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Mario Randholm Blog. Mario is the founder of Randholm & Co. S.A.C., an investment management company dedicated to producing superior returns for its clients and employees by adhering to mathematical and statistical methods.
Market Update
Stocks Lower as Budget Deadlock Goes On! Stocks on Wall Street were lower at midday as negotiations to end the ongoing partial government shutdown, and to extend the nation’s debt limit to avoid a default, appear to have made little progress. No major earnings reports were released today, though the third quarter earnings season will kick off this week. Alcoa (AA) is no longer included in the Dow Jones Industrial Average, but its report tomorrow is still widely viewed as the beginning of the season. In addition to the aluminum company, reports are expected from Yum! Brands (YUM), Costco (COST), Family Dollar (FDO) and two of the nation’s largest banks, namely JPMorgan (JPM) and Wells Fargo (WFC). ECONOMIC EVENTS: The domestic economic calendar was quiet again this morning. A report on consumer credit growth in August is due out at 3:00 pm ET, with economists expecting credit to have risen $13.5B during the month. COMPANY NEWS: BlackBerry (BBRY) shares gained 4% and moved back above $8 after Reuters said the mobile device maker is in talks with Cisco Systems (CSCO), Google (GOOG) and SAP (SAP) about selling them all or parts of itself. Boeing (BA) shares slid 0.5% after its rival Airbus (EADSY) secured its first order for commercial jets from Japan Airlines, which has ordered exclusively with the U.S. plane maker for decades. MAJOR MOVERS: Among the notable gainers was Redbox owner Outerwall (OUTR), which was up about 5% near noon after activist investor JANA Partners disclosed Friday that it had taken a 13.5% stake and said that it would encourage the company to explore strategic alternatives, including selling itself. Among the noteworthy losers was Cooper Tire (CTB), which fell 12% as the company and Apollo Tyres, the Indian tire-maker which has agreed to buy Cooper, engaged in a public fight over the price of the deal. Also lower were shares of Deckers Outdoor (DECK), which slid almost 6% after research firm OTR Global made cautious comments about sales of the company’s UGG brand boots.
GW Pharmaceuticals soars after analyst nearly triples price target – Shares of Britain’s GW Pharmaceuticals (GWPH) are jumping after a Lazard Capital analyst wrote that the company has one of the most compelling opportunities he’s ever seen, and nearly tripled his price target on the stock. WHAT’S NEW: GW’s CBD, a drug derived from the cannabis plant, has significantly helped some epilepsy patients to whom it has been administered, Lazard Capital analyst Joshua Schimmer wrote in a note to investors earlier today. Although not all the refractory childhood seizure patients who have taken the drug have improved, evidence suggests that the treatment does have "an antiseizure effect," the analyst believes after speaking with multiple experts. Moreover, "there is an enormous unmet need" for such an antiseizure treatment, and specialists appear to be extremely interested in CBD, Schimmer contended. He hiked his price target on GW to $65 from $22, and kept a Buy rating on the shares. TODAY’S PRICE ACTION: In morning trading, GW rallied $6.63, or 27%, to $31.33.
Apple climbs after Jefferies ups rating to Buy – Shares of Apple (AAPL) are advancing in a down market after research firm Jefferies upgraded the stock in a note to investors earlier today. WHAT’S NEW: After meeting with Apple’s Asian supplier, Jefferies analyst Peter Misek believes that the tech giant will benefit from stronger than expected gross margins in the near-term and the launch of a new, bigger iPhone in the longer term. Apple is getting price breaks from its suppliers, wrote Misek, who consequently raised his profit estimates for Apple’s fourth quarter. The analyst previously expected the tech giant to report lower than expected profits for its fourth quarter, but he now thinks that the iPhone maker’s fourth quarter profits will be nearly in-line with analysts’ expectations. Meanwhile, the analyst is upbeat about the outlook for Apple’s next iPhone, the iPhone 6. By equipping the iPhone 6 with a significantly larger screen than its predecessors, Apple may be able to convince some Android users to move over to the iPhone, Misek wrote. Moreover, relatively few iPhone users are upgrading to Apple’s latest smartphones this year, meaning that more people will look to upgrade to the iPhone 6 when it is launched late next year, the analyst contended. He upgraded the stock to Buy from Hold and raised his price target on the shares to $600 from $425. WHAT’S NOTABLE: Piper Jaffray analyst Gene Munster wrote in a note to investors today that Apple’s launch of a smart watch could cause the stock’s multiple to expand as investors give the company credit for innovating. Apple’s smart watch launch could also lead to the unveiling of more wearable technology products that could generate significant revenue for the company, added the analyst. But after conducting a survey of 799 U.S. consumers, Munster does not expect the watch alone to generate significant revenue for the company next year. He kept an Overweight rating on the shares. TODAY’S PRICE ACTION: In morning trading, Apple rose $7.85, or 1.6%, to $491.