>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: DRWI +23%, AMBA +3.4%, BF.B +2.3%.

M&A news: PL +18.2% (Dai-ichi Life to acquire Protective Life for $70 per share), LM +7% (Stifel (SF) announces agreement to acquire Legg Mason Investment Counsel; terms were undisclosed), THRD -HALTED - (acquired by National Penn (NPBC) for $42/share).

Other news: NSTG +15.4% (entered into biomarker companion diagnostic Collaboration with Celgene (CELG)), DXCM +5.3% (received FDA approval for its Dexcom G4 PLATINUM Professional CGM), NQ +4.8% (reports on the Special Committee's Independent Investigation; the Investigation Team did not find evidence that the Company's revenues were inconsistent with public disclosures), DVR +4.7% (announces sale of its US Gulf of Mexico surface diving fleet for $18.5 mln), PGRX +4.6% (disclosed that Karlsson will not extend date to prepay debt; co has no cash available and terminated all but CEO; exploring alternatives, which may result in a bankruptcy filing), VVTV +3.7% (Cannell Capital discloses 5.6% active stake in 13D filing), YNDX +3.7% (still checking),FSLR +2.5% (India dumping case deferred to July 7, according to reports), MNKD +2.4% (cont momentum), IDCC +2.4% (pushing Apple (AAPL) for patent agreement, according to reports).

Analyst comments: EXAS +2.9% (initiated with a Buy at Goldman), RXN +2.3% (upgraded to Overweight from Equal Weight at Barclays), XL +1.9% (upgraded to Overweight from Equal-Weight at Morgan Stanley), UA +1.6% (upgraded to Buy from Hold at Jefferies), GNC +1.5% (initiated with Buy at BofA), ANDE +0.8% (upgraded to Outperform from Neutral at Macquarie)

>>> Brown-Forman beats by $0.04, misses on revs; guides FY15 EPS in-line, revs a

Brown-Forman beats by $0.04, misses on revs; guides FY15 EPS in-line, revs above consensus

Reports Q4 (Apr) earnings of $0.62 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.58; revenues rose 3.1% year/year to $893 mln vs the $921.71 mln consensus.
  • Co issues guidance for FY15, sees EPS of $3.25-3.45 vs. $3.30 Capital IQ Consensus Estimate; sees FY15 revs of +6-8% calc to ~$4.18-4.26 bln vs. $3.82 bln Capital IQ Consensus Estimate.
  • Guidance:The company anticipates that the favorable dynamics experienced over the last three years, including premiumization trends and strong global demand for American whiskey brands, will continue into fiscal 2015, despite continued uncertainty in the global macroeconomic environment, including weak on-premise trends in the United States and a slight slowdown in some of the emerging markets. Accordingly, the company expects 6-8% growth in reported and underlying net sales, driven by the continued global expansion of the Jack Daniel's trademark, including both Tennessee Whiskey and Tennessee Honey. The company also expects other brands such as Woodford Reserve, Herradura, and Finlandia to help drive sales growth.
  • The company expects to continue investing in its long-term growth, driven by A&P increases slightly ahead of net sales growth and SG&A increases slightly below net sales growth in fiscal 2015. The company believes that this would result in another year of operating margin expansion and 9-11% growth in reported and underlying operating income. This full year outlook includes a negligible impact from foreign exchange. The company also expects first quarter results to be negatively impacted by comparisons with the large buy-ins in advance of price increases that occurred over the last two years, primarily in the United States, but this impact should reverse over the balance of fiscal 2015.

>>> Brown-Forman Corp. Reports Q4 $0.62 v $0.59e, R$689M (ex excise taxes) v $70


Brown-Forman Corp. Reports Q4 $0.62 v $0.59e, R$689M (ex excise taxes) v $703Me

- Guides initial FY15 $3.25-3.45 v $3.29e, Expects 6-8% growth in reported and underlying net sales, driven by the continued global expansion of the Jack Daniels trademark, including both Tennessee Whiskey and Tennessee Honey. 

- Outlook: company expects to continue investing in its long-term growth, driven by A&P increases slightly ahead of net sales growth and SG&A increases slightly below net sales growth in fiscal 2015. 

- CEO: I believe that our leadership position in premium American whiskey, led by the one and only Jack Daniels trademark, and a very balanced geographic contribution, underpin the companys differentiated performance. We remain optimistic about the organic growth prospects for Brown-Forman, and our investment posture and fiscal 2015 earnings outlook reflect that optimism.

NY Post : Herbalife opponent seeks to add plaintiffs to suit

A failed Herbalife salesman who is suing the company for being an alleged pyramid scheme asked a federal judge to add four other former distributors to his suit.

The new motion, filed late Monday in Los Angeles federal court, comes after attorneys for California resident Dana Bostick and the controversial nutritional products company failed to reach a settlement after 50 hours of formal mediation sessions, according to court papers.

