Daily Wrap
DJIA -19.12 (-0.12%) to 15,335.28; S&P 500 -1.18 (-0.07%) to 1,666.29; NASDAQ -7.99 (-0.26%) to 3,020.97
Today the market somewhat consolidated after its ramp into options expiration last Friday. Initially it looked as though it could be another strong move higher as early trading was choppy but then we spiked higher into the noon EST time. That spike was eventually lost and we ultimately close near flat on the day. It was interesting to see the Russell 2000 be the strongest index and only one to close higher. Small caps leading might bode well for ultimately higher prices. Tomorrow is Tuesday and interestingly enough we have been up 18 straight Tuesday. Will tomorrow make 19?
Merger Monday with multiple takeovers or mergers being announced and the focus for tonight. First, the market had two big names getting together with Yahoo (YHOO) confirming its plan to buy Tumblr for $1.1B. This is not a deal you base on revenue or earnings as you can quickly see after reviewing Tumblr’s financials, but it is more about access to daily unique content and eyeballs and the belief that the content can be profitable. Merissa Mayer’s first tweet after the announcement was something along the lines of that they promise to not mess it up and I think that almost has a double entendre to YHOO shareholders after spending $1.1B and Tumblr users.
Another Merger in the news was between Actavis (ACT) and Warner Chilcott (WCRX) where ACT agreed to acquire WCRX in an all stock deal valuing the merger at roughly $8.5B. The mergers were not done there with Acquity Group (AQ) agreed to be acquired by Accenture (ACN) for $13 per ADR which was an over 113% increase from Friday’s close and Websense (WBSN) agreeing to be acquired by Vista Equity for $24.75 per share which is an over 28% increase from Friday’s close. Lastly, while not yet a takeover, Pactera Technology (PACT) received a nonbinding offer from Company insiders and Blackstone (BX) to go private valuing the company at $7.50 per share. The company announced that they will form a board to review the offer and opportunities.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: HD, MDT, TJX, AZO, BBY, DKS, TDW, SKS, RXN, MNRO
In analyst notes today, Abbott Labs (ABT) was upgraded to Buy at Goldman Sachs with a $44 price target. Netease.com (NTES) received an upgrade to Buy at Citigroup with a $70 price target and J.C. Penny (JCP) was upgraded to Buy at Maxim with $27 price target. On the downside, Bed Bath & Beyond (BBBY) was downgraded at Jefferies, Leap Wireless (LEAP) was downgraded to Sell at Deutsche Bank with $4 price target and Thoratec (THOR) was downgraded to Neutral at Goldman Sachs. Some of these and other upgrades and downgrades for the day can be found each morning when I post my 9 @ 9 in the Upgrades/Downgrades section.