Hot Stocks: MGM, Spansion Among Tuesday's Big Winners
Asset sales and earnings reports were some of the catalysts behind the most actively traded stocks on Tuesday.
Shares of MGM Mirage jumped more than 6% on heavy trading volume after billionaire Kirk Kerkorian's Tracinda Corp. announced it was looking to buy the casino operator's Bellagio casino. Tracinda also said it was exploring strategic options in regard to its majority shareholder stake in MGM.
Bear Stearns upgraded MGM shares to "outperform" from "peer perform" and said the pending deal could "unlock significant value" and may lead to a multi-stage takeout of MGM. "It significantly improves MGM's balance sheet and allows MGM to more rapidly develop in Las Vegas," said analyst Joseph Greff. "In short, what could be left is a smaller, more nimble, higher-growth MGM."
Shares of other gaming companies such as Wynn Resorts and Las Vegas Sands also gained on the news.
Intel said it was combining its NOR flash memory card business with European chipmaker STMicroelectronics and a private equity firm. Intel forged a similar agreement for its NAND flash business with Micron in 2005. News of the deal boosted shares of Spansion by 7%. The company, which spun off from Advanced Micro Devices in 2004, is a major producer of NOR flash memory, used primarily in mobile phones.
Fremont General said it is selling its subprime loan business to iStar Financial for $1.9 billion, sending Fremont shares up more than 40%.
Shares of small drugmaker Advancis Pharmaceutical surged after the company said federal health regulators accepted its application for an experimental strep throat treatment.
Halfway through Tuesday's session, trading volume in Advancis shares was more than 80 times the stock's daily average over the last three months. Shares were up 22%, pulling back from earlier gains of as much as 47%.
Among downside movers, office supplies retailer Staplesreported first-quarter earnings in-line with Wall Street expectations. The company said quarterly earnings rose 12% on strong international growth, but North American sales weakness remained. Staples warned that second-quarter earnings may come in at the low end of guidance, prompting a 3% decline in the stock.