Herbalife has “raised issues regarding [Bostick’s] ‘adequacy’ ” to serve as a class representative, the motion said.

The prospective plaintiffs “are from different states; have different experiences and backgrounds in their attempts to succeed as Herbalife distributors and reached different levels within the alleged Herbalife endless chain,” Bostick’s attorneys said in the motion.

They include:
•Anita Vasko, a homemaker from West Chester, Pa., who claims she lost $12,000 in 2013 on an Herbalife nutrition club after working six or seven days a week to make a go of it.
•Judy Trotter, a Washington retiree who said she was $10,000 in debt from her Herbalife business before quitting in the fall of 2012.
•Beverly Molnar of Pennsylvania, who claims she bought leads to try to get her business going and ended up more than $11,000 in debt.
•Chester Cote of Vermont, who said he tried to sell Herbalife products online in 2009, but couldn’t because prices were depressed by others sellers seeking to unload their products at a deep discount.

A hearing on June 30 will determine if the prospective plaintiffs can be added to the case. The deadline for filing for class certification is Aug. 25.

NY Post : Ackman’s winning streak stretches into May

Bill Ackman continued his hot streak in May, with his Pershing Square eking out a 2.9 percent gain in a tough month for hedge funds, according to investors.
The $14 billion Pershing Square is up 22.5 percent this year, making it the top performing fund in the US, according to HSBC’s widely followed ranking.
Ackman’s returns were bolstered by 14 percent gains in his Fannie and Freddie shares — a position that fellow billionaire Carl Icahn has embraced. Icahn revealed a $51 million stake in the mortgage giants on Tuesday.
A last minute spike in Allergan, which accounts for 30 percent of Ackman’s fund, also helped. The stock gained 1 percent last month after Pershing-backed Valeant boosted its cash offer to Allergan shareholders.
Ackman also outdid the broader market, which was up 2.3 percent in May — a feat neither of his fellow famous hedgies David Einhorn or Dan Loeb could duplicate.
Einhorn’s Greenlight Capital rose 2 percent in May, for a year to date gain of 5.4 percent.
His new short position on Athenahealth, which Einhorn publicized at the annual Ira Sohn investment conference on May 5, failed to gain traction. The stock gained 2.64 percent during the month.
Dan Loeb’s $14.5 billion Third Point was the laggard of the famous trio, only up 1.7 percent last month and 4 percent for the year.
Loeb won his battle with Sotheby’s in May, gaining three board seats and the auction house’s willingness to pay his legal bills for his unsuccessful bid to overturn the company’s poison pill. But Sotheby’s stock fell 6 percent during the month.
Loeb is also lagging the S&P 500 for the year. The broader market is up 5 percent.

WSJ : Merck, Sanofi, Glaxo Take Steps to Shed Older Drugs

Merck, Sanofi, Glaxo Take Steps to Shed Older Drugs
Potential Deals Are Part of a Narrowing of Focus on Products With Faster-Growing Sales

Several big drug makers, including Merck MRK -0.03% & Co., France's Sanofi SA SAN.FR +0.59% and the U.K.'s GlaxoSmithKline GSK.LN -0.09% PLC, are exploring the possibility of selling or splitting off large portfolios of older drugs as they seek to focus on products with faster-growing sales.

Merck has held preliminary discussions with a number of possible buyers for a group of treatments that could fetch in the neighborhood of $15 billion, according to people familiar with the matter.

Sanofi, meanwhile, is considering the possibility of putting some of its established products into a joint venture with another health-care company, according to a person familiar with the matter. And Glaxo said recently that it is "evaluating options," including divestment, for a group of mature drugs that make up about 15% of the company's sales. Other pharmaceutical companies are considering similar moves, bankers say. Private-equity firms including Advent International are considering bids for the assets, according to people familiar with the possible sales.

The businesses generally have wide profit margins, as their owners have already incurred many of the expenses associated with launching the medicines. Consequently, in a sale they could be worth a multiple of their annual sales, bankers say. The portfolios tend to have slow-growing or declining revenue, however, as many of the drugs have lost patent protection and compete with low-cost generic copies.

The deals are part of a narrowing of focus at big drug makers, which in recent months have been divesting slower-growing businesses or ones in which they have less of a competitive advantage.

"Companies are responding to their shareholders, who are asking management teams to double down on their strengths and divest their weaknesses," says Mark Schoenbaum, a pharmaceutical analyst with ISI Group in New York.

To be sure, the slow-growing or declining sales at these businesses could make them less appealing to the private-equity firms that some industry watchers say are the most natural buyers. Private-equity firms tend to make acquisitions largely using borrowed money, which could be harder to come by for the purchase of a shrinking business. And given that other drug companies may be wary of taking on businesses that could hamper their overall sales growth, it's not clear whether deals will materialize for any of the mature-drug portfolios.

