Tag - JNJ

"Johnson & Johnson (NYSE: JNJ) has vast holdings, but its strategy is simple: Support a deep pipeline of new drugs and medical devices with an aggressive acquisition strategy and cost controls," notes blue chip investor Richard Moroney.

In his Dow Theory Forecasts, he adds, "And despite the recession, J&J has kept its financial footing, remaining one of the few companies with the top credit rating of AAA." Here's his long term outlook.

"Beyond 2009, an economic recovery should reinvigorate J&J, though it is too early to determine whether health-care reform will help or harm the company.

"J&J’s pharmaceutical segment (38% of revenue) has seen sales fall nearly 9% over the past year. In addition to recessionary forces, generic competition has weighed on the segment.

"The patent on epilepsy drug Topamax expired in March, and J&J lost exclusivity for its Risperdal antipsychotic in June 2008.

"Several experimental drugs have the potential to rejuvenate J&J’s portfolio. Analysts expect up to seven new drugs from the pipeline to begin contributing to revenue this year.

"Stelara for severe plaque psoriasis and Simponi for rheumatoid arthritis have already gained regulatory approval outside of the U.S. and are under review by the U.S. FDA.

"Meanwhile, since November, J&J has completed three takeovers for more than $2.2 billion and agreed to invest another $1.5 billion in Elan’s Alzheimer’s portfolio.

"As part of its investment in Elan, J&J gained an option that could allow it to acquire Biogen Idec’s 50% stake in Tysabri, a blockbuster drug for multiple sclerosis, if Biogen is acquired.

"J&J’s other two segments -- medical devices and consumer products -- have treaded water in the past 12 months, delivering roughly flat sales. And consensus estimates project roughly flat per-share profits in the second half of 2009.

"J&J’s stock price already reflects Wall Street’s modest expectations. Shares trade at 13 times trailing earnings, a 23% discount to the five-year average P/E ratio.

"The stock’s price also looks appealing relative to trailing sales (21% below the five-year average), cash flow (26%), and book value (18%). We rate the stock -- which is on our focus list -- a long-term buy."
 
 

Early morning weakness in the markets was made up during the afternoon trading hours. The Dow closed just slightly down at 8,497 for a loss of 0.09%. The Nasdaq was up 0.66% for a close of 1,808 and the S&P 500 lost 0.14% to close today at 910.

Small-cap stock investors were rewarded with a 0.65% gain on the Russell 2000 index, a composition of the 2,000 largest small-cap stocks, that closed at 507 today.

Pharma continued it's leadership position in small-caps with Molecular Insight Pharmaceuticals (Nasdaq:MIPI) up 41.3% today as money continues to move into healthcare stocks. Blue Chip pharma stocks followed their upward trajectory, though not nearly as much as small-caps put in, with Abbot Laboratories (NYSE:ABT) up 2.7%, Merck (NYSE:MRK) moved up 1.5%, and Johnson and Johnson (NYSE:JNJ) posted a 1.2% gain.

The other small-cap leader in pharma was Savient (Nasdaq:SVNT) up 35.5% after receiving the recommendation from a panel of arthritis experts who suggested the Food and Drug Administration approved Savient's new gout drug. By a vote of 14 to 1 the panel recommended that the firm's drug, KRYSTEXXA, be granted marketing approval by the FDA. The action date for the FDA's decision is currently set for August 1, 2009.

Other small-cap gainers for today include Alvarion (Nasdaq:ALVR) up 18.3% on news of its $100 million contract with Open Range Communications; Cayman Islands based United America Indemnity (Nasdaq:INDM), a provider of property and casualty insurance products, up 16.4%; and Connecticut based MTM Technologies (Nasdaq:MTM), up 42.8%.

Decliners were lead by Star Scientific (Nasdaq:STSI) which shed 73% off it's opening price to close today at $1.13. Star lost its patent suit against No. 2 cigarette maker RJ Reynolds Tobacco, a unit of Reynolds American (NYSE:RAI). It alleged that RJ Reynolds had infringed in its patents related to the way of growing and treating tobacco plants to prevent nitrosamines from forming. It's believed that in reducing nitrosamines that the cancer-causing agents in tobacco can be significantly reduced. The jury ruled not only that the patents were invalid, but that they should not have been issues. Star said it would seek a new trial or appeal to the U.S. Court of Appeals.

Other small-cap decliners were lead by financials including National Penn Bancshares (Nasdaq:NPBC) down 23.2%; First Financial Service Corp. (Nasdaq:FFKY) down 18.5%; and Provident Community Bancshares (Nasdaq:PCBS) down 16.4%. Larger capitalization bank shares were not immune to the sell-off in financials with Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC) all declining today.

*****On Monday, an influential bank analyst raised his price target for Bank of America (NYSE:BAC) to $19. That implies a 40% jump for BAC. Curiously, this particular analyst didn't cite any improvements to the business or strength in the bank's balance sheet. Rather, he based his analysis on improving investor sentiment.

