Jefferies Estimates AbbVie Could Have a Deal if Shire Bid Boosted
Jefferies Estimates AbbVie Could Have a Deal if Shire Bid Boosted
Midday Report: Stocks Lose Gains, Monsanto to Cut 2,600 Jobs
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Analysts at Jefferies are estimating that pharmaceutical company AbbVie could find itself a deal if it sweetens its $46 billion takeover offer for London-listed rival Shire. Jefferies analysts estimate that AbbVie could improve its offer to 55 pounds a share, or $55 billion. That's up from its most recent cash-and-shares offer of just over 46 pounds, which was rejected. Shire has argued that AbbVie's offer undervalues its business. Since the offer, Shire is giving long-range forecasts for its drugs, predicting that its $4.9 billion in sales in 2013 may double to $10 billion by 2020, helped by its successful ADHD treatment.
U.S. markets fell to the flatline by midday Wednesday. One company moving markets was Monsanto (MON) which missed quarterly estimates and announced plans to cut as many as 2,600 jobs over the next two years as lower commodity prices hurt sales. Stocks lost gains by the middle of the session. Benchmark indexes had surged more than 1% as crude oil closed in on the psychologically-important $50-a-barrel level. However, the rally in crude oil was cut short after weekly inventories rose by 3.1 million barrels, nearly double an expected gain. Oil had spiked more than 2% earlier, gaining for its fourth straight session in its longest winning streak in six months.
In Wednesday's Analysts' Actions one Wall Street firm is bearish on Tesla Motors (TSLA), while another gives Morgan Stanley (MS) nods of approval. Meanwhile, analysts drop Yum! Brands' (YUM) price target. Tesla was downgraded at Robert Baird to NEUTRAL from OUTPERFORM. At the same time, its price target was cut to $282 from $335. The firm said that Model X production ramp could take longer than expected. The Model X is priced at $130,000. Analysts believe its price could be too high, and are concerned that consumers may cancel some orders. A different story for Morgan Stanley. RBC Capital upgraded the financial services company to OUTPERFORM from SECTOR PERFORM. Wealth management is a key driver of earnings growth analysts said. Another positive is its capital strength. The firm predicts capital return to gradually increase in the future. For now, it's keeping its $39 price target. In another analyst note, Barclays cut Yum! Brands' price target to $73 from $82. The firm has an EQUAL WEIGHT rating on the stock. This comes after the fast food company reported weak third quarter earnings after the market close yesterday. It missed analysts' estimates on both the top and bottom line. Analysts are disappointed in China's same store sales and say that the recovery there is sluggish. TheStreet's U-Jin Lee reports in New York.
Yum Brands (YUM) says sales will miss by a mile and its blaming the shortfall on China. Same store sales in China, where it generates more than half of its operating profit, rose just 2%. They were expected to be especially strong, up 9.6%. New York's Attorney General has started an inquiry into fantasy sports sites. Eric Schneiderman is looking into allegations that employees of fantasy sports companies used inside information to win major payouts. He has sent a letter to fantasy sports sites FanDuel and DraftKings requesting information on employees who compile athlete's data and help set prices for daily fantasy contests. SABMiller has rejected an improved takeover offer from bigger rival Anheuser Busch Inbev. The renewed offer was $104 billion.
A monster brewing deal is in the works but only at the right price. Reports this morning indicate that SABMiller has turned down Anheuser Busch Inbev's (BUD) 3rd buyout offer, the latest being worth $104 billion. AB Inbev CEO Carlos Brito told USA Today 'we have the highest respect for SABMiller, its employees and leadership and believe a combination of the two companies would build the first truly global beer company.' The sky may be falling at KFC parent company Yum Brands (YUM). It said profit and sales will miss estimates and China is to blame. Shares are down 18% in the pre-market. Same stores sales in China, where it generates more than half of its operating profit rose 2% when almost 10% was expected. Adobe (ADBE) warned about its 2016 profits. It is partly due to a strong dollar, sending its shares down as much as 13% in extended trading.
For Wednesday October 7, TheStreet is concentrating on a number of companies slated to release their latest financial data. We kick of the morning with Acuity Brands (AYI), Constellation Brands (STZ) and Monsanto (MON) all reporting before the opening bell. For Constellation Brands' second quarter fiscal 2016 results, analysts are calling for earnings of $1.32 a share on revenue of $1.73 billion. The drinks company owns over a hundred brands in beer, wine and spirits. Strong demand for beer is expected to drive sales along with new product offerings. Overall, the company's top and bottom line are forecasted to grow year-over-year. There are several reports to watch on the economic calendar. The MBA mortgage applications report is due out at 7 a.m. Eastern, which is a leading indicator for single-family home sales and housing construction. Then, the Gallup U.S. job creation index comes out at 8:30. Next, we get the weekly oil inventory data from the Energy Information Administration. Last, we end the day with consumer credit coming out at 3 p.m. TheStreet's U-Jin Lee reports in New York.
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