The U.S. equity markets are off to a slightly lower start to the week as the earnings releases from Goldman Sachs (GS) and Citigroup (C) , though solid in their own right, did little to spark a broader rally. These two reports, which you can read our takes on through our Alerts here and here, respectively, kick off a busy week of corporate earnings. Later this afternoon, we'll provide thoughts on the other six portfolio names set to report in the coming days.
As Jim mentioned in today's Daily Rundown, he interviewed J.P. Morgan retail analyst Matthew Boss on Friday's Mad Money. The interview can be found at the site here and came just a few days after J.P. Morgan (JPM) hosted its annual Retail Round-up Conference. At the event, Boss hosted Five Below (FIVE) CFO Ken Bull and VP/IR Christiane Pelz, resulting in J.P. Morgan upgrading their rating on Five Below to a Buy with a $150 price target. This upgrade was key as Boss and his team were the ones who downgraded FIVE back in February. In today's news, shares were greeted this morning with a Buy initiation at Bank of America with a $150 price target of their own. Admittedly, our current price target of $135 may prove to be too conservative as this regional to national expansion story still has tremendous legs to it.
Jim's interview with Boss also featured bullish commentary around the initiatives Kohl's (KSS) CEO Michelle Gass has in place. As a reminder, Jim discussed our interest in making our current position bigger during last Friday's members-only conference call. Our current upgrade to ONE price point is around $67, which would reflect a 4% dividend yield.
We also want to follow up on Anadarko Petroleum Corp (APC) . As a reminder, Chevron (CVX) announced last Friday that it has entered an agreement with Anadarko to acquire all of the outstanding APC shares in a stock and cash transaction valued at $33 billion, or $65 per share. Based on Chevron's closing price on April 11th, APC shareholders will receive 0.3869 shares of CVX and $16.25 in cash. This announcement caused APC to skyrocket approximately 32% higher on Friday, taking the stock from the mid-$40s to the lower $60s. Due to the cash and stock nature of the deal, we are left with a choice. Do we take the money, run, and find the next stock, or do we hold on to our position and eventually become CVX shareholders? We'll get a better read on Chevron tonight when Jim sits down with Chairman and CEO Mike Wirth and discusses the outlook behind this acquisition.
Meanwhile, it is worth noting that Chevron wasn't the only company interested in acquiring APC. This makes sense as we noted previously like in our Alert here how its stock performance was not in sync with its improved profitability and increased cash flow generation.
Per the reporting by David Faber of CNBC that you can read more about here, Occidental Petroleum Corp (OXY) had shown interest in Anadarko before the aforementioned deal was finalized. According to the report, which cited people familiar with the situation, Occidental thought its talks with Anadarko management would have extended into the weekend (meaning this most recent one) with the opportunity to increase its bid, which reportedly reached the mid-$70s per share and was structured around 40% cash. Based on this higher absolute value amount, it appears that Anadarko management was more interested in getting stock back and partnering with Chevron over Occidental. The report also adds that, according to sources, Occidental continues to evaluate whether it should take its higher bid to shareholders in an unsolicited offer. Keep in mind that a breakup fee on the Chevron-Anadarko deal is reported to be 3%, so that may temper the benefits of a higher bid price. We'll continue to stay close to the situation.