Genentech (NYSE: DNA) shares are trading higher today after the company announced that a trial of Avastin in colon cancer patients who have undergone surgery will be completed earlier than expected. Though the news has no effect on the likelihood of the drug's success, investors seem excited that the drug might be approved for use in colon cancer patients up to a year ahead of schedule. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on DNA.
After hitting a one-year low of $65.35 in December, the stock hit a one-year high of $82.2 in March. DNA opened this morning at $70.37. So far today the stock has hit a low of $69.52 and a high of $70.60. As of 11:55, DNA is trading at $69.98, up $1.15 (1.7%). The chart for DNA looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $65 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 12.4% return in just five weeks as long as DNA is above $65 at June expiration. Genentech would have to fall by more than 7% before we would start to lose money. Learn more about this type of trade here.
DNA hasn't been below $65 at all in the past year and has shown support around $67 recently. This trade could be risky if one of the company's treatments gets into regulatory trouble, but even if that happens, this position could be protected by the support the stock might find around $66, where it has bottomed out twice in the past six months.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in DNA.
With the current challenging market conditions probably many of us are wondering which are those reliable stocks that could offer us a big profit in the next coming years. In the light of those questions, Gene Marcial's new book, 7 Commandments of Stock Investing, reveals his perspective over seven stocks that are considered to be worth buying and holding for the next seven years (check out BusinessWeek's slideshow of his seven picks).
Taking advantage of the experience he gained over the past 30 years, BusinessWeek's Gene Marcial shares his opinions related to investors' strategy to use market meltdowns for their own benefit, being able to turn the stock market panic into success.
Regulators Zero in on Credit Card Reform Federal regulators are pushing ahead to stop abuses by credit card issuers at a time when the $2 trillion industry has come under increasing scrutiny. Regulators zero in on credit card reform - CNNmoney
Despite today's major markets showing a drop, this would really look like another mixed day on fairly light trading volume as profits fight economic numbers. Oil fell more than $3.00 per barrel and consumer confidence came in at a 5-Year low. Foreclosures also have risen by more than 100% with what now appears to be 1 home per 194 that are in foreclosure. All this is one day ahead of the FOMC meeting with the decision to raise rates, and one day after Warren Buffett called a recession already here. Below are the unofficial closing prices for major US index averages:
DNA and Biogen Idec Inc. (NYSE: BIIB) announced that the phase three EXPLORER study evaluating Rituzan in Systemic Lupus Erythematosus (SLE) failed to meet its primary endpoint.
DNA call option volume of 31,631 contracts compares to put volume of 18,340 contracts. DNA May option implied volatility is at 27 and June is at 30; near its 26-week average according to Track Data, suggesting non-directional price movement.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
PDUFA date for Genentech, Inc. (NYSE: DNA) and Roche Holding Ltd. (OTC: RHHBY)'s supplemental Biologics License Application for Herceptin for label expansion to include AC followed by docetaxel in treatment of adjuvant HER2+ breast cancer.
PDUFA date for Shire plc (NASDAQ: SHPGY) and New River Pharma's supplemental New Drug Application for Vyvanse (NRP-104) treatment of Attention Deficit Hyperactivity Disordre, or ADHD, in adult patients 18-55 years old; the drug is already approved for pediatric ADHD ages 6-12.
Verizon Communications Inc. (NYSE: VZ) to report Q earnings; conference call at 8:30am.
Tyson Foods, Inc. (NYSE: TSN) to report Q2 earnings; conference call at 9:00am.
Tuesday, April 29
Two-day FOMC meeting beginning at 8:30am.
PDUFA date for Merck & Co., Inc. (NYSE: MRK)'s New Drug Application for Cordaptive (MK-0524A) adjunctive therapy to diet for treating elevated LDL Cholesterol, low HDL Cholesterol and elevated triglycerides levels.
