Category: Stock Market News

Shares of Cisco Systems Inc. surged 2.5% in afternoon trade Monday, after Morgan Stanley upgraded the networking giant, citing expectations for an improved replacement cycle in switches and optimism over potential tax policy changes. Analyst James Faucette raised his rating to overweight after being at equal weight since August 2015. He boosted his stock price target to $39, which is 14% above current levels, from $32. “The paradigm shift to security-defined networks…presents an investment opportunity in Cisco,” Faucette wrote in a note to clients. “We continue to see evidence in our channel checks and surveys that security sales are beginning to pull through network equipment upgrades, which we think will improve replacement cycle metrics.” He said tax policy changes that incentivize foreign cash repatriation, as President Donald Trump has promised, can lead to share repurchases that reduce shares outstanding by 10% to 15%, which in turn would boost fiscal 2018 EPS by 10% to 20%. The stock has rallied to within 0.5% of the 16-year closing high $34.44 reached on May 3. It has run up 13% year to date, while the Dow Jones Industrial Average has gained 6.1%.

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Oil prices climbed Monday to their highest finish in two weeks, as a joint statement from Saudi Arabian and Russian energy ministers backed a nine-month extension to the output-cut agreement led by Organization of the Petroleum Exporting Countries. Prices, however, pulled back from earlier highs above $49 a barrel after the Energy Information Administration forecast a monthly rise of 122,000 barrels a day in June oil output from seven major U.S. shale plays. June West Texas Intermediate crude settled at $48.85 a barrel on the New York Mercantile Exchange, up $1.01, or 2.1%.

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WideOpenWest Inc., a provider of high-speed internet, phone and TV services, on Monday filed for an initial public offering, in which it will offer 19 million shares priced at $20 to $22 a share. UBS and Credit Suisse are lead joint bookrunners, with RBC, SunTrust Robinson Humphrey, Evercore ISI and Macquarie acting as joint book running managers on the deal. Shares are expected to be listed on the New York Stock Exchange under the ticker symbol “WOW”.

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Shares of Sears Holdings Corp. plunged 11% in afternoon trade Monday, putting them on course to suffer their worst three-day stretch in nearly two years, after Chief Executive Eddie Lambert revealed that a supplier intends to file suit against the department store chain to get out of a supply agreement. Lambert said in Sears’ corporate blog that supplier One World, which Sears has had a business relationship for nine years, is trying to take “unfair advantage” of “negative rumors” about Sears’ prospects, by threatening to refuse to perform under the supply deal unless Sears agrees to what Lambert believes are “unreasonable” demands. He said One World is looking to “embarrass us in the media” by filing a lawsuit to let them out of their contract. “But Sears has nothing to be embarrassed about–we have lived up to our word under our contract, and we will take the appropriate legal action to protect our rights and ensure One World honors their contract,” Lambert wrote. Sears’s stock has plunged 25% in three sessions, the biggest three-day percentage decline since it plummeted 27% in the three days ending June 11, 2015. The selloff was kicked off on Thursday after disappointing results from Macy’s Inc. cast a pall fellow department store shares, then continued on Friday after J.C. Penney Co. Inc.’s disappointing results. Sears shares have dropped 9.5% year to date, while the SPDR S&P Retail ETF has slipped 4.3% and the S&P 500 has gained 7.3%.

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Oil production from seven major U.S. shale plays is forecast to climb by 122,000 barrels a day to 5.401 million barrels a day in June from May, according to a monthly report from the Energy Information Administration released Monday. Oil output from the Permian Basin, which covers parts of western Texas and southeastern New Mexico, is expected to see the largest climb among the big shale plays, with an increase of 71,000 barrels a day. June West Texas Intermediate oil held onto most of its earlier gains, trading $1.21, or 2.5%, higher at $49.05 a barrel, less than half an hour before the settlement on the New York Mercantile Exchange.

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Exact Sciences Corp. shares dropped 3.2% to $32.71 on Monday morning after short-seller Citron Research released a report about the company that called its colon cancer test “a seriously inferior product and a disastrous business model.” The stock tumbled as much as 8% Monday morning before Exact Sciences Chief Executive Kevin Conroy brawled with Citron Research’s Andrew Left on CNBC, after which Exact Sciences stock losses evened out to around 3%. Exact Sciences’ Cologuard screening test works using a stool sample that patients send in and, if positive, should be followed by a colonoscopy, according to Exact Sciences. But Citron Research alleged in its report that the product is bad and that not only are doctors not ordering more of it, but Medicare will pay less for the test next year. The company has been successful because “some men think they are ‘too cool’ (or too scared) to get a colonoscopy, despite the real dangers of colon cancer,” the Citron Research report said. But, the report continued, “we believe Exact Sciences is what happens when Wall Street meets bad medicine.” But Exact Sciences, for its part, is “extremely confident in the near and long-term growth of Cologuard,” said Conroy. “It should be noted that for years ‘research institutions’ have doubted Cologuard’s growth trajectory and ability [to] impact colon cancer screening by detecting early, curable-stage cancer. The Exact Sciences team continues to prove them wrong, as patient demand increases, provider ordering rises, and insurance coverage accelerates.” Exact Sciences shares have skyrocketed 65.8% over the last three months, compared with a 2.3% rise in the S&P 500 .

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Deputy Attorney General Rod Rosenstein will brief senators on Thursday regarding the circumstances behind the firing of former Federal Bureau of Investigation Director James Comey, Senate Majority Leader Mitch McConnell’s office announced Monday. President Donald Trump fired Comey last week. Rosenstein wrote a memo critical of Comey, which the White House initially cited as the reason for the firing.

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Shares of Exact Sciences Corp. bounced off earlier lows Monday, after Chief Executive Kevin Conroy went mano-a-mano with famed short-seller Andrew Left on CNBC, with Conroy saying Left’s bearish comments were “dead wrong.” The stock had tumbled as much as 8.1% just before noon ET, after Left’s Citron Research released a report saying the company’s Cologuard screening test was a “seriously inferior product and a disastrous business model.” After both Conroy and Left went at it on CNBC, with Conroy defending the company and Left pushing his bearish view, the stock pared losses to be down just 3.1% around 12:30 p.m., before pulling back to be down 4.9% in recent trade. The stock, which had closed at a record $35.43 on May 5, has more than doubled year to date, while the iShares Nasdaq Biotechnology ETF has climbed 11% and the S&P 500 has gained 7.3%.

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Shares of Trivago N.V. , a hotel and flight booking site, were soaring 21% Monday morning, after the company swung to a profit from its year-earlier results. The German-based company reported net income of €7.7 million, compared to a loss of €0.1 million euros in the first quarter of 2016. Revenue grew 68% to €267.7 million, up from €159 million in the year-earlier period. Axel Hefer, the chief financial officer of Trivago, said the results were driven by improvements in the company’s technology and algorithms as well as general growth in the business. Trivago reaffirmed its full-year guidance, with total revenue expected to grow by 50%.

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Two former traders at Nomura who ran the commercial mortgage-backed securities desk were charged by the Securities and Exchange Commission with deliberating lying to customers to inflate the profits of the desk and themselves. The SEC alleges that James Im and Kee Chan each misrepresented price information while acting as intermediaries on trades with Nomura’s customers who sought to buy and sell CMBS on the secondary market. Chan agreed to settle the charges, without admitting or denying the allegations, by paying $51,965 in disgorgement plus $11,758 in interest and a $150,000 penalty and agreeing a three-year bar from the securities industry. The case continues against Im.

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