MORNING COFFEE

Oil Prices Fall. Oil prices are continuing to fall after Thursday’s -9% decline oil again is lower in overseas trading.  In Asia oil was down -$3.86 to $95.94 on fears that the U.S. Economy is slowing which will affect future demand.  Traders will be watching closely today at the release of the government’s non-farm payroll numbers which is expected to come in at 185,000 and the unemployment rate to remain unchanged at 8.8%. Crude Oil $98.09  -$1.71

CVS Caremark Receives SEC Subpoena.  Yesterday CVS Caremark (CVS) reported earnings Q1 EPS of $0.57 beating estimates by +$0.02 on revenue of $25.88 billion, beating estimates by +$0.01 billion.  The company also disclosed that they had received a subpoena from the SEC in requesting information about public disclosures it made in 2009 on its Caremark pharmacy-benefits-management division and its Medicare Part D business. The SEC is also looking at employee security transactions. Pre-market:  37.01 +0.22 (0.60%)

Upgrades

Sally Beauty (SBH): Robert W. Baird raised their rating from neutral to Outperform and raised their target price from $16.00 to $18.00. Pre-market: 15.36 +0.35 (2.33%)

Coverage Reiterated/Price Target Changed

DIRECTV (DTV): Kaufman Bros reiterated their Buy rating and raised their target price from $55.00 to $57.00.

Emerson (EMR): Oppenheimer reiterated their Outperform rating and lowered their target price from $74.00 to $71.00. Pre-market: 56.40 +1.37 (2.49%)

CIGNA (CI): Oppenheimer reiterated their Outperform rating and raised their target price from $52.00 to $54.00.

Aeropostale (ARO): Oppenheimer reiterated their Outperform rating and lowered their target price from $31.00 to $27.00. Pre-market: 21.41 +0.12 (0.56%)

Blue Nile (NILE): The Benchmark Company reiterated their Hold rating and lowered their target price from $44.00 to $41.00.

Priceline.com (PCLN): The Benchmark Company reiterated their Buy rating and raised their target price from $660.00 to $676.00. Pre-market: 522.25 -11.72 (-2.19%)

Earning Reports

AIG (AIG): Reported Q1 EPS of -$0.35 missing estimates by -$0.20. Pre-market: 30.60 -0.19 (-0.62%)

Constellation Energy Group (CEG): Reported Q1 EPS of $0.63 beating estimates by +$0.33 on revenue of $3.57 billion, missing estimates by -$0.55 billion. Pre-market: 34.55 -1.11 (-3.11%)

Fluor (FLR): Reported Q1 EPS of $0.78 in-line with estimates on revenue of $5.1 billion, missing estimates by -$0.5 billion.

Hansen Natural (HANS): Reported Q1 EPS of $0.59 beating estimates by +$0.10 on revenue of $408 million, beating estimates by +$84 million. Pre-market: 66.24 +4.30 (6.94%)

Kraft Foods (KFT): Reported Q1 EPS of $0.52 beating estimates by +$0.05 on revenue of $12.6 billion, beating estimates by +$0.30 billion.

Microchip Technology (MCHP): Reported FQ4 EPS of $0.59 beating estimates by +$0.02 on revenue of $380 million, beating estimates by $6 million. Pre-market: 41.09 +0.55 (1.36%)

Priceline.com (PCLN): Reported Q1 EPS of $2.66 beating estimates by +$0.20 on revenue of $809 million, beating estimates by +$30 million. Pre-market: 522.25 -11.72 (-2.19%)

Visa (V): Reported FQ2 EPS of $1.23 beating estimates by +$0.03 on revenue of $2.2 billion, in-line. The company also authorized a new $1 billion share buyback program. Pre-market: 78.20 -0.50 (-0.64%)

·         Futures at 8:23: Dow +0.06%. S&P +0.13%. Nasdaq +0.08%. Crude -1.9% to $98.09. Gold +0.07% to $1482.50.

·         Europe: London +0.09%. Paris +0.63%. Frankfurt +0.78%.

·         Asia: Japan -1.4% to 9859.2. Hong Kong -0.4% to 23159. China -0.3% to 2864. India 0.0% at 18519.

MORNING COFFEE

World Food Prices Continue To Climb. The United Nations’ Food and Agriculture Organization reported today that world food prices rose to a near record high in April as grain prices continue to rise.  The Index of 55 commodities rose to 232 from month ago levels of 231.  The all time high was reached in February at 237.2.

