Tag Archives: stocks

Frontier Downgraded By Citi On Post-Verizon-Deal Synergies

Citigroup downgraded Frontier Communications ( FTR ) saying synergies expected from its acquisition of residential lines in three states from Verizon Communications ( VZ ) may fall short of consensus estimates. Verizon’s sale of wireline assets in California, Florida and Texas for $10.5 billion to Frontier is expected to close by March 31. Verizon, No. 4 on the latest IBD Big Cap 20 list of top-performing big-cap stocks, is aiming to strengthen its balance sheet ahead of an auction of radio spectrum controlled by local TV stations, which is slated to begin this month. Verizon, which acquired AOL last year for $4.4 billion, also has stated interest in acquiring parts of Yahoo ’s ( YHOO ) Internet business. Citigroup analyst Michael Rollins on Wednesday lowered his rating on Frontier to sell from neutral. “We are lowering our pro-forma OIBDA (operating income before interest tax, depreciation and amortization) outlook for Frontier,” wrote Rollins. “Our study of the company’s last two acquisitions suggests net synergy realization is much lower than the guided gross synergy figures. We do not think the emerging consensus is discounting the guided synergy contributions enough.” Frontier stock was up 21% in 2016 through Tuesday, though it has a mediocre IBD composite rating of 68. But shares were down more than 5%, near 5.30, in early trading in the stock market today . AT&T ( T ), No. 2 on the IBD Big Cap  20 and an IBD Leaderboard stock, is the highest-rated phone company in IBD’s Telecom Services-Integrated group. AT&T’s cash flow has been bolstered by its acquisition of satellite TV broadcaster DirecTV. Frontier will assume $600 million in debt as part of the deal Verizon deal, involving former GTE assets in California, Florida and Texas. In 2010, Verizon sold Frontier 4 million phone lines in 14 states for $5.3 billion. Frontier in 2013 acquired AT&T’s wireline assets in Connecticut for $2 billion in cash. Both AT&T and Verizon have been shedding residential lines as well as noncore assets such as cellphone towers. Verizon stock was up a fraction in early trading Wednesday, near 53 and within range of a 51.30 buy point first touched Feb. 25. Image provided by Shutterstock.

Market Lab Report – Premarket Pulse 3/9/16

Major averages fell yesterday on lower volume as oil took a 4% hit. That said, the Dow Jones Utility Average had another strong day as it made a higher-high. It is up 11.2% year-to-date while the NASDAQ Composite is down -7.2%, the S&P 500 is down -3.2%, and the Russell 2000 is down -6.0% year-to-date. This pronounced divergence along with the tough time the few leading stocks have had in their ability to follow-through with any reasonable gains suggests the life expectancy of this bounce may be limited. Futures are up owing to higher oil prices and European stocks one day ahead of the European Central Bank meeting. The ECB tends to be dovish and has indicated more easy money is on the way. The ECB will deliver a policy decision on Thursday. The central bank is widely expected to push its deposit rate further into negative territory, but analysts are also betting on an expansion of the ECB’s aggressive quantitative-easing program as well as another round of cheap loans to banks. That said, the ECB could disappoint markets again, as it did in December when its rate cut and QE extension massively underwhelmed investors. European markets remain in downtrends overall as QE has yet to spark any sort of economic recovery.

4 Energy ETFs Outperforming On Oil Rebound

Energy investors have long been waiting for oil prices to soar and energy stocks and ETFs to join the party. Though the start of 2016 was not at all joyous for oil, the commodity finally bucked the trend as evident by the 17% one-month gain and an 11.3% five-day uptick in the WTI crude ETF, the United States Oil ETF (NYSEARCA: USO ) . The picture is equally rosy for Brent crude with the United States Brent Oil (NYSEARCA: BNO ) rising 11.1% in the last five days and adding 21.1% in the last one month. Brent crude is hovering around $40 while WTI crude is around $37 at the time of writing. Though the commodity was stressed lately by soft Chinese data , the underlying momentum remained strong. Several investors turned bullish on the product. Also, the number of rigs fell to the lowest level since December 2009 (as per Baker Hughes (NYSE: BHI )) pointing to a likely fall in U.S. output. The U.S. rig count slipped to below 500 for the week ending March 4. Of these, there were 392 active oil rigs and the rest were drilling natural gas. If this was not enough, the biggest oil producing countries – Saudi Arabia and Russia – along with Qatar and Venezuela had agreed to freeze oil output at the January level. Needless to say, the move brought a fresh lease of life in the energy sector. In short, efforts from both U.S. and OPEC to shore up the oil market signal that producers are now really serious about reining in the oil rout. As far as demand is concerned, China’s crude imports surged 19.1% between January and February despite a soft economy, per Reuters. Speculation is rife that oil can reach the $50 level by the end of this year. While buoyancy was noticed in the entire energy sector, below, we highlight four energy ETFs that cashed in the most on the recent rally. First Trust ISE-Revere Natural Gas Index ETF (NYSEARCA: FCG ) This product offers exposure to the U.S. stocks that derive a substantial portion of their revenues from the exploration and production of natural gas. It follows ISE-REVERE Natural Gas Index and holds 30 stocks in its basket that are well spread out across components. The product has amassed $186.9 million in its asset base while it sees solid volume of nearly 896,000 shares per day. It charges 60 bps in annual fees from investors. The fund added 27.8% in the last one month (as of March 7, 2016). It has a Zacks ETF Rank of 3 or ‘Hold’ with ‘High’ risk outlook. PowerShares S&P SmallCap Energy Portfolio ETF (NASDAQ: PSCE ) This fund provides exposure to 33 firms by tracking the S&P SmallCap 600 Capped Energy Index. The fund has garnered about $30.9 million in its asset base while it sees a moderate volume of around 21,000 shares a day. The product is largely concentrated on the top 10 firms that collectively make up for about 60% share of the basket. About 58% of its assets is allocated to energy, equipment and services while oil, gas and consumable fuels account for the remainder. The ETF charges a fee of 29 bps annually and added 25.3% in the last one month (as of March 7, 2016). The fund has a Zacks ETF Rank #5 (Strong Sell) with a ‘High’ risk outlook. SPDR S&P Oil & Gas Equipment & Services ETF (NYSEARCA: XES ) This fund provides equal weight exposure across 42 securities by tracking the S&P Oil & Gas Equipment & Services Select Industry Index. None of the firms account for more than 3.95% of total assets. The fund has amassed $189.1 million in its asset base. The ETF has an expense ratio of 0.35% and gained 26.9% in the last one month. XES has a Zacks ETF Rank #5 with a ‘High’ risk outlook. SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA: XOP ) This fund follows the S&P Oil & Gas Exploration & Production Select Industry Index, holding 63 stocks in its portfolio. It is well diversified across its holdings with none of the companies accounting for more than 2.96% of total assets. The ETF has been able to manage $2.01 billion in its asset base. It charges 35 bps in annual fees and expenses. The product gained 17.5% in the last one month and has a Zacks ETF Rank #4 (Sell) with a ‘High’ risk outlook. Original Post