Market Wrap For January 17: Stocks Finish Week With Mixed Results
Stocks traded mostly lower today as investors digested a new set of earnings that were disappointing.
A mixed housing data and a consumer sentiment coming in lower than expected was enough to tame the bulls as major indices finished the day mixed.
Markets will be closed on Monday for Martin Luther King, Jr. Day.
- The Dow gained 0.25 percent, closing at 16,458.56.
- The S&P 500 lost 0.39 percent, closing at 1,838.70.
- The Nasdaq lost 0.50 percent, closing at 4,197.58.
- Gold gained 1.02 percent, trading at $1,252.80 an ounce.
- Oil gained 0.23 percent, trading at $94.32 a barrel.
- Silver gained 1.10 percent, trading at $20.27.
News of Note
December Housing Starts came in at 999K, higher than the expected 985K. Permits read 986K lower than the 1.015 million expected.
December Industrial Production rose 0.3 percent, in line with expectation. Capacity utilization came in at 79.2 percent, slightly beating the consensus of 79.1 percent.
January Reuters/UofM Consumer Sentiment read 80.4, lower than the 83.5 expected.
November Job Openings and Labor Turnover Survey (JOLTS) showed 4.0 million job openings, higher than the consensus of 3.93 million.
The Treasury has sold $3 billion worth of shares in Ally Financial in a private placement bringing down its stake to 37 percent from 64 percent.
As of February 1, IntercontinentalExchange (NYSE: ICE) will assume the task of administrating the Libor rate from the British Banker's Association.
Equities-Specific News of Note
Analysts at Stifel initiated coverage of Twitter (NYSE: TWTR) with a Buy rating and a $75 price target. The analysts noted that shares are clearly at a discount at current levels. The analysts said "And, while it would be much safer and easier to back away from the shares at current levels, we believe strategic value, business model flexibility, and earnings momentum will keep them moving higher." Shares gained 2.06 percent, closing at $61.82.
Analysts at FBR reiterated an Outperform rating on Intel (NASDAQ: INTC) but noted skepticism over the company's long-term 15 percent compounded annual growth rate for its server CPU division. The analysts also said that the company blaming its weaker-than-expected results on a government shutdown as being a “bad excuse.” Analysts at Goldman Sachs reiterated a Sell rating and noted that Intel's numbers “confirm our view that there is a downside, not upside to Intel's 2014 EPS.” Separately, according to reports, the company will reduce its workforce by five percent in 2014. Shares lost 2.60 percent, closing at $25.85.
Analysts at Susquehanna upgraded American Express (NYSE: AXP) to Positive from Neutral with a price target raised to $107 from $90. The analysts favor the company because of its expectations for accelerating comps, relative underperformance, low expenses and de-consolidation of the travel business. Analysts at Goldman Sachs reiterated a Neutral rating and $100 price target noting “we believe the bar for 2014 will likely be higher as its provision will likely be a further headwind (we forecast 7 percent increase) and we sensed American Express' optimistic on large buybacks given the run shares have had.” Shares hit new 52 week highs of $93.62 before closing the day at $90.97, up 3.63 percent.
Analyst at Canaccord defended Herbalife (NYSE: HLF) while reiterating a Buy rating and $87 price target. The analysts noted that Herbalife “has long taken a cautious and measured approach to growing its mainland China segment that allows it to better manage its operations and salespeople.” Separately, Bill Ackman said that he will make a presentation next month and present evidence that Herbalife is operating illegally in China. Shares lost 2.07 percent, closing at $70.15 but traded as low as $68.23 in the morning.
Analysts at Wedbush reiterated an Outperform rating on Tesla Motors (NASDAQ: TSLA) with a $205 price target. The analysts noted “we hosted investor meetings with management from Tesla and came away with further confidence in our constructive thesis” and “we see increasing potential Tesla could add another Model S production line in 2014 to serve what the company describes as robust demand.” Shares lost 0.52 percent, closing at $170.08.
Analysts at Credit Suisse upgraded Forest Labs (NYSE: FRX) to Outperform from Neutral with a price target increased to $85 from $60. The analysts noted “we believe the company is in the early innings of a multi-year rejuvenation story. We believe a combination of improvements in base business growth (most notably our increased confidence on the potential and longevity of their Namenda franchise), an opportunity for substantial operating margin expansion, and incremental growth from future business development all bode well for the stock.” Shares hit new 52 week highs of $70.86 before closing the day at $68.76, up 0.70 percent.
