Wednesday, March 23, 2011

Hot Stocks Of the Day: CIGX, BIDU, CREE, LVLT, IRM

Happy Trader

Shares of the following companies are having unusual moves in U.S. trading.

Shares of Star Scientific Inc. (NASDAQ: CIGX) jumped more than 5% after the company said that U.S. health regulators have informed the company that two of its products do not come under a federal law that restricts the sale of tobacco products. The Food and Drug Administration’s decision clears the way for Star Scientific, based in Glen Allen, Virginia, to start selling its Ariva-BDL and Stonewall-BDL tobacco lozenges, the company said today in a statement. 

Baidu, Inc. (NASDAQ: BIDU) rallied more than 3% after the Chinese sear giant said that it aims to develop software that lets users of smartphones and other devices navigate and perform other activities online via a search box on the screen. The latest move indicates that Baidu could be preparing to develop an operating system that would put it closer in competition with Google Inc. (NASDAQ: GOOG).

Shares of Cree, Inc. (NASDAQ: CREE) plunged more than 11% after the company slashed its fiscal third quarter sales guidance, citing lower sales of LED chips and LED components. The company said that it now anticipates revenue in the range of $215 million to $220 million, down from the prior forecast of $245 million to $265 million issued in January. 
Gross margin for the quarter is expected to be approximately 43%. The decline in gross margin targets is attributable primarily to increased pricing pressure in the LED chip product line. Operating expenses are expected to be slightly lower than previously targeted. 
The company said that the LED component demand is improving post-Chinese New Year, yet revenue is lower than originally targeted. It has taken longer to work through customer inventories than previously anticipated and pricing was lower than the company had previously forecast, the company said. The LED chip business is also weaker than targeted due to more aggressive pricing and weaker demand. "The LED components business appears to be turning the corner," stated Chuck Swoboda, Cree's CEO and chairman. "Despite the challenges we faced in Q3, distributor sell-through has improved and we target solid growth next quarter. Based on our preliminary outlook for Q4, we are currently targeting revenue to increase 10 to 12% in fiscal Q4 led by growth in LED components."

Level 3 Communications Inc. (NASDAQ: LVLT) surged more than 5% on Wednesday after Dawson James initiated coverage on the company with a Buy rating and a price target of $3.

Shares of Iron Mountain Inc. (NYSE: IRM) surged more than 5% after the Wall Street Journal reported that Davis Advisors, the largest shareholder of document-storage company, plans to support activist investor Elliott Management Corp.'s four board nominees. Davis Advisors, a Tuscon, Arizona-based money manager, owns around one-fifth of Iron Mountain, which has a market capitalization of about $6 billion. Boston-based Iron Mountain stores and archives business documents and other data for corporate clients, much of it in warehouses.

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