Featuring MGM’s shaky stance; JCI’s market position, analyst rating; MRO’s $400M acquisition; LM’s trading activity, analyst upgrade; TWX’s deal with CMCSA; and EGY’s $10M share buyback.
Today’s Stock Alerts include: MGM Mirage (NYSE: MGM), Johnson Controls Inc. (NYSE: JCI), Marathon Oil Corp. (NYSE: MRO), Legg Mason Inc. (NYSE: LM), Time Warner Inc. (NYSE: TWX) and Vaalco Energy Inc. (NYSE: EGY).
MGM Mirage (NYSE: MGM) Stock Alert – MGM Lifts “Going Concern” Doubt; Cites Restructuring Efforts
Shares of gambling giant MGM Mirage (NYSE: MGM) were recently boosted on eased bankruptcy fears. The Las Vegas-based company said there is no longer substantial doubt about its ability to continue as a “going concern,” citing last month’s amendment to a credit agreement, as well as offerings of stock and notes.
MGM auditors, seeing the company in danger of failing, issued a going-concern qualification for the company three months ago, following a delayed filing of its annual results. Auditors expressed concern that the company may default on its debt.
Erasing doubts about its near-term ability to continue operating, MGM said it completed a public offering of 164.5 million common shares at $7 per share, for roughly $1.1 billion in proceeds, last month. In addition, the company made a private placement of $650 million senior secured notes due May 2014 and $850 million notes due November 2017. In addition, the company amended its credit agreement for a sixth time.
While the announcement boosted confidence on the stock, some analysts were not excited at all, noting that investors shouldn’t be surprised by MGM’s news. In a report, Susquehanna Financial Group’s Robert LaFleur stated, “Nothing has changed. It’s not like this was a great revelation.”
MGM is engaged in gaming and resort operations. The company owns and operates casino resorts, which includes offering gaming, hotel, dining, entertainment, retail and other resort amenities.
As of December 31, 2008, the company’s operations consisted of 17 wholly owned casino resorts and 50% investments in four other casino resorts. The company owns and operates casino resorts in Las Vegas, Nevada, which include Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, Luxor, Treasure Island (TI), New York-New York, Excalibur, Monte Carlo, Circus Circus Las Vegas and Slots-A-Fun.
In its recent chart, MGM’s Bollinger Bands indicate a relatively stable condition as reflected by tighter than normal band width. Trading within its Bollinger Bands, the stock reflects neither an overbought nor oversold condition relative to its recent price trend. MACD reflects strong bearish signal, with the indicator below the 9-day moving average signal line, and also below the critical 0 level, indicating that moving averages are trending lower. With share prices currently above the stock’s 13-day moving average, an indication of a bullish trend is generally considered.
Johnson Controls Inc. (NYSE: JCI) Stock Alert – JCI Shares Up on Positive Predictions for the Year Ahead; Buy Rating Initiated by Merriman Curhan Ford
Johnson Controls Inc. (NYSE: JCI) shares rise along with the broader market from expectations of 2010 earnings recovery, the Associated Press (AP) reported.
Predicting significant growth next year, Merriman Curhan Ford initiated a Buy rating on stocks of the Milwaukee-headquartered maker of automotive and building systems.
In a note to investors, analyst Craig E. Irwin wrote, “The company is currently working through a transitional year and we expect it will emerge with rising profitability in the building efficiency and power solutions segments and a diminished contribution from automotive experience reflecting weak auto market fundamentals.”
In addition, Irwin expects favorable energy efficiency growth trends and stable aftermarket automotive battery demand to provide solid platforms for future earnings growth.
Over the next 12 months, the analyst see the stock reaching $25 to $30, implying upside of between 27.6% and 53.1%t over its closing price Tuesday of $19.60.
Over the past 52 weeks, JCI shares have traded between $8.35 and $36.
Johnson Controls provides automotive interiors, products and services that optimize energy usage in buildings and batteries for automobiles and hybrid electric vehicles, along with related systems engineering, marketing and service expertise.
The company operates in three businesses: building efficiency, automotive experience and power solutions. The building efficiency business is engaged in designing, producing, marketing and installing integrated heating, ventilating and air conditioning (HVAC) systems, building management systems, controls, security and mechanical equipment. The automotive experience business provides interior systems to more than 30 million vehicles annually. The power solutions business is a producer of lead-acid automotive batteries, serving both automotive original equipment manufacturers (OEMs) and the general vehicle battery aftermarket.
