Companies featured in the current edition of the newsletter: CLXS, GNBT, HYTM, ICLK, ILNS, PLKH, TKO, VYTR
Last week was a volatile and active week of trade, although the end result wouldn’t suggest this. With the exception of Friday, the stock market closed each day with a gain or loss of more than 1%. However, when the dust settled, the S&P 500 posted a slight 0.2% or 3 point gain, bringing its year to date loss to 14.2%. The Dow Jones Industrial Average lost 44 points, increasing it year to date loss to 14.6%. The Nasdaq Composite Index finished the week unchanged at 2310.96, keeping its year to date loss at 12.9%. The Russell 2000 gained 6 points, bringing its year to date loss to 6.5%.
The financial sector enjoyed several positive developments, including the Fed extending the length of its Term Securities Lending Facility program through Jan. 30 and is introducing longer terms to maturity for its Term Auction Facility. The facilities were implemented to improve liquidity during the recent credit market turmoil. In addition, President Bush signed the housing bill into law, which includes support for Fannie Mae and Freddie Mac. Separately, the SEC is extending its temporary restriction on naked short selling on financial institutions that have been granted temporary access to the Fed’s liquidity facilities. The extended order will be in effect until Aug. 12.
But there was plenty of action outside of financials, with the release of key economic data and a barrage of earnings reports. Contrary to all the doom and gloom in newspaper headlines, the economy expanded in the second quarter, albeit at a moderate pace. Second quarter GDP rose by 1.9%, aided by the fiscal stimulus, although the result was lower than the expected 2.3% gain. The reading was stronger than the headline suggests, though, as a decline in inventories cut 1.9% off the change. The government’s jobs report for July was mixed, as payrolls slipped by a smaller-than-expected amount, while the unemployment rate rose by a larger-than-expected amount. Specifically, nonfarm payrolls fell by 51,000, which was better than the expected decline of 75,000.
On the commodity front, crude oil went on wild swings with prices hitting as high as $128.60 and as low as $120.80. Crude settled the week with a 1.5% gain, with an unexpected drop in gasoline inventories acting as the main buying catalyst. In corporate news, Exxon Mobil — the world’s largest company by market capitalization — posted a 14% increase in net income to $11.68 billion, marking the largest quarterly profit inU.S. history. Still, the results trailed analyst estimates, as lower production and shrinking gasoline margins partially offset record crude prices. Chevron announced similar earnings results. U.S. Steel posted blowout second quarter earnings of $5.65, which more than doubled compared to the previous year. Strong global demand and pricing power aided the huge upside surprise. Steel companies as a whole rose 4% for the week. Auto manufacturers fell 10%. General Motors swung to a massive $15.5 billion second quarter net loss, as consumer preferences shift away from large trucks and SUVs in the face of record gasoline prices.
What should investors look for this week? The earnings calendar continues to be active, with Fannie Mae (NYSE: FNM), Humana (NYSE: HUM), and DISH Network (NASDAQ: DISH) all scheduled to report before Monday’s open. On Tuesday prior to the opening investors will look for earning from Archer-Daniels (NYSE: ADM), Procter & Gamble (NYSE: PG), Duke Energy (NYSE: DUK), and Emerson Electric (NYSE: EMR), followed by News Corp (NYSE: NWS) and Cisco Systems (NASDAQ: CSCO) after the close. Wednesday morning, expect numbers from Dean Foods (NYSE: DF), Devon Energy (NYSE: DVN), Sprint Nextel (NYSE: S), and Time Warner Cable (NYSE: TWC). American International (NYSE: AIG), Comp Vale Do Rio (NYSE: RIO), Gerdau S.A. (NYSE: GGB), Magna (NYSE: MGA), Plains All American Pipeline (NYSE: PAA), and Sunoco (NYSE: SUN) will all release number after close on Wednesday. Thursday will feature releases from AES Corp (NYSE: AES), Cardinal Health (NYSE: CAH), DIRECTV (NASDAQ: DTV), and World Fuel Services (NYSE: INT).
The economic calendar will be closely monitored as well, kicking off with June Personal Income/Spending before the market opens on Monday, followed by June Factory Orders at 10:00 a.m. ISM Services will be released at 10:00 a.m. on Tuesday, followed by the FOMC Policy Statement in the afternoon. Weekly Crude Inventories and June Consumer Credit report will be released on Wednesday. Weekly Initial Claims will be announced Thursday before the opening bell, followed by June Pending Home Sales at 10:00 a.m. Friday before the market opens Q2 preliminary Productivity numbers will be released, with June Wholesale Inventories being reported at 10:00 a.m.
The conference schedule continues to be light, beginning Monday with the four day IBC’s 13th Annual Drug Discovery & Development of Innovative Therapeutics World Congress in Boston and Oppenheimer’s first annual Small and Mid Cap Clinical and Regulatory Conference in NYC. The two day BMO Capital Markets Focus on Healthcare Conference in NYC and the three day RBC Capital Markets 2008 Technology, Media & Communications Conference in San Francisco, both begin on Tuesday. Healthcare services company Hythiam, Inc. (NASDAQ: HYTM) will present at the former event on Tuesday at 3:30 p.m. eastern time, while Internet marketing company interCLICK, Inc. (OTCBB: ICLK) will present at the RBC Conference on Thursday at 4:30 p.m. pacific time. Thursday will also feature the two day Bank of America Securities Specialty Pharmaceuticals Conference taking place in Long Island, New York.
Telkonet, Inc. (AMEX: TKO), the leading provider of innovative, centrally managed solutions for integrated energy management, networking, building automation and proactive support services, announced that its revolutionary PLC solutions have been approved after laboratory and field testing by BPL Global’s Serveron subsidiary, a leading provider of smart grid solutions including online monitoring technology and services for electric utility assets. The company also announced that it has received “Permitted” status from the Transportation Security Administration for its FIPS 140-2 validated powerline communications products for networking applications. This is the result of exhaustive trials, conducted at designated airports across the United States, and an intensive cost analysis and ROI review. Enabling fast-deployment, secure, high-speed network connectivity, Telkonet is now the only Permitted PLC solution authorized by TSA. The acceptance of a ‘Permitted’ technology represents a significant and valuable milestone, underlining Telkonet’s ability to provide world-class, enterprise powerline networking technologies in the highly stringent and secure government networking space. The stock fell by a penny for the week, to close at $0.43.
Vyteris, Inc . (OTCBB: VYTR) , manufacturer of the first FDA-approved active patch transdermal drug delivery system, in partnership with Ferring Pharmaceuticals , announced the completion of a Phase I dose ranging study using Vyteris’ patented Smart Patch transdermal system for delivery of a peptide hormone. The effective completion of this study is a key ingredient in the preparation work for Phase II studies. Specifically this study demonstrates the potential for delivering peptide molecules into the human body in therapeutic levels without the use of needles. It also represents another milestone for the company in developing an effective peptide transdermal delivery product. The stock remained unchanged at $0.41 for the week.
Scimitar Equity, LLC issued a review last week of drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT) entitled, “RapidMist, the Non-Invasive Oral Drug Delivery Platform, Sets the Tone as Best in Class Followed by an Expanding Pipeline and Global Revenues.” While the firm did not put a price target on the stock, we note that Rodman & Renshaw rates the company a Market Outperform with a price target of $6. Shares ended the week at $0.76, down 7 cents.
ProLink Solutions, a wholly-owned subsidiary of ProLink Holdings Corp. (OTCBB: PLKH), a leading provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, announced that Shadow Ridge Country Club and Skybrook Golf Club now feature the ProLink Solutions GPS System. The company appears to be gaining significant traction in the U.S. for its System, as reflected in Q2 operating results and recent announcements related to new course wins. Shares fell by $0.02 for the week, to close at $0.48.
Collexis Holdings Inc. (OTCBB: CLXS), a leading developer of semantic search and knowledge discovery software, announced that it has contracted with Balan Biomedical, Inc., a medical and consumer health intelligence company, to provide its Collexis Mediator product for the organization to support market research and trend analysis in the field of biotechnology. Balan will use the software as a research and analysis tool to identify and track clinical needs, which will facilitate consumer health research and clinical analytics. The company also announced that its premier professional scientific social networking site, Biomedexperts.com, has more than 30,000 registered users, enabling researchers across organizations and around the globe to collaborate more efficiently and effectively. The stock fell by $0.01 for the week, to close at $0.33.
Intellect Neurosciences, Inc. (OTCBB: ILNS), biopharmaceutical company engaged in the discovery and development of disease-modifying therapeutic agents for the treatment and prevention of Alzheimer’s disease and other disorders, announced it has obtained a European patent relating to the company’s ANTISENILIN monoclonal antibody platform for the treatment of Alzheimer’s disease. The claims of the issued patent cover the ANTISENILIN “free-end specific” antibodies that bind to beta amyloid and use of the antibodies in preventing or inhibiting the progression of Alzheimer’s disease. The technology is designed to promote the clearance of beta amyloid which accumulates to reach toxic concentrations in the brains of Alzheimer’s patients while reducing the potential for adverse side-effects. Importantly, such drugs avoid binding and thereby potentially interfering with the functions of the Amyloid Precursor Protein, which is an important physiological regulator in the body implicated in controlling essential brain functions as well as blood coagulation. The grant of the European Patent represents an important milestone with respect to the company’s strategy, which is to leverage its monoclonal antibody patent estate by licensing it to a number of major pharmaceutical companies with drug candidates in clinical development. Shares rose by $0.10, to finish the week at $0.45.
