Things turn ugly for Ulta Beauty

Ulta drops as Piper survey shows slowdown in teens’ beauty spending 

$ULTA Beauty spending lower. See Stockwinners.com for details

Shares of Ulta Beauty (ULTA) dropped in Wednesday’s trading after the cosmetics retailer was downgraded at Piper Jaffray, which cited a survey showing a slowdown in beauty spending by teenagers.

Ulta had been removed from the Conviction Buy list at Goldman Sachs earlier this week and also received a price target cut at Oppenheimer yesterday.

SLOWDOWN IN SPENDING

Piper Jaffray analyst Erinn #Murphy downgraded Ulta to Neutral from Overweight and cut her price target for shares to $210 from $260.

In a note to clients, Murphy said her firm’s Fall 2017 Teen Survey results indicated spending declines of 13% in color cosmetics among all female teenagers. While skincare declines were “less bad,” down 7% year-over-year, overall beauty wallet was down low-double digits.

She also noted that Piper saw broader signs of strength from LVMH’s (LVMUY) Sephora, and that Sephora’s Beauty Insider program has gained share while Ulta’s Ultimate Rewards Program has lost share.

Murphy said she is “incrementally concerned” on current category dynamics.

REMOVAL FROM CONVICTION BUY LIST

Earlier this week, Goldman analyst Matthew #Fassler removed Ulta from the firm’s Conviction Buy List and lowered his price target to $267 from $290, telling clients that recent data points suggest a “more complicated path to recovery.”

Oppenheimer analyst Rupesh Parikh this week cut his price target for Ulta to $210 from $250 as he believes sustained outperformance is “less likely” from here and sees a more competitive brick and mortar landscape in the coming quarters.

STILL A BUYING OPPORTUNITY

One analyst still seems positive on the stock, however.

William Blair analyst Dan #Hofkin said in a note yesterday that while he recognizes concerns surrounding slower industry growth, “the Amazon (AMZN) overhang,” and the lull in the beauty industry, he believes Ulta is “differentiated” and positioned to deliver strong earnings and sales growth going forward.

He does not believe Amazon is having a materially larger impact on Ulta than a year ago.

Ulta also faces competition from department stores like Macy’s (M), which are discounting high-end cosmetics and offering rewards, but Hofkin, who has an Outperform rating on Ulta shares, said he has not seen material changes in department stores’ approach to beauty and believes they have not impacted Ulta to-date.

WHAT’S NOTABLE

In August, Ulta reported quarterly comparable sales that declined from last year.

The earnings report followed “softer” commentary from L’Oreal (LRLCY) on its earnings call regarding trends in its North American beauty business, increasing promotional activity from the department store channel and more difficult year-over-year comparisons that “could now signal a potentially more challenging beauty backdrop going forward.”

OTHERS TO WATCH

e.l.f. Beauty (ELF) is down 2.6% this morning after Piper’s Murphy lowered her price target on shares, while Sally Beauty (SBH) is fractionally lower.

PRICE ACTION

In Wednesday’s trading, shares of Ulta Beauty are down 1.25% to $199.77. Shares are down nearly 22% year-to-date.


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Alnylam Pharmaceuticals is on the move

Alnylam Pharmaceuticals could receive $1 billion in milestone payments

ALNY-LOGO

 

Alnylam Pharmaceuticals, Inc. (ALNY) announced an exclusive licensing agreement with Vir Biotechnology, a company dedicated to transforming the care of people with serious infectious diseases, for the development and commercialization of RNAi therapeutics for infectious diseases, including chronic hepatitis B virus (HBV) infection.

As part of this agreement, the companies will advance Alnylam’s HBV program and also initiate a research collaboration for the development and advancement of up to four additional RNAi therapeutic programs for the treatment of other infectious diseases with high unmet needs.

Alnylam is developing ALN-HBV for the treatment of chronic HBV infection. A Phase 1/2 clinical trial of ALN-HBV was initiated in July 2016.

