Wednesday, October 18, 2017 - 3:01pm
Photo courtesy of Pixabay.

PG&E Corporation (NYSE: PCG) shares remain under selling pressure Wednesday as the public utility continues to face scrutiny for its alleged role in California wildfires that have claimed at least 41 lives and destroyed thousands of businesses.

Pacific Gas and Electric Co.'s stock has lost nearly 20 percent since Oct. 11, when California officials confirmed an investigation into whether the utility's power lines played a role in igniting the fires. The total financial damage to the company, if found liable, could exceed $12 billion, SF Gate reported.

State Sen. Jerry Hill said he'll try to break up the utility or ban it from doing business in California if it's found negligible in the fire, the report said. 

"They've crossed the line too many times," Hill reportedly said. "They need to be dissolved in some way, split."

Not New To Penalties

Investors may have legitimate reason to be concerned about the wildfire. PG&E was found responsible for playing a role in a 70,000-acre fire in 2015 and the utility's liability could total more than $1 billion, The Sacramento Bee reported.

PG&E was also hit with $1.6 billion in fines and other costs connected with the 2010 San Bruno gas explosion, which almost resulted in the company declaring bankruptcy.

The investigation into the Wine Country fires could take months to complete. In the meantime, some Wall Street analysts aren't waiting for the conclusion of an investigation, including Goldman Sachs' Michael Lapides, who removed the stock from the firm's "Americas Conviction Buy List" on Monday, although Goldman Sachs did maintain a Buy on PG&E. 

Related Links:

PG&E Crushed Amid California Wildfire Investigation

8 Of The Biggest Whistles Ever Blown On Wall Street


Wednesday, October 18, 2017 - 3:00pm

Stifel analysts Steven Wieczynski and Brad Boyer downgraded MGM Resorts International (NYSE: MGM) from Buy to Hold and decreased their price target from $38 to $33. They have also removed the stock from the Stifel Select List.

The analysts don't think the tragic shooting at Mandalay Bay is going to significantly impact the demand over the long term. It could only slow down the margin growth for the Strip.

See Also: 5 Ways To Help Las Vegas Massacre Victims

They decided to downgrade the stock because they're having a tough time identifying growth catalysts over the next 12 months. MGM Cotai opening is probably going to have a positive impact on growth, but investors are going to have to wait for several quarters before the property fulfills its potential.

Stifel analysts don't believe the margin growth and fundamental improvement story on the Strip are over and they didn't lose faith in management. They're only concerned that investors are going to lose interest in the stock, because of the short-term obstacles, which could lead to a range bound trading.

The analysts expect MGM Resorts to achieve $2.82 billion EBITDA in 2017, $3.11 billion EBITDA in 2018 and $3.41 billion EBITDA in 2019, which is lower than its prior estimate of $2.86 billion, $3.22 billion and $3.48 billion, respectively. Stifel expects the company is going to report its 3Q 2017 EBITDA, slightly above the consensus.


Wednesday, October 18, 2017 - 2:51pm
Photo by Dustin Blitchok

Ride-sharing apps such as Uber and Lyft have revolutionized travel over short distances. But what about college students who are 100 miles from home?

Wheeli, an app that connects students for ride sharing, is building a solution. The New York City-based company is one of 11 startups that showed off their platform to 150 manufacturers, suppliers and investor representatives Wednesday at the Techstars Mobility Industry Expo & Demo Day in downtown Detroit.

The idea for Wheeli — which is available on iOS and the web and launching on Android in about a month — came from CEO Jean-Pierre Adechi’s frustration with spending $160 each weekend to travel the 100 miles from Wesleyan University to New York, said Lee Jorgensen, Wheeli’s community manager.

Wheeli, which costs an average of 12 cents per mile, has launched on three eastern seaboard campuses: the University of Vermont, the University of New Hampshire and the University of Massachusetts Amherst.

“It’s the cheapest transportation solution for college students, which is pretty great,” Jorgensen told Benzinga.