PDUFA date for Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP)'s supplemental New Drug Application for dose of 8mg treatment of Irritable Bowel Syndrome with Constipation; already approved for Chronic Idiopathic Constipation at 24ug dosage.
BP plc (NYSE: BP) to report Q1 earnings; conference call at 10:15am.
United States Steel Company (NYSE: X) to report Q1 earnings; conference call at 2:00pm.
MOST NOTEWORTHY: Hershey Foods, Genentech and Garmin were today's noteworthy downgrades:
Bernstein downgraded Hershey Foods (NYSE: HSY) to Market Perform from Outperform, citing commodity cost pressures & slowing volume growth.
Thomas Weisel downgraded Genentech (NYSE: DNA) to Market Weight from Overweight after the company reported Q1 results, due to Avastin growth concerns and a lack of meaningful drivers of long-term revenue growth until 2009.
Oppenheimer cut Garmin (NASDAQ: GRMN) to Perform from Outperform on concerns regarding PND pricing and the company's profitability dynamics.
OTHER DOWNGRADES:
Blackrock (NYSE: BLK) was downgraded at Goldman to Neutral from Buy and to Market Perform from Outperform at Wachovia.
Genentech announced that its profit during the first-quarter rose 12% to $790 million, or 74 cents per share, boosted by strong cancer drug sales. These numbers are up from $706 million, or 66 cents a share reported in the same period a year ago. Excluding special items, the company's earnings would have come at 84 cents a share, exceeding analysts' forecasts for a quarterly profit of 82 cents a share.
The company's quarterly revenue saw a growth of 8% to $3.06 billion, up from $2.84 billion a year ago. However, this was not enough to beat analysts' predictions for sales of $3.1 billion in the quarter, according to Thomson Financial.
The New Espionage Threat A BusinessWeek probe of rising attacks on America's most sensitive computer networks uncovers startling security gaps at key US government agencies and critical government contractors, especially defense contractors. The perpetrators of these attacks are often impossible to track down, and likely include foreign governments. And quietly, the US government is moving towards spending billions of dollars to better protect their interests in cyberspace. The New E-spionage Threat - BusinessWeek
6 Stocks to Buy and Hold Sick of the market's gyrations? A master analyst identifies stocks that are safe bets for the next ten years. They include Alberto-Culver, Ansys, Inc., AptarGroup, Inc., Dentsply International, Stericycle, Inc. and Stryker. Six Stocks to Buy and Hold - Kiplinger.com
Surviving Flight Cancellations Emergency repairs and defunct airlines have stranded hundreds of thousands of travelers in recent weeks, sending the industry into a tailspin. With hundreds of flights grounded, here's how to salvage your trip or get money back. Salvaging Your Trip When the Flight Is Cancelled- SmartMoney.com
America's Most Congested Cities The D.C. Beltway is legendary for its ability to cause residents frustration. What has made things worse over the last few years is increased suburban sprawl so it should be no surprise to D.C. residents that Washington tops the list. Others ranking highly include Atlanta, Los Angeles, San Francisco, Houston and New York. In Pictures: America's Most Congested Cities - Forbes.com
Tax Nightmare: More Filers Are Falling Victim to Identity Thieves Federal Trade Commission complaints involving tax returns linked to identity theft have risen 158% since 2003. Similar complaints to the IRS Taxpayer Advocate jumped to 3,327 in federal fiscal year 2007, up 644% in three years. Identity theft has emerged as one of the top problems facing taxpayers. Often, the goal is to collect an undeserved tax refund. File with one stolen identity, claim multiple dependents and apply for the federal Earned Income Tax Credit, and an identity thief can snag a tax refund worth thousands of dollars, or more. Identity thieves tax the system - USATODAY.com
Are You a Tax Procrastinator? Why do we procrastinate, foot-drag, dither and delay filing our income tax, even when we owe nothing or can claim a refund? After all, as Ben Franklin observed, taxes rank right up there with death in life's short list of inevitabilities. The psychology behind tax procrastination - Bankrate.com
Futures turned lower this morning after a weaker-than-expected earnings report from General Electric (NYSE: GE). The company said first-quarter earnings fell 8% to 44 cents a share, well below analysts' expectations of 51 cents. CEO Jeffrey Immelt blamed the disappointing results on declines in financial services earnings, saying extraordinary disruption in the capital markets in March resulted in an inability to complete asset shares.
