• DJIA 11,288.79 (+72.79)
• S&P500 1,262.88 (+1.36)
• NASDAQ 2,245.38 (-6.08)
• 10YR T-Note 3.963% (+0.004%)
• 52-Week Lows
• Top Analyst Calls

Permalink | Email this | Linking Blogs | Comments

Abbott Laboratories (NYSE: ABT) got approval for its new drug-coated stent. The products are used to open clogged arteries, often in the place of by-pass surgery. The field has been dominated by deeply troubled medical device company Boston Scientific (NYSE: BSX). It looks that the weakened company is in for much more pain.

According to The Wall Street Journal, ABT "received regulatory approval for its Xience V drug-coated stent, which is expected to be the top seller in the roughly $2 billion U.S. market because it appears to be more effective than rival devices." Boston Scientific will sell the new Abbott product, but with 40% of the revenue going to its rival, it is hard to see how that is a good deal.

BSX has been beaten by competition at almost every turn. It took on tremendous debt when it bought medical device company Guidant. It faced trouble when some Guidant products hit quality control issues. Boston Scientific stents came under criticism a year ago, when medical research questioned how effective they were.

BSX traded at almost $45 in 2004. It is now at about $12. With new competition and a bad balance sheet, that is not likely to change much.

Douglas A. McIntyre is an editor at 247wallst.com.

Read | Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

The average price of gas finally crossed $4 last week, perhaps on its way to $5.

According to The Wall Street Journal, "The record nationwide average for regular-gasoline prices, announced by auto club AAA, follows Friday's near-$11 surge in oil prices to a record $138.54 a barrel."

While it makes a good headline, it is really no more important than when gas went above $3.95 or if and when it moves above $.4.05. What is important is that, at the current level, gas on its own could break the back of the consumer, and of many businesses.

It is not unusual for drivers to use 20 gallons of gas a week. For that consumer, the difference between $2 gas and $4 gas is $2,100 a year. A family making $40,000 is probably keeping $30,000 after taxes. So, 7% or 8% of their net income now goes to gasoline. That does not leave much for the rising cost of food and a mortgage.

The news is obviously just as bad for industries like farming and the airlines.

If investors want to see where the economy and markets are going, watch gas prices. They are probably a better proxy for how bad things are for the consumer than any other single measure. Gas at $5 would be a catastrophe.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

Read | Permalink | Email this | Linking Blogs | Comments

"You can invest for all the right reasons and still get the wrong result," notes long-standing turnaround stock expert George Putnam, referring to the poor performance of the pharmaceutical sector in recent years.

Here, in his industry-leading The Turnaround Letter, he offers a fascinating review of 10 leading drug stocks which he now believes offer a combination of growth potential at "pretty cheap" valuations. Here is his overview.

"In 2000 and 2001, when the Internet boom was becoming a bust, many smart investors turned away from technology stocks and put their money into drug stocks. How could you go wrong with the big pharmaceutical companies?

"Demand for their products was growing as the population aged. These companies had huge research
and development programs that seemed to keep cranking out new blockbuster drugs. And most of them had great balance sheets, with many paying handsome dividends.

"Much of this reasoning has been borne out in the intervening years. Many large drug manufacturers have rung up substantial revenue gains over the last decade. So what's happened to the big drug stocks? With few exceptions they have gone sideways or down - in some cases down a lot.

"What happened? With the benefit of hindsight, we can see that while they were indeed great companies (and still are), their stocks were overvalued. Investors gradually realized that these companies did face risks - generic competition, shifting regulatory winds and product liability lawsuits, to name a few.

"Now, as often happens, the markets may have gone too far in the other direction, and the big drug stocks look pretty cheap. The growth potential is still there, but the risks are pretty well priced into the stocks.

"Moreover, many of the dividends are even richer today, which gives you some downside protection in case the markets remain volatile. We highlight below ten large pharmaceutical makers whose stocks look particularly attractive to us right now.

"Abbott Laboratories (NYSE: ABT) recently reported quarterly results that showed double-digit revenue and earnings gains.

"But the stock has sold off to trade near its lows of the last 16 months and only marginally higher than levels of early 1999! With a forward P/E below 15 and a dividend yield of 2.9%, Abbott is well priced to reward patient investors.

"AstraZeneca (NYSE: AZN) has gone nowhere for a decade, despite revenues having grown from $5.5 billion to $29.6 billion. The major difference being that investors in 1999 were willing to pay as high as 75x earnings, but now are unwilling to pay even 10x expected earnings for 2008.