Alnylam plans to discontinue further development of this investigational compound and to advance a new Development Candidate, ALN-HBV02, utilizing the Company’s Enhanced Stabilization Chemistry-Plus (ESC+) GalNAc conjugate technology.

As part of the agreement, Alnylam will lead ALN-HBV02 to IND filing, with Vir then progressing ALN-HBV02 through human proof of concept (POC); the companies will co-fund the program through this point.

Subsequently, Vir will fund and conduct all development through completion of Phase 2 studies. Thereafter, Alnylam retains the right to opt into a profit-sharing arrangement prior to the start of Phase 3. In connection with the companies’ research collaboration for up to four additional infectious disease programs, Vir will fund all research and development costs, while Alnylam retains a product-by-product option on each program to opt into a profit-sharing arrangement following human POC.

Under the terms of the agreement, Alnylam will receive an upfront payment, comprised of cash and shares of Vir common stock. Alnylam is also eligible to receive more than $1 billion in potential milestone payments related to the successful advancement of ALN-HBV02 and other infectious disease programs, as well as tiered royalties on products ultimately commercialized by Vir under the collaboration, should Alnylam elect to decline its co-development and profit share option on a per-product basis.

PRICE ACTION

ALNY closed at $118.70. It last traded at $124.98. The issue has a 52-weeks trading range of $31.38 – $126.16.


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Warranty Group sold for $2.5 billion

Assurant to acquire Warranty Group in $2.5B transaction

Warranty Group sold for $2.5 billion. See Stockwinners.com for details

Assurant (AIZ) and The Warranty Group, a leading global provider of protection plans and related programs, and a portfolio company of TPG Capital, announced that they have entered into a definitive agreement to combine operations, with Assurant shareholders retaining majority ownership of the combined company.

The transaction is valued at approximately $2.5B and is expected to close in the first half of 2018, subject to shareholder and regulatory approvals, and other customary closing conditions.

The transaction will significantly advance Assurant’s strategy in the global lifestyle market with an attractive product and client portfolio, diversified growth profile and a deeper global footprint.

With annualized revenue greater than $1B as of June 30, 2017, The Warranty Group will enhance Assurant’s scale and market presence in its vehicle protection, extended service contracts and financial services businesses across 35 countries.

The resulting geographic footprint also will provide resources to accelerate Assurant’s mobile strategy in key markets such as Asia-Pacific.

The Warranty Group’s U.S. vehicle protection business also brings new client partnerships and distribution channels including dealer networks and national accounts, and positions Assurant to capitalize on emerging trends in the auto market such as digital auto retailers.

The transaction values The Warranty Group at $1.9 billion in equity value, or $2.5 billion of enterprise value, including their existing debt.

Under the transaction agreement, Assurant, Inc. will become a wholly owned subsidiary of TWG Holdings Limited, whose name will be changed to Assurant Ltd. Assurant shareholders will own approximately 77 percent of the combined entity as existing Assurant, Inc. shares are converted into shares of Assurant Ltd. on a one-for-one basis.

TPG and its affiliates will own the remaining 23 percent, equal in value to 16 million Assurant shares, or approximately $1.5 billion at yesterday’s closing price. Assurant will also pay approximately $372 million in cash to TPG.

Upon closing, Assurant Ltd. shares will trade on the New York Stock Exchange under the ticker symbol AIZ.

The senior management team of Assurant will lead the combined organization.

Assurant intends to finance the cash consideration and repayment of approximately $591 million of The Warranty Group’s existing debt through new debt, and preferred securities expected to be issued after closing.

Assurant has entered into a commitment letter for a $1.0 billion bridge facility. The transaction is expected to be modestly accretive to Assurant’s 2018 operating earnings per share on a run-rate basis.

By the end of 2019, Assurant expects to generate $60 million of pre-tax operating synergies by optimizing global operations.


