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Updates on Stocks Effected by Japan’s Quake

Japan Update: Many groups on the move as assessment Japan fallout continues… (10.00 -0.80) -Update

As we’ve mentioned throughout the morning, Japan’s Nikkei fell 6.2% overnight as the fallout from Friday’s earthquake and tsunami becomes more clear. There are many groups on the move this morning as a result of the developments there, including alternative energy (uranium stocks down sharply, solar-related issues bid up), technology (DRAM supplier MU higher on shortage concerns), Japanese ADRs, insurers and other.

Nuclear Power/Alternative Energy: There was another explosion at Japan’s damaged Fukushima Daiichi nuclear plant over the weekend, which is raising concerns about the potential for a nuclear meltdown at the facility. The emergency at Japan’s nuclear plant is naturally stoking fears about nuclear power programs in other parts of the world. The highly publicized Japanese issues are causing concerns about increased scrutiny and a more negative perception of nuclear power (which already has a negative stigma). This is weighing heavily on uranium stocks (DNN -23%, URRE -23%, UEC -20%, URG -20%, CCJ -18%, USU -17%) and companies that are involved in the nuclear power business (SHAW -19%, BWC -11.4%, URS -6.0%, FLR -1.5%). The Nuclear Energy ETF (NLR) is -12%… On the other hand, solar and wind power stocks are trading higher this morning, given the safer nature of those form of alternative energy: WFR +9.7%, TSL +8.4%, JKS +6.7%, YGE +6.0%, LDK +6.0%, STP +5.0%, FSLR +4.6%, JASO +4.1%, SOL +3.6%, APWR (wind power) +3.6, SPWRA +2.3%. The U.S. Nuclear Regulation Commission said it sees no radiation at harmful levels reaching the U.S.

Insurance: There were plenty of notes on the Street this morning analyzing the impact of the Japan earthquake, many of which surrounded the insurance industry. Catastrophic (CAT) insurance companies stand to carry some of the cost of the clean up, which is now estimated at upwards to $35 bln. FSR (-3.7%) is a notable CAT bond holder. However, much of the burden will fall upon a Japanese government-sponsored catastrophe reinsurance program. Wunderlich noted this morning that the event will likely increase pricing to insure in the region, and HCC (-0.4%) could stand to benefit… AFL (-3.2%) said earlier today that its Japanese offices are fully operational, and that it sees a minimal impact on Japanese sales; AFL also affirmed its earnings guidance.

Technology: The earthquake also has implications for the tech supply chain. Some companies with larger operations in Japan include ONNN -1.7%, NTE -0.7%, FLEX +0.3%, MOLX +0.3%. On the other hand, few companies may actually benefit. Micron (MU +4.6%) is seeing early strength off the open on speculation that DRAM chip suppliers have stopped offering price quotes. Essentially, this suggests the potential for a shortage in DRAM and higher prices.

Geographic ETFs: Given the continued volatility in Japanese stocks, we’d again point out the Asian geographic ETFs: EWJ (Japan) -8.5%, EWH (Hong Kong) -0.5%, EWY (South Korea) +1.1%, EWS (Singapore) -0.7%, VNM (Vietnam) -2.8%, EWM (Malaysia) -2.3%, AAXJ (Asia excluding Japan) -0.0%, and FXY (Japanese yen) +0.0%.

Japanese ADRsHIT -14%, MFG -9.0%, NJ -8.0%, SNE -6.6%, HMC -6.3%, MITSY -6.0%, TM -5.3%, MTU -5.0%, CAJ -4.7% and NTT -4.0%.

Oil: Japan is the world’s third largest consumer of crude oil, so its disruption is seen as a negative for crude demand. Crude oil traded as low as 98.95 overnight, but has since risen back above $100 on headlines out of the Middle East.

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52 Week Highs and Lows Today

New 52-week highs trading over 250K (average daily volume) include: Biotechnology & Drugs (BIIB, GENZ, JAZZ, KV.A, REGN, TLCR, VRUS), Electric Utilities (D, LNT, NU, PNW, WEC, XEL), Food Processing (HSY, SJM), Healthcare Facilities (FVE, HMA, RHB),Medical Equipment & Supplies (BLTI, COO, STJ), Natural Gas Utilities (AHD, APL), REITs (EXR, YSI), and Software & Programming(BSFT, CALD, CBR, RNOW).

