S.A. Team

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Wednesday’s Wall Street Recap: Atossa Genetics Inc (ATOS), Advanced Micro Devices, Inc. (AMD), Bon-Ton Stores Inc (BONT), Chipotle Mexican Grill, Inc. (CMG)

‘Sell the News’ Action Is Taking Atossa Genetics Shares Down

Today, Atossa Genetics Inc (NASDAQ:ATOS) investors are scratching their heads as to why the stock collapsed following the news that the company’s breast cancer oral treatment Endoxifen delivered positive results from its Phase 1 study.

Specifically, there were no clinically significant safety signals and no clinically significant adverse events in participants receiving oral Endoxifen. In addition, the drug was well tolerated at each dose level and for the dosing duration utilized in the study. Moreover, the drug demonstrated blood levels that have been associated with a therapeutic effect in the adjuvant setting in women with breast cancer.

That’s good news for Atossa, but less good news for long-term investors. You see, according to the principle of “buy the rumor, sell the news,” the major catalyst for Atossa stock to rise has now been removed, and traders who were awaiting the clinical results have now reaped all the gains they’re going to get from that particular catalyst. Hence, they’re selling the stock today, and a large fraction of the gains that the stock enjoyed over the past few days are now evaporating.

AMD Lacks Ability to Sustain Share Gains

Advanced Micro Devices, Inc. (NASDAQ:AMD) investors may have been granted a third quarter earnings beat yesterday from the chip giant, but are scurrying today in the aftermath of a weak outlook, sending shares plunging 9% in pre-market trading today.

Citi Research analyst Christopher Danely sounds off blasting from the side of the bears, critical that the company is still leaking dollars even with new products released. In a chip-maker-eat-chip-maker world, Danely’s money is on AMD to get eaten up, especially when having to brace for the impact of rival Intel’s new “Coffee Lake” processor family, fresh out 20 days ago.

“We see the competitive environment for AMD CPUs getting more difficult over time as the competition continues to introduce new processors,” writes the analyst, who notes that a month that has seen Intel let loose its fresh line of CPUs, the company now seems to “have extended its performance lead.” Glancing ahead, the situation does not look much better for AMD: “We see the competitive environment for AMD CPUs getting more difficult over time as the competition continues to introduce new processors.”

To put it very bluntly, the analyst cheekily notes, “Despite new products, AMD is still losing money we see no change in sight as it falls further behind the competition.”

AMD Ryzen processors have been underclassing Intel’s chips to the harsh tune of roughly 20%, and even if AMD can make up some of the lost market share, it will only be a rise of 7.2%. In other words, not enough for AMD to beat the competition.

“We do not expect share gains to be sustainable,” Danely contends, believing AMD will not be able to recover its lost lead at the end of the day: “We believe AMD’s next process should not be sufficient to close the current performance gap and Intel’s next process should increase the performance gap.”

As such, the analyst reiterates a Sell rating on AMD with a $5 price target, which represents a 61% increase from where the stock is currently trading. (To watch Danely’s track record, click here)

Bon-Ton Stores’ Financial Overhang Lifted

It’s a very rewarding trading day for investors in Bon-Ton Stores Inc (NASDAQ:BONT) with shares up over 50%, making the stock Wall Street’s bull of the day. The reason? The department store chain announced that it has amended its $880 million ABL Tranche A and Tranche A-1 credit facility, providing the Company with immediate flexibility and substantial additional liquidity under its current credit facility.

Nancy Walsh, Bon-Ton’s Executive Vice President and Chief Financial Officer, commented, “We are pleased with this amendment which immediately provides us with additional liquidity cushion and strengthens our financial flexibility through the holiday season. We appreciate the ongoing support of our bank group as our team continues to execute key operational and financial initiatives focused on positioning the business for both near- and long-term profitable growth.”

William Tracy, President and Chief Executive Officer, commented, “As we build our inventory position heading into the holiday season, we are pleased to have increased access to capital. We look forward to continuing to work closely with our vendor partners to ensure we are delivering quality merchandise and an exceptional shopping experience for our customers in our stores and online.”

Chipotle Is a Far-Off Comeback Kid

Chipotle just cannot seem to shake the ghost of E. coli past from two years prior, and it certainly did not ease investor fears over the summer when a Virginia customer’s sickness spooked the Street all over again. In what has been a rocky trek to redemption, the burrito chain’s third quarter performance exposes that the company still has a long way to go- not even a queso dip launch could be a saving grace.

On back of an earnings underclass posted yesterday evening, shares are crashing almost 15% in the wake of Chipotle’s disappointing third quarter results, marking the stock’s lowest point since 2012. Collier points out that unit development has stalled, and in a “noisy quarter,” the top-line continues to be “sluggish.”

In reaction, the analyst surveys from the sidelines with rising apprehension, maintaining a Hold rating on CMG stock while chopping the price target from $400 to $325, which implies a close to 18% increase from where the stock is currently trading.  (To watch Collier’s track record, click here)

For 2018, the analyst has cut her EPS forecast from $10.94 (that was once more bullish than FacetSet consensus of $10.22) to $8.60.

There have been some improving quarter-to-date trends, with comps trending better by 2 to 3%, but with a “somewhat confusing” outlook as the CMG team suggests the run-rate will likely continue as is through the fourth quarter.

On a positive note, the debut of queso juiced up a “much needed lift to comps,” writes Collier and there the CMG team is trying to garner some buzz with “new potential menu items on the horizon” from frozen margaritas to salad greens to a revamped beverage program. Moreover, the burrito chain intends to kick up the price by 5% throughout 900 restaurants spanning predominantly Texas and Midwest markets on back of a price boost earlier in the year. Even a mobile app update will soon be underway, as Collier highlights, “New mobile app will expand features: CMG plans to update its app on November 6th, featuring new capabilities that will enhance the guest experience and improve speed of service. Examples include rapid reorder, a digital offer platform and mobile payment.”

In a nutshell, Chipotle’s “sales remain well below pre-incident levels nearly two years later despite unprecedented levels of marketing and other initiatives (i.e. queso introduction),” Collier writes with unease, concluding: “We continue on the sidelines given our belief that a sales recovery will take longer than many investors expect as we maintain that competitive intrusion is the most significant L-T issue for CMG.”