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IBM Reports Today

What to watch for in IBM’s earnings report

IBM Reports today. See Stockwinners.com for details

IBM (IBM) is scheduled to report results of its third fiscal quarter after the market close on October 17, with a conference call scheduled for 5:00 pm ET.

What to watch for:

1. FY EPS CONSENSUS UP A TICK: Along with its last report, IBM reaffirmed its fiscal 2017 adjusted earnings per share guidance of at least $13.80. At the time, analysts expected the company to report FY17 adjusted EPS of $13.68, but that figure has since risen to $13.75.

2. CLOUD GROWTH: In its last report, IBM reported second quarter Cloud revenue of $3.9B, which marked a 17% year-over-year increase, excluding constant currency. On its quarterly conference call, the company said that Cloud made up roughly 20% of total revenue in Q2 and noted that it added more “leading” companies to IBM Cloud in the quarter.

3. TRUMP FORUM: On August 16, the New York Times reported that members of President Trump’s Strategic and Policy Forum were on the verge of disbanding following controversial comments the president made following the white nationalist rally in Charlottesville, Virginia. The council included BlackRock’s (BLK) Laurence Fink and IBM chief executive officer Ginni Rometty.

Before members of the forum could officially make a decision on the matter, President Trump tweeted that he was ending the forum, saying he was trying to avoid “putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum.” In response, Rometty said that the forum could not serve its purpose any longer, according to CNBC.

4. BLOCKCHAIN: On Monday, IBM announced a new blockchain banking solution to “address the processes of universal cross-border payments.” The service, which is called IBM Blockchain, is intended to improve the speed at which banks both clear and settle payment transactions on a single network in near real time, the company said.

IBM added that it has convened an initial group of diverse banking leaders as part of the development and deployment process, including Banco Bilbao Vizcaya Argentaria, Bank Danamon Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Permata, Bank Rakyat Indonesia, Kasikornbank Thailand, Mizuho Financial Group, National Australia Bank, Rizal Commercial Banking Corp. Philippines, Sumitomo Mitsui Financial Group, TD Bank, Wizdraw of WorldCom Finance, and other financial institutions.

Blockchain technology has been used as a core component of the digital currency bitcoin.


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FDA approves Quidel’s Solana RSV

Quidel receives FDA clearance for Solana RSV + hMPV Assay

Quidel receives FDA clearance for Solana RSV. See Stockwinners.com for details

Quidel  (QDEL) announced that it has received clearance from the United States Food and Drug Administration to market its Solana respiratory syncytial virus + human metapneumovirus Assay for the detection of nucleic acids isolated from nasal and nasopharyngeal swabs from patients with signs and symptoms of respiratory infection to aid in the diagnosis of RSV and/or hMPV infections.

The Solana RSV + hMPV Assay is intended for use only with the Solana instrument.

The Solana molecular platform leverages Quidel’s Helicase-Dependent Amplification technology, and in the case of Solana RSV + hMPV Assay, a novel Reverse-Transcriptase HDA that is resident in Quidel’s AmpliVue molecular product line to generate a fast and accurate test result.

Solana can process up to 12 patient samples in each 45-minute run, thereby providing time-saving workflow advantages to healthcare professionals in moderately complex settings, which is critical during a busy respiratory season when testing volumes are at their highest.

The Solana RSV + hMPV assay received CE Mark in August, and is Quidel’s seventh molecular diagnostic test to receive 510 clearance from the FDA in the scalable and versatile Solana format.

QDEL closed at $41.36.


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Intralinks sold for $1 billion

Siris Capital affiliates to acquire Intralinks from Synchronoss for $1B

Synchronoss sells Intralin for $1 billion. See Stockwinners.com for details

Siris Capital Group announced that investment funds affiliated with Siris have entered into a definitive agreement to acquire 100% of the common stock of Intralinks Holdings, a wholly owned subsidiary of Synchronoss Technologies (SNCR).

Investment funds affiliated with Siris have also entered into a definitive agreement to make an investment in convertible preferred equity of Synchronoss.