Related Link: Startup Angels Debuts Marketplace Platform: 'We're Trying To Make It Easier For Potential Investors'

A Safety Net For Motorcycles

Wheeli was one of 11 startups from six countries at the event. Techstars Mobility, which is backed by Ford Motor Company (NYSE: F), has invested in 23 startups in the last two years that are now collectively valued at $200 million, said managing director Ted Serbinski.

Damon, another startup making its pitch Wednesday, brought two Yamaha motorcycles to Detroit. One was equipped with stereoscopic cameras, while the second was fitted with Lidar sensors.

The Vancouver-based company is developing a cloud-connected system for motorcycles with sensors that perceive more threats than a human operator can, said engineer Bob Cao. It’s expected to cost between $700 and $1,000 when it reaches the market, and Damon is in discussions with both motorcycle manufacturers and tier one suppliers, he said.

“Over the last 20 years, as car safety technology has dramatically increased, motorcycles aren’t really any safer than they were in the ‘60s and ‘70s,” Cao said.

As a simulator showed a car passing a motorcycle on the left during a demonstration of Damon’s technology for Benzinga, haptic feedback was sent to the Yamaha’s left handlebar to alert the driver of the threat. In another scenario, both handlebars pulsated with increasing intensity as the system detected an imminent collision.

"What we're trying to solve is how to monetize a connected vehicle charging infrastructure," says Dr. Johannes Hund, founder and chief technology officer at the startup EcoG. Photo by Dustin Blitchok.

Monetizing The EV Infrastructure

As electric vehicles become more widely adopted, the Munich-based startup EcoG aims to connect vehicles, their drivers and businesses to further integrate EVs into the global infrastructure.

The platform-as-a-service company, which has a demo installed at the NextEnergy tech accelerator in Detroit, is bringing the app economy to charging stations, said Dr. Johannes Hund, a founder and chief technology officer at the startup. EcoG is in talks with businesses, charger manufacturers and fleet operators, he said. EcoG was founded by former Siemens employees.

The platform could allow ubiquitous businesses such as Starbucks Corporation (NASDAQ: SBUX) and Subway to use EV charging stations at their locations as a perk, Hund said.

“What we’re trying to solve is how to monetize a connected vehicle charging infrastructure.”

Drones That Don’t Drown

In another corner of the Techstars Mobility office, Chris Seto used a remote control to guide a drone submerged in a nearby pool.

Seto is a staffer at Fathom, a startup founded by three graduates of Hope College in Holland, Michigan — first as a senior design project at a school, then as a Kickstarter-funded venture that received $197,943 in pledges against a $150,000 goal.

The drones have modular thrusters and are rated for water depths of up to 150 feet, Seto said.

“We’ve never actually had a failure due to pressure. It probably can go deeper,” Seto said with a laugh.

The company is partnering with resorts and launching a pilot program in Hawaii. The drones have a built-in 1080p camera and mounts for GoPro Inc (NASDAQ: GPRO) cameras.

“We really wanted it to be affordable, intuitive and easy to use,” Seto said.

Chris Seto demos an underwater drone made by the Michigan startup Fathom at the Techstars Mobility office in Detroit. The company was started by three Hope College graduates. Photo by Dustin Blitchok.

Related Link: How This Startup Accelerator Could Help Find 'The Next Uber' In Detroit

Main image: Bob Cao, an engineer at the Vancouver startup Damon, with a Yamaha motorcycle that's fitted with stereoscopic cameras designed to detect and prevent accidents before they happen. Photo by Dustin Blitchok.


Wednesday, October 18, 2017 - 2:39pm
Photo courtesy of Pixabay.

With Chevron Corporation (NYSE: CVX)'s stock trading in line with BMO Capital Market's price target, the research firm downgraded shares of the company.

A widening valuation multiple isn't justifiable, despite Chevron's promising growth prospects in the Permian and a ramp of Australian LNG volume supporting the dividend and the potential for share buybacks, analyst Brendarn Warn said in a Wednesday note. 

BMO downgraded shares of Chevron from Outperform to Market Perform, with a $120 price target.

At the time of writing, shares of Chevron were sliding 1.20 percent to $118.78.