Corn prices have almost doubled in the past 12 months.  Wheat is up 57% and soybeans prices have risen 39% over the past 12 months.

Fears of inflation have caused the central banks in China, Poland, India, Swede and Europe to raise interest rates in an attempt to get inflation under control.  The higher food costs also contributed to the riots in the Middle East and Africa.  DBC 30.75, +10.75% ytd, +29.72% 1 yr

Coverage Reiterated/Price Target Changed

American Water (AWK): Brean Murray reiterated their Buy rating and raised their target price from $35.00 to $38.00.

Comcast (CMCSA): Kaufman Bros reiterated their Buy rating and raised their target price from $28.00 to $30.00.

CSX (CSX): Longbow reiterated their Buy rating and raised their target price from $90.00 to $92.00.

HCC Insurance (HCC): Wunderlich reiterated their Buy rating and raised their target price from $34.00 to $37.00.

MetLife (MET): FBR Capital reiterated their Buy rating and raised their target price from $52.00 to $54.00.

Molex (MOLX): Longbow reiterated their Buy rating and raised their target price from $30.00 to $32.00.

Earning Reports

CVS Caremark (CVS): Reported Q1 EPS of $0.57 beating estimates by +$0.02 on revenue of $25.88 billion, beating estimates by +$0.01 billion. Pre-market: 35.94 -0.18 (-0.50%)

DirecTV Group (DTV): Reported Q1 EPS of $0.85 beating estimates by +$0.014 on revenue of $6.31 billion, beating estimates by +$0.09 billion. Pre-market: 48.50 0.00 (0.0%)

Electronic Arts (ERTS): Reported FQ4 EPS of $0.25 beating estimates by +$0.03 on revenue of $995 million, beating estimates by +$71 million. Pre-market: 20.90 +0.98 (4.92%)

Expeditors International of Washington (EXPD): Reported Q2 EPS of $0.42 beating estimates by +$0.05 on revenue of $1.5 billion, in-line. Pre-market: 52.40 -0.40 (-0.76%)

JDS Uniphase (JDSU): Reported FQ3 EPS of $0.22 beating estimates by +$0.02 on revenue of $454 million, beating estimates by +$6 million. Pre-market: 21.56 +1.56 (7.80%)

Kellogg (K): Reported Q1 EPS of $1 missing estimates by -$0.04 on revenue of $3.48 billion, beating estimates by +$0.08 billion. Pre-market: 56.48 -0.28 (-0.49%)

News Corp. (NWS): FQ3 EPS of $0.26 missing estimates by -$0.01 on revenue of $8.26 billion, missing estimates by -$0.16 billion.

NRG Energy (NRG): Reported Q1 EPS of -$1.06 missing estimates by -$1.17 on revenue of $1.99 billion, missing estimates by -$0.32 billion.

Whole Foods Market (WFMI): Reported FQ2 EPS of $0.51 beating estimates by +$0.05 on revenue of $2.4 billion, in-line. Pre-market: 61.99 +2.25 (3.77%)

·         Futures at 8:45: Dow -0.4%. S&P -0.6%. Nasdaq -0.5%. Crude -2.35% to $106.67. Gold -0.9% to $1501.80.

·         Europe: London -1.01%. Paris -1.25%. Frankfurt -0.62%.

·         Asia: Japan closed. Hong Kong -0.2% to 23259. China +0.3% to 2873. India -1.6% to 18169.

MORNING COFFEE

Applied Materials To Buy Varian Semi. Applied Materials (AMAT) has announced that they will buy Varian Semiconductor (VSEA) $4.9 billion, or $63 a share. The offer is a 55% premium to yesterday’s closing price and will be paid from a combination of cash and debt.  In a statement Mike Splinter, chief executive of Applied Materials said “Varian is a great fit for our strategy to profitably grow share in our core semiconductor business with best-in-class technology and talent.”  VSEA Pre-market: 61.48  +20.93 (51.62%) AMAT Pre-market: 16.17 +0.93 (6.10%)

Upgrades

BlackRock (BLK): Ticonderoga raised their rating from Neutral to Buy and placed a target price of $225.00 on the company.

Dick's Sporting Goods (DKS): Oppenheimer raised their rating from Perform to Outperform and placed a target price of $50.00 on the company.

ValueClick (VCLK): Needham raised their rating from Hold to Buy and placed a target price of $25.00 on the company.

Downgrades

First Solar (FLSR): Collins Stewart lowered their rating from Buy to Hold.

Coverage Resumed

Apple (AAPL): Oppenheimer resumed coverage with an Outperform rating and placed a target price of $450.00 on the company.

Coverage Reiterated/Price Target Changed

Emerson (EMR): Oppenheimer reiterated their Outperform rating and lowered their target price from $74.00 to $71.00.

First Solar (FSLR): Brean Murray reiterated their Buy rating and lowered their target price from $181.00 to $170.00.

MasterCard (MA): Oppenheimer reiterated their Outperform rating and raised their target price from $295.00 to $315.00.

MasterCard (MA): FBR Capital reiterated their Outperform rating and raised their target price from $290.00 to $330.00.

MetroPCS (PCS): Oppenheimer reiterated their Outperform rating and raised their target price from $19.00 to $21.00.

Earning Reports

AOL (AOL): Reported Q1 EPS of $0.04 missing estimates by -$0.15 on revenue of $551 million, beating estimates by +$15 million. Pre-market: 21.20 +0.80 (3.92%)

Cephalon (CEPH): Reported Q1 EPS of $2.09 beating estimates by +$0.05 on revenue of $736 million, missing estimates by -$15 million.

 

Comcast (CMCSA): Reported Q1 EPS of $0.36 beating estimates by +$0.02 on revenue of $12.13 billion, missing estimates by -$1 billion. Pre-market: 27.07 +0.46 (1.73%)

Las Vegas Sands (LVS): Reported Q1 EPS of $0.37 missing estimates by -$0.07 on revenue of $2.1 billion, in-line. Pre-market: 43.02 -2.85 (-6.21%)

Molex (MOLX): Reported Q3 EPS of $0.22 missing estimates by -$0.20 on revenue of $875 million, beating estimates by +$3 million. . Pre-market: 25.90 -0.73 (-2.74%)

R.R. Donnelley & Sons Company (RRD): Reported Q1 EPS of $0.33 missing estimates by =$0.04 on revenue of $2.58 billion, in-line.

 

THQ (THQI): Q4 EPS of $0.15 beating estimates by +$0.04 on revenue of $249 million, missing estimates by -$6 million. Pre-market: 4.00 -0.12 (-2.91%)

ValueClick (VCLK): Reported Q1 EPS of $0.21 beating estimates by +$0.03 on revenue of $117 million, beating estimates by +$2 million. Pre-market: 18.50 +2.03 (+12.33%)

·         Futures at 8:16: Dow -0.1%. S&P -0.2%. Nasdaq -0.2%. Crude 0.0% at $111.04. Gold -0.3% to $1535.80.

·         Europe: London -0.9%. Paris -0.2%. Frankfurt -0.4%.

·         Asia:  Japan closed. Hong Kong -1.3% to 23324. China -2.2% to 2867. India -0.4% to 18461.

MORNING COFFEE

Debt Ceiling Deadline Extended. 

Treasury Secretary Geithner will start taking “extraordinary measures” on Friday that will prevent the U.S. from hitting the $14.29 trillion debt ceiling.  The measures which include suspending the sale of some bonds combined with better-than-expected tax revenues will extend the deadline for Congress to vote on raising the debt ceiling until August 2.  Without the extra extraordinary measures the debt ceiling would have been reached on May 16^th.

Upgrades

Arch Coal (ACI): Brean Murray raised their rating from Hold to Buy and raised their target price from $32.00 to $43.00.

Downgrades

DISH Network (DISH): Hudson Square Research lowered their rating from Buy to Hold.

Coverage Reiterated/Price Target Changed

Arch Coal (ACI): FBR Capital reiterated their Outperform rating and lowered their target price from $50.00 to $46.00.

DISH Network (DISH): Kaufman Bros reiterated their Buy rating and raised their target price from $31.00 to $36.00.

Humana (HUM): Oppenheimer Kaufman Bros reiterated their Perform rating and raised their target price from $62.00 to $83.00.

Molycorp (MCP): Dahlman Rose Bros reiterated their Buy rating and raised their target price from $85.00 to $125.00.

Earning Reports

Cognizant Technology Solutions (CTSH): Reported Q1 EPS of $0.71 beating estimates by +$0.07 on revenue of $1.37 billion, beating estimates by +$0.01 billion. Pre-market: 79.50 -2.71 (-3.30%)

MetroPCS Communications (PCS): Reported Q1 EPS of $0.15 missing estimates by -$0.04 on revenue of $1.19 billion, beating estimates by +$0.07 billion. Pre-market: 17.50 +1.02 (6.19%)

Mylan Laboratories (MYL): Reported Q1 EPS of $0.44 in-line on revenue of $1.43 billion. Pre-market: 24.90 +0.06 (0.24%)

Spectra Energy (SE): Reported Q1 EPS of $0.54 beating estimates by +$0.02 on revenue of $1.61 billion, missing estimates by -$0.02 billion. Pre-market: 28.75 +0.04 (0.14%)

Automatic Data Processing (ADP): Reported FQ3 EPS of $0.85 in-line on revenue of $2.73 billion, in-line. Pre-market: Pre-market: 54.40 -0.30 (-0.55%)

·         Futures at 8:00: S&P -0.5%.  Nasdaq -0.41%. Dow -0.4% 10-yr +0.1%. Euro -0.2% vs. dollar. Crude -0.8% to $112.65. Gold -0.9% to $1542.60. Silver -5.2% to $43.67.

·         Europe: London -0.1%. Paris -0.6%. Frankfurt -0.9%.

·         Asia: Japan closed. Hong Kong closed. China closed. India -2.4%.

MORNING COFFEE

Stocks Set To Open Higher On bin Laden’s Death. 

Stocks are set to open higher after President Obama confirmed that U.S. Navy Seals killed Osama bin Laden.  Crude oil prices were -2.3% and the dollar index gained +0.3% in Asian trading. Analysts are questioning how Osama bin Laden could be living in a three story castle and very close to a Pakistan military base without help from some officials in the Pakistan military.  While I believe that his death is an overall positive, not only for the U.S. but the world, the reality is that his death doesn't change anything regarding the 

current turmoil in the Middle East, our energy situation or the war on terror.

Berkshire Hathaway’s Profits Fall. Warren Buffett at the Berkshire Hathaway (BRK.A/BRK.B) annual meeting said he estimates the Q1 fell to 1.5 billion from $3.6 billion a year earlier due to $1.7 billion pretax insurance losses due to the disasters in Japan, Australia.  During the meeting he said that it was "probably the second-worst quarter for the insurance industry in terms of disasters." Berkshire Hathaway is due to report earnings on Friday. Pre-market: 82.30 -1.00 (-1.20%)

Downgrades

Electronic Arts (ERTS): Kaufman Bros lowered their rating from Buy to Hold and placed a target price of $20.00 on the company.

JA Solar (JASO): Needham lowered their rating from Buy to Hold.

Coverage Reiterated/Price Target Changed

Akamai Tech (AKAM): Collins Stewart reiterated their Hold rating and lowered their target price from $51.00 to $45.00.

Baker Hughes (BHI): Dahlman Rose Collins Stewart reiterated their Hold rating and raised their target price from $81.00 to $95.00.

BP (BP): The Benchmark Company reiterated their Buy rating and raised their target price from $65.00 to $70.00.

FLIR Systems (FLIR): Needham reiterated their Buy rating and raised their target price from $65.00 to $70.00.

ITT Industries (ITT): FBR Capital reiterated their Market Perform rating and lowered their target price from $61.00 to $57.00.

Priceline.com (PCLN): The Benchmark Company reiterated their Buy rating and raised their target price from $570.00 to $660.00.

Earning Reports

DISH Network (DISH): Reported Q1 EPS of $1.22 beating estimates by +$0.54 on revenue of $3.22 billion, missing estimates by -$0.01 billion. Pre-market: 27.28 +2.24 (8.95%)

Humana (HUM): Reported Q1 EPS of $1.86 in-line on revenue of $9.19 billion, beating estimates by +$0.05 billion. Pre-market: 77.00 +0.88 (1.16%)

Loews Corp (L): Reported Q1 EPS of $0.92 beating estimates by +$0.01 on revenue of $3.66 billion, beating estimates by +$0.05 billion. Pre-market: 44.04 -0.22 (-0.50%)

·         Futures at 7:00: Dow +0.5%. S&P +0.5%. Nasdaq +0.5%. Crude -1.8% to $111.86. Gold +0.04% to $1557.

·         Europe: London closed. Paris +0.2%. Frankfurt +0.8%.

·         Asia: Japan +1.6% to 10004.2. Hong Kong closed. China closed. India -0.7% to 18998.