Under the terms of the agreements, investment funds affiliated with Siris will acquire all of the stock of Intralinks for approximately $1B in consideration and Intralinks will become an independent, privately owned portfolio company of investment funds affiliated with Siris.

Under the terms of the agreements, investment funds affiliated with Siris will make an investment in convertible preferred equity of Synchronoss in an amount of $185M.

Siris’ investment would initially be convertible into approximately 19.8% of Synchronoss’ common stock and would involve certain approval and governance rights, including with respect to the composition of the board as well as certain consent rights relating to the company.

The investment in Synchronoss is subject to specified closing conditions, including the closing of the sale of Intralinks, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other foreign antitrust regulatory approvals, as well as certain other regulatory conditions.

The investment is expected to be consummated in the first quarter of 2018.

Equity financing will be provided by investment funds affiliated with Siris and certain co-investors.

Committed debt financing for the Intralinks transaction will be provided by RBC Capital Markets, Golub Capital, and Macquarie Capital. Evercore, Macquarie Capital, Moelis & Company LLC, and RBC Capital Markets are acting as financial advisors to Siris.

Wachtell, Lipton, Rosen & Katz is acting as corporate counsel to Siris and Greenberg Traurig, LLP is acting as financing counsel to Siris in connection with the transactions.Goldman Sachs & Co. and PJT Partners are acting as financial advisors and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP is acting as legal advisor to Synchronoss in connection with the transactions.

SNCR closed at $13.73.


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Netflix Reports Today

What to watch in Netflix earnings report

Disney loss having minimal impact on Netflix subscribers. See Stockwinners.com Market Radar to read more

Netflix (NFLX) is scheduled to report results of its third fiscal quarter after market close on October 16, with a conference call scheduled for 6:00 pm ET.

What to watch:

1. SUBSCRIBER FORECASTS, PRICE HIKE:

Netflix’s subscriber numbers are a closely-watched measure of the company’s growth trajectory. Last quarter, the company reported streaming net additions of 5.2M members, including second quarter U.S. additions of 1.07M and international additions of 4.14M members. Turning to its Q3 outlook, Netflix had forecast streaming net additions of 750,000 in the U.S. and international streaming net additions of 3.65M. On October 5, Netflix announced a price increase in the U.S., U.K., and other select markets, noting that the last time it had changed prices in the U.S. was 2015.

2. NO ‘UN-GRANDFATHERING’ THIS TIME:

A number of analysts have been bullish about Netflix shares since its price increase announcement, voicing support for its pricing power.

Morgan Stanley analyst Benjamin #Swinburne raised his price target on Netflix shares to $225 from $210, stating that he expects less of a churn impact from its new domestic price increases. He estimates that higher average revenue per user will more than offset the estimated near-term subscriber impact from the price increases and raised his 2018 revenue estimates to reflect that view.

Stifel analyst Scott #Devitt raised his price target on Netflix to $230 from $200 ahead of the company’s Q3 earnings report, saying he expects “healthy subscriber trends” in the quarter and for the current price increase to be much less disruptive than last year.

Meanwhile, Goldman analyst Heath #Terry believes Netflix consensus subscriber estimates are too low, particularly for Q4 and beyond. Terry’s second half net subscriber addition forecast of 13.9M is considerably above consensus of 10.8M, which he believes management is likely to exceed.

Terry also boosted Netflix’s price target to $235 from $200 on faster top-line growth and revised estimates and reiterated his Buy rating on the shares. 3.

BULLISH EVEN BEFORE HIKE:

Early this month, before the company announced its price increase plans, UBS and Piper Jaffray predicted that the company’s third quarter subscriber data would come in above expectations.

The positive momentum that Netflix saw in the second quarter continued at similar rates in the third quarter, wrote analyst Doug #Mitchelson on October 4, noting that the continued strong year-over-year subscriber growth “across almost all markets” came despite a downturn in the quality of the company’s original programming last quarter. He raised his Q3 U.S. net subscriber addition estimate by 100,000 to 850,000 and increased his Q3 international net add estimate by 300,000 to 3.95M.

