Category: Stock Market News

Shares of Chipotle Mexican Grill Inc. shed 2.3% in midday trade Monday, putting it on track to suffer a fifth-straight loss, after Nomura slashed his price target and sales outlook on the fast-casual restaurant chain. Analyst Mark Kalinowski, who rates the shares neutral, cut his stock price target to $372, which is nearly 6% below current levels, from $405. He lowered his third-quarter same-store sales forecast to decline of 19.5% from a 18.0% drop, and his earnings-per-share estimate to $1.60 from $1.90. “The company’s third-quarter promotions–including but not limited to Chiptopia–do not appear to have had the desired effects from the company’s perspective,” Kalinowski wrote in a note to clients. For the fourth quarter, Kalinowski lowered his same-store sales outlook to a decline of 3% from a decline of 2% and his EPS forecast to $2.00 from $2.15. The stock has tumbled 9.8% during its current losing streak to put it on track close at a two-month low. The stock has tumbled 18% year to date, while the S&P 500 has gained 4.2%.

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Walgreens, the drugstore chain that’s part of Walgreens Boots Alliance Inc. , said Monday that it’s introducing a ship-to-store service, offering free shipping for digital orders made on the Walgreens website and mobile app. There are more than 7,600 Walgreens and Duane Reade locations for order pick-up and no minimum purchase is required. Orders normally arrive in one to three business days. Items can also be shipped to the customer’s home at no charge, though there’s a $35 minimum order requirement for that service. Walgreens shares are down 0.3% in Monday trading, and down 8.4% for the year so far. The S&P 500 Index is up 4.4% for 2016 to date.

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BMO Capital analyst James Fotheringham said he was no longer bearish on Wells Fargo & Co. or bullish on J.P. Morgan Chase & Co. , based on valuation, following the recent share price moves. Fotheringham raised his rating on Wells Fargo to market perform, after being at underperform since February 2015, and cut J.P. Morgan’s rating to market perform, after being at outperform for the past 13 months. He said he remains cautious on Wells Fargo’s outlook, given the uncertainty surrounding the fallout from the cross-selling scandal, he said he thinks the stock has already “price in” the scandal. “Even after considering the anticipated effects of the cross-selling scandal on WFC revenues (lower), costs (higher), target valuation multiple (lower), and share count (higher), we still see (albeit marginal) upside potential for WFC shares,” Fotheringham wrote in a note to clients. Regarding J.P. Morgan, he said that despite “impressive” third-quarter results, he said the potential upside for the stock is limited, as it is now “valued appropriately” following its recent outperformance. Wells’ stock has tumbled 18% year to date, while J.P. Morgan shares have gained 2.4%, the SPDR Financial Select Sector ETF has tacked on 0.4% and the Dow Jones Industrial Average has gained 4%.

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PTC Therapeutics Inc. shares plummeted 29.2% to $9.41 on Monday morning after the company said its appeal of a Food and Drug Administration’s decision about its Duchenne muscular dystrophy drug had been denied. The company was appealing the regulator’s “refuse to file letter,” which the FDA issues with applications it deems clearly inadequate or having “omissions of clearly necessary information,” such as in cases requiring more data or analysis. PTC Therapeutics said it plans to continue its appeal with the FDA and said it expects “multiple cycles of appeals” may be necessary. As part of the FDA’s review, the company said an advisory committee meeting allowing patient advocacy is necessary. Translarna, which is intended for the treatment of DMD caused by a nonsense genetic mutation, should “be provided the same opportunity for full review” as “other recent applicants” for DMD treatments, the company said. The company’s appeal is a clear reference to the controversial approval of Sarepta’s DMD drug last month, the first treatment approved for the rare degenerative disease, and one in which patient advocacy efforts figured prominently. PTC Therapeutics shares rose 32.7% over the last three months, compared with a 1.5% decline in the S&P 500 .