Analyst at FBR reiterated an Outperform rating on Goldman Sachs while upgrading the price target to $200 from $184. The analysts noted “it was a tough operating environment in Q4, however, we believe the company's top- and bottom-line results are reason for optimism as we move into 2014.” Shares gained 0.46 percent, closing at $175.98.
Analysts at Bank of America reinstated coverage of Dillard's (NYSE: DDS) with a Buy rating and $110 target. The analysts noted “we expect Dillard's to generate substantial free cash for capital returns given its solid earnings growth and stable capex requirements.” Shares gained 0.52 percent, closing at $90.63.
Analysts at OTR Global reported that InvenSense (NASDAQ: INVN) has won a MEMS motion sensor socket for Samsung's upcoming Galaxy S5. InvenSense has won a contract over rival STMicroelectornics (NYSE: STM). Shares of InvenSense gained 0.21 percent, closing at $21.00 while STMicroelectronics lost 3.25 percent, closing at $7.75.
Analysts at CRT Capital suggested investors take their chips off the table and cash in on Questcor (NASDAQ: QCOR) after yesterday's 11 percent gain. The analysts noted that the company's ambitious acquisitions plans for 2014 could meet resistance as the sector is no longer in the early stages of M&A. Shares lost 3.57 percent, closing at $59.24.
The New York Times reported that “only about a dozen customers” showed up at a Beijing store to buy Apple's (NASDAQ: AAPL) iPhone devices which China Mobile (NYSE: CHL) officially began selling today. The Times article conflicts previous reports by other media sources claiming that sales are healthy with strong pre-orders having already taken place. Shares of Apple lost 2.44 percent, closing at $540.74 while China Mobile lost 0.03 percent, closing at $50.15.
According to several reports, Family Dollar (NYSE: FDO) has cancelled its appearance at an analyst conference on February 5.
According to a Dow Jones report, Deutsche Bank is considering issuing a fourth quarter profit warning announcement. The bank has been hit by losses from selling non-core assets as well as legal and accounting costs. Shares lost 3.04 percent, closing at $52.27.
IBM (NYSE: IBM) said that it will invest over $1.2 billion on up to 15 new data centers to expand its cloud services. Shares gained 0.58 percent, closing at $189.86.
Destrier Capital reported a 6.1 percent passive stake in Uni-Pixel (NASDAQ: UNXL). Shares lost 0.19 percent, closing at $10.34.
UPS (NYSE: UPS) lowered its full year 2013 guidance to $4.57 to $4.75 with the consensus estimate ranging from $4.65 to $4.85. The company noted that it sees EPS growth of 10 to 15 percent in 2014. Shares lost 0.61 percent, closing at $99.88 but traded as low as $97.10 this morning.
Whitney Tilson reiterated his short position in World Acceptance Corporation (NASDAQ: WRLD) calling the company among the “scummiest, most predatory financial companies.” Shares lost 5.55 percent, closing at $85.37
According to Reuters, Freeport McMoRan (NYSE: FCX) could face $5 billion in extra taxes over the next three years due to Indonesia's plans to form a new export tax. Shares lost 1.98 percent, closing at $36.18.
Ariad Pharmaceuticals (NASDAQ: ARIA) announced the commercial availability of its Iclusig dug and has begun shipping the product to Biologics, its exclusive specialty pharmacy. Shares gained 2.37 percent, closing at $6.90.
Royal Dutch Shell (NYSE: RDS.A/RDS.B) warned that its fourth quarter profit will be “significantly lower than recent levels of profitability.” The company forecasts that its earnings will drop to $2.9 billion, well below the $4 billion consensus estimate and $7.3 billion last year. Shares lost 1.62 percent, closing at $70.58.
Winners of Note
Electronic Arts (NYSE: EA) had three games on NPD's December bestseller list. Battlefield 4, Madden NFL 25 and FIFA 14 took in the number two, four and nine spots, respectively. Analysts at Cowen noted that EA has scored a “hat trick” and that the company has a shot at beating consensus estimates and guidance when it reports on January 28. Shares gained 11.88 percent, closing at $24.10.
Skyworks (NASDAQ: SWKS) has received a total of seven price target hikes from analysts following the company's first quarter results and strong guidance. Of note, analysts at Needham raised their price target to $34 from $30 saying that the company is well positioned to benefit from the rising demand of new connected devices aka the “Internet of things.” Shares hit new 52 week highs of $31.80 before closing the day at $30.54, up 6.71 percent.