The energy company's multiple expansion over the last 18 months was anticipated, given BMO's view that 2017 was going to be an inflection year for Chevron, Warn said. (See Warn's track record here.) Chevron is shifting the amount of its employed pre-productive capital from about 50 percent in 2015 to less than 25 percent in 2018, with Gorgon, Wheatstone LNG and other projects kicking off in 2017.

The natural gas projects are major cash cows, generating revenues of more than $4 billion, covering half of the company's $8 billion cash dividend, Warn said. 

"Overall cash margins will achieve strong accretion and capex declines as high capex-intensive projects are being delivered." 

Chevron's Permian positioning has proved to be ideal, according to BMO. The firm sees the Permian as not only a large, high-margin and low royalty acreage position in the world's most sought-after unconventional basin, but also as one that allows Chevron to derisk its capital investment program from long cycle projects to a more flexible spend profile.

"Given our flat price forecast, $55/bbl Brent until 2020, we do not anticipate any material upside for the shares, which already trade at a premium to their peers," Warn said. 

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Wednesday, October 18, 2017 - 2:31pm

Toward the end of trading Wednesday, the Dow traded up 0.70 percent to 23,158.02 while the NASDAQ climbed 0.15 percent to 6,633.65. The S&P also rose, gaining 0.16 percent to 2,563.49.

Leading and Lagging Sectors

Wednesday afternoon, the financial shares surged 0.44 percent. Meanwhile, top gainers in the sector included Assurant, Inc. (NYSE: AIZ), up 6 percent, and Community Trust Bancorp, Inc. (NASDAQ: CTBI), up 6 percent.

In trading on Wednesday, basic materials shares fell 0.60 percent. Meanwhile, top losers in the sector included KMG Chemicals, Inc. (NYSE: KMG), down 6 percent, and Fibria Celulose SA (ADR) (NYSE: FBR) down 4 percent.

Top Headline

Abbott Laboratories (NYSE: ABT) posted better-than-expected earnings for its third quarter.

Abbott posted quarterly adjusted earnings of $0.66 per share on revenue of $6.8 billion. However, analysts expected earnings of $0.65 per share on revenue of $6.72 billion.

Abbott narrowed FY17 adjusted earnings outlook from $2.43 to $2.53 per share, to $2.48-$2.50 per share.

Equities Trading UP

Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) shares shot up 47 percent to $21.27. Buyers are flocking to the stock after the company's oral presentation of data from a Phase 2 clinical study evaluating Poziotinib for the treatment of lung cancer while presenting at the 18th IASLC World Conference in Japan.

Shares of Krystal Biotech Inc (NASDAQ: KRYS) got a boost, shooting up 17 percent to $11.38. Ladenburg Thalmann initiated coverage on Krystal Biotech with a Buy rating and a $23.00 price target.

Viveve Medical Inc (NASDAQ: VIVE) shares were also up, gaining 14 percent to $5.49 as the company issued a strong sales forecast for the third quarter.

Equities Trading DOWN

Akari Therapeutics PLC (ADR) (NASDAQ: AKTX) shares dropped 27 percent to $4.69 following news of a common stock offering.

Shares of Social Reality Inc (NASDAQ: SRAX) were down 23 percent to $3.75. Social Reality shares surged 70.73 percent on Tuesday after the announcement of its own Initial Coin Offering: BIGtoken.

Mobileiron Inc (NASDAQ: MOBL) was down, falling around 10 percent to $3.42 after the company issued weak sales forecast and disclosed that CEO Barry Mainz was leaving the company.

Commodities

In commodity news, oil traded up 0.35 percent to $52.06 while gold traded down 0.26 percent to $1,282.80.

Silver traded down 0.21 percent Wednesday to $17.005, while copper fell 0.63 percent to $3.1755.

Eurozone

European shares closed higher today. The eurozone’s STOXX 600 gained 0.29 percent, the Spanish Ibex Index rose 0.55 percent, while Italy’s FTSE MIB Index gained 0.08 percent. Meanwhile the German DAX rose 0.37 percent, and the French CAC 40 climbed 0.42 percent while U.K. shares rose 0.36 percent.

Economics

U.S. housing starts dropped 4.7 percent at an annual rate of 1.13 million in September. Economists expected a rate of 1.18 million.

