Investors Are Buzzing About Apple, Rio Tinto, Amsurg, More

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Analyst Questions Rio Tinto’s Projections for Mine

Rio Tinto plc (ADR) (NYSE:RIO) is in the spotlight after analysts at Bernstein Research said that the company’s projected return from its $5.3 billion dollar development of the Oyu Tolgoi mine is overstated. Rio Tinto projects an internal rate of return (IRR) of around 20% for the underground copper and gold mine in Mongolia, while analysts at Bernstein point out that the company faces substantial technical and execution risks that could lead to cost over-runs. Whether the IRR for the mine is 20% or not, Rio Tinto plc (ADR) (NYSE:RIO)’s fortunes are more dependent on commodity prices, which have inched higher of late. Of the 766 active funds that we track, 24 of them owned $280.96 million in Rio Tinto plc (ADR) (NYSE:RIO) positions as of the latest 13F reporting period. Rio shares are down by 2% in pre-market trading.

Potential Merger in the Healthcare Sector 

According to the Wall Street Journal, Amsurg Corp (NASDAQ:AMSG) is in talks with Envision Healthcare Holdings Inc (NYSE:EVHC) about a potential merger. The companies are in advanced talks, and a merger deal could be announced as soon as next week. Seeing as both companies provide healthcare services, the combination of the two could yield significant synergies. There is no guarantee of a deal, however. Amsurg Corp (NASDAQ:AMSG) has been an industry consolidator over the past five years and its stock is up by 2.5% year-to-date. 32 funds in our database owned shares of Envision Healthcare Holdings Inc (NYSE:EVHC) on March 31, while 27 were long Amsurg.

On the next page we examine why Restoration Hardware Holdings and Apple Inc have investors’ attention this morning.

Restoration Hardware Lower on Earnings

Restoration Hardware Holdings Inc (NYSE:RH) is sharply lower in the pre-market hours after the company reported a loss of $0.05 per share for its first quarter of fiscal year 2016 ended April 30 after the market close yesterday, missing the consensus estimate by $0.10 per share. Sales rose by 7.8% year-over-year to $455.5 million, exceeding estimates by $3.36 million, as comparable brand revenue inched higher by 4%. Restoration Hardware shares are down by just under 20% in extended market trading however, primarily due to weak guidance. Management expects full fiscal year EPS of $0.28-to-$0.33, less than half of analysts’ consensus estimate of $0.80 per share. Full fiscal year revenue is being pegged at $505 million-to-$520 million, below the consensus of $532 million. As reason for the lower EPS, management blames, “the costs associated with RH Modern production delays and investments to elevate the customer experience, the timing of recognizing membership revenues related to the transition from a promotional to a membership model, and a more aggressive approach to rationalizing our SKU count to optimize inventory.” The number of elite funds in our system with holdings in Restoration Hardware Holdings Inc (NYSE:RH) rose by five quarter-over-quarter to 38 as of the end of the first quarter.

Apple Adjusts App Store Fees

Apple Inc. (NASDAQ:AAPL) is trending today after App store boss Phil Schiller said that iOS developers who maintain a subscription with customers for longer than a year will have Apple’s share of the subscription fees halved to 15%. Apple is also planning to allow all developers to offer subscriptions rather than just a certain subset as before. Mr. Schiller commented, “Now we’re going to open up to all categories, and that includes games, which is a huge category.” In addition, Apple is planning to show search ads in its App Store. Apple Inc. (NASDAQ:AAPL) was the fourth-most popular equity among the funds that we follow at the end of the first quarter, with 152of them reporting Apple stakes.

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