Business Wire: Schaeffer's Midday Options Update Features H&R Block, Federated Department Stores

CINCINNATI -- Today's Schaeffer's Midday Options Update Features H&R Block (NYSE:HRB), Federated Department Stores (NYSE:FD), May Company (NYSE:MAY), Biogen Idec (NASDAQ:BIIB) and H.J. Heinz (NYSE:HNZ). The Midday Options Update contains a brief commentary on the day's most notable activity and a table listing the most-active calls and puts for the day.

The Midday Options Update is published every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. For additional information about this report or to have it delivered to you free via email every day click on the following link: http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1M&PAGE=1

New Options Kids on the H&R Block

After enjoying three consecutive sessions in the black last week, major market averages have spent nearly all of Monday's session perched below the breakeven mark. Today's decline comes amid calamitous news in the biotech sector, crude oil's journey to yet another four-month high, and a weakening dollar.

Personal income data figures were reported ahead of the opening bell this morning. Income dropped 2.3 percent in January, the reading's largest decline in 11 years, though the figure still surprised the analyst community, which was expecting a heftier 2.6-percent pullback. Personal spending was unchanged during the month, matching the consensus forecast. December income and spending growth levels were unrevised at 3.7 percent and 0.8 percent, respectively.

Retail Roulette

In what some analysts are calling the "last stand" for department-store retailing, Federated Department Stores (NYSE: FD) has firmly committed to an $11 billion acquisition of May Department Stores (NYSE: MAY). The deal, which values the latter firm at $35.50 per share (a premium of less than half a percent from Friday's close), will combine the parent of Macy's and Bloomingdale's together with the matriarch of Lord & Taylor, David's Bridal, and numerous regional department-store chains. In total, there are about 950 national department-store locations at stake between the two firms. In assuming control of MAY, FD will also be responsible for $6 billion of its new acquisition's debt, bringing the total value of the deal to $17 billion. FD officials expect the deal to close in the third quarter, and hope for the new acquisition to being contributing to earnings per share by 2007. In other news, FD boosted its annual dividend payout to $1.00 per share, up from 54 cents per share (or 13.5 cents per quarter) as reported earlier this month. In midday action, FD is down slightly following the announcement, while MAY has shed more than two percent.

On the Homes Front

U.S. new single-family home sales dropped 9.2 percent in January to a seasonally adjusted rate of 1.106 million, the Commerce Department said Monday. This was just shy of analysts' expectations of 1.125 million. Sales were lower in all U.S. regions with the exception of the West. Breaking down the numbers a bit, sales dropped 17.1 percent in the Northeast, 40.3 percent in the Midwest, and 3.3 percent in the South, rising 5.6 percent in the Western quadrant.

December home sales, on the other hand, were revised higher to reflect a gain of 5.6 percent to a rate of 1.218 million (up from the previously reported 1.098 million). The average price for a single-family home totaled $281,900 in January, up a fraction from $281,800 the previous month. The median price stood at $199,400 after reaching $229,700 in December.

Biotechnical Knock-Out

Heavy trading volume has sent Biogen Idec (NASDAQ: BIIB) 45 percent lower today to its lowest point since December 2003. Elan (ELN) is off by nearly 70 percent to a new annual low and its first venture into single-digit territory since February 2004. Spurring this bear rush was the firms' combined decision to suspend marketing of the multiple sclerosis (MS) drug, Tysabri. The companies have told doctors to suspend treatment with the medication following two incidents, one of which was fatal, which may have been linked to the treatment. Biogen's Chief Executive says the suspension is a "prudent" move, during which time the companies will "evaluate (the) risk." Companies with rival MS treatments, including Teva (TEVA) Pharmaceuticals, are rising higher today as a result of their peers' misfortune.

H.J. Heinz Plays Catch-Up

Consumer foods giant H.J. Heinz (NYSE: HNZ) reported third-quarter earnings this morning that totaled $152.4 million, or 43 cents per share. This was a 25-percent drop from year-ago results of $202.2 million, or 57 cents per share. Excluding impairment charges related in an investment in Hain Celestial Group, the firm notched earnings of 60 cents per share, surpassing Wall Street's consensus estimate by a penny per share. In other fundamental news, third-quarter sales rose 7.8 percent at HNZ to $2.26 billion. Leading the charge were strong sales for Ore-Ida, Bagel Bites, TGI Friday's frozen appetizers, and good old-fashioned Heinz Ketchup. Looking to the future, HNZ officials say the company is on track to hit the low-end of the projected full-year earnings range of $2.32-$2.42 per share (before items). The current First Call estimate stands at $2.33 per share. HNZ is outperforming the broader market today, up more than one percent in an attempt to overcome a downsloping trendline that has been in place since early December.

Most-Active Options Update

At 1:31 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,762.7) is lower by 0.73 percent and the S&P 500 Index (SPX - 1,202.20) has sloughed off 0.76 percent. The Nasdaq Composite (COMP - 2,046.7) has surrendered 0.90 percent. At 1:32 p.m. in the options pits, 2,062,264 calls and 1,297,042 puts traded for a composite put/call ratio across all six exchanges of 0.62. The CBOE put/call volume ratio for equity options weighed in at 0.56.

H&R Block

H&R Block (NYSE: HRB) is descending upon its most-active time of year, as the ides of April draws ever closer. According to Hoover's, HRB is the nation's leading tax preparer, boasting more than 19 million tax customers. The company's employees aren't able to take a months-long vacation after tax day; however, as HRB also offers mortgage loans and other products and services.

Late last Thursday, HRB announced fiscal third-quarter earnings of 55 cents per share, or $91.7 million, down slightly from 59 cents per share in the previous year. Revenue managed to jolt 7.2 percent higher on promising tax-service numbers.

Investors responded positively to the financial-services firm's revenue gain, sending the shares 9.5 percent higher in Friday's trading. The equity's uptrend has followed through today, with HRB rising 3.4 percent higher in midday activity. From a longer-term perspective, this two-day jolt higher has buoyed the shares above an intermediate-term trading range, which was gapped near the 50 level. Additionally, the move has forced the stock's 10-week and 20-week moving averages into a bullish crossover and lifted HRB above the significant 52.6 mark. This level defines a 50-percent retracement between the stock's February 2004 peak and its May 2004 nadir.

Click on the following link to see the Equity Scorecard and Weekly Chart of HRB since January 2004 With 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=12614&obspage=2

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Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com, is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method.