Meanwhile, on the same day, Piper Jaffray‘s Michael #Olson said that after analyzing Google search trends he believed that Netflix’s international and domestic subscriber growth beat expectations last quarter.

The analyst said the search data suggests that the company’s U.S. subscriber base jumped 16% in Q3, while its foreign subscriber base surged by 71% year-over-year, both of which were better than the consensus growth outlook at that time.

OPTIONS  MARKET

Pre-earnings options volume in Netflix is 1.6x normal with calls leading puts 8:7. Implied volatility suggests the market is anticipating a move near 11.9%, or $23.79, after results are released. Median move over the past eight quarters is 10.6%.

NFLX last traded at $201.18, up $1.69.


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Nordstrom can’t find a buyer

Nordstrom suspends active exploration of going private transaction

https://stockwinners.com/blog

Nordstrom (JWN) announced that members of the Nordstrom family – company co-presidents Blake Nordstrom, Peter Nordstrom, and Erik Nordstrom, president of stores James Nordstrom, chairman emeritus Bruce Nordstrom, and Anne Gittinger – have notified the Special Committee of the Board of Directors of Nordstrom that the group has suspended active exploration, for the balance of the year, of the possibility of proposing a transaction to take the company private.

The Group informed the Special Committee that it intends to continue its efforts to explore the possibility of making a going private proposal after the conclusion of the holiday season.

The Special Committee, which is committed to protecting the interests of the Company and all its shareholders, is prepared to thoroughly evaluate such a proposal from the Group at that time, if one is made.

In the meantime, the Company and its employees will remain focused on running the business and delivering the best shopping experience for customers.

Shares of Nordstrom are down 5%, or $2.12 to $40.53.


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Ruby Tuesday sold for $335 million

Ruby Tuesday to be acquired by NRD Capital for $2.40 per share

Ruby Tuesday sold for $335M. See Stockwinners.com for details

Ruby Tuesday (RT) announced an agreement to be acquired by a fund managed by NRD Capital, an Atlanta-based private equity firm that specializes in franchised and multi-location business investments.

Under the terms of the agreement, NRD will acquire all of Ruby Tuesday’s common stock for $2.40 per share in cash and will assume or retire all debt obligations for a total enterprise value of approximately $335M, excluding transaction expense.

The purchase price represents a premium of approximately 37% over Ruby Tuesday’s closing share price on March 13, 2017, the day before the Company announced its intention to explore strategic alternatives, and a premium of approximately 21% over Ruby Tuesday’s closing share price on October 13, 2017.

“The Board of Directors and our advisors have thoroughly evaluated all options available to the Company and are confident that this agreement will provide the most promising opportunity to realize the highest value for our stockholders while providing the best path forward for the Ruby Tuesday brand, its employees, franchisees, and loyal customers,” said Stephen Sadove, Non-executive Chairman of Ruby Tuesday.

“NRD Capital has a distinguished track record of achieving and maintaining profitable growth for restaurant concepts and will be an excellent partner to lead Ruby Tuesday going forward.”

The transaction has been unanimously approved by Ruby Tuesday’s Board of Directors and NRD and is subject to shareholder approval and other customary closing conditions.

The acquisition is expected to be completed during the first calendar quarter of 2018. UBS Investment Bank is serving as financial advisor to Ruby Tuesday and provided a fairness opinion to the Ruby Tuesday Board of Directors.


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Exelixis is in focus

Ipsen says Phase 2 Celestial trial of cabozanitinib met primary endpoint of OS 

Exelixis says to present data from cabozanitinib, See Stockwinners.com Market Radar to read more

Ipsen (IPSEY) and its partner Exelixis (EXEL) announced that its global phase 3 CELESTIAL trial met its primary endpoint of overall survival, with cabozantinib providing a statistically significant and clinically meaningful improvement in median OS compared to placebo in patients with advanced hepatocellular carcinoma.