I don't know about you, but I'm not running out and buying a stock - especially a bank stock - just because investors feel better. No, I'm going to need to see actual evidence that conditions for banks are improving before I wade into those murky waters.

So far, the improvements we've seen in bank fundamentals have been based on accounting changes and government stimulus for the housing market. These measures don't fix the problem; they simply make the symptoms look better.

*****To underscore this point, S&P just cut its ratings on 22 banks because of the potential for further weakening in the sector. The S&P analyst had this to say:

"We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions…Financial institutions are now shedding balance sheet risk and altering funding profiles and strategies for the marketplace's new reality. Such a transition period justifies lower ratings as industry players implement changes."

Bank of America was not among the banks whose outlook was cut by S&P. And I don't care. So long as the sector is weak and the economy is struggling I'm not going anywhere near banks stocks, improved investor sentiment or not.

*****I know Cold War politics are long over, and that Russia and the U.S. are no longer vying for supremacy, but I still can't help thinking "In your face, Russia" when I read that dollar denominated bonds sold by Russia, China and Brazil performed far better than bonds denominated in those countries own currency.

Russian and Brazilian bonds lost money. China's yuan denominated bonds posted small gains. In every case, dollar denominated bonds made money.

It should be obvious that the BRIC countries (Brazil, Russia, India and China) demand that the world's reserve currency should be manipulated to weaken the influence of the dollar is pure politickin'. Or in the words of a currency strategist quoted by Bloomberg, "It's not up to politicians to determine which currency will be the world reserve currency…In the end the market decides it."

In this case, it should be apparent that the market has spoken.

*****So I won't buy their debt, but I will buy Chinese stocks. Yesterday,   SmallCapInvestor PRO added another Chinese stock to the portfolio. China's one of the few countries in the world that's posting any growth. And investors should absolutely own some Chinese stocks right now. If you want to find out what we're holding in SmallCapInvestor PRO just click HERE.

U.S. stocks are expected to open lower, pulled down by losses in overseas markets amid an ongoing crisis in the banking sector and awful corporate profit readings. Even after an extended holiday weekend, trading could be light and choppy at times today with the nation’s attention on the inauguration ceremonies for Barack Obama. The Dow is expected to open about 90 points lower, while the Russell 2000 (NYSE:IWM) is seen down 1.1% near 461.00.

Bank stocks continue to struggle around the world with the Royal Bank of Scotland posting the largest quarterly loss in UK corporate history, which sparked a second bank rescue plan to be mobilized by the UK government. The rout looks to extend here today, with Bank of America Corp. (NYSE:BAC) down 12% in pre-market trading, while Wells Fargo & Co. (NYSE:WFC) was off 9%, JP Morgan Chase and Co. (NYSE:JPM) was down 5% as was Citigroup Inc. (NYSE:C).

So far this earnings season, things here in the U.S. have not gone well either; key earnings slated for later today include Johnson and Johnson (NYSE:JNJ) and International Business Machines Corp. (NYSE:IBM).

Crude oil prices were taking a hit in London trading overnight on news that a deal has been brokered to resume gas supplies from Russia into the Ukraine and the rest of Europe. In addition, the U.S. dollar was up about 1.2% against the euro, which could weigh on a host of commodity markets.

The chart picture rolled over early last week, but left some mildly positive short-term patterns in play with the recovery move Friday. However, a slide today below 453 would clip upside promise from those formations, so price action today – especially with an opening slide forecast – starts to gather importance from a charting perspective. Look for support around 453.50, then very little down to the 440 zone. On the upside, resistance is at 467, then 473 and 481.

Small-cap stocks turned lower into mid-session trading, unable to sustain a mild morning rise as ongoing worries about the economy came back to the forefront following dreadful data on home sales. As expected, homebuilders were among the hardest hit stocks so far today, with retailers, banks and auto manufacturers also acting as a drag on the market. At 12:49 p.m. ET, the Russell 2000 (NYSE:IWM) was down 7.79, or 1.64%, at 467.28.

Existing home sales, which account for the overwhelming majority of activity, plunged 8.6% to an annual rate of 4.49 million units, far below the projection of 4.93 million units. What’s more, the price on homes tumbled 13.2%, the biggest percentage decline in 40 years. The ISE Homebuilders Index tumbled 3%, outpacing the overall market slide by a wide margin. Among small-cap homebuilders, Centex Corp. (NYSE:CTX) was off 4.1%; KB Home (NYSE:KBH) was down 3%; and Lennar Corp. (NYSE:LEN) was down 4%.

The worst performers so far today have been the automakers, with General Motors Corp. (NYSE:GM) down 15% and Ford Motor Co. (NYSE:F) off 16% following news that their credit ratings were slashed. The PHLX Retail Index was down 1% at midday, while the S&P Retail Index was off about 0.5%. Big department stores were among the worst sector groups today, with Macy’s Inc. (NYSE:M) sinking 5.5%.

The ongoing fretting about the economy pulled down crude oil prices, which slipped below $39 a barrel, off about 3.7% at midday. Energy shares weren’t as weak as the cash market, but were still down about 0.9%, with oil and gas drillers among the weaker performers.

