beat the 50 cents per share consensus forecast of about 20 Wall Street analysts and marked Ford’s most profitable first-quarter in 13 years. In 2010’s first quarter Ford made $2.1 billion, or 46 cents per share.

    Revenue increased 18% to $33.1 billion from $28.1 billion a year earlier.

    “Our team delivered a great quarter, with solid growth and improvements in all regions,” said Alan Mulally, Ford president and CEO. “We continue to accelerate our One Ford plan around the world.”

    Other good news is that the earthquake in Japan will have a very minor impact on Ford’s finances.