"In addition to the industry's general malaise, AstraZeneca has some integration issues from recent acquisitions. But once it sorts those out, the stock should perform well.

"Bristol-Myers Squibb (NYSE: BMY) is streamlining. It recently sold its medical-imaging unit and plans to divest half of its 27 manufacturing facilities, cut its work force by 10% and spinoff up to 20% of its nutritionals business.

"Meanwhile, it is also building a pipeline of new products. With the stock recently trading at the same level it did in 1991, it seems that mainstream investors have given up on Bristol-Myers, which provides an opportunity for those willing to go against the crowd.

"Eli Lilly & Company (NYSE: LLY) is generally recognized for having a more diversified drug portfolio and a deeper pipeline than many in the industry. Nevertheless, the stock trades at low multiples right along with its industry peers.

"Management isn't sitting idle. In addition to spending a formidable 18.7% of sales on developing the firm's pipeline, it is also pursuing strategic acquisitions.

"The valley at GlaxoSmithKline (NYSE: GSK) appears to be about 18 months to two years wide. That's how long it will take, according to the company's CEO, for it to be marketing newer products and for generic competition to erode.

"In the meantime, management is making acquisitions to build out its portfolio and streamlining operations in order to sustain profitability. In case you have to wait a bit for GlaxoSmithKline's stock to rebound, there is an attractive 5.7% dividend yield.

"Johnson & Johnson (NYSE: JNJ) is seen as a more stable competitor due to a more diverse operating
base. Pharmaceuticals account for about 41% of total sales, with medical/diagnostic products at 35% and consumer personal care products at 24%. The stock has acted better than most, but it has made little net progress in the last six years.

"Merck (NYSE: MRK) has faced formidable headwinds ever since it was forced to pull Vioxx from the market in 2004. More recently, the firm's Vytorin and Zetia have faced challenges to their effectiveness, and Fosamax is facing increasing generic competition.

"Not surprisingly, the stock has taken a hit, falling more than 30% from its January 2008 level. But based on cost-cutting initiatives and sales of its cervical-cancer vaccine, Gardasil, management recently reaffirmed earnings guidance. Maybe the glass is half full.

"Pfizer (NYSE: PFE), the world's largest pharmacglaeutical company, reported disappointing quarterly results that pushed the stock below $20 for the first time since 1997.

"Competition for two of its leading products Norvasc (blood pressure) and Zyrtec (allergy), strict labeling requirements for Chantix (Pfizer's newer antismoking medication) and lackluster sales for Lipitor combined to hurt results. With a forward P/E below 8, it would appear that investors are assuming a pharmaceutical Armageddon.

"The latest quarterly results at Schering-Plough (NYSE: SGP), according to at least one article, 'trounced Wall Street expectations.' And, indeed, the stock has rallied a bit, but only after it had fallen to its lowest price since 1996.

"The results benefited from more rapid assimilation of last year's $14.5 billion acquisition of Organon BioSciences, strength in the U.S. dollar, overseas demand, growth in the firm's animal health segment and revenues from its joint venture with Merck covering Vytorin and Zetia. Despite the good news, the stock is off more than 40% from its level a year ago.

"Wyeth (NYSE: WYE), formerly American Home Products, continues to struggle with product liability issues and generic competition.

"Management is rethinking the company's business model. But there are bright spots in the outlook, including the recent approval of the firm's Pristiq antidepressant drug and a new drug pipeline that offers significant diversity."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

Permalink | Email this | Linking Blogs | Comments

MOST NOTEWORTHY:

• Citigroup believes SunPower (NASDAQ: SPWR) is faced with high cell production costs, its silicon cost and installation cost advantages are increasingly commoditized and finds the risk/reward even at current levels. Shares were initiated with a Hold rating and $105 target.
  
• Citigroup believes Evergreen Solar (NASDAQ: ESLR) faces significant financing requirements over the next few years, making it difficult to see a sustained period of EPS growth beyond the $1 range. The firm sees downside to $5/share. Shares were assumed with a Sell rating and $8 target.
  
• UBS started Abbott Lab (NYSE: ABT) with a Buy rating and $61 target. The firm is positive on Humira potential growth and expects Xience to drive vascular operating margins to positive.

• Lazard initiated Cree (NASDAQ: CREE) and Rubicon Tech (NASDAQ: RBCN) with Hold ratings.
  
• BMO Capital started Smith & Nephew (NYSE: SNN) with an Outperform rating and $70 target.

