Buzz Stocks: Regal Entertainment, Madison Square Garden

Today's stocks to watch include RGC, RCPT, and MSG

Oct 28, 2014 at 9:10 AM
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Stock futures are notably higher ahead of the bell, as traders weigh a handful of corporate earnings reports, and look ahead to today's kick-off of the Federal Open Market Committee's (FOMC) two-day policy-setting meeting. Among equities in focus are movie theatre maven Regal Entertainment Group (NYSE:RGC), biopharmaceutical firm Receptos Inc (NASDAQ:RCPT), and sports and entertainment issue The Madison Square Garden Co (NASDAQ:MSG).

  • RGC is flirting with a 5% pop before the open, after announcing plans to explore its strategic options -- including the possibility of putting itself up for sale. The company also reported a third-quarter profit that arrived just above analysts' expectations, revenue that fell short of the consensus estimate, and a special dividend payment of $1 per share. The news was met with price-target hikes from Macquarie (to $22) and B. Riley (to $23.25), with both brokerage firms maintaining a "neutral" outlook. Benchmark also weighed in, raising its price target on the security to $22.25 from $21.99, and underscoring its "buy" rating. Overall, the analyst community is split on a stock that's up 5.5% this year to trade at $20.51, with nine "buy" or better ratings levied toward Regal Entertainment Group, versus eight "holds" or worse. Meanwhile, the consensus 12-month price target of $22.39 stands at a tepid 9.2% premium to current trading levels.

  • Credit Suisse boosted its price target on RCPT to $125 from $75, and maintained its "outperform" rating, after the company posted positive mid-stage trial results for its experimental ulcerative colitis drug RPC1063. Against this backdrop, the stock is set to soar 36% out of the gate -- after closing Monday at $67.74 -- and notch new record highs, adding to its already impressive 133.7% year-to-date gain. On the sentiment front, option players at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have shown a distinct bullish bias of late, buying to open 109.79 calls for every put over the past 10 sessions.

  • MSG's board of directors unanimously approved a plan to consider a spinoff of its entertainment and media and sports divisions into two publicly traded companies. "We are exploring the opportunity to improve upon the excellent shareholder return created since MSG's spinoff over four years ago by separating our business into two companies, each with its own distinct value proposition for investors," said President and CEO Tad Smith in a statement. The stock is ready to rally on the news -- as well as an upgrade to "buy" from "hold" and price-target hike to $74 from $66 at ISI Group -- adding 10.5% in pre-market trading. Should the equity extend this positive price action, another round of bullish brokerage notes could be on the horizon. At present, 80% of covering analysts maintain a "hold" rating on The Madison Square Garden Co, while the consensus 12-month price target of $68.50 stands at a 4.1% premium to Monday's closing price of $65.78. Looking ahead, MSG is scheduled to unveil its fiscal first-quarter earnings report Friday morning.

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