Domestic crude supplies declined 5.7 million barrels for the week ended October 13, the U.S. Energy Information Administration reported. However, analsyts projected a fall of 3.9 million barrels. Gasoline stockpiles rose 900,000 barrels, while distillate stockpiles gained 500,000 barrels for the week.

The Federal Reserve released its latest Beige Book report.


Wednesday, October 18, 2017 - 2:15pm
Photo courtesy of Pixabay.

The semiconductor stocks are the best-performing S&P 500 sector — and Barclays analyst Blayne Curtis said he expects to see a seventh consecutive period of positive earnings growth from the group.

The most interesting segment in the sector is Apple Inc. (NASDAQ: AAPL)'s supply chain, which has been underperforming other stocks in the space, Curtis said. (See Curtis' track record here.) 

Broadcom Ltd (NASDAQ: AVGO) and Skyworks Solutions Inc (NASDAQ: SWKS) have upside potential, the analyst said. Barclays upgraded both stocks to Overweight, with a $300 price target for Broadcom and $120 price target for Skyworks. There's no reason for concern over Apple's suppliers, as they have always been more conservative than Apple analysts, Curtis said. Any initial supply constraints will spill into the first quarter, leading to better results for the next year, the analyst said. 

The performance of iPhone X is important for both Broadcom and Skyworks, according to Barclays. Broadcom has the best growth and profitability and is trading at a compelling valuation, the analyst said; he expects a 50 percent dividend increase, which would give the stock a superior yield at a 25- to 50- percent valuation discount to other analog names.

Skyworks will likely report conservative guidance as they wait for iPhone X data, Curtis said. Apple risks are priced in given the under performance of the stock, the analyst said. 

Barclays has an Underweight on Advanced Micro Devices, Inc. (NASDAQ: AMD) with a price target of $10. The research firm projects the company will beat expectations due to a temporary cryptocurrency tailwind. Mass adoption of the company's Epyc server chip is unlikely due to first generation silicon and latency issues between cores and memory, Curtis said. 

Related Links:
Semiconductors: Which Stock Positions To Add To, Which To Take Profits In
5 Reasons To Invest In Semiconductors, And 5 Of The Best Stocks To Own 


Wednesday, October 18, 2017 - 1:57pm
Image credit: Keith Allison, Flickr

At last season’s close, NBA broadcasters sulked to the bus, heads down, defeated. Across Walt Disney Co (NYSE: DIS)’s ABC and ESPN, NBA TV and Time Warner Inc (NYSE: TWX)’s TNT, the league’s regular-season average viewership had fallen 6 percent year-over-year.

TNT, in particular, came in third with its lowest NBA ratings since 2007-2008.

But the broadcaster is ready for a comeback, and it looks like its hope is justified.

NBA Opening Night ratings for TNT were up 46 percent year-over-year with an average 3.5 household rating, the station’s Nate Smeltz told Benzinga.

“TNT won the night across all of cable in prime time with an average 4 rating,” Smeltz said.

Related: Live Sports Could Be The Next Boon For Big Tech

Compared to the 2016-2017 opening double-header, Tuesday’s Cavaliers-Celtics game posted a 4 rating with viewership up 82 percent while Houston-Golden State had a 3.1 rating with viewership up 24 percent.

Time Warner boasted another win last night with the TBS subsidiary’s Dodgers-Cubs game coming in as the highest rated program across all of cable, according to Smeltz.

Overall, Turner’s TV Everywhere Live Streaming coverage saw a 43-percent year-over-year increase in viewership with an average 8.9 minutes of consumption.

Sports Illustrated justified last year’s poor NBA performance by competing programming, particularly election coverage, as well as lackluster rivalries. Experts expect more excitement this year driven by offseason transactions.

Image credit: Keith Allison, Flickr


Wednesday, October 18, 2017 - 1:35pm
Public Domain

Ocean Power Technologies Inc (NASDAQ: OPTT) stock has caught fire this week after the company was granted a patent for a wave energy converter buoy on Tuesday.

Ocean Power is an alternative energy company that specializes in harnessing the power of ocean waves via floating storage systems. The company has previously landed development contracts with Mitsui Engineering and Shipbuilding and the U.S. department of defense.

