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* 3M -3M agreed to purchase Avery Dennison’s office and consumer-products business for $550M, broadening 3M’s exposure to the office-supply industry. As part of the deal, 3M will be allowed use of the Avery brand name. 3M expects the acquisition, scheduled to close in the second half of the year, to reduce earnings by about six cents a share in the first year after the closing.
* Amgen -Amgen and Watson Pharmaceuticals agreed to collaborate on several cancer antibody biosimilar products, which they plan to sell under a joint label. The collaboration will not pursue biosimilars of Amgen’s proprietary products. -1/6/12 “Amgen Among Biotechs That May Become Acquirers in 2012 to Pursue Growth.”
* Avon Products -Barron’s 12/19/11 “Avon Needs More Than Lipstick.” -WSJ 12/21/11 “2 Former Avon CEOs Criticize Jung Staying As Chairman.” -WSJ 12/29/11 “Shiseido, US Unit Begin To See Eye To Eye.”
* Becton-Dickinson -Morgan Stanley downgraded BDX to underweight from equal-weight and has established a price target of $68.
* BNY Mellon -WSJ 12/27/11 “Internal Bank of New York Mellon Corp Documents Show Panic”
* Berkshire Hathaway -WSJ 1/3/12 “Ready to Try on Mr. Buffett’s Shoes” *Starting this month, Ted Weschler will Join BRK to help Buffett oversee BRK’s $110B in stocks.
* Boeing -2011 was the safest year ever for commercial aviation, with roughly one passenger death for every 7.1M air traveler worldwide. Last year was also among the lowest total number of passenger deaths, at 401. The record is best for carriers flying western-built planes. This year, they have experienced one major crash per 3 million flights worldwide. Including Russian-built and other types of airliners, the global accident rate fell slightly to about two crashes per million flights, or seven times higher than the rate for western-built planes. -The U.S. has reached a $30B agreement to sell advanced fighter aircraft to Saudi Arabia. The government-to-government deal includes the sale of 84 new F-15 fighter jets and an upgrade to 70 others. -WSJ 1/5/12 “Boeing to Shut Tanker Plant” *Facing cutbacks in government military spending, BA intends to close its defense operation in Wichita. About 2,000 workers are at risk of losing their jobs. -ANA said it has taken delivery of its third BA 787 Dreamliner, allowing it to launch the first international services with the plane. -BA said its fourth-quarter and 2011 commercial-aircraft deliveries and orders climbed over 2010. For the year, deliveries were up 3.3% to 477. Net orders for all commercial aircraft rose 52% to 805.
* BP -A U.S. judge in Alaska dismissed government charges that BP had violated the terms of its criminal probation after a 2009 oil spill in Alaska, and released the company form probation. The judge said the U.S. government failed to present convincing evidence that BP committed criminal negligence. He concluded that BP acted responsibly and followed accepted industry practices “at all relevant times.”
* Bristol-Myers -BMY announced plans to purchase Inhibitex Inc. (INHX) for $2.5B. The purchase is a play on Hepatitis C. -Inhibitex Details: *The all cash deal values Inhibitex at $26/share, a 163% premium to its 1/6/12 closing price. *BMY expects the deal to dilute earnings through 2016 and projects costs from the merger of $0.04/share in 2012 and $0.05/share in 2013. *BMY had $8.2B in cash and equivalents at the end of the third quarter. *INHX focuses on treatments for bacterial and viral infections. *Analysts expect the results of a Phase 2 on INX-189 for the treatment of Hepatitis C later this year. The treatment is oral. *BMY also has an oral treatment in development. *Hep C is a major growth area for BMY (stroke and immuno-oncology are also key areas). *For 2010, INHX had revenue of $1.9 million and posted a loss of $22.7 million. *Analysts estimate that the worldwide hepatitis C market could reach $16B in 2015, up from $1.7B in 2010. -BMY’s senior VP of strategy, Jeremy Levin left on January 1 st. Levin was a key person in business development. CEO Lamberto Andreotti and Chief Scientific Officer, Elliott Sigal are now covering his duties. -A new study is casting doubt on the usefulness of genetic testing for patients using Plavix. BMY has not commented on the study because it has not had the opportunity to review the findings. -BMY is funding the Gladstone Institutes’ research efforts to identify targets that affect a key protein related to Alzheimer’s. Terms of the three-year collaboration were not disclosed. -CLSA upgraded BMY to outperform from underperform based on expectations for 4Q results and its outlook for 2012. The target was raised to $38, up from $35. -BMY reports 4Q results on January 26 th.