In its recent chart, JCI’s MACD currently reflects weak bearish signal, with the indicator above the critical level of 0 but has crossed below its 9-day signal line, indicating that positive momentum has begun to slow. With share prices currently below the stock’s 13-day moving average, the bearish sign is more pronounced with decreasing moving averages. Trading within its Bollinger Bands, the stock reflects neither an overbought nor oversold condition relative to its recent price trend.
Marathon Oil Corp. (NYSE: MRO) Stock Alert – MRO announces Sale of Unit with Interest in Gas Project off Ireland to Vermilion for up to $400 million
Marathon Oil Corp. (NYSE: MRO), an integrated international energy company, announced it has entered into a definitive agreement with Vermilion Energy Trust for sale of its Irish subsidiary for up to $400 million
As per agreement, Vermilion will purchase Marathon’s wholly owned subsidiary, Marathon International Petroleum Hibernia Ltd., which holds Marathon’s 18.5% interest in the Corrib natural gas development offshore Ireland, the report said. The final sale proceeds will range between $235 million and $400 million, depending on the timing of the first commercial gas at Corrib.
In a press release, Marathon said an initial payment of $100 million will be made at closing, expected sometime before December. The remaining balance will be due at the time of the first commercial gas, which is expected between late 2010 and late 2011. As part of the deal, Vermilion agreed to invest up to $300 million to complete the facilities needed to reach the gas.
The transaction, subject to government and regulatory approvals, is expected to close during the second half of 2009, the companies said.
As a result of this deal Marathon said it will record an after-tax loss, currently estimated at $150 million, in the second quarter. The total could be adjusted in future periods, depending on the amount of the total proceeds.
Marathon Oil is engaged in exploration, development and production activities in ten countries: United States, Angola, Canada, Equatorial Guinea, Gabon, Indonesia, Ireland, Libya, Norway and the United Kingdom. The company’s operations consist of four segments: exploration and production, oil sands mining, refining, marketing and transportation and integrated gas.
In its recent chart, MRO is trading within its Bollinger Bands, a normal condition signaling that the stock is neither overbought nor oversold relative to the recent price action. MACD reflects strong bearish signal, with the indicator below the 9-day moving average signal line, and also below the critical 0 level, indicating that moving averages are trending lower. With share prices currently below the stock’s 13-day moving average, the bearish sign is more pronounced with decreasing moving averages.
Legg Mason Inc. (NYSE: LM) Stock Alert – LM Shares Up on Activist Investor’s Increased Stake; Upgraded by Deutsche Bank
Shares of Legg Mason Inc. (NYSE: LM), a global asset management company, rallied on Wednesday on reports that activist investor Nelson Peltz increased his stake in the company and is looking to continue doing so. Report has it that, as of March, Peltz owned less than 1% of Legg Mason.
In related news, The Telegraph, citing unnamed “market players,” reported the company could face a shareholder challenge as Peltz plans to begin a campaign against the management of Legg Mason. According to the paper, Peltz secretly bought 9% of the company.
Despite fundamentals remaining weak at Legg Mason, Deutsche Bank recently upgraded the company from Sell to Hold, with price target increased from $18 to $23. It was reported that the company has come through a tough period after it was forced to prop up money market funds that held toxic assets. For the fiscal year ended March 31, Legg Mason lost $1.9 billion.
In a report, Deutsche Bank analysts stated press reports of an activist investor increasing its stake in the business will likely push the valuation higher, offsetting weak fundamentals at the fund manager.
“While it could turn out not to be true, even the possibility of an activist getting involved and/or a strategic transaction occurring will likely limit the downside in the near term,” Deutsche Bank analysts said.
Acting through its subsidiaries, Legg Mason provides investment management and related services to institutional and individual clients, company-sponsored mutual funds and retail separately managed account programs. The company offers these products and services directly and through various financial intermediaries.
The company operates its business as two divisions: Americas and International. One of its asset managers, Western Asset Management Company, has significant business both within the United States and internationally, and thus is divided between the divisions. Within each division, it provides services through a number of asset managers, each of which is an individual business that generally markets its products and services under its own brand name and, in many cases, distributes retail products and services through a centralized retail distribution network.
In its recent chart, LM’s Bollinger Bands indicate a relatively stable condition as reflected by tighter than normal band width. Trading within its Bollinger Bands, the stock reflects neither an overbought nor oversold condition relative to its recent price trend. MACD currently reflects weak bearish signal, with the indicator above the critical level of 0 but has crossed below its 9-day signal line, indicating that positive momentum has begun to slow. With share prices currently above the stock’s 13-day moving average, an indication of a bullish trend is generally considered.
Time Warner Inc. (NYSE: TWX) Stock Alert – TWX, Comcast Partner to Develop More TV on Web
Media and entertainment company Time Warner Inc. (NYSE: TWX) recently announced a partnership with Comcast for widespread distribution of cable TV content online, in an effort to protect cable TV subscriber base amid growing pressure within the television industry.
