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business newsCon Ed Runs Out of Energy
By
Justin Sharon
Jan 14, 2011 4:20 pm
Shares are trading lower after getting cut to Sell from Neutral at Goldman Sachs today as part of an overall ratings reset to "Cautious" on the regulated utilities industry.
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Anyway, it’s thus with something of a heavy heart, and lighter wallet, I report its shares are trading lower after getting cut to Sell from Neutral at Goldman Sachs today. As part of an overall ratings reset to “Cautious” on the regulated utilities industry the bank also trimmed its 12-month price target by $2 to $47 on Con Ed, which was established way back in 1884 and can claim to be the NYSE’s longest listed stock.
Truth be told it was a fairly benign valuation-based reduction on an outfit that provides service to about 4.4 million residential and business customers in New York City, Westchester County, northern New Jersey, and northeastern Pennsylvania. It comes after a six-month stock price performance that, if not exactly lights-out, has certainly sent shares comfortably higher. Those who like their utility players can point to Con Ed being a 4.78% dividend payer whose dependable, if hardly spectacular, earnings growth can only benefit from the ever-increasing infrastructure needs of its home city.
That said, regulatory and rate case issues remain constant risks, and a lack of capacity generation exposes the company to potentially higher wholesale prices.
Please see Gauging the Utility of Utilities, Smart Money Is “Selling the News”, and Minyanville’s Business Briefs Exposed.
Busy New York bachelors often turn to Match and/or Chemistry.com, but here again Goldman is doing us no favors. The bank also downgraded Gotham-based IAC/InterActive (IACI), owner of the Internet dating sites, to Neutral from Buy this morning. Shares are sliding more than 2% as a result at the 25-year-old Barry Diller-owned outfit whose online assets also include Ask.com, Citysearch, Evite, and the Daily Beast. While some of these sites are musty Methuselahs in Web terms, none are entirely chopped liver and indeed the latter is a buzz-worthy Tina Brown property that just bought venerable Newsweek for all of a dollar.
At a time when companies from Motorola (MOT) to ITT Corporation (ITT) are suddenly in a rush to rid themselves of separation anxiety, this Internet conglomerate was way ahead of the game. In August 2008 IAC spun off a quartet of its largest divisions, including the HSN shopping network, Ticketmaster, and LendingTree. While its timing was in hindsight horrific, given the way Wall Street imploded only four weeks later, shares have since recovered to surge more than 35% in the past 12 months even after today’s tumble.
Online dating long ago became respectable and is indeed now so mainstream even your grandmother may be doing it. Match.com is the most popular personals site in cyberspace and while domestic growth is slowing, emerging countries, including India, represent a lucrative potential new cash cow for the company. (Although the land of arranged marriages has yet to fully embrace computerized Cupids.)
Areas of concern include this year’s expiration of Ask.com’s search partnership with Google (GOOG) and the always-present possibility that serial dealmaker Diller will make one too many, damaging shareholder value in the process.
Also check out Weekly Web Watch: Picking The E-Tail Winners, Playing Matchmaker, Winning a Profit, and Video: Diller Defends IAC, IBM Investigated, and Hayward to Resign.
Stock in Automated Teller Machine owner and operator Cardtronics (CATM) is making some serious money of its own today after being added to Deutsche Bank’s list of “short-term” Buys. Though this particular rating time horizon can -- and has, in the high-profile case of Apple (AAPL) -- cause confusion, it's certainly capable of exerting an impact.
The 22-year-old Houston-headquartered outfit is far from a household name but boasts an impressive footprint of about 33,400 ATMs and ancillary kiosks in the Americas and Great Britain, including about 11,100 company-owned cash dispensers contracted out to financial institutions that will then emblazon their logos on the machines. (Some of which are occasionally found in the sort of dodgy delis and 7-Elevens that have in the past proven particularly susceptible to scams, as Naked Citi (C) points out.)
The stock has been on a run of late as the ubiquity of cash terminals continues unabated -- one minute spitting out gold, the next dispensing a pre-Christmas gift of “free” money at The Bank of Ireland (IRE), one financial institution that can ill afford such largesse. Cardtronics recently reported third-quarter revenue rose 6.2% from year-ago levels, to $136.6 million, and per share earnings of $0.28 excluding a one-time gain beat Street forecasts by $0.04.
Among the caveats are turnover among its executives -- Chairman Fred Lummis left last November, though the firm was at pains to point out this “was not the result of any disagreement with the company or its management” -- and valuation with the stock having run up some 60% in 52 weeks.
Turn to ATMs as Vulnerable as Ohio Voting Machines, California Welfare Cards Can Be Used in Many Casino ATMs, and -- although only after first ensuring you have ample amounts of Purell on hand -- ATMs as Dirty as Public Bathrooms.
“Buy to the roar of cannons, sell to the sound of trumpets,” Lord Nathan Rothschild -- head of a family who knew a thing or two about making money -- famously advised clients 24 months ahead of the War of 1812, proving himself a profitable prophet and an icon of contrarian investors ever since. Given that Canon (CAJ) didn’t arrive on the scene until 1937 -- two years before another war -- he likely wasn’t referring to this Japanese giant, but it may not be bad advice for its equity either.
Shares are solidly higher on the back of an upgrade for this Tokyo multinational that manufactures all manner of color copiers, camcorders, digital SLR cameras, laser printers, and image scanners. Besides boasting a proud history, having been an early pioneer in calculators and given the world its first Inkjet in 1985, the company’s current outlook also appears solid. The Nikkei business daily reported three weeks ago that Canon’s full-year operating profit is expected to increase 84% from the 12 months previous, to roughly 400 billion yen. Strong sales of single-lens reflex cameras in China and a relatively robust holiday shopping season in more mature markets were cited. The company also raised its dividend at the end of December ahead of earnings, expected on January 27.
This office equipment powerhouse commands an industry-leading 20% market share for both photocopiers and digital cameras, though there are a couple factors that could muffle those cannons. Namely any appreciation in the yen and intense competition in printers.
Canon Introduces Keyword-Narcing Software, Throwback Products We Love: Polaroid and 35mm Cameras, and How to Play the Bank of Japan Currency Intervention have additional analysis.
No positions in stocks mentioned.
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