Permalink | Email this | Linking Blogs | Comments

Read | Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

After hitting a one-year low of $49.58 in July, the stock hit a one-year high of $61.09 in January. ABT opened this morning at $53.32. So far today the stock has hit a low of $52.97 and a high of $53.73. As of 12:10, ABT is trading at $53.24, up $1.63 (3.2%). The chart for ABT looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in just seven weeks as long as ABT is above $50 at June expiration. Abbott would have to fall by more than 6% before we would start to lose money. Learn more about this type of trade here.

ABT hasn't been below $49.50 at all in the past year and has shown support around $50.50 recently. This trade could be risky if one of the company's products gets in trouble with the FDA, but even if that happens, this position could be protected by the support the stock might find around $50, where it has bottomed out many times in the past year.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in MRK or ABT.

Permalink | Email this | Linking Blogs | Comments

The euro rose about 1.5 cents to $1.6020 versus the dollar before paring some gains to trade around $1.5985 in Tuesday afternoon trading. The Euro also rose about four-tenths of a pence against the British pound to 80.20 pence.

Dollar falls, again

Meanwhile, the dollar retreated across the board, falling about 1.5 cents to $1.9950 versus the British pound and about one-half yen to 102.95 versus Japan's yen. Independent currency trader Andrew Resnick told BloggingStocks Tuesday that traders responded to the ECB's announcement by doing what you'd expect: they bought the euro.

"The only thing holding back the euro was the possibility the ECB would cut rates. The fundamentals have been in the euro's favor for several years. The market had priced-in a possible rate cut by the ECB, but when ECB comments came in today the market quickly bid up the euro," Resnick said. He added that he is presently long with the euro against the dollar.

G-7 impact: None

Resnick said last week's G-7 meeting, in which global finance leaders voiced concern over the falling dollar "seems like a distant memory, in market terms, now." Initially, traders had feared a central bank(s) intervention to support the dollar, he said. It was not a concern rooted in empirical evidence.

"Basically, the market feels economic leaders will tolerate the dollar's decline, so long as it's not sudden, or volatile. And with oil getting near $120, the dollar will continue to decline," Resnick said. "It's back to fundamentals ruling the day in the currency market." Oil closed Tuesday up $1.89 to $119.37 per barrel, a record-high close.

Resnick said there's a good chance the dollar will weaken to $1.65 versus the euro by the end of Q2 2008. If it does, the euro will have doubled in value versus the dollar since 2001.

When will the greenback begin its comeback? "When the United States cuts its budget deficit, lowers its trade deficit, and its economy starts to grow again, making our [U.S.] investments more attractive to foreign investors," Resnick said.

Permalink | Email this | Linking Blogs | Comments

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Abbott Laboratories Inc. (NYSE: ABT) first-quarter profit soared on overseas demand for Humira.
• Advanced Micro Devices Inc. (NYSE: AMD) posted a bigger-than-expected loss, its sixth straight.
• Coca-Cola Co. (NYSE: KO) posted better-than-expected first-quarter results on strength overseas.
• CSX Corp. (NYSE: CSX) first-quarter profit soared on strong demand for grain, ethanol, and coal.
• eBay Inc. (NASDAQ: EBAY) beat first-quarter expectations but the outlook was uninspiring.
• Google Inc. (NASDAQ: GOOG) first-quarter profit soared 42%, beating Wall Street estimates.
• Intel Corp. (NASDAQ: INTC) first-quarter earnings slipped but exceeded expectations.
• Intuitive Surgical Inc. (NASDAQ: ISRG) beat first-quarter estimates and offered a disappointing outlook.
• J.B. Hunt Transport Services Inc. (NASDAQ: JBHT) missed first-quarter estimates on rising fuel prices.
• Nokia Corp. (NYSE: NOK) first-quarter profit missed expectations and it warned of a coming decline.
• Pfizer Inc. (NYSE: PFE) first-quarter profits fell and missed analysts' expectations.
• Reliance Steel & Aluminum Co. (NYSE: RS) lowered its second-quarter outlook.
• Royal Philips Electronics posted a bigger-than-expected fall in profit on weak North America TV sales.
• Wolverine World Wide Inc. (NYSE: WWW) beat earnings estimates but shareholders were not impressed.
• Xerox Corp. (NYSE: XRX) posted a first-quarter loss that matched analysts' estimates.

Also, Jim Cramer doesn't think General Electric (NYSE: GE) is the bellwhether some take it for. Goldman Sachs (NYSE: GS) is pessimistic about this earnings season. And here's a look at some companies that reported this week that could bounce back after the recession, as well as earnings expectations for "barometer" companies reporting next week.