The independent data monitoring committee for the study recommended that the trial should be stopped for efficacy following review of the second planned interim analysis.

CELESTIAL is a randomized, global phase 3 trial of cabozantinib versus placebo in patients with advanced HCC who have been previously treated with sorafenib.

The safety data in the study were consistent with the established profile of cabozantinib.

In line with and in collaboration with our partner Exelixis, Ipsen expects to file in the first half of 2018 a variation of the initial application to the EMA and other relevant regulatory agencies and to evaluate potential next steps in the development strategy for cabozantinib outside the United States and Japan as a treatment for advanced HCC in patients who have been previously treated.

Detailed results from CELESTIAL will be submitted for presentation at a future medical conference.

CELESTIAL is a randomized, double-blind, placebo-controlled study of cabozantinib in patients with advanced HCC conducted at more than 100 sites globally in 19 countries.

The trial was designed to enroll 760 patients with advanced HCC who previously received sorafenib and may have received up to two prior systemic cancer therapies for HCC and had adequate liver function.

Enrollment of the trial was completed in September 2017, and 773 patients were ultimately randomized.

Patients were randomized 2:1 to receive 60 mg of cabozantinib once daily or placebo and were stratified based on etiology of the disease, geographic region and presence of extrahepatic spread and/or macrovascular invasion. No cross-over was allowed between the study arms.

Based on available clinical trial data from various published trials conducted in the second-line setting of advanced HCC, the CELESTIAL trial statistics for the primary endpoint of OS assumed a median OS of 8.2 months for the placebo arm.

A total of 621 events provide the study with 90 percent power to detect a 32 percent increase in median OS at the final analysis.

Two interim analyses were planned and conducted at 50 percent and 75 percent of the planned 621 events.

EXELIXIS

Separately, Exelixis announced (EXEL) that the U.S. FDA has determined the company’s supplemental New Drug Application for #CABOMETYX for patients with previously untreated advanced renal cell carcinoma to be sufficiently complete to permit a substantive review.

The FDA granted Priority Review of the filing and assigned a Prescription Drug User Fee Act action date of February 15, 2018.


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Aramark goes shopping

Aramark to acquire Avendra for $1.35B, AmeriPride Services for $1B

 Aramark to acquire Avendra for $1.35B. See Stockwinners.com

Aramark (ARMK) announced that it entered into definitive agreements to acquire two companies that will deliver growth and strengthen the company’s competitive position across its portfolio of Food, Facilities and Uniforms businesses.

Aramark and Avendra, LLC have entered into a definitive agreement under which Aramark will acquire Avendra for a purchase price of $1.35B, or a net purchase price of $1.05B after adjusting for the value of the anticipated tax benefits.

The merger also creates opportunities for Aramark and Avendra to grow their customer base outside of their traditional industries. Additionally, Aramark anticipates annual procurement cost synergies of approximately $40M, which it expects will be fully realized by the third fiscal year after closing.

Aramark and AmeriPride Services Inc. also announced today that they have entered into a definitive agreement under which Aramark will acquire AmeriPride for a purchase price of $1B, or a net purchase price of $850M after adjusting for the value of the anticipated tax benefits.

AmeriPride is a leading uniform and linen rental and supply company in the U.S. and Canada, with annual revenue of approximately $600M.

Additionally, Aramark anticipates annual cost synergies of approximately $70M, which it expects will be fully realized by the fourth fiscal year after closing.

The board of Aramark has unanimously approved both transactions, which were also unanimously approved by the board of managers of Avendra and board of AmeriPride, respectively.

The transactions are expected to close by the end of calendar year 2017, subject to customary closing conditions and regulatory approvals. Aramark will finance the transactions through the issuance of new debt, and has received fully committed financing.


