U.S. HOT STOCKS:, Keryx, LodgeNet, PetSmart, Repros, HMS -2-
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Expressing concerns about HMS Holdings Corp.'s (HMSY, $27.51, -$0.79, -2.79%) ability to meet the low end of its own revenue guidance in addition to a nearly 40% rise in share price since reporting disappointing third-quarter results at the end of October, Oppenheimer downgraded the health-care data processor to perform from outperform. "Our concern stems from the ongoing protest that has thrown its Medicare COB contract in limbo," said the firm in a note to clients, adding that guidance assumed the contract would start in February and contribute about $50 million. Oppenheimer, however, sees contract start being delayed and the risk of the award being overturned "is greater than the market anticipates."
Citigroup analysts lowered their view on Ingredion Inc. (INGR, $67.01, -$2.99, -4.27%) to neutral from buy, depspite good fundamentals in the global corn sweetener markets that are supported by strong capacity utilization rates. However, Citi sees looming headwinds this year posed by declining sugar prices, which are now trading below high fructose corn syrup prices.
Keryx Biopharmaceuticals Inc. (KERX, $6.24, +$2.81, +81.90%) said results from the long-term Phase 3 study of Zerenex showed the drug reduced serum phosphorus levels in patients with end-stage renal disease on dialysis.
LodgeNet Interactive Corp. (LNET, $0.02, -$0.01, -17.86%) filed a prepackaged Chapter 11 bankruptcy petition, as expected, and said it plans to complete the reorganization process within 60 days. The company, which provides cable television to hotels, would gain access to $60 million of new capital under a prepackaged bankruptcy filing that gives control of LodgeNet to an affiliate of investment firm Colony Capital.
After moving to neutral in July, Nomura turned cautious on PetSmart Inc. (PETM, $63.83, -$6.16, -8.80%), lowering its rating on the pet food and supplies retailer to reduce and cutting its price target to $55 from $72. "We worry that one of PETM's key competitive advantages may erode online," the firm said in a note to clients, adding that Amazon.com Inc. (AMZN, $276.23, -$7.76, -2.73%) is lowering its break-even point in consumables, leading to a 10% year-over-year drop in shipping costs per unit.
Repros Therapeutics Inc. (RPRX, $13.40, -$5.21, -28.00%) plans to release data from a clinical trial of its Androxal treatment for secondary hypogonadism during the third quarter instead of the second quarter amid marked discrepancies in baseline sperm counts at one of 17 sites in the study. Repros said it doesn't expect the developments to affect the timing of its new-drug application to the Food and Drug Administration for the treatment.
School Specialty Inc. (SCHS, $0.13, -$0.47, -78.47%) has filed for Chapter 11 bankruptcy protection and agreed to sell its assets to Bayside Capital Inc. The education company, which develops curricula for preK-12 educators, said it has secured a new lending arrangement to be provided by its existing lenders and a commitment for $50 million in additional capital in the form of debtor-in-possession financing from Bayside.
Terex Corp. (TEX, $33.12, +$1.07, +3.34%) is at a 21-month high as Bank of America Merrill Lynch says rivals' results and improvement in nonresidential construction "suggest that our prior below-consensus forecast for Terex was far too negative." Catalysts include Oshkosh's better-than-expected quarterly results Friday. The investment bank upgrades the construction-machinery maker to neutral.
Xerox's (XRX, $8.12, +$0.19, +2.33%) fourth-quarter results looked a smidgen better than analysts expected yet delivered nothing shocking--perhaps the report's most encouraging sign, according to BMO. The investment bank moved Xerox to outperform, as steady margin growth replaces "years of inconsistent results."
Write to Debbie Cai at debbie.cai@dowjones.com
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