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U.S. stocks opened little changed Monday as investors waited for a slew of earnings reports. Toy maker Hasbro Inc. shares jumped after the company reported results above expectations. Bank of America Corp. shares rose after better-than-reported earnings. The S&P 500 was flat at 2,133. The Dow Jones Industrial Average added 10 points to 18,150. The Nasdaq Composite began the session unchanged at 5,213.

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Caterpillar Inc. said Monday that its chairman and chief executive officer, Doug Oberhelman, will retire in March 2017, after 41 years with the company. The construction and mining equipment maker said Jim Umpleby, currently a group president in its energy and transportation business, who was been with the company for 35 years, will succeed Oberhelman as CEO. Current board member Dave Calhoun will become non-executive chairman when Oberhelman retires. “During the last four years, Caterpillar has faced unprecedented global economic conditions that have significantly impacted the industries served by our customers, as those industries and economic growth in many regions around the world have slowed or severely contracted,” Oberhelman said. The stock, which fell 0.6% in premarket trade, has run up 29% year to date through Friday, while the Dow Jones Industrial Average has gained 4.1%.

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Time Warner Inc. was downgraded to neutral from outperform at Wedbush Securities, which cited concerns that the stock was overvalued following the recent rally. At the same time, Analyst James Dix upgraded Viacom Inc. to outperform from neutral, also for valuation reasons, reversing a recommendation he made back in February 2013. “Our rating change is part of closing out a ‘pair’ trade from over three years ago,” Dix wrote in a note to clients. “Today, we believe [Time Warner] shares are now fully valued while [Viacom] is undervalued. Therefore, our rating changes today reverse the prior changes.” Although Dix is still upbeat about Time Warner’s TV programming production business, and the potential for higher earnings growth at HBO, he expects a more challenging economic environment for its basic and premium pay TV networks. For Viacom, Dix is now bullish because of the likely merger with CBS Corp. . Even if there is no merger, he is upbeat about the potential for a sale of a stake in Paramount. Neither stock was active in premarket trade. Year to date, Time Warner’s has shot up 23% and Viacom’s has tumbled 13%, while the S&P 500 has gained 4.4%.

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Constellation Brands Inc. announced Monday a deal to sell its Canadian wine business to Ontario Teachers’ Pension Plan for the U.S. dollar equivalent of about $784.5 million. Earlier this year, the spirits company said it was mulling an initial public offering of part of its Canadian wine business, so it could focus more on high-margin, high-growth brands, but decided to sell the entire business instead. The company expects to recognize net cash proceeds of about $571.3 million, after debt repayment, from the deal. Separately, Constellation said it agreed to a deal to buy Washington-based Charles Smith Wines for $120 million. The stock, which surged 1.5% in premarket trade, has run up 19% year to date through Friday, while the S&P 500 has gained 4.4%.

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British TV production company RLJ Entertainment Inc. , the owner of Acorn TV, said Monday it has entered into a streaming partnership with AMC Networks Inc. , the owner of AMC, BBC America, We tv, SundanceTV, AMC Networks International, IFC and IFC Films. As part of the deal, AMC will invest $65 million in loans to RLJ, which will be used to refinance the company’s senior credit facility, provide working capital, reduce the cost of capital through lower interest rates, and provide revised covenants that will increase flexibility. AMC will also receive warrants, which if exercised, would grant it a 50.1% stake in RLJ. RLJ shares surged 10% premarket on the news and were up 15% on the year through Friday’s close, while the S&P 500 has gained 4%.

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Shares of Groupon, Inc. climbed 4% in premarket trade Monday after the stock was upgraded to outperform from neutral at Wedbush. The analysts upgraded the stock because they say Groupon has been seeing growing traffic to its site and improved deal inventory. “We
see a large valuation discrepancy between GRPN and its internet peers,” the analysts wrote. They raised the price target to $6.50 from $4.50. The analysts expect Groupon to report third quarter earnings above expectations. Shares of Groupon have gained 43.5% in the past three months, compared to the S&P 500’s loss of 1.3%.

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