Financial shares were holding up reasonably well, but banks were a noticeable source of strain in the financial arena. The KBW Banking Index was off . . .

The Russell 2000 (NYSE:IWM) closed down 11.85% today, snapping a string of five consecutive winning sessions with the worst daily loss of the year. Some of today’s small-cap gainers are Mentor Corp. (NYSE:MNT), Premiere Global Services (NYSE:PGI) and Telvent (Nasdaq:TLVT).

Other Market Watch highlights today included:

• The Russell is now down 46% for 2008, while the Dow is down 39% and the S&P 500 is down 44%.
• Credit market safe havens were the preferred outlet of choice today, as investors fled stocks and sought refuge in Treasuries.
• The market got off on the wrong foot today when manufacturing data out of China reflected a big drop in new orders.
• The ISM Manufacturing Survey came in at 36.2, which was below the 38 forecast, and which was also the lowest reading in 26 years.
• Sub-index data on prices paid was the lowest in 59 years and the new orders sub-index was the lowest since 1980.
• Energy, commodity stocks were major decliners today. Crude prices plunged 9.4% to $49.28/barrel, pulling down energy shares in the wash.
• Industrial, precious metals took a beating, platinum was down 7%, palladium down nearly 10%, silver off more than 8% and gold down some 5%.

Small Cap Gainers:

• The biggest mover today was Mentor Corp. (NYSE:MNT), as the maker of breast implants shot some 90% higher on news that the firm would be purchased by Johnson & Johnson (NYSE:JNJ) for $31 a share.
• Premiere Global Services Inc. (NYSE:PGI) rallied 29% as the on-demand . . .

Small-cap stocks may have finished out November like a lamb, but they started out December like a lion, sinking hard and fast today in an abrupt about-face from last week’s strong upward surge. Slumping manufacturing reports around the world triggered today’s rout and the only safe place to park money was in credit instruments as financial, industrial, retail and commodity markets were in retreat mode. The Russell 2000 (NYSE:IWM) closed down 56.05, or 11.85%, at 417.09, snapping a string of five consecutive winning sessions with the worst daily loss of the year. The Russell is now down 46% for 2008, while the Dow is down 39% and the S&P 500 is down 44%.

Credit market safe havens were the preferred outlet of choice today, as investors fled stocks and sought refuge in Treasuries – especially after Federal Reserve Chairman Ben Bernanke said that the Fed could buy long-dated Treasuries and that the economy remained under considerable stress. He also said that the Fed’s scope for reducing rates to stimulate growth was limited at this point, but that the U.S. economy was now better equipped to deal with the credit crisis. Yields on benchmark 10-year notes went wild, sinking more than 7% at one point during the day to about 2.7% as strong demand for notes lifted the price and slashed yields. Treasury Secretary Henry Paulson said that recent bailout moves were making progress, that banks should increase lending habits and that he has more programs developing to boost lending. He also said that mortgage rates have not come down as much as hoped and that Americans know the economy is in recession. The market extended the afternoon sell-off as he spoke.

The market got off on the wrong foot today when manufacturing data out of China reflected a big drop in new orders. China is the world’s hub for labor, with widgets assembled there and shipped out around the globe. Then, manufacturing reports out of Europe were dour, setting the stage for a startlingly bad report on manufacturing activity here in the United States. The ISM Manufacturing Survey came in at 36.2, which was below the 38 forecast, and which was also the lowest reading in 26 years. What’s more, sub-index data on prices paid was the lowest in 59 years and the new orders sub-index was the lowest since 1980. This is a heavy week for economic data, and today’s numbers clearly sent an icy shudder through the market. As the week progresses, we’ll see data on vehicle sales, services sector activity, factory orders and weekly claims as we head toward Friday’s big monthly employment release. What’s more, we’ll also have weekly and monthly retail sales numbers to pour over, . . .

Small-cap stocks started out the new month with a bearish bang, sinking hard amid gloomy manufacturing data around the world, which weighed on industrial and commodity stocks. At 10:03 a.m. ET, the Russell 2000 (NYSE:IWM) was down 23.79, or 5.03%, at 449.35.

The dour tone on manufacturing started in Asia, where new orders for China’s manufacturing sector fell hard, stirring worries about the global recession. Then, the worries followed through to Europe and finally here to the United States, as the ISM Manufacturing Survey came in at 36.2, which was below the forecast of 38.0. In addition, the construction spending report was pegged at minus 1.2%, also below the projection for a dip of 0.9%.

Energy stocks were also an early drag on the market, taking a cue from sinking crude oil prices. The market for “black gold” was off nearly $4 a barrel this morning, pummeled by news that OPEC said they would wait to make a decision on further supply cuts and also by the troubling economic news around the globe.

The dollar was up about 0.5% against the euro, which also weighed on commodity prices this morning. Copper and aluminum prices were lower in Asian trading as those markets react to the China manufacturing news. Within the commodity realm, Brazilian stocks were off some 3% early today, as that country is heavily dependent on commodity exports.

