Markets & Finance

Movers: Fannie Mae, Freddie Mac, Lehman, Amylin, Dollar Tree, J.Crew


Stocks in the news Wednesday

From Standard & Poor's Equity ResearchFannie Mae (FNM) announces management changes. The mortgage company's chief financial officer, Stephen Swad, was replaced and the chief business officer, Peter Niculescu, will take on an expanded role. It appointed a new chief financial officer and chief risk officer. CEO Daniel Mudd will remain in place.

Fannie Mae and Freddie Mac (FRE) rose after Dow Jones reports that U.S. Federal Reserve Bank of Atlanta President Dennis Lockhart said: "The recent news on balance has been positive," noting FNM's recent successful debt financing. He also said recent developments looked positive for FRE as well. The comments seem to further support investors recent beliefs that their shareholdings would not be wiped out by government intervention.

Lehman Brothers (LEH) has told three private equity firms -- Kohlberg Kravis Roberts, Hellman & Friedman and Bain Capital --that they remain in the bidding for its asset management arm even though the investment bank has yet to make a final decision on whether to sell the unit: Financial Times. S&P maintains hold.

Amylin Pharmaceuticals (AMLN) and Eli Lilly's (LLY) diabetes drug Byetta reportedly was linked to four more deaths in patients with pancreatitis, adding to two deaths announced by federal regulators last week. Baird reportedly downgrades to neutral from outperform. Cowen maintains neutral.

Dollar Tree (DLTR) posts $0.42, vs. $0.33 a year ago, second quarter EPS on 6.5% higher same-store sales, 13% higher total sales. Gross margin narrowed by 40 basis points, primarily driven by the planned shift in merchandise mix towards consumables and increased diesel fuel costs. Sees $0.40-$0.43 third quarter EPS on low-to-mid single digit positive comps. Sees fiscal year 2009 EPS of $2.33-$2.43, below Street's view of $2.44, on low-to-mid single digit positive comps.

J.Crew Group (JCG) posts $0.28, vs. $0.32, second quarter EPS on slightly lower same-store sales, narrowed gross margin. Total revenue rose 10%. Direct systems upgrades impacted JCG's Direct sales trend, limited its ability to leverage the multi-channel platform and resulted in incremental expenses. Cuts $1.70-$1.75 fiscal year 2009 EPS guidance to $1.44-$1.54. Sees third quarter EPS of $0.28-$0.33. S&P maintains buy; cuts estimate. Brean Murray reportedly downgrades to hold from buy.

Borders Group (BGP) posts $0.19 second quarter loss from continuing operations, vs. $0.31 loss, as controlled costs, inventory management offset 6.9% lower total consolidated sales from continuing operations. At Borders domestic superstores, same-store sales fell 8.9% (year ago comp included release of final book in the Harry Potter series). Comps at Waldenbooks Specialty Retail segment fell 7%.

Talbots (TLB) posts $0.34 second quarter loss, vs. $0.18 loss (both from ongoing core operations), on 12% lower same-store sales, 9.1% lower total sales. Sees $0.15-$0.25 fiscal year 2009 EPS. Expects same-store sales for the full fall season to be in the range of flat to slightly negative compared to last year, with the Talbots brand approximately flat and the J. Jill brand down low to mid single digits. Reconfirms $0.47-$0.52 fiscal year 2009 EPS from ongoing core operations (excluding items) forecast.

Ikon Office Solutions (IKN) agrees to be acquired by Ricoh in a $1.6 billion deal. Terms: $17.25 cash per IKN share.

Baird reportedly downgrades the U.S. auto and truck parts suppliers industry to market weight from overweight. Reportedly downgrades Superior Industries International (SUP), Modine Manufacturing (MOD), Stoneridge (SRI), and Strattec Security (STRT) to underweight from neutral.

Solarfun Power Holdings (SOLF) posts RMB 0.31, vs. RMB 0.08, second quarter EPS despite sharply higher revenues. Notes lower gross margin from the first quarter 2008 primarily due to higher polysilicon, wafer costs. Expects second half gross margins to improve, although it expects that polysilicon and wafer pricing will continue to be high during the third quarter. Separately, SOLF in letter-of-intent for 3-year supply agreement with Q-Cells Intl.

Mattel (MAT) announces that a federal jury unanimously awarded MAT $100 million in damages from MGA Entertainment and its CEO, Isaac Larian, for copyright infringement and other claims related to MAT's rightful ownership of Bratz-related works.

Dillard's (DDS) posts $0.51 second quarter loss, vs. $0.31 loss, on 4% lower same-store sales, 3% lower total sales. Notes gross margin declined 170 basis points primarily as a result of increased markdowns in a notably difficult sales environment.

Brown Shoe (BWS) posts $0.05 (including costs of $0.15 per share, mainly related to relocation of its Famous Footwear headquarters), vs. $0.22 (including $0.08 in costs) second quarter EPS on 2.9% lower same-store sales (SSS) at Famous Footwear, 1.3% lower total sales. For the third quarter, it sees SSS at Famous Footwear down 1.0%-3.0%, $0.31-$0.41 EPS (including costs) on $650-$660 million total sales. For fiscal year 2009, sees SSS at Famous Footwear down 2.0%-4.0%, $1.12-$1.29 EPS (including costs) on $2.38-$2.40 billion total sales.

Pfizer (PFE) and Bristol-Myers (BMY) report that an early evaluation of results from a Phase III study of apixaban for the prevention of venous thromboembolism (VTE) in patients undergoing total knee replacement indicates that the primary endpoint of this study was not met. The companies are considering further studies with different protocols in preventing VTE in knee surgery and will not submit the U.S. filing for VTE prevention in the second half of 2009, as previously communicated.

CNOOC Ltd. (CEO) says its first half oil and gas sales increased 64% from last year, net profit was up 89% to RMB 27.54B, EPS were RMB 0.62.

Hain Celestial Group (HAIN) posts $0.34, vs. $0.25, fourth quarter adjusted EPS on 25% sales rise. Sees fiscal year 2009 sales of $1.2-$1.3 billion and EPS of $1.54-$1.61. Company expects to incur $0.08 per share in stock compensation expense to amortize equity grants made this past fiscal year 2009.


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