Trader Talk

Boeing's Nice Earnings vs. Weak Water IPO

Futures about flat as oil is at least down a bit this morning. Earnings were mixed, and an IPO pricing was a bit disappointing.

Boeing earnings better than expected: $1.62 vs. $1.35 est. Reaffirmed 2008 guidance of $5.70-$5.85.  For 2009, guidance of $6.80-$7.00 is about in line with expectations.

Ryder handily beat earnings estimates, and raised full year forecast to $4.55-4.75.

How much money can an airline lose? Delta lost $6.4 billion, or $16.15 a share. Its merger partner Northwest reported a net loss of $4.1 billion, or $15.78 a share.

What happened to American Water Works? The IPO price talk was 64 million shares at $24-$26; it priced 58 million at $21.50. This IPO had been postponed before, in November, as the company cited unfavorable market conditions.

Water is certainly a hot space right now. I have heard that valuation was the concern (i.e., it was priced too high). Also heard that retail street allocation was large -- which means institutions did not load up).

Eaton priced 17.5 m shares at $84 a share, which will be used to pay off prior aquisitions. They also affirmed their full year operating earnings.

GlaxoSmithKline is paying big for anti-aging research. They are buying Sirtris Pharmaceuticals for $720 million in cash, or $22.50 per share.

This price represents an 84 percent premium over SIRT's closing price yesterday.
Two things are going on here:
1) this company is the leading research outfit in anti-aging research through very promising chemical compounds (sirtuins) that appear to slow the aging process (they are initially being tested for diabetes), and
2) big pharmaceutical companies are desperate for new drugs and novel technologies; expect more European pharma companies to sniff around and buy U.S. biotechs with their inflated Euros.

I will have the founder and CEO of Sirtris, Christoph Westphal, on Closing Bell at 3:20pm ET.

Questions?  Comments?