Upcoming results to watch for include Bank of America (NYSE: BAC), Halliburton (NYSE: HAL), Merck (NYSE: MRK) Texas Instruments (NYSE: TXN), AT&T (NYSE: T), DuPont (NYSE: DD), Yahoo! (NASDAQ: YHOO), Amazon.com (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Qualcomm (NASDAQ: QCOM), Boeing (NYSE: BA), UPS (NYSE: UPS), 3M (NYSE: MMM), PepsiCo (NYSE: PEP), Microsoft (NASDAQ: MSFT), Motorola (NYSE: MOT), and McDonald's (NYSE: MCD).

Visit AOL Money & Finance for more earnings coverage.

Permalink | Email this | Linking Blogs | Comments

For the quarter, Abbott Laboratories reported that its profit climbed to $938 million, or 60 cents per share, boosted by higher sales of its prescription drugs and medical devices that benefited from favorable foreign exchange rates. Excluding special items, the company's earnings came in at 63 cents a share, beating analysts' estimations for quarterly earnings of 62 cents a share.

The pharmaceutical company also announced a 14% growth in revenues, to $6.77 billion, up from $5.95 billion a year earlier. Revenue during the period was helped by a 54% increase in its drug Humira sales which surged to $878 million in the first quarter. Analysts, on average, were expecting the company show $6.53 billion in revenue, according to Thomson Financial.

According to a statement from Thomas C. Freyman, Abbott's chief financial officer, the company was satisfied with its "strong first quarter delivering double-digit sales and earnings growth" as global sales of Humira were able to offset the weak economy that added pressure on consumer spending.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

• Wachovia upgraded Abbott Lab (NYSE: ABT) to Outperform from Market Perform as they believe their earlier concerns have been addressed. Past concerns included the potential for a negative outcome from the FDA panel on Xience and slowing prescription growth of lead drug Humira.
  
• Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) were raised to Outperform from Market Perform at Keefe Bruyette citing recent government actions to stabilize the mortgage markets.
  
• Micromet (NASDAQ: MITI) was upgraded at RBC Capital to Outperform from Sector Perform as they expect positive data for its lead candidate, MT103, by year-end.

• ThinkEquity raised Atheros Comm (NASDAQ: ATHR) to Buy from Accumulate.
  
• Goldman upgraded US Steel (NYSE: X) to Buy from Neutral.
  
• General Electric (NYSE: GE) was upgraded at Merrill to Buy from Neutral.

Permalink | Email this | Linking Blogs | Comments

UBS downgraded United Airlines (NASDAQ: UAUA) and Northwest (NYSE: NWA) from "buy" to "neutral," according to Briefing.com. The news service also writes that Keefe, Bruyette upgraded Fannie Mae (NYSE: FNM) to "outperform" from "market perform."

Altria (NYSE: MO) was started as a "buy" at UBS, according to 24/7 WallSt. The website also reports that Abbott Laboratories (NYSE:ABT) was raised to "outperform" by Wachovia.

Douglas A. McIntyre

Read | Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

The earnings crunch is in full swing, and here are a few of the highlights of this past week's earnings coverage from BloggingStocks:

• Abbott Laboratories (NYSE: ABT) swung to a profit on the strength of drug sales.
• AK Steel Holding Corp. (NYSE: AKS) swung to a fourth-quarter profit and easily beat estimates.
• Aladdin Knowledge Systems Ltd. (NASDAQ: ALDN) posted solid results and raised its forecast.
• Amdocs Ltd. (NYSE: DOX) reported a record quarter and reaffirmed its guidance.
• Amgen Inc. (NASDAQ: AMGN) beat exectations, but concerns remain about FDA scrutiny.
• Apple Inc. (NASDAQ: AAPL) easily beat expectations and offered revised guidance (see live blog, transcript).
• Caterpillar Inc. (NYSE: CAT) posted a solid quarter on strong international growth.
• Coach Inc. (NYSE: COH) beat estimates on strong direct-to-customer and same-store sales.
• ConocoPhillips (NYSE: COP) posted a strong fourth quarter due to rising oil prices.
• CSX Corp. (NYSE: CSX) beat expectations as increased productivity offset increased fuel costs.
• Eaton Corp. (NYSE: ETN) posted solid fourth quarter results due to growth overseas.
• Equity LifeStyle Properties Inc. (NYSE: ELS) beat expectations in the fourth quarter and offered guidance.
• Franklin Resources Inc. (NYSE: BEN) reported solid results and increased its quarterly dividend.
• Johnson & Johnson (NYSE: JNJ) posted a solid fourth quarter and affirmed its 2008 guidance.
• Microsoft Corp. (NASDAQ: MSFT) posted strong results due in part to demand for Vista.
• Nintendo Co. (OTC: NTDOY) profit soared on demand for the Wii, and the company raised is sales outlook.
• Nokia Corp. (NYSE: NOK) reported a strong fourth quarter and increased market share in handset sales.