The agreement between the companies will reportedly make it possible for Comcast customers to access programming from Timer Warner unit Turner Broadcasting`s entertainment networks free online and on demand.
Commenting on the partnership, Time Warner CEO Jeff Bewkes stressed he viewed the plan as a “free gift” for consumers that simply “expands” their entertainment choices. “If this approach gets adopted … it will clearly be the biggest story in video-on-demand and Internet video,” Bewkes said.
For his part, Comcast CEO Brian Roberts said he expected other content companies to join the approach and offer their own hit shows.
Taking concrete step to bring cable television shows to the Internet, Time Warner and Comcast will begin a national technical trial of the service in July, carrying programming from Turner networks TNT and TBS. Roughly 5,000 customers in the trial will be able to access full episodes of shows from TNT and TBS networks like “The Closer” and “My Boys” on Comcast.net just hours after they air on TV, the report said. To keep cable content secure online, Comcast will reportedly test a technology that can authenticate the viewer as a subscriber.
In his note, Bernstein Research analyst Craig Moffett wrote the test confirms that “content companies will take steps to protect their dual revenue stream, and in the process will not just respond to, but will shape, the evolution of Web video consumption.”
Time Warner also said it will engage in similar trials with other pay-TV operators, phone companies, satellite TV providers and several cable TV operators are interested, Bewkes said.
Time Warner operates in five business segments: AOL LLC (AOL), consisting principally of interactive consumer and advertising services; Cable, consisting principally of cable systems that provide video, high-speed data and voice services; Filmed Entertainment, consisting principally of feature film, television and home video production and distribution; Networks, consisting principally of cable television networks that provide programming, and Publishing, consisting principally of magazine publishing. In May 2008, AOL completed the acquisition of Bebo, a global social media network that will form the centerpiece of AOL’s newly created People Networks business unit.
In its recent chart, TWX’s MACD currently reflects weak bearish signal, with the indicator above the critical level of 0 but has crossed below its 9-day signal line, indicating that positive momentum has begun to slow. With share prices currently below the stock’s 13-day moving average, an indication of a bearish trend is generally considered. However, rising moving average signals that there has been buying interest in this stock.
Vaalco Energy Inc. (NYSE: EGY) Stock Alert – EGY Board Approves Share Buyback Program of up to $10 million
Vaalco Energy Inc. (NYSE: EGY) recently announced its board has authorized the repurchase of up to $10 million of the company’s common stock, which is part of its capital allocation program, according to chairman and CEO Robert Gerry. VAALCO engages in the acquisition, exploration, development and production of crude oil and natural gas.
According to the press release, shares of common stock will be purchased on the open market or through privately negotiated transactions from time-to-time during the authorized 12-month period. Under the authorization, the timing and amount of purchases would be based upon market conditions, securities law limitations and other factors. The share buyback program does not obligate the company to acquire any specific number of shares in any period, and may be modified, suspended, extended or discontinued at any time without prior notice.
“In addition to providing for a return of capital to our shareholders, we believe our stock is an excellent investment at today’s prices,” said Gerry. “With our strong balance sheet and projected cash flow, we continue to review additional opportunities to increase shareholder value.”
Currently, VAALCO has approximately 59 million shares outstanding.
VAALCO owns producing properties and conducts exploration activities as operator in Gabon, West Africa and conducts exploration activities as operator in Angola, Africa. VAALCO’s international subsidiaries are VAALCO Gabon (Etame) Inc., VAALCO Production (Gabon) Inc., VAALCO Angola (Kwanza) Inc. and VAALCO UK (North Sea) Ltd.
The company produces from the Etame, Avouma and South Tchibala fields on the license. During the year ended December 31, 2008, the Etame Avouma and South Tchibala fields produced approximately 7.8 million barrels (1.9 million barrels net to the company). Onshore Gabon, the company has a 100% working interest in the Mutamba Iroru block located near the coast in central Gabon. The Mutamba Iroru block contains approximately 270,000 acres for exploration.
In its recent chart, EGY’s Bollinger Bands indicate greater than normal volatility as reflected by an increase in distance between the upper and lower bands. Trading within its Bollinger Bands, the stock reflects neither an overbought nor oversold condition relative to its recent price trend. MACD reflects strong bearish signal, with the indicator below the 9-day moving average signal line, and also below the critical 0 level, indicating that moving averages are trending lower. With share prices currently below the stock’s 13-day moving average, the bearish sign is more pronounced with decreasing moving averages.
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