Tag - Cers

After trading down for most of today's session stocks edged up toward the close to finish up.

The Dow finished at 9,108.51, up 15.27 points; the Nasdaq was up 1.93 point to close the day at 1,967.89; and the S&P 500 was up 2.92 points to end at 982.18.

The Russell 2000 was up 2.42 points to finish strong at 550.88.

Leading small-cap price gainers was Select Comfort Corp. (Nasdaq:SCSS) up 46% on news that while sales for the second quarter of 2009 were down compared to the same quarter in 2008, operation income was positive net losses were substantially less. The company reported that Q2 operating income was $1 million.

Other leading small-cap gainers include Cerus Corp. (Nasdaq:CERS) up 45%; Jazz Pharmaceuticals (Nasdaq:JAZZ) up 44%; Ariad Pharmaceuticals (Nasdaq:ARIA) up 42%; and Harleysville National Corp. (Nasdaq:HNBC) up 38% on news that it would be acquired by First Niagara (Nasdaq:FNFG) for $237 in an all stock deal. The deal values HNBC at roughly $5.50 per share, representing a 37.5% premium over Friday's closing price for HNBC.

*****Earnings season has been overwhelmingly positive so far. Only 16% of the S&P 500 companies that have reported so far has missed expectations. 75% have beaten expectations. That's what happens when earnings estimates are so low that they are virtually impossible not to beat. 

But what's happening now is very interesting…

Analysts are raising their earnings estimates considerably. Bloomberg reports that forward revisions to estimates now put the forward P/E of the S&P 500 at 13.13. That's 26% below the 50-year average 16.54.

So are we due for a 26% rally as stocks return to their historical norms?

*****If earnings season finishes with 75% of the S&P 500 exceeding expectations, that would be a record. Since 1933, no more than 72% of the S&P 500 has beaten earnings expectations.

But Bloomberg also reports that just half of the S&P 500 companies that have reported have beaten revenue expectations. That means much of the earnings surprises we've seen are a product of cost-cutting and not rising revenues.

To the bears, this suggests there is still risk for stock prices.

*****To the bulls, it's now clear that pessimism went way too far. Stocks were priced way too low for a disaster that never materialized. More and more strategist-types are coming out and saying things like the economy is stronger than the numbers show and that a V-shaped recovery is underway.

Some economists are even raising their 3rd quarter GDP estimates.

Federal Reserve Chief Ben Bernanke states that the economy will be in stronger footing. And this is an interesting point. Overinvestment in real estate is being written off and prices are falling to levels that make sense for the family budget and the business bottom line. Increased regulation will keep investors' money safer (we hope). Increased savings will put consumers on stronger footing.

In essence, the U.S. economy will, at some point, start growing from a much lower baseline. And while the stock market may only recover the gains it lost over the last two years, that recovery process would lead to some phenomenal gains from current levels.

*****The question for me is: when? I can't help but think that analysts may be overshooting on the upside, just as they overshot on the downside. And I'm pretty sure I'm not the only one who feels this way. Consider that existing home sales jumped 11% in June, and yet stocks are in the red so far today.

There can be no doubt that such a jump in home sales is unexpected good news. But stocks are ignoring it. I say that's because there's a lot of good news priced in already. 

*****So I may be cautious, but I'm going to do what I have been: buy quality stocks, watch them closely and take profits. That approach has been working great so far this year… 

*****TradeMaster Daily Stock Alerts readers just took another 19% gain on MYR Group (Nasdaq:MYRG). Nice work, Jason. If you missed Jason's video chart analysis from Friday, you can check it out HERE. 

*****Now let's have a look at the economic data for the week.

Tomorrow, Tuesday, June 28, we get the Case-Shiller Home Price Index and Consumer Confidence numbers. Wednesday, it's Durable Goods and Oil Inventories. Jobless Claims are out on Thursday.

Friday is the big one, with the release of Second Quarter GDP. This should be a major market mover.

Best Regards,

Ian Wyatt
Editor
SCI Daily

Shares of Cerus Corp. (Nasdaq: CERS) are sagging following news after the close on Tuesday that the biopharmaceutical firm has spun-off certain assets from its immunotherapy programs.

The Concord, Calif.-based company, which makes treatments to inactivate blood-borne pathogens in donated blood, has spun-off its immunotherapy business to a newly formed independent company financed by venture capital firms. In return, Cerus has received an equity stake of about 15.5% and could receive up to an additional $1.5 million of equity in the new company or in cash.

Cerus could also receive over $90 million in royalty payments if the spun-off assets develop and commercialize vaccines.

“The completion of this transaction allows Cerus to focus organizational and financial resources solely on our core strengths in the blood safety business,” said Claes Glassell, president and CEO Claes Glassell in a statement.

At 3:53 p.m. ET, shares of Cerus Corp. (CERS) had lost $0.38, or 5%, to $7.76. The 52-week low of $5.11 was set on Jan. 8, while the 52-week high of $10.29 was touched on Oct. 15.

The Russell 2000 (NYSE: IWM) futures are lower and the small-cap index will probably open with a fall as investors worry about the U.S. economy.

The mood on Wall Street is bearish as investors weighed news of rising oil prices and the U.S. Federal Reserve lowered its growth outlook for the U.S. economy. On Tuesday the Fed forecasted that growth will slow in 2008 and unemployment will creep up slightly.

In other economic news, the Labor Department reported that jobless claims for the week ended Nov. 17 decreased 11,000 to 330,000 from the previous week’s upwardly revised level of 341,000.

The four-week moving average, considered a more stable measure, fell 750 to 329,750 from 330,500 a week earlier.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• NGAS Resources Inc. (NGAS), up 11% on news it has priced an offering of 4.2 million shares of its common stock at $6 per share.
• ChemGenex Pharmaceuticals Ltd. (CXSP), up 8%.
• Cerus Corp. (CERS), up 5% on news it has spun off assets of its immunotherapy business to an independent company.

Biggest percentage losers:

• China Finance Online Co. Ltd. (JRJC), down 23% despite news of a rise in quarterly profit.
• LSI Industries Inc. (LYTS) down 9%.
• Solarfun Power Holdings Co., Ltd. (SOLF) down 7%.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are higher following news of stronger-than-expected September retail sales.

At 10:16 a.m. ET, the small-cap index had added 5.15 points, or 0.62%, to 840.13. The Dow Jones Industrial Average (INDU) had advanced 47.64 points, or 0.34%, to 14,062.72.

Retail sales for September increased 0.6% to $380.2 billion, according to the U.S. Census Bureau before the opening. That’s more than the projected 0.2% and a sign that the American consumer is alive and well despite the ongoing slump in the housing sector.

The gains were led by sales of autos, electronics and groceries.

On a year-over-year basis, retail sales have increased 5%.

Retail sales excluding motor vehicles and parts added 0.4% to $301.6 billion, outpacing analysts’ forecasts of a rise of 0.3%.

In other economic news, the U.S. Labor Department reported that producer prices for September increased 1.1%, the largest gain since February. That’s above the projected rise of 0.5%. The producer price index declined 1.4% in August.