Hot Stocks: Infospace, Qualcomm Among Tuesday's Winners
Merger speculation and product recalls were some of the catalysts behind the most actively traded stocks on Tuesday.
Qualcomm shares rose more than 2% on heavy trading volume after federal regulators delayed a decision on the cell phone chipmaker's patent dispute with rival Broadcom. The U.S. International Trade Commission said late Friday it will take an additional 13 days to decide if it will implement a ban requested by Broadcom for domestic sales of certain wireless phones using chips made by Qualcomm.
"We believe this delay could be a sign that the ITC is giving the two companies more time to hash out a settlement," said Credit Suisse analyst Michael Masdea, in a report sent to investors. "This could be in the best interest for both firms."
Shares of InfoSpace rose more than 13% on an unconfirmed report the Internet search firm would be bought for more than $1 billion. A report in Spanish newspaper Negocio said Infospace was in late stage negotiations with Spanish mobile phone content provider LaNetro Zed.
Avaya shares jumped on takeover speculation. The Wall Street Journal reported that the telecom equipment maker was in talks with a private equity firm in a potential deal to sell all or part of the company.
S&P Equity Research raised the price target on the stock to $17 from $14. "We view Avaya's extensive installed base in the legacy private branch exchange arena and its large services support business as attractive assets in what we forecast to be a sizable IP telephony market," said analyst Ari Bensinger.
Biotechnology company Genzyme said Tuesday it would acquire cancer-focused drugmaker Bioenvision for $345 million, or $5.60 a share, in an all-cash deal. Shares of Bioenvision, which have gained more then 45% in the last month on merger speculation, rose 6% on Tuesday. The companies already co-market and co-develop clofarabine, a treatment for acute lymphoblastic leukemia.
"Given our expectation for peak European clofarabine revenues of more than $200 million annually, we believe the acquisition price for Bioenvision was somewhat low," said CIBC World Markets analyst Bret Holley.
Among downside movers, Advanced Medical Optics plunged 13% after the eye products maker recalled its Complete Moisture Plus contact lens solution. Bear Stearns analyst Rick Wise said the recall will likely act as a drag on sales and earnings for at least the next several quarters, given the product's high gross profit margins. "We think Advanced Medical Optics could face significant challenges ahead," the analyst wrote in a client note.