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Apple Stock Upgraded To Buy On iPhone 7, 8 Prospects

Investment bank Cowen turned positive on Apple ( AAPL ) stock on Wednesday, upgrading shares to outperform (the equivalent of a buy rating) from market perform (neutral). Cowen analyst Timothy Arcuri raised his price target on Apple stock to 135 from 125 on prospects for iPhone sales perking up, starting this fall with the upcoming iPhone 7 series. Apple stock was up 1.5%, near 109, in morning trading on the stock market today . Arcuri had been on the sidelines regarding Apple stock for about eight months before his change in sentiment. He says year-over-year comparisons and forward estimates for Apple have bottomed. The company is likely to see a rebound in smartphone sales this fall with the launch of the iPhone 7, as iPhone 6 owners decide to upgrade, he said in a research report. He also is excited about the prospects for Apple to switch to an OLED display from the current LCD screen next year. If Apple makes that move, it could skip its usual S cycle of incremental smartphone improvements and call the next model the iPhone 8 rather than the 7S. Some on Wall Street expect Apple to move to OLED in 2018, not 2017, but Arcuri is confident that Apple will accelerate its adoption of the technology. OLED, short for organic light-emitting diode, screens consume less power than LCD (liquid crystal display) screens and boast richer colors and darker blacks. OLED will give Apple greater freedom on product design because OLED screens are flexible. OLED displays could lead to “dreamy” new form factors for the iPhone, Arcuri said. Apple probably would have to source the OLED screens from rival Samsung in the near term, until other manufacturers can scale up production, he said. Other possible OLED suppliers include LG Display ( LPL ) and Japan Display, he said. One company benefiting from the speculation that Apple will move to OLED is Universal Display ( OLED ), which develops OLED technology for TVs and mobile devices. Shares of the Ewing, N.J.-based company were up 1.5%, near 53.50, morning trading. Meanwhile, Apple is finishing the design of the iPhone 7. That handset is believed to be waterproof and have a thinner, sleeker look. Apple is rumored to be eliminating the home button and the audio jack with the new design. The pressure-sensitive screen would take the place of the circular home button. People who want to use headphones with the iPhone 7 would have to use wireless Bluetooth headsets or wired headsets that plug into the multipurpose Lightning connector.

TerraForm Global Distances From SunEdison On Bankruptcy Risk

Yieldco TerraForm Global ( GLBL ) distanced itself late Tuesday from parent SunEdison ( SUNE ), noting “substantial risk” that SunEd might soon file bankruptcy and thereby complicate ongoing negotiations with TerraForm’s creditors. Meanwhile, JPMorgan downgraded sister yieldco TerraForm Power ( TERP ) stock Wednesday, and FBR suspended coverage of “unpredictable” SunEdison stock, which hasn’t updated its financials since Sept. 30. In morning trading on the stock market today , SunEdison stock lit up 8%, but it still trades at just 60 cents. TerraForm Global stock was up 1%, just above 2. TerraForm Power stock was down a fraction, near 8.50. Late Tuesday, TerraForm Global said that it expected to delay its annual 10-K filing beyond the Wednesday deadline. SunEdison and TerraForm Power also have until Wednesday to file their 10-K paperwork, which both have delayed. Both TerraForms rely heavily on parent SunEdison to complete financial reporting. SunEdison first delayed its 10-K during an investigation into its liquidity stance . This month, SunEd said that deficient IT controls had snagged the process. SunEdison might seek bankruptcy protection, TerraForm Global wrote in an 8-K filing. TerraForm Global says that it could operate without SunEdison, but the company’s creditors want its 10-K by Wednesday. “In the event SunEdison seeks bankruptcy protection, TerraForm Global will have sufficient liquidity to support its ongoing operations,” the yieldco wrote in the 8-K filing. “We are in active discussions with our revolving credit lenders to obtain an extension with respect to the required delivery of our Form 10-K.” The company added that SunEd’s potential bankruptcy filing would make TerraForm Global’s negotiations “more difficult and time consuming.” SunEdison, too, is likely in discussions with creditors of $725 million in second-lien loans, according to a Wall Street Journal report. If SunEdison can’t file its 10-K by Wednesday, “their fate lies with the lenders,” S&P Capital Global Market Intelligence analyst Angelo Zino told IBD on Monday. TerraForm Global is largely wrapped in power purchase agreements (PPAs) that wouldn’t allow it to terminate the contracts or accelerate debt maturity if SunEd files bankruptcy. A handful of PPAs in India and South Africa do have provisions in the case of a SunEd bankruptcy. SunEdison is on the hook for 98.9 megawatts in South American and Bora Bora projects. Per the agreement, SunEd must drop the projects to TerraForm Global upon completion or, if they’re not completed by July 31, drop substitute projects of equal value into the yieldco. And several projects in India could sting SunEdison. TerraForm Global prepaid $231 million in November for equity interests in 425-MW projects in India. If SunEd can’t wrap the projects, TerraForm Global says that it will go after the prepayment.

Acadia Pharma Pops After Panel Backs Parkinson’s Disease Drug

Development-stage drugmaker  Acadia Pharmaceuticals ( ACAD ) vaulted to a 12-week high in early trading Wednesday after an FDA panel voted late Tuesday in favor of approving its drug for Parkinson’s disease psychosis. The FDA had summoned an advisory committee of outside experts to evaluate Acadia’s Nuplazid, known generically as pimavanserin, as a treatment for hallucinations and delusions that afflict about 40% of Parkinson’s disease patients. While clinical trials had shown that is was effective in reducing the psychotic symptoms without worsening the symptoms of Parkinson’s (the major drawback of standard antipsychotics), the FDA had concerns about the drug’s safety, given that there was a significantly higher death rate among patients on the drug compared to the placebo group. The panel wound up voting 12 to 2 that Nuplazid showed a favorable risk/benefit profile, though they voiced concerns that will likely lead to the drug getting a “black box” label, which is the stiffest possible warning, wrote Leerink analyst Paul Matteis. “While FDA, and some panelists, noted that a 3-to-1 death imbalance on drug vs. placebo does not confirm an increased risk of death, FDA stated that the labels of new antidepressants and new antiepileptics warn against suicidality risk (like their predecessors) even if they don’t show this in clinical trials,” Matteis wrote in a research note. “When discussed, 4 of 6 panelists who explicitly commented on a black box were in favor of its presence, citing concerns surrounding not only safety, but also off-label use.” The FDA usually, though not always, follows the recommendations of these advisory panels. It’s due for a final decision — including on labeling — by May 1. Matteis affirmed his outperform rating on Acadia’s stock and price target of 40. Piper Jaffray analyst Charles Duncan maintained an overweight rating and lifted his price target to 44 from 39, noting that the vote bodes well not only for the May 1 decision, but for European Union approval later this year, as well as planned label expansions in Alzheimer’s disease psychosis and agitation. After a trading halt all day Tuesday, Acadia stock was up 13% in early trading on the stock market today , near 27. Image provided by Shutterstock .