Investors will be looking for news about how the holiday shopping season is moving along. The early returns seem positive for the “Black Friday” kickoff of the season after last Thursday’s Thanksgiving Day holiday, but the way the market is trading today suggests there might be some hidden weakness in those returns. Today is known as “Cyber Monday” as consumers scan the Internet for holiday bargains, and any feel for those returns could also be important as the day progresses.

From a money flow perspective, investors appeared to be fleeing stocks for safe-haven outlets in the credit markets. European bund futures hit contract highs . . .

Small-cap stocks are expected to open sharply lower following a stiff decline in European equities and a mild drop in Asian markets overnight. Manufacturing data in China and Europe was awful, which sparked losses in industrial metals and intensified a dour tone for crude oil. Stock index futures were down 2.8% in after-hours trading, which suggests the Russell 2000 (NYSE:IWM) will open near 462.

The slump in China orders and pullback in European manufacturing comes just ahead of manufacturing reports in the United States this morning, with the ISM Manufacturing Survey and Construction Spending reports set for release at 10:00 a.m. ET.

Copper and aluminum prices tumbled in Asian trading after the weak China manufacturing data, which could spill over into U.S. action this morning, weighing on commodity-themed stocks. Speaking of commodities, crude oil prices were off some 4% overnight, which should pressure energy shares.

Amid all the bearish talk this morning, one bright spot for small-caps is that Mentor Corp. (NYSE:MNT), a supplier of breast implants and other aesthetic goods, will . . .

Small-cap stocks opened higher, lifted by a rescue package for the nation’s No. 2 bank, which eased bank failure worries. In addition, optimism about President-elect Obama’s economic advisory team bolstered stocks Friday and remained in play today ahead of a news conference to announce his appointments. At 10:06 a.m. ET, the Russell 2000 (NYSE:IWM) was up 9.52, or 2.34%, at 416.06. The market appeared to add to the morning gains after the home sales report was released.

The existing home sales report came in at an annual rate of 4.98 million, which was basically in line with the forecast. October sales were off 3.1%, versus a 4.7% rise in September. The inventory of homes for sale was down 0.9% to 4.23 million units, representing 10.2 months of supply. The median price for a home tumbled 11.3%, the largest percentage drop since the data series was started 40 years ago.

The rescue package for Citigroup Inc. (NYSE:C) includes $306 billion in loan guarantees on toxic debt assets and $20 billion in direct cash injection. Citigroup’s stock had been in a startling freefall in recent days, and there were concerns that the massive bank was in jeopardy of failure, which would carry broader systemic risk to the financial system, so today’s rescue news bolstered psychology across a wide range of financial stocks. Citigroup shares were up 41% shortly after the open. Oppenheimer analyst Meredith Whitney said that she would maintain an “underperform” rating for Citigroup and that she was cautious about the bank’s futures losses and capital raising efforts. She also said that Citigroup shares at $5 represented a “speculative investment” that was appropriate for risk-tolerant investors.

President-elect Obama is slated to announce news on his economic team today at noon ET. The market already has embraced his apparent appointment of New York Federal Reserve Bank President Tim Geithner as the next Treasury Secretary. In a radio address this weekend, Obama said he wants a two-year stimulus plan to have a goal of creating 2.5 million new jobs. President Bush is also expected to make an announcement this morning around 10:35 a.m. ET after a morning meeting . . .

After initially spiking out of the gate on the government’s plan to unfreeze credit markets by directly injecting capital in banks and guaranteeing loans between banks, the Russell 2000 has steadily descended into the red midday, as traders locked in profits from Monday’s goliath rally.

At 12:21 p.m. ET, the Russell 2000 (NYSE:IWM) was down 7.05, or 1.23%, at 563.66. The Russell continues to lag the Dow; however, the tech laden Nasdaq remains down double fold.

Building on Monday’s colossal gains, small caps opened higher following news that the U.S. will take Europe’s lead and directly inject capital into troubled banks, while also temporarily guaranteeing newly issued debt by banks. The government said it will also provide insurance for all non-interest-bearing accounts.

Also under the Treasury’s voluntary Capital Purchase Program, the government will purchase $250 billion in preferred shares of banks who elect to participate in the Treasury’s program by November 14. Thus far, nine major banks have said they will participate in the program. Commenting on the direct investment in financial entities, President Bush Tuesday said, the administration’s steps were “not intended to take over the free market but to preserve it.”

Financial firms remain in the green midday, with Morgan Stanley (NYSE:MS) up 20%, Citigroup Inc. (NYSE:C) up 17%, Bank of America Corp. (NYSE:BAC) up 14% and Goldman Sachs (NYSE:GS) up 13% leading the way.

“I would caution that the world is not going back to where it was before September,” Andy Busch, global foreign exchange strategist for BMO Capital Markets, said in an email. “The freeze has meant that the outlook for the economy has soured and we're still not sure by how much. Call it the Z factor. This means that no one can be sure the impact on companies’ sales or earnings. The market was assessing a very negative outcome by selling equities down as far as they did prior to the US/global actions.  Now, we have had a massive rally as the market anticipates brighter times ahead. Don't get too excited by the upmove. The Z factor will cap this rally as will the terrible economic numbers that will come out over the next 6 weeks.”  ...