New 52-week lows trading over 250K (average daily volume) include: ANW, CAK, CNIT, DJSP, ELNK, GEDU, JAG

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Hershey, HSY, Price Target Raised by UBS

Hershey Foods target raised to $54 at UBS (53.63 -0.10)

UBS raises their HSY tgt to $54 from $51 based on continuing strength in non-measured channels. Firm says C-store data for the 4 weeks ending 2/19 shows accelerating sales momentum (+11% YOY) driven by +10% volumes. This marks the third consecutive period that Hershey’s has outpaced category growth, and also represents the third period of sequential top line acceleration.

Next earnings release: Apr 21 before market, unconfirmed. Thomson Reuters estimate: 0.69

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Pfizer, PFE, Downgraded to a Hold

Pfizer downgraded to Hold at Standpoint Research (20.14 +0.67)

Standpoint Research downgrades PFE to Hold from Buy based on valuation.

Next earnings release: May 3 before market, unconfirmed. Thomson Reuters estimate: 0.58

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Upgrades and Downgrades This Morning

  • Upgrades

  • Noble (NE 44.10) upgraded to Overweight from Neutral at JP Morgan
  • DuPont Fabros Technology (DFT 23.15) upgraded to Top Pick from Outperform at RBC; tgt $32
  • Parker Hannifin (PH 85.39) upgraded to Buy from Hold at Deutsche Bank; tgt $100
  • Cintas (CTAS 27.91) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $34 from $32. Firm’s upgrade is based on what they see as attractive valuation with a backdrop of improving fundamentals, supported by recent labor data, preliminary results of Baird’s 1Q11 industry survey, and recent channel checks. Firm additionally notes recent volatility has reduced the relative attractiveness of riskier names, which they believe provides opportunity for outperformance at CTAS, given the co’s lower-risk business model, quality franchise, and leverage to the emerging employment recovery.
  • Amer States Water (AWR 32.93) upgraded to Buy from Hold at Brean Murray; tgt $39. Firm notes shares have traded off substantially since November, 2010 and are now at a level they consider attractive from both a P/E and dividend yield perspective. Firm notes risks to the achievement of target price include integration of acquisitions, weather, environmental regulations, regulation of rates, and interest rates.


  • Las Vegas Sands Corp. (LVS 40.06) downgraded to Hold from Buy at Jefferies; tgt $45
  • OpenTable (OPEN 91.53) downgraded to Neutral from Buy at Merriman
  • Pall (PLL 57.02) downgraded to Hold from Buy at Jefferies
  • Noble Corp (NE 44.10) downgraded to Mkt Perform from Outperform at FBR Capital; tgt $48. Firm notes downgrade comes as their near-term thesis on the name is largely played out. They note shares are up 25% year to date, which compares favorably to firm’s coverage universe. Firm now prefers names with a greater preponderance of catalysts that have yet to materialize, particularly Ensco (ESV 55.23). They believe that ESV is ideally situated to benefit from upside in jackup day rates over the next several years, as well as realize substantial synergies from the pending merger with PDE.


  • Epocrates (EPOC 25.00) initiated with Overweight at Piper Jaffray; tgt $30
  • NeoPhotonics Corporation (NPTN 10.56) initiated with Overweight at Piper Jaffray; tgt $14

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Moody’s Expects Heavy Losses for Insurance Companies and Will This Cause Japan to Sell U.S. Treasuries ?

Moody’s expects insurance and reinsurance companies to take heavy losses from Japan’s disaster. This is causing some to speculate Japan will have to sell U.S. treasury holdings…

Full Article

Will treasuries be sold for Japan to access liquidity ?

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China Against Allowing Yuan to Rise

China’s premier said it must mull over the effect on prices and Chinese companies.

Analyst expect this to lower certain commodities in China price terms. China prices jumped 4.9% in February along with a 11% increase in food prices.

Full Article

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Anonymous- A Hacker Wiki Leak Hopeful Releases Alleged Documents on Bank of America

Released emails from a former Bank of America employee reveal Balboa, an insurance unit of BoA, potentially removing files from loan document files.

The group Anonymous states it is related to improper foreclosures while BoA state the emails relate to clerical and administrative documents not related to foreclosures.

Full Article

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Japan Adds $183 Billion of Liquidity While Doubling Asset Repurchases

“The BOJ will increase buying of government debt in the fund by 500 billion yen and boost purchases of short-term government securities by 1 trillion yen. Corporate debt will rise by 1.5 trillion yen and it will also take on an additional 450 billion yen in ETFs and 50 billion yen in Real Estate Investment Trusts, today’s statement said.”

Full Article

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