Stocks rallied yesterday for the first time in three days, spurred by a drop in weekly unemployment claims and some good news from discount retailers Costco Wholesale (NASDAQ: COST) and Wal-Mart (NYSE: WMT). The Dow Jones industrial average rose 54.72 points or 0.44%; the S&P 500 was up 6.06 points or 0.45%; and the Nasdaq Composite, boosted by Takeda Pharmaceuticals' deal to acquire Millennium Pharmaceuticals, rose 29.58 points or 1.27%.
Genentech (NYSE: DNA) said Q1 net income rose 12% to $790 million, or 74 cents a share, from $706 million, or 66 cents, a year earlier, although sales of anti-tumor drug Avastin disappointed.
Genentech (NYSE:DNA) was cut to "market weight" from "overweight" at Thomas Weisel according toMarketWatch.
Broadpoint upgraded Aventine Renewable Energy (NYSE:AVR) to "neutral" from "under-perform" according toBriefing.com. The news service also reports that JP Morgan upgraded BP (NYSE:BP) to "overweight" from "neutral."
Harley-Davidson's (NYSE:HOG) sales will be hurt in Q1 by an overall 7 percent and 9 percent motorcycle sales drop nationwide according to Wachovia research quoted by the AP.
Douglas A. McIntyre is an editor at 247wallst.com.
Stock futures were lower this morning amid fears of weak earnings reports and jitters about oil prices, which continue to rise today.
Stocks fell Wednesday after a lowered outlook from UPS, seen as an economic bellwether, and oil briefly topping $112 a barrel, bringing the Dow industrials down 49 points or 0.4%, the Nasdaq Composite down 26 points or 1.1%; and the S&P 11 points or 0.8% lower.
On the economic calendar today, the weekly jobless claims data for the week ending April 5 is due out this morning at 8:30 a.m. EDT. According to Bloomberg, claims are expected to be around 386,000, and anything above 400,000 will fuel concerns about the weakening of the job market. Investors will also be watching March chain store sales reports. The day began with an upbeat report from Costco (NASDAQ: COST), whose sales rose 7%. Wal-Mart (NYSE: WMT) then reported its same-store sales rose 0.7%, which was below analysts' estimates of 1%, but said it expects better April figures. The company said its inventory in US stores is well managed.
Dupont (NYSE: DD) said in a statement today that its first quarter earnings topped forecasts.
PDUFA date for Bristol-Myers Squibb Co. (NYSE: BMY)'s supplemental Biologics License Application for Orencia for the treatment of Juvenile Rheumatoid Arthritis.
Alcoa Inc. (NYSE: AA) to report Q1 earnings; conference call at 5pm.
Tuesday, April 8
Chattem Inc. (NASDAQ: CHTT) to report Q1 earnings; conference call at 9:00am.
FOMC to release minutes of the March 18th meeting at 2:00pm.
Genentech (NYSE: DNA) shares are trading higher today after the company announced that a trial of Avastin in colon cancer patients who have undergone surgery will be completed earlier than expected. Though the news has no effect on the likelihood of the drug's success, investors seem excited that the drug might be approved for use in colon cancer patients up to a year ahead of schedule. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on DNA.
With the current challenging market conditions probably many of us are wondering which are those reliable stocks that could offer us a big profit in the next coming years. In the light of those questions, Gene Marcial's new book, 7 Commandments of Stock Investing, reveals his perspective over seven stocks that are considered to be worth buying and holding for the next seven years (check out BusinessWeek's 
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Genentech
Comfort Zone Investing: One thriving area of real estate: Apartments
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