Small-cap stocks shot higher on the opening, extending Monday’s rise on news that the U.S. government will plow some $250 billion in taxpayer funds directly toward stock purchases of major banks. At 9:55 a.m. ET, the Russell 2000 (NYSE:IWM) was up 1.79, or 0.31%, at 572.68. Tech stocks were lagging the early rally, as were small caps, as the focal point of the move was on big banks.

The U.S. announcement follows news from the United Kingdom, France and Germany of similar plans to buy equity in banking institutions and the U.S. plan includes a three-year guarantee on bank loans. Financial firms took flight early today on the news, with Citigroup Inc. (NYSE:C) up 18% and Bank of America Corp. (NYSE:BAC) up 18%.

Looking at money flow this morning, Treasury markets were falling hard as the safe-haven push dulled amid strong gains in equities. The yield on benchmark 10-year notes (which moves inversely to price) was up some 3.3%. The market has been fixated on interbank lending rates, which were stuck at extreme levels despite central bank rate cuts, but those rates posted their biggest decline of the year overnight in response to the steps taken around the world to restore confidence to banks — including measures to guarantee interbank loans.

Crude oil prices were higher this morning, which should help support energy shares. The energy market continues to track movement in stocks, gaining hope that the recent recovery rally will soften the demand blow to crude from difficult economic conditions. Although the focus is firmly on stocks and the financial sector early this week, the market will receive data on inflation figures Wednesday and Thursday.

Outside of the financial sector, earnings came out this morning for Johnson and Johnson (NYSE:JNJ) and the consumer products firm topped the forecast, helping to generate a 5% rally in JNJ shares on the open. Pepsico Inc. (NYSE:PEP) also released results today, but missed the estimate and the stock was off 10% early . . .

Small-cap stocks are expected to open sharply higher again this morning, bolstered by news that the U.S. government will spend some $250 billion buying equity in various major banks. The Russell 2000 (NYSE:IWM) was up nearly 3% in after-hours trading, which would translate to an open near 587.

Stock markets around the world remained in rally mode overnight, with Japan generating a massive 14% surge. European shares were up some 5%, while Hong Kong was up 3.1%, Taiwan up 5.4%, Australia up 3.7%, Singapore up 2.5%, South Korea up 6.1% and India up 1.5%. China shares were actually down 2.5%.

Banks will be in the spotlight early today. In after-hours action, Bank of America Corp. (NYSE:BAC) was up nearly 8%; Wells Fargo & Company (NYSE:WFC) up 5%; JP Morgan Chase & Co. (NYSE:JPM); Bank of New York Mellon Corporation (NYSE:BK) up 7% and Goldman Sachs Group Inc. (NYSE:GS) up 9%, just to name a few of the big banks that should stand to benefit from this latest government freebie.

In addition, in an address on the financial crisis this morning, President Bush said the government will also guarantee “most” new loans for a short period of time, another measure aimed at thawing the distrust level among banks lending to each . . .

An aging population and increased spending on medical care has meant big money for CONMED Corporation (Nasdaq:CNMD).

The Utica, N.Y.-based medical device maker has been around since 1973 when it was known as Consolidated Medical Equipment. Its first product was a disposable ECG monitoring electrode. The company went public in 1987 and in 1989 it acquired Aspen Labs from Bristol-Myers Squibb (NYSE:BMY) to bolster a growing electrosurgery line of products. Today CONMED stands at a market cap of $920 million and derives approximately 60% of its revenue from powered surgical instruments and devices used in the orthopedic surgery market.

The company’s arthroscopy segment, which accounts for nearly 40% of the firm’s revenue, manufactures arthroscopes, tissue repair sets and video imaging systems used in surgery. CONMED’s powered surgical instruments business makes powered saws, drills and related disposable accessories that are used in various surgical procedures. Each of CONMED’s business segments have shown the ability to adapt to changing trends and a push toward disposable instruments. Approximately 75% of the company’s revenue comes from the sale of single-use products.

The company is fresh off of a record quarter. Last month, it reported second-quarter results that included a 34% surge in EPS on a 13.9% rise in sales versus the year-ago quarter. The company benefited from strong growth in its arthroscopy and electrosurgery product lines, which grew 18% and 16.7%, respectively, on a year-over-year basis. CONMED was also able to improve its gross margin percentage and expand sales internationally. This performance has helped propel the company’s stock price. Year to date, shares of CONMED are up 38.47%.

The rise in price of this stock has been a pleasant surprise to one analyst. Back in April, when the company announced its first-quarter results, Mark Mullikin, a senior research analyst for Piper Jaffray (NYSE:PJC), set a price target of . . .

Small-cap stocks fell hard this morning, pulled down by soft economic data, a global rout in equities, record lows in the U.S. dollar and a sobering outlook from central bank leaders. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was down 13.92, or 2.09%, at 650.59, the lowest level seen since March.

