The Early Edge: Fannie Mae, Global Payments, Six Flags, and Sprint Nextel

              

Today's headlines include Fannie Mae (FNM) canceling a planned charge, Global Payments (GPN) reporting first-quarter earnings, Six Flags (SIX) considering steps should its price not rebound, and Sprint Nextel (S) receives interest in its Nextel business. Here is what you need to know about this morning's news.

Fannie Mae

After the closing bell rang yesterday, Fannie Mae (FNM: sentiment, chart, options) announced that it will cancel the planned increase in its delivery charge thanks to adverse market conditions. FNM was set to enact a 25-basis-point increase on November 1. Herb Allison, FNM President and CEO, noted the company's expectation that "this decision to forgo the across-the-board increase in our delivery charges will be passed on to borrowers in the form of lower mortgage costs." FNM added that, in light of these changes, it is evaluating its risk-management, underwriting guidelines, pricing and costs.

FNM is still poised to start the morning below the 2 level, which has acted as resistance since early September. If there is good news for the financial firm, it is that the stock is resting on its 10-day moving average. Despite the equity's rather sizeable plunge, option players are extremely bullish about FNM's prospects. The firm's Schaeffer's put/call open interest ratio (SOIR) of 0.30 is at a 52-week low. The problem with this sentiment is that it could unwind and serve to push the stock lower.

Global Payments

Electronic payment processor Global Payments (GPN: sentiment, chart, options) announced that its first-quarter net income increased to 71 cents per share. These results topped those of a year ago by 18 cents, and trumped the consensus estimate by 11 cents per share. The company also reported quarterly revenue of $405.8 million, topping the consensus estimate as well. The company also upped its 2009 earnings outlook to a range of $2.37 to $2.45 per share and its revenue forecast to a range of $1.64 billion to $1.68 billion.

GPN is poised to start the morning more than $3 higher thanks to its earnings report, but it appears that the 45 level may remain in a position of resistance. The good news is that the stock should take out resistance from its 10- and 20-month moving averages. Optimism already runs high on the Street toward GPN, as the firm's SOIR ranks in the seventh percentile and 12 of the 18 analysts following the firm rate it a "buy" or better.

Six Flags

Late yesterday, Six Flags (SIX: sentiment, chart, options) announced that it is considering a number of alternatives (including a reverse-stock split) in order to boost its share price to meet the NYSE's listing standards. SIX's 30-day average closing price is under $1, and the amusement-park operator stated that the NYSE generally gives companies 6 months to boost their share price. SIX stated that a reverse-stock split must be done no later than its annual meeting in May 2009 if it decides to make such a move. SIX has had to sell 7 parks identified as noncore assets and has lowered prices at several of its parks in hopes of keeping its businesses running.

To say that SIX is a poor performer is a bit of an understatement, as the stock is wallowing below $1. During the past 52 weeks, SIX has lost 81%, and it faces overhead resistance from all of its major trendlines. With the stock trading below $1, there is no SOIR reading available, but analysts are understandably bearish. According to Zacks, SIX receives 1 "strong buy," 1 "hold," and 2 "strong buys." Upgrades are possible for SIX, but the stock needs to turn its performance around quickly to spark such moves.

Sprint Nextel

According to an article in The Wall Street Journal, Sprint Nextel (S: sentiment, chart, options) has received interest from various potential buyers for its Nextel operations. S has been exploring a sale of this business, which has struggled to keep subscribers in the wireless market. Reportedly, the interest comes from NII Holdings (a Latin American firm) and several private-equity firms. However, the article adds that there are a variety of factors that are complicating any deal - including the cost of separating the Nextel unit to the large amount of debt S wants the buyer to take on.

S is set to start the morning slightly higher, but the stock still faces overhead resistance from its 10-month moving average. On a year-to-date basis, S has lost 54%, and sentiment from option players and analysts alike is pessimistic. S's SOIR of 0.79 is higher than 87% of those taken during the past 52 weeks and 13 of the 16 analysts tracking the firm rate it a "hold." Upgrades and/or a shift in sentiment from option players could help push S higher, but the firm's performance doesn't leave much hope for such moves.

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