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Ionis Pharmaceuticals presents data on NEURO-TTR study

Ionis Pharmaceuticals presents new data from NEURO-TTR study

Ionis Pharmaceuticals presents new data from NEURO-TTR study. See Stockwinners.com

Ionis Pharmaceuticals  (IONS) announced that new data from the Phase 3 NEURO-TTR study with inotersen in patients with hereditary TTR amyloidosis with polyneuropathy were presented at the 142nd annual meeting of the American Neurological Association in San Diego, California.

In healthy people, normal, so-called “wild-type” TTR functions as a transporter of thyroid hormone and vitamin A (retinol) within the bloodstream.

People with mutations in the TTR gene produce abnormal, amyloidogenic (“variant”) TTRthroughout their lives. Over the course of several decades, usually by the time these people are middle aged, they may develop symptoms of disease caused by the build-up of amyloiddeposits. This is called Familial Amyloid Polyneuropathy.

In the study, inotersen-treated patients achieved a mean 19.73-point benefit in the mNIS+7 co-primary endpoint after 15 months of treatment, compared to placebo-treated patients, further demonstrating the clinically meaningful benefit of inotersen treatment.

A statistically significant benefit in mNIS+7 was also observed at eight months.

Key safety findings of thrombocytopenia and renal events identified during the study were shown to be monitorable and manageable with routine blood and urine testing.

Multiple other innovative drugs from Ionis’ portfolio of drugs for patients with serious neurological and neurodegenerative diseases will be highlighted as part of the Antisense Oligonucleotide Treatment of Genetic Neurological Diseases plenary session on Tuesday, October 17.

IONS closed at $59.10. Shares have a 52-weeks trading range of  $24.58 – $61.08.


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Barron’s is bullish on JD.com, Softbank

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names: 

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin

M&A may be easiest way for Google to catch-up in the Cloud – Alphabet’s (GOOG; GOOGL) Google has been chasing competitors Amazon (AMZN) and Microsoft (MSFT) in cloud computing, Tiernan Ray writes in this week’s edition of Barron’s. The easiest way to close in may be through M&A, the publication notes, with rumors saying Alphabet could contemplate a deal as large as buying Workday (WDAY) or Salesforce (CRM).

JD.com could rise 25% or more – With the China Single’s Day – the biggest shopping day of the year – less than a month away, investors looking for growth stocks in the country may want to look to JD.com (JD), its number two online retailer after Alibaba (BABA), Jack Hough writes in this week’s edition of Barron’s. JD.com stock could gain 30% or more in the next year, he adds.

Post-Peltz, P&G must to do more than cut costs – Last week, Procter & Gamble (PG) announced that its eleven standing board members won re-election, while activist Nelson Peltz had not won a seat, Vito Racanelli writes in this week’s edition of Barron’s. Nonetheless, Peltz has yet to concede, saying the vote remains too close to call, with an independent inspector expected to certify the results, the publication adds. Management’s victory means that its CEO David Taylor is on “a short leash,” facing the task of doing more than just cutting costs, Racanelli contends.

Softbank shares can still go higher – SoftBank (SFTBF) is reportedly ready to announce a $10B deal to buy up to 17% of Uber, as it negotiates a merge of its Sprint (S) unit with rival T-Mobile (TMUS) to challenge Verizon (VZ) and AT&T (T), Assif Shameen writes in this week’s edition of Barron’s. SoftBank stock is up 27% year to date and 140% from the lows of February 2016, but its shares can go still higher, the publication adds.

Time to rethink how to play Wal-Mart. – Wal-Mart (WMT) has had a good run, so it is time to rethink how to play the stock, Steven Sears writes in this week’s edition of Barron’s. The sell-side analyst community may spend the next few months getting bullish on Wal-Mart’s digital future, while realizing that more than 4,000 retail stores offer competitive advantages, Sears noted, adding that the November earnings report should provide additional evidence for “analysts to update earnings models, raise price targets, and hike investment ratings.”