In Senate testimony this morning, Federal Reserve Chairman Ben Bernanke will address the economy and monetary policy. In a release of the advance text, Bernanke said that the financial markets remain under “considerable stress” and that consumer spending was likely to be “restrained” in coming quarters. The immediate response to the Bernanke text headlines was that stock markets extended the morning slide.

The stock market was already taking a beating in after-hours trading before a fresh batch of economic data came out on the weak side ahead of the opening. On the inflation front, the PPI headline figure came in at plus 1.8%, which was well ahead of the forecast for a rise of 1.3% and the year-over-year figure was a sobering plus 9.2%, the largest rise since June 1981. On the consumer spending ledger, the news was also dour, with June retail sales up just 0.1%, well down from the median forecast for a rise of 0.4% as car sales notched their biggest drop in more than two years. Even when excluding autos, June sales were up just 0.8%, which also missed the forecast for a rise of 1%.

Retail sales in May were strong, and although this month’s figure missed the estimate, it was still a decent number. The problem is that May and June sales were temporarily boosted by government stimulus checks and the strength is seen as temporary from most analysts. “Despite recent strength, consumers are slowly and grudgingly succumbing to job losses, high energy prices, the housing meltdown and the financial market turmoil,” Steven Wood, chief economist with Insight Economics, . . .

Small-cap stocks are expected to open sharply lower, pulled down by a global rout in equities overnight fueled by fears of global financial systemic risk. In addition, a plunging U.S. dollar will weigh on stocks, and a fresh batch of economic data this morning presented a sour picture on the inflation and retail sales front. The Russell 2000 (NYSE:IWM) is expected to open down more than 1%, suggesting an open near 657.

Speaking of this morning’s batch of data, the Producer Price Index came in at +1.8%, which was well above the forecast for a rise of 1.3%. Meanwhile, June retail sales were up only 0.1%, which was far worse than the projection for a rise of 0.4%. The figure ex-autos was up 0.8%, but even that figure was below the 1% rise that was anticipated. The last piece of the data puzzle this morning (and by far the least important from a short-term trading perspective) was the N.Y. Manufacturing Survey, which was down 4.92, better than the forecast for minus 8. The immediate market impact of the numbers this morning was that stock index futures dipped another couple of handles, while the U.S. dollar plumbed new lows.

In overseas trading, stock market bears were on a rampage. Equity markets in Europe were down 2.5%, Hong Kong off 3.8%, China down 4.1%, Taiwan down 4.5%, Australia down 2.1%, Singapore down 2.5%, South Korea down 3% and India down 4.9%, as global investors feared financial instability in America spreading like a virus throughout the global system.

Large caps in the news overnight included Kimberly-Clark Corp. (NYSE:KMB). Shares in the maker of Kleenex tissues and Huggies diaper products were down about 7% after sloppy second-quarter earnings and as the firm slashed its yearly outlook. Johnson & Johnson (NYSE:JNJ) quarterly results topped the Street . . .

Bill Martin is well known as the founder of RagingBull.com, one of the earliest and most successful online investor sites. Now, he edits the equally successful BullMarket.com, which offers daily trading and investing advice and is noted for its in-depth research.

Martin recently turned his analysis to Omrix Biopharmaceuticals (Nasdaq:OMRI), a small-cap firm that operates in the biosurgical products and passive immunotherapy markets. The stock has a market capitalization of $261 million.

The company's biosurgical products are used for the control of bleeding, or hemostasis, during surgery along with other surgical applications. Its key products are Evicel, Quixel and Evithrom.

The company has a marketing partnership with Ethicon, Martin says, which is a subsidiary of Johnson & Johnson (NYSE:JNJ). Ethicon handles the marketing and sales of the products, while Omrix focuses on manufacturing and product development.

"Evicel and Quixil are the first, and currently the only, commercially available liquid fibrin sealants that do not contain animal-derived components," he says. Evicel is approved in the United States for use in patients undergoing surgery when the control of bleeding by standard surgical techniques is ineffective or impractical.

The advisor says that Evithrom is the first human thrombin to be approved by the Food & Drug Administration since 1954, and it is the only product currently licensed.

The company's second market is a passive immunotherapy product line that includes products that are used to treat immune deficiencies and infectious diseases, as well as for potential biodefense applications.

It supplies vaccinia immunoglobulin, or VIG, to several governments as a means to treat smallpox vaccine-related complications in the event of a smallpox terrorist attack, according to Martin.

It also markets an intravenous version in Israel, known as IVIG, he says, . . .

The Russell 2000 (NYSE:IWM) moved up on news of a higher-than-expected rise in producer prices and solid earnings from major players. The small-cap index added 5.99 points, or 0.87%, to 692.06. The Dow Jones Industrial Average rose 60.41 points, or 0.49%, to 12,362.47.

On a year-to-date basis, the Russell 2000 has declined 9.66%, while the Dow is off 6.80% and the S&P 500 is missing 9.12%.