• Nucor Corp. (NYSE: NUE) easily beat analysts' expectations for the fourth quarter.
• PetMed Express Inc. (NASDAQ: PETS) profits soared as more people buy pet meds online.
• Qualcomm Inc. (NASDAQ: QCOM) reported a solid first quarter on strong demand for its chips.
• Skyworks Solutions Inc. (NASDAQ: SWKS) beat expectations and offered revised guidance.
• Southwest Airlines Co. (NYSE: LUV) profit nearly doubled despite weather and operational challenges.
• Sun Microsystems Inc. (NASDAQ: JAVA) net income soared despite stiff competition.
• Texas Instruments Inc. (NYSE: TXN) beat fourth quarter earnings estimates (see transcript).
• Xerox Corp. (NYSE: XRX) profit soared on strong sales and it announced a share buyback plan.
• Xilinx Inc. (NASDAQ: XLNX) beat expectations due to strong demand for its new products.

See additional earnings highlights.

Also, Jim Cramer's advice for what earnings should mean in your buy or sell decision. Both Peter Cohan and Georges Yared look at the part earnings have played in this week's volatility. And Aaron Katsman is bullish on tech stocks.

Upcoming results to watch for include Verizon (NYSE: VZ), Halliburton (NYSE: HAL), American Express (NYSE: AXP), McDonald's (NYSE: MCD), Yahoo! (NASDAQ: YHOO), Amazon.com (NASDAQ: AMZN), Starbucks (NASDAQ: SBUX), Altria (NYSE: MO), Boeing (NYSE: BA), United Parcel Service (NYSE: UPS), Procter & Gamble (NYSE: PG), Google (NASDAQ: GOOG) and Exxon Mobil (NYSE: XOM).

Visit AOL Money & Finance for more earnings coverage.

Permalink | Email this | Linking Blogs | Comments

Abbott Laboratories (NYSE: ABT) announced that it swung to a profit in the fourth quarter from year-earlier results that were reduced by charges for acquisition costs. Abbott's drugs Humira, Depakote, TriCor, and Kaletra all posted double-digit sales gains.

For the quarter ending December 31, Abbott earned $1.2 billion, or 77 cents per share, compared with a loss of $476.2 million, or 31 cents per share, in the same period a year ago. Revenue rose to $7.22 billion from $6.22 billion, exceeding the $6.97 billion estimated by analysts polled by Thomson Financial.

Adjusted earnings, excluding certain items, rose to 93 cents per share, a penny better than analysts' consensus estimate. For the full year, Abbott earned $3.6 billion, or $2.31 a share, compared with $1.72 billion, or $1.12 a share, in 2006. Revenue increased 15% to $25.9 billion from $22.5 billion.

Shares were down about 2% to 56.20 by midday on Wednesday.

For more news on Abbott Labs, see BloggingStocks' Abbott coverage.

WellPoint Inc. (NYSE: WLP), which operates Blue Cross and Blue Shield plans in several states, reported that its fourth-quarter profit rose 7% to $859.1 million, or $1.51 per share, from $801.1 million, or $1.28 per share, in the same quarter of the previous year. Revenue climbed 7% to $15.56 billion from $14.58 billion a year ago, helped by a rise in premiums. Analysts surveyed by Thomson Financial had expected a profit of $1.51 per share on revenue of $15.26 billion.

For the full year, WellPoint reported earnings of $3.3 billion, or $5.56 per share, on total revenue of $61 billion, which was in line with analysts' earnings expectations. WellPoint also reaffirmed its outlook for fiscal 2008 earnings per share of $6.41, and said it will buy back more than $4 billion worth of shares during the year.

The share price fell about 5% in morning trading after analysts expressed concerns over an 82.9% rise in WellPoint's benefit expense ratio. The ratio represents the percentage of revenue spent on medical expenses.

See also:
Pfizer net income plunges 70% but profits beat expectations
Tuesday earnings recap: Johnson & Johnson, UAL

Visit AOL Money & Finance for more earnings coverage.

Permalink | Email this | Linking Blogs | Comments

Read | Permalink | Email this | Linking Blogs | Comments