Keryx Biopharma (NASDAQ: KERX) announced that its Japanese partner has received marketing approval for ferric citrate from the Japanese Ministry of Health. Keryx will receive $10 million for the marketing approval milestone, double-digit tiered royalties and up to an additional $55 million upon certain sales milestones. Shares hit new 52 week highs of $16.18 before closing the day at $15.22, up 6.88 percent.
Notable short seller, Citron Research, said that shares of BlackBerry (NASDAQ: BBRY) are worth $15 a share. Citron noted that the company's new CEO John Chen has success in turning around companies and BlackBerry's deal with Foxconn have “significantly de-risked BlackBerry's balance sheet.” Shares gained 6.07 percent, closing the day at $9.08.
Analysts at JPMorgan added Illumina (NASDAQ: ILMN) to their coveted Focus List with a price target raised to $190 from $120. The analysts noted that there is very little that can slow down the company's momentum after the company unveiled a strategic road-map for market expansion yesterday afternoon. Shares hit new 52 week highs of $141.00 before closing the day at $136.34, up 8.85 percent.
Decliners of Note
Dr. Mark Ahn, CEO of Galena Biopharma (NASDAQ: GALE) was a guest on Jim Cramer's Mad Money show last night. Cramer questioned the company's studies and noted his skepticism of its products being approved. Cramer also recommended investors cash in on the stock that has more than tripled over the past few months. Shares lost 6.42 percent, closing at $7.00.
Analysts at Craig-Hallum initiated coverage of J.C. Penney (NYSE: JCP) with a Sell rating and a price target of zero dollars a share. The analysts noted that the retailer will never recover and will burn through half of its market cap in cash this year. Shares lost 5.52 percent, closing at $6.52
Analysts at Jefferies downgraded Sina (NASDAQ: SINA) to Hold from Buy with a price target lowered to $85 from $107. The analysts noted that its channel checks showed a lack of advertiser interest in Weibo as a social commerce platform. The analysts also stated that it does not believe the Chinese government will allow a Twitter like platform to emerge. Shares lost 6.90 percent, closing at $75.02.
The plunge in Nu Skin (NYSE: NUS) picked up where it left off yesterday. Today, a second Chinese agency said it would investigate reports against the company's alleged pyramid scheme operation. Shares lost 6.29 percent, closing at $79.47.
SLM Corporation (NASDAQ: SLM) announced its earnings yesterday that was below consensus estimates. The company reported core earnings of $275 million, below the consensus estimate of $300 million after the company reserved $70 million for "expected compliance remediation efforts related to pending regulatory inquires." Shares lost 9.84 percent, closing at $24.47.
Earnings of Note
This morning General Electric (NYSE: GE) announced its fourth quarter results. The company reported an EPS of $0.53, in-line with the consensus estimates. Revenue of $40.38 billion beat the consensus estimate of $40.22 billion. The company's 2014 outlook remains unchanged and most notably it is sitting on $89 billion in cash. Shares lost 2.28 percent, closing at $26.58.
This morning The Bank of New York Mellon (NYSE: BK) announced its fourth quarter results. The company reported an EPS of $0.54, in-line with expectations. Revenue of $3.75 billion beat the consensus estimate of $3.72 billion. Shares lost 3.60 percent, closing at $32.70.
This morning, Morgan Stanley (NYSE: MS) announced its fourth quarter results. The company reported an EPS of $0.20, below the consensus estimate of $0.47. Revenue of $7.8 billion missed the consensus estimate of $8 billion. The company noted that it faced legal expenses of $1.2 billion in the quarter, knocking off $0.40 from its EPS. Shares gained 4.38 percent, closing at $33.40.
This morning Schlumberger (NYSE: SLB) announced its fourth quarter EPS. The company reported an EPS of $1.35, above the consensus estimate of $1.33. Revenue of $11.91 billion missed the consensus estimate of $11.76 billion. Revenues climbed 18 percent in the Middle East and Asia with total international markets bringing in roughly two-thirds of the company's 2013 total revenue of $45.27 billion. Shares gained 1.81 percent, closing at $90.21.
Quote of the Day
“The gold market is lacking enthusiasm and interest. With hopes of an upside break now dashed, collective sentiment is firmly back in the bearish camp. It's concerning when market thinking is channelled in one direction, and indeed that has been the biggest positive about gold, amidst a sea of negatives. We tried to go against consensus after the poor employment data, but now find ourselves back where we started, thinking that gold's next path is down.” – UBS analysts Edel Tully and Joni Teves in