Markets & Finance

Movers: Citigroup, WaMu, Continental Airlines, Coventry Health, Huntsman


Stock in the news Thursday

From Standard & Poor's Equity ResearchCitigroup (C) reportedly says it could take more hits from exposure to troubled bond insurers and risk credit products in the second quarter; it warns that it sees "substantial additional" markdowns on CDOs and potential write-downs in the second quarter.

Washington Mutual (WM) announces it will cut 1,200 jobs. This news comes after Wednesday's announcment by WaMu that it would stop offering two types of riskier mortgages: option adjustable-rate mortgages and WaMu Mortgage Plus loans.

Continental Airlines (CAL) and UAL Corp.'s (UAUA) United Airlines announce a framework agreement to cooperate extensively, linking their networks and services worldwide to the benefit of customers and creating revenue opportunities and cost savings and other efficiencies. In addition, CAL plans to join United in the Star Alliance, the most comprehensive airline alliance in the world. S&P reiterates strong buy on CAL.

Coventry Health Care (CVH) sees second quarter EPS of $0.55-$0.57 and 2008 EPS of $3.65-$3.75. Expects the 2008 Medicare Advantage medical loss ratio to be 85.5%-85.9%, an increase of approximately 300-340 basis points from the company's prior estimate. Also notes higher-than-expected levels of outpatient utilization and, to a lesser extent, a higher-than-expected inpatient unit cost trend caused by an increased severity level of facility claims. Wachovia reportedly downgrades to market perform.

XM Satellite Radio Holdings (XMSR) and Sirius Satellite Radio (SIRI) fall after Goldman Sachs reportedly cuts price targets for both stocks.

Hexion Specialty Chemicals and related entities file a lawsuit in Delaware court to declare its contractual rights with respect to its $10.6 billion merger deal with Huntsman (HUN) is no longer viable. Hexion says it believes that the capital structure agreed to by HUN, Hexion for the combined company is no longer viable because of HUN's increased net debt and its lower-than-expected earnings.

Circuit City Stores (CC) posts $1.00 first quarter loss per share, vs. $0.33 loss a year ago, on 11% consolidated same-store sales drop, 7.4% total sales drop. Loss was narrower than expected. It sees $170-$185 million second quarter loss from continuing operations before income taxes. Expects gradual recovery in the second half of fiscal year 2009. Suspends future dividend payments.

Triad Guaranty (TGIC) falls after the company announces that it has ended its negotiations with Lightyear Capital LLC to form a new mortgage insurance company. Also reports that Freddie Mac (FRE) has informed the company that the appeal of its subsidiary's suspension as an approved mortgage insurer has been denied.

Aetna (AET) reaffirms $0.93 second quarter operating EPS guidance and $4.00 for 2008. It says the medical cost trend it is experiencing in second quarter is in line with its expectations to date and consistent with it prior guidance of 7.5%, plus-or-minus 50 basis points.

J.M. Smucker (SJM) posts $0.67, vs. $0.75, fourth quarter EPS as restructuring and merger, other costs offset 20% sales rise. Sees $3.45-$3.50 fiscal year 2009 non-GAAP EPS on $3.8-$4.0 billion sales (before one-time costs associated with deal to merge PCG's Folgers coffee business into the company).

Deluxe Corp. (DLX) agrees to acquire Hostopia, a provider of web services, in an all-cash transaction valued at about C$124 million.

Usana Health Sciences (USNA) raises $0.48-$0.51 second quarter EPS guidance to $0.60-$0.63 on sales of $107-$109 million (from $103-$106 million). It cites better-than-expected results from promotional and incentive programs offered during the second quarter.

Monsanto Company (MON) agrees to acquire Marmot S.A., which operates Semillas Cristiani Burkard, a privately-held seed company in Guatemala. Terms of the agreement were not disclosed.

Progress Software (PRGS) posts $0.47, vs. $0.41, second quarter non-GAAP EPS on 6.9% revenue rise. Sees $0.43-$0.45 third quarter non-GAAP EPS on $125-$127 millioin revenue, $1.91-$1.95 fiscal year 2008 on $518-$526 million revenue.

Actuant (ATU) posts $0.60, vs. $0.47, third quarter EPS on 15% revenue rise. Sees $0.51-$0.55 fourth quarter EPS, $2.02-2.06 fiscal year 2008 EPS (excl. tax gain, European Electrical restructuring charges). Ignoring future acquisitions, sees fiscal year 2009 EPS growth of 10%-15% above mid-point of fiscal year 2008 EPS guidance range, to $2.25-2.35.

Pier 1 Imports (PIR) posts $0.37 first quarter loss, vs. $0.64 loss a year ago, despite 5.4% same-store sales drop, 13% total sales drop. Sees slightly negative to modestly positive second quarter same-store sales, with merchandise margins at or above first quarter levels. Sees flat or slightly positive fiscal year 2009 same-store sales with merchandise margins of at least 53%, expects to report modest net income before special charges for fiscal year 2009.

Sepracor (SEPR) announces presentation of Phase III combined clinical results for eslicarbazepine acetate (SEP-0002093 / BIA 2-093) in the treatment of epilepsy at conference in Spain. Says results of the studies demonstrated a significant reduction in the frequency of partial seizures in patients who were administered eslicarbazepine acetate in combination with other existing anti-epileptic drugs. UBS Financial reportedly upgrades to buy from neutral.

Evergreen Solar (ESLR) announces that it has signed two new long-term sales contracts valued at approximately $600 million with U.S.-based groSolar and German-based Wagner & Co Solartechnik GmbH. These contracts extend through 2012 and bring the company's total contractual backlog to approximately $1.7 billion.

IHS (IHS) posts $0.37, vs. $0.32, second quarter EPS on 34% revenue rise. Posts $0.46 adjusted EPS. Sees 21%-23% fiscal year 2008 revenue growth, raises adjusted EBITDA guidance to 28%-30% growth.


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