US HOT STOCKS: IDT, RehabCare, Smith & Wesson, Technitrol -2-

28th Jun 2010 22:01

IDT Corp. (IDT, $11.37, +$1.58, +16.14%), a company that only regained New York Stock Exchange compliance in April, made a splash at the exchange on Monday. The holding company, which focuses on telecommunications services but is turning more attention to energy services, rang the opening bell Monday morning and then saw a subsequent leap in shares throughout the session. Goldman Sachs started coverage of the Chinese solar sector, putting JA Solar Holdings Co. (JASO, $4.87, +$0.09, +1.88%) at buy based on its improving cash return and stronger-than-peer balance sheet. Jefferies raised its rating on Limelight Networks Inc. (LLNW, $4.29, +$0.10, +2.39%), which provides video streaming and other services, to buy from hold, saying the company's recently acquired EyeWonder business adds scalable, high-margin software to Limelight's mix. "Our new model now calls for accelerating revenue growth and positive EPS for the first time," the firm said, adding price stabilization, improved traffic trends, and increasing value-added services are future levers. Activist investor Carl Icahn took the latest shot in the battle he's waging with film studio Lions Gate Entertainment Corp. (LGF, $7.01, -$0.26, -3.58%), saying he thinks the company's stock price will fall after his tender offer expires on Wednesday. Icahn sharply criticized Lions Gate's board in his latest note, saying the company needs to clean up its balance sheet and reduce "absurd" overhead costs. He also said he "cannot help but wonder who will purchase stock" when the offer expires Wednesday and noted after its expiration, he expects Lions Gate to trade lower than his $7-a-share offer price. Noble Corp. (NE, $30.00, +$0.72, +2.46%) has agreed to acquire privately held drilling company FDR Holdings Ltd. for $2.16 billion as the energy company also announced the signing of new contracts with Royal Dutch Shell PLC (RDSA, $52.86, -$0.05, -0.09%). A proposal by the Centers For Medicare & Medicaid Services to change the fee amounts physicians get for a wide range of services had RehabCare Group (RHB, $22.76, -$4.19, -15.55%) shares tumbling. The broad list of rules from CMS is generally aimed at increasing preventative medicine covered by Medicare, the agency said. But it is the flip side, cuts proposed for rehabilitation fees, that has RehabCare investors nervous. Select Medical Corp. (SEM, $7.40, -$0.17, -2.25%) was also weak, as was Sun Healthcare Group Inc. (SUNH, $8.40, -$0.11, -1.29%). Shares in two U.S. firearms companies were up Monday after the U.S. Supreme Court stuck down the city of Chicago's decades-old ban on individual ownership of handguns. Shares of Smith & Wesson Holding (SWHC, $4.33, +$0.23, +5.61%) and Sturm, Ruger & Co. (RGR, $15.39, +$0.33, +2.19%) both gained. Fiscal fourth-quarter results from privately held orthopedic device-maker Biomet are positive for other sector players, J.P. Morgan said. These include bigger rivals Stryker Corp. (SYK, $51.04, +$1.09, +2.18%) and Zimmer Holdings Inc. (ZMH, $54.57, +$1.30, +2.44%). With growth accelerating in replacement hips and knees, plus other areas of Biomet's business, the company's performance "was quite strong," J.P. Morgan said. Biomet is small and its quarters end a month before rivals' reporting periods, but this is "an important positive data point for the industry," firm said. Needham increased its rating on electronics-components maker Technitrol Inc. (TNL, $3.26, +$0.34, +11.64%) to buy from hold, saying the recent downdraft creates compelling valuation. "With new leadership at the helm, labor constraints addressed, the sale of AMI Doduco likely closer toward a finalized deal, and the brunt of Nokia's departure impact becoming smaller, we believe Technitrol's business has troughed and is now becoming better positioned for future growth," the firm said. Tellabs Inc. (TLAB, $6.89, +$0.52, +8.16%) was one of the top gainers Monday among companies in the S&P 500 index, rising 8% to recover some of its recent sharp losses stemming from worries about its long-term competition. Standard & Poor's Ratings Services cut its rating on Universal Health Services Inc. (UHS, $39.48, -$0.59, -1.47%) to junk territory, saying the company's pending $2 billion acquisition of Psychiatric Solutions Inc. (PSYS, $32.80, +$0.05, +0.15%) will have a dramatic impact on its financial risk profile. Steel companies ranked as some of the weakest stocks Monday with the material sector among the worst performing groups in the S&P 500. U.S. Steel Corp. (X, $41.55, -$1.69, -3.91%) and Reliance Steel & Aluminum Co. (RS, $39.32, -$2.00, -4.84%) were both among the weakest, as was AK Steel Holding Corp. (AKS, $13.32, -$0.51, -3.69%). -By Dow Jones Newswires; write to [email protected] (END) Dow Jones Newswires June 28, 2010 17:01 ET (21:01 GMT)