Small-cap stocks began the day in the green and spent the majority of the session above the flat line on news before the opening that producer prices rose a greater-than-expected 1.1% in March following a rise of 0.3% in February.

The numbers also show a jump in energy and food costs, indicating that inflation pressures remain. However, core producer prices, which exclude the costs of food and energy, rose a modest 0.2%.

“The good news is that core PPI remains tame, but how long can that last for?” global foreign exchange strategist Andrew Busch with financial services firm BMO Capital Markets wrote in a note today. “At some point, U.S. businesses . . .

It’s not much fun when you offer to give your heart to the apple of your eye and the transaction is declined. Oh, it’s painful, but usually nothing a long bubble bath or a series of cold, fermented beverages can’t wash away.

However, it’s a true matter of life and death when a transplant recipient’s body rejects actual donated heart tissue.

That’s why doctors and investors alike are excited by the launch of a new technique developed by Kennesaw, Ga.-based CryoLife, Inc. (NYSE:CRY) called SynerGraft that’s expected to significantly reduce transplanted heart valve rejection, not to mention boost revenues along the way.

This is big news for the $256 million market cap developer of biomaterials and surgical implant devices that knows a thing or two about rejection itself (more on that shortly).

Among its enviable arsenal of products, CryoLife offers: an increasingly profitable surgical adhesive called BioGlue, which alone generates around 45% of total revenues; a wound sealer called BioFoam, currently being modified for battlefield applications with military R&D funding; transplantable porcine heart valves; and vascular grafts of bovine tissue.

Besides these products, the company is also a well-known leader in the cryo-preservation and distribution of donated cardiovascular and vascular tissue for transplant. CryoLife was hit hard in 2002, though, when it was ordered by the U.S. Food and Drug Administration to recall and halt the production and sale of non-valved cardiac vascular and orthopedic tissue after reports of infections and injuries resulting from implanted tissues surfaced. The order prompted huge sell-offs of the stock.

Then, heartbreakingly, after just getting its circulation back with improved quality controls, third-party accreditation and regained FDA approval, CryoLife once again . . .

For many aging boomers combating heart disease, it is in Merit Medical Systems (Nasdaq: MMSI), a maker of disposable medical products used in radiology and cardiology, that they will find an indispensable ally.

The company is a market leader in many of the products it offers, which include disposable catheters, syringes, inflation devices, disposable blood transducers, angioplasty needles and guidewires, pressure infusion bags, kits and procedure trays, among many other products. The company peddles 72% of its products to U.S. hospitals, custom packagers and distributors, and original equipment manufactures, with the remainder sold in international markets.

The company received notification from the U.S. Food and Drug Administration in December 2007 of 510(k) clearance for its new Sea Dragon torque device, which is used specifically with hydrophilic guide wires. The Sea Dragon follows November's release of the All-Star hemostasis valve, which is designed to maintain a fluid-tight seal around interventional devices, and the  Prelude marker tip introducer sheath, which allows visualization of the sheath tip for precise placement during interventional and diagnostic procedures. 

According to Fred Lampropoulus, chairman, president and CEO of Merit, all three products are high margin and enhance the company’s revenue growth and profitability in 2008.

Merit’s sale have been growing at a compound average annual rate of 11.8% over the past 10 years to an estimated $207.4 million in 2007. EPS, meanwhile, has been repeating and growing as well — at a 16.2% compound annual rate to an estimated $0.54. The stock closed at 16.07 on Friday. Shares have ranged between $10.89 and $16.84 over the last 52 weeks.

Comptition in the space is formidable, to be sure. Merit butts head with the likes of Boston Scientific Corporation (NYSE: BSX), Johnson & Johnson (NYSE: JNJ) and Medtronic, Inc. (NYSE: MDT), but that's OK. The company has been holding its own against these behemoths for the past 20 years and believes it will continue to hold its own because of “quality of materials and workmanship, innovative design, ease of operation and a prompt attention to customer inquiries.” 

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are sagging this morning on news of record oil prices and poor third-quarter earnings.

At 10:33 a.m. ET, the small-cap index had shed 5.43 points, or 0.65%, to 823.93. The Dow Jones Industrial Average (INDU) was off 87.78 points, or 0.63%, to 13,897.01.

The price of oil has continued climbing to record highs, up more than $0.60 and approaching $87 a barrel. The increase is due to tight inventories as winter approaches and tensions along the border between Iraq and Turkey. On Monday the cabinet of Turkish prime-minister Tayyip Erdogan asked parliament for approval to launch an attack on Kurdish rebels in northern Iraq.

In corporate news, health-care products maker Johnson & Johnson (NYSE: JNJ) reported that its third-quarter profit fell 7.7% despite a 12.7% increase in sales.

Contributing to the bearish mood this morning is news after the close on Monday that U.S. Federal Reserve chairman Ben Bernanke told the Economic Club of New York that the slump in the housing sector is expected to get worse and will act as a drag on economic growth into early 2008.

In economic news, Federal Reserve’s monthly index of industrial production, showed a small rise for September. The index, which measures the change in the production of the nation’s factories, mines and utilities, added 0.1%, as projected. However, the reading for August was revised down to 0% from a previously reported increase of 0.2%.

Secrets of the consumer are coming undone, exposed by DemandTec’s breakthrough marketing software. DemandTec, Inc. (Nasdaq: DMAN) leaves little to the imagination: its suite of scientifically infused software  tells retailers and makers of consumer products how to attract sales, price goods, run promotions, mold and predict demand, and drive profits.

Trading publicly since August but started in 1999, DemandTec has grown into a leader of commerce software, sporting a client list of the biggest retailers: Wal-Mart Stores, Inc. (NYSE: WMT), Safeway Inc. (NYSE: SWY), Target Corporation (NYSE: TGT), Best Buy Co., Inc. (NYSE: BBY) and Office Depot, Inc. (NYSE: ODP), among others. It also markets to consumer products companies, including Campbell Soup Company (NYSE: CPB), Cargill, PhilipMorris and Johnson & Johnson (NYSE: JNJ).

Even DemandTec would find it hard to better shape its own returns since its initial public offering at $11 per share. Its shares have rallied 50% in a little more than two months, closing Friday at $16.59. The high so far is $18.55 on Oct. 10, hit as the company rallied after second-quarter returns released Oct. 4 exceeded analyst expectations. Its market capitalization has grown to more than $420 million.

Revenues in the second quarter of fiscal 2008 ended Aug. 31 rose 40% from the previous year to $14.7 million. Sequential growth was 11% from the first quarter. The company gets its revenues from customer agreements that cover the use of DemandTec’s software and services that go with it. Revenue is recognized over the term of the agreement, which tends to run two to three years. On a non-GAAP basis, the quarterly loss was $0.02 per share, versus a penny gain in the same quarter a year earlier.

DemandTec also pleased investors by projecting revenues for full fiscal 2008 of $60.2 million to $60.7 million—up 40% year-over-year. The San Carlos, Calif.-based company said on its quarterly conference call that earnings for the year would be $0.07 to $0.08; in the third quarter, DemandTec expects to earn $0.03. 

“DemandTec’s consumer demand management solutions are clearly resonating within the retail and consumer goods verticals and we believe that the company is in the early stages of a multi-year growth opportunity,” analyst Jason Maynard at Credit-Suisse wrote in a research note following the conference call. Maynard repeated his “outperform” rating, saying that the company’s second-quarter results reaffirmed a very attractive small-cap growth story.

Investing in companies that make medical devices can be risky, to say the least. In a highly competitive industry in which the prototypical business model involves years of painstaking research and development (not to mention the time-consuming process of obtaining FDA approval) before translating into revenues, winners have to overcome competitive threats, pricing pressures, and quality issues.

According to industry experts at Standard & Poor’s, when evaluating a medical device company's competitive position, it's crucial to examine its track record of product innovation and its market share over time. With that criteria in mind, if any stock in the medical-device group qualifies as a strong holding in the Street's eyes, it's Synovis Life Technologies Inc. (Nasdaq: SYNO). The St. Paul, Minn.-based medical device company shows exceptional annual growth in research and development, and it has a dominant position in its two core market segments: devices used in surgical and interventional treatment of diseases.

The surgical end of the business creates tools for surgeons and hospitals, devices for microsurgery, and implantable biomaterial products (which aid tissue repair and regeneration). The interventional end develops and manufactures components used in minimally invasive devices for cardiac, vascular, neuro, and other surgeries—selling primarily to other medical device companies that use them in the manufacture of their own products.

At first blush, Synovis appears overmatched compared with its peers: healthcare powerhouses Johnson & Johnson, Inc. (NYSE: JNJ), Boston Scientific Corp. (NYSE: BSX) and Medtronic, Inc. (NYSE: MDT). But thanks to a pipeline of products that have propelled sales, the company continues to post impressive profits in the face of formidable competition.

The subject of today’s column, BioCryst Pharmaceuticals, Inc. (Nasdaq: BCRX), comes with numerous caveats, not the least of which is that it has been a terrible performer over the past two years, falling from above $20 to single digits. Further, as a development stage biotech this is inherently a risky situation. The fact that is has yet to receive regulatory approval for its drugs adds further risk.

It also holds the inherent risk of being a small-cap stock, with a market capitalization of $235 million. And, it is working in a highly speculative area; the company is developing a drug, Peramivir, as a treatment for flu, as well as Fosodine, a treatment for leukemia.

BioCryst is often considered a “bird flu” play, as its Peramivir is being tested as a treatment for Avian influenza. As a result, the stock rose sharply through the second half of 2005, when media and investor attention were focused on the potential for a bird flu pandemic. It has fallen equally sharply since early 2006 as concerns over the Avian flu have abated.

The severe decline in the shares over the past year, however, has not deterred two leading biotechnology advisors who continue to see significant long-term potential. Both foresee continued development success with BioCryst’s Avian flu treatment. And both foresee additional potential in its pipeline.