* Caterpillar -CAT has locked union workers out of a train locomotive plant in London, Ontario. CAT said workers would be barred from the Electro-Motive Canada plant until a ratified contract is in place. Union officials said CAT’s latest proposal would halve wages and reduce benefits. CAT has declined to provide details of its offer but said that wages and benefits at the Canadian plant are twice those of workers represented by the UAW at the Electro-Motive plant in LaGrange
* Cisco -JPM upgraded CSCO to overweight from neutral and lifted its target price to $21 from $19.
* CVS Caremark -CVS raised its guidance for 2012 and raised its dividend. CVS is now forecasting 2012 adjusted EPS of $3.15-$3.25 with revenue growth of 11.5%-13%. Analysts were expecting $3.21 with revenue growth of 8%. For the 1Q12, CVS sees adjusted EPS of $0.58-$0.60 on 14.5%-16% top-line growth. The street was expecting 1Q EPS of $0.62 on 10% top-line growth. CVS said the limited supply of some generics coming to market would keep costs higher for some months. The 2012 outlook does not include and benefit from the WAG and ESRX impasse. CVS could potentially see a benefit of $0.08-$0.11/share from the impasse. CVS raised its quarterly dividend 30% to $0.1625. CVS reiterated its anticipated dividend payout ratio of 25%-30% by 2015, which translates to a compound dividend growth rate of approximately 25%/year since 2010. CVS also expects to buy back the $3B left on its share repurchase program. -Goldman Sachs has a buy rating on CVS with a target of $44. -Barron’s 12/26/11 “For CVS, Twice Is Nice.” -Dow Jones 1/6/11 “CVS Caremark Shines After Rebuffing Calls For Breakup.”
* Devon -China Petrochemical Corp. struck a $2.5B deal with DVN for a stake in five U.S. shale oil and gas fields. Under the deal, expected to close in the current quarter, DVN will serve as the operator. Sinopec, as the Chinese oil giant in known, will pay DVN $900M at closing for a one-third stake in each of the five shale fields. In addition, Sinopec will pay $1.6B to DVN in the form of a “drilling carry” expected to be realized by the end of 2014..
* DuPont -Analysts at Barclays are viewing Monsanto’s strong 1Q results as good news for DD. DD’s Pioneer is likely benefit from the same trends that benefited MON. -The US Department of Agriculture releases its final assessment of last year’s crop and data on domestic grain inventories on the 12 th. -DD announced plans to work with NexSteppe to develop advanced feedstocks for biofuels, biopower and biobased products. DD will make an equity investment in NexSteppe and DuPont’s Pioneer Hi-Bred division will provide knowledge and resources to the collaboration. -WSJ 12/22/11 “Gas Exports Ignite A Feud.” *Dow Chemical and other users say allowing gas exports will crimp US supply and drive up their prices. -WSJ 1/4/12 “Corn Seed Shortage Sows Farm Belt Woes.” *Estimates are that US supplies of corn seed are down 25%-50% for this planting season. *Corn seed was hurt by drought conditions. *There is speculation that corn prices could reach $9-$10/bushel. *Pioneer Hi-Bred does not expect major disruptions from tight supplies. -OWH 1/4/12 “Farming practices threaten Bt corn.”
* GE -GE Capital will buy MET’s U.S. retail-deposit business. The acquisition will bring GE $7.5B in deposits and MET’s online-banking platform, which could speed up GE’s efforts to attract more individual savers. The deal will boost GE’s existing U.S. deposit base of $23B by about a third and help support tis commercial-lending business. GE expects the deal to close in mid-2012. GE paid less than $100M for the operation, at the low end of the usual range for such deals.
* Honda -HMC was the only major auto maker to report a decrease in December as its sales dropped 19% to 105,230. Its annual sales also tumbled 7.1% to 1.15M. Toyota’s sales rose less than 1% to 178,131. For the year, Toyota sales overall declined 6.7%.
* Intel -Bloomberg 1/3/12 “Intel Confronts Qualcomm in Vegas Standoff” -Marvell Technology is replacing Intel as Google’s lead chip provider for TVs as the Internet company seeks to bring down the cost of the devices to raise their popularity.