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Applied Optoelectronics tumbles on guidance

Applied Optoelectronics collapses after Q3 view, peers dragged lower

Applied OptoElectronics Tumbles on Q3 Guidance. See Stockwinners.com for details

Shares of optical equipment makers fell in Thursday’s after-hours trading after Applied Optoelectronics (AAOI) reported Q3 preliminary results that fell short of estimates.

The maker of fiber-optic networking products dramatically lowered both its profit and revenue view for the quarter.

The company now anticipates Q3 earnings per share of 91c-96c, down from its prior view of $1.30-$1.43. Revenue is expected to be $88M-$89M, lower than prior expectations of $107M-$115M. Analysts were expecting EPS of $1.31 on revenue of $111.58M for Q3.

MANAGEMENT COMMENTARY

“Our preliminary results for the third quarter fell short of prior estimates and were negatively impacted by lower than expected sales to one of our large datacenter customers. Despite this shortfall, we maintained a strong gross margin profile in the quarter, and continued to experience solid demand with our other top datacenter customers,” said Dr. Thompson Lin, Applied Optoelectronics founder, president, and CEO.

“Although we are disappointed with these preliminary results, we continue to feel good about our leadership position in advanced optics and remain optimistic based on the customer traction we are seeing with our 100G products, especially our 100G CWDM transceivers.”

RECENT ANALYST VIEWS

On October 3, Craig-Hallum analyst Richard #Shannon lowered his price target for Applied Optoelectronics to $80 from $95 on 40G transition acceleration and Intel (INTC) competitive threat. Nonetheless, the analyst said 100G+ remains robust, and Applied Optoelectronics’ cost structure enables it to compete effectively. He reiterated a Buy rating on Applied Optoelectronics’ shares at the time.

Just a day before, on October 2, BWS Financial analyst Hamed #Khorsand said he believed Applied Optoelectronics sales to Amazon (AMZN) have softened even more as the company moves away from 40G. He also thought Intel’s start of shipments of competing CWDM4 transceivers poses a threat to 100G revenue Applied has been generating from Facebook (FB).

Khorsand kept his Sell rating on Applied Optoelectronics shares.

PRICE ACTION

Shares of Applied Optoelectronics (AAOI) fell down more than 18% to $48.10 per share in after-hours trading.

OPTICAL PEERS LOWER

Shares of other companies in the space fell lower in post-market action, with Lumentum (LITE) down 2% to $57.80 per share, Finisar (FNSR) lower by 1.5% to $21.96 per share, and Oclaro (OCLR) falling 2.2% to $8.42 per share.


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Target and Google join forces

Target to expand nationally on Google Express

target

Target Corporation (TGT) announced it is deepening its partnership with Google (GOOG, GOOGL) to make online shopping even easier.

The partnership includes Target’s nationwide expansion on Google Express, including voice- activated shopping, as well as the addition of Target REDcard as a payment option in 2018.

Target and Google also will partner to explore and develop future digital experiences focused on Target’s signature style categories.

The expansion of Google Express follows Target’s successful trial of the home delivery shopping service in California and New York City.

By expanding Google Express nationally, more guests will be able to shop Target’s assortment, including exclusive brands that are only available at Target. And since items are shipped from a nearby Target store, guests will receive their orders in just two days.

Google’s announcement that shopping will soon be available via the Google Assistant on eligible Android phones and iPhones, joining Google Home and Android TV, will allow Target guests to make their “Target Run” from a phone solely using voice commands, a first for the company.

Target will further deepen its partnership with Google in 2018, as Target plans to make the Target REDcard debit or credit card available as an option for Google Express shoppers.

That means guests shopping Target through Google Express will enjoy the convenience of #REDcard benefits, including 5% off most purchases and free shipping. Beginning in 2018, guests will have the option to pick up their orders in a Target store, where orders are ready in just two hours.

Guests also will be able to choose to link their Target.com accounts with Google for a more personalized shopping experience.

TGT last traded at $59.90. GOOG last traded at $992.26.


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.