Another big question: whether drug companies will completely divest their older drugs, or hang on to them in emerging markets, where off-patent, low-cost medicines from well-known Western drug firms tend to sell well. "These tend to be solid and often growing assets in emerging markets, and so divesting them on a global basis will be detrimental to growth" in those markets, says Mark Clark, a pharmaceutical analyst with Deutsche Bank DBK.XE +0.37% in London.

The biggest portfolio currently on the block appears to be Merck's. The company's "diversified brands" category includes drugs that have lost patent protection, or soon will lose patent protection, in developed markets, including the anti-hypertension drugs Cozaar and Hyzaar; Propecia for male-pattern baldness; and the migraine treatment Maxalt.

Sanofi, meanwhile, believes it might be able to use its older products as a sweetener, to help convince another drug company to part with a particular asset, according to a person familiar with the matter. In such a scenario, Sanofi might agree to contribute its older products to a joint venture with the other company, in exchange for the opportunity to buy another asset from that company, this person said, adding that Sanofi is at the early stages of considering such a move. Sanofi has looked at possibly acquiring a number of assets recently, including Merck's over-the-counter and consumer health-care business, though it balked at the asking prices, people familiar with the matter said.

Glaxo's established-drug portfolio includes the antidepressant Paxil, the malaria drug Malarone and Lovaza, a treatment for high triglycerides, a type of fat in the blood. Glaxo reported an 11% year-over-year sales drop for the division in the first quarter, to £814 million ($1.36 billion). The division notched a "core" operating profit margin of nearly 60%. That's more than twice that of the overall company.

RTR China state media calls for 'severe punishment' for Goog

China state media calls for 'severe punishment' for Google, Apple, U.S. tech firms BEIJING (Reuters) - Chinese state media lashed out at Google Inc, Apple Inc and other U.S. technology companies on Wednesday, calling on Beijing "to punish severely the pawns" of the U.S. government for monitoring China and stealing secrets.

U.S. companies such as Yahoo Inc, Cisco Systems Inc, Microsoft Corp and Facebook Inc threaten the cyber-security of China and its Internet users, said the People's Daily on its microblog, in comments echoed on the front page of the English-language China Daily.

It is not clear what sparked this latest round of vitriol, nor what information the U.S. firms are alleged to have stolen. But Chinese media have repeatedly attacked American tech companies for aiding the U.S. government's cyber espionage since U.S. National Security Agency (NSA) contractor Edward Snowden revealed widespread spying programmes including PRISM.

Under PRISM, the NSA seized data from companies such as Google and Apple, according to revelations made by Snowden a year ago.

Chinese state-owned firms have since begun dispensing with the services of U.S. companies such as IBM Corp, Oracle Corp and Cisco in favour of domestic technology. As a result, Snowden's revelations may cost U.S. companies billions of dollars, analysts say.

"U.S. companies including Apple, Microsoft, Google, Facebook, etc. are all coordinating with the PRISM programme to monitor China," the People's Daily said on its official microblog.

"To resist the naked Internet hegemony, we will draw up international regulations, and strengthen technology safeguards, but we will also severely punish the pawns of the villain. The priority is strengthening penalties and punishments, and for anyone who steals our information, even though they are far away, we shall punish them!" it said.

Google has already had problems in China this week. On Monday, a China censorship watchdog said Google services were being disrupted ahead of Wednesday's 25th anniversary of the 1989 crackdown on pro-democracy demonstrators around Beijing's Tiananmen Square.

"We cannot say this more clearly - the (U.S.) government does not have access to Google servers - not directly, or via a back door, or a so-called drop box," said Google Chief Legal Officer David Drummond in an emailed statement on Wednesday. "We provide user data to governments only in accordance with the law."

Microsoft declined to provide immediate comment. Facebook, Yahoo, Apple and Cisco were not immediately available when Reuters sought comment by telephone and email.

Facebook is currently blocked by Chinese censors, but said last month it may open a sales office in China to provide more support to local advertisers who use the website to reach customers overseas.

ROCKY TIME

In December, Google, Microsoft, Apple, Facebook, Yahoo and other Internet companies issued an open letter to U.S. President Barack Obama and Congress to reform and introduce restrictions on surveillance activities.

Even so, U.S. tech companies have had a rocky time in China since the NSA revelations. Just last month, central government offices were banned from installing Windows 8, Microsoft's latest operating system, on new computers.

But the U.S. has responded with its own measures. In May, the U.S. Department of Justice charged five Chinese military officers with hacking U.S. companies to steal trade secrets.

The indictment sparked outrage in China and added urgency to Beijing's efforts to promote the development of local information technology (IT) companies.

Chinese media called the United States "a high-level hooligan" and officials accused Washington of applying "double standards" on issues of cyber spying.

After the charges were announced, China said it will investigate providers of important IT products and services to protect "national security" and "economic and social development."