Ocean Power’s buoys float on the surface of the ocean, and passing waves push a cylinder up and down to generate electricity. This type of wave power is still in its very early stages of development, but improvements to the technology could make it a major source of renewable energy in the future.

Traders see the new patent as a sign the next chapter of the Ocean Power story may soon begin.

The Rally...

The stock rallied from around $1.27 to above $1.50 on Tuesday before selling off to finish the day at $1.44. The stock made a huge move on Wednesday on its largest volume in more than a year, pushing as high as $2.54 before drifting lower to around $2.20 in mid-day trading.

It’s likely that at least some of Wednesday’s buying is short sellers exiting their positions. According to Shortsqueeze.com, Ocean Power has an elevated 23.2 short percent of float. There are more than 1.3 million shares held short with 8.2 days to cover.

For now, traders will be watching to see how Ocean Power closes out Wednesday’s session to determine whether the stock is in the beginning stages of a huge rally or has already peaked at $2.54 and is headed back below $2.00.

Ocean Power stock traded as high as $15.65 in 2016 and as low as $1.14 roughly a month ago.

Related Link: Tariffs Or No Tariffs, SunPower's Outlook Is Dim


Wednesday, October 18, 2017 - 1:28pm
Image credit: Mark Ahsmann (Own work) [CC BY-SA 3.0], via Wikimedia Commons

International Business Machines Corp. (NYSE: IBM) stock jumped more than 9 percent on Wednesday after the company reported a big third-quarter earnings beat. Several Wall Street analysts weighed in on IBM following the report.

Here’s a rundown of what they had to say.

Voices From The Street

Bernstein analyst Toni Sacconaghi said investors should be careful not to confuse a cyclical upswing with a secular inflection point.

“While IBM's Q3 results are encouraging (with total company revenue growth declining 1.3% organically at constant currency), we caution that results appear to have been meaningfully impacted by the launch of IBM's z14 mainframe, and unusual strength in the company's transactional software revenues, which appeared to have pulled in revenues from Q4,” Sacconaghi wrote.

UBS analyst Steven Milunovich said IBM’s quarter was the nest it has delivered in some time, but the stock is still not out of the woods just yet.

“True, the new z14 mainframe and growth in transaction processing software were non-recurring boosters, but the overall results still suggest stabilization,” Milunovich wrote.

See Also: Big Blue's Big Beat: Is IBM's Q3 The Real Deal Or A Flash In The Pan?

Morgan Stanley analyst Katy Huberty said IBM’s impressive organic revenue and gross margin numbers mark inflection points for the stock.

“Low investor expectations & ownership set-up for a re-rating as fundamentals recover post a period of investment,” Huberty wrote.

Bank of American analyst Wamsi Mohan said IBM remains a defensive play given its relatively stable margins and strong balance sheet.

“Longer term, we expect IBM to take share in IT spending with its Cloud and AI initiatives,” Mohan wrote.

Ratings And Price Targets

Despite the earnings beat, Wall Street analysts have mixed feelings about IBM stock:

  • Bernstein has a Market-Perform rating and $150 target.
  • UBS has a Neutral rating and $160 target.
  • Morgan Stanley has an Overweight rating and $192 target.
  • Bank of America has a Buy rating and $200 target.

Image credit: Mark Ahsmann (Own work) [CC BY-SA 3.0], via Wikimedia Commons


Wednesday, October 18, 2017 - 1:13pm

Allergan plc Ordinary Shares (NYSE: AGN) shares are trading lower by $10.80 (4.8 percent) at $186.98 in Wednesday's session.

Before the open, Edward Jones downgraded the stock from Buy to Hold. That has it trading in the red for the fifth time in its last six sessions.

After a lower open, Allergan attempted to rally but found sellers ahead of Tuesday's close ($197.78), only reaching $197.33 before continuing its move lower. So far, the ensuing decline has taken the stock to $186.88 and it's not far off that low. That marks the lowest level for the stock since it bottomed on Dec. 8 at $185.70. Beyond that level, stands its December low ($184.75) and its Nov. 23 low ($184.50).