* Johnson & Johnson -The European Commission approved JNJ’s and Bayer’s Xarelto for an additional indication. In addition for treating patients with atrial fibrillation and for the use in preventing clots in patients undergoing hip or knee replacement surgery, Xarelto was approved for use in patients with acute coronary syndrome, a condition in which narrowing or blockage of a blood vessel suddenly reduces blood flow to the heart. -Sources have indicated that JNJ will pay more than $1B to resolve a civil investigation into the marketing of Risperdal. A JNJ spokeswoman would not comment. -JNJ recalled about 12 million bottles of Motrin due to concerns that the painkillers could dissolve too slowly. There is no action required by consumers. -A family is suing JNJ and company CEO William Weldon, claiming their child died after taking Children’s Tylenol from a batch that had been recalled. -The FDA is ordering manufacturers of surgical mesh to conduct new studies when the products are used for pelvic organ prolapse and stress urinary incontinence. The FDA wants the patients to be followed for three years to look at side effects. In addition, there needs to be a comparison of safety and effectiveness to other procedures. -JNJ halted a clinical trial of its antibiotic Doribax after more patients who took the product died and fewer were cured when compared to the control group. The trial was looking at the drug for the treatment of pneumonia. Doribax is already approved for urinary and abdominal infections. -JNJ said it does not expect new supplies of its cancer drug Doxil until late 2012. JNJ is pursuing options to make the drug available in the short term. -Synthes Inc. has filed a lawsuit against Stryker, accusing the company of raiding its sales force and stealing trade secrets. JNJ is acquiring Synthes in a $21B deal.
* McDonald’s -MCD was the best performing DOW stock in 2011, up 30.7%. IBM was second, up 25.3% and PFE third, up 23.6%. (excludes divs)
* Microsoft -Credit Suisse sees good prospects for NOK’s and MSFT’s new phone. The firm cited research among wireless carriers that are hoping MSFT’s Windows Phone mobile operating system will become a “third ecosystem” in a market largely dominated by the iPhone and Android.
* Pfizer -The US FDA granted approval for the expanded use of Prevnar 13 to patients age 50 years and over. The vaccine had been approved for use in children to prevent certain bacterial infections that can cause meningitis and bloodstream and ear infections. -Watson Pharmaceuticals (WPI) sees itself and Ranbaxy Labs splitting half of the generic Lipitor market. PFE is seen keeping 40% of the overall market until this spring. WPI sells the authorized generic version of Lipitor. WPI has lost value due to PFE’s branded Lipitor promotions.
* Verizon -VZ backed off a plan to charge some customers $2 to pay their bills after a barrage of customer complaints and the scrutiny of federal regulators. The company had planned to implement the fee Jan. 15 for customers making one-time payments on the VZ Wireless website or over the phone. Customers began petitions online to protest the fee, and the FCC said that it was “concerned about VZ’s actions” and was “looking into the matter.” -While remaining its “preferred telecom pick for 2012” and reiterating its $45 price target, GS removed VZ from its conviction buy list. -VZ said profit margins for its wireless venture dropped by about half a percentage point in the fourth quarter due to record high sales of the iPhone.
* Zimmer -Indications are that the privately held Biomet is seeing an improvement, though the improvements could be seasonal.
* Fixed Income -The minutes from the Fed’s December meeting revealed that policymakers have decided to include estimates for the fed funds rate when it releases its summary of economic projections four times a year. The first rate estimates will come January 25 th, at the conclusion of its next meeting. -The Ibbotson Associates SBBI bond index, a broad bond measure, returned 28% last year. The index also topped stocks for the past 10 and 20 years. The Ibbotson Associates SBBI bond index has returned 11.03% a year on average over the past 30 years, edging out the 10.98% return of stocks. -Bloomberg 12/30/11 “Municipal Bond Yields End 2011 Near Levels Not Seen Since Lyndon Johnson.”
* Retail -The 22 retailers tracked by Thomson Reuters showed a 3.4% gain in December sales. Analysts were expecting a gain of 3.3%. December results indicated that consumers were motivated by discounts and that the middle-class remains cautious. Soft-lines were impacted by unseasonably warm temperatures.
* Pharmaceutical Industry -WSJ 12/27/11 “Big Pharma’s New Business Model.” *R&D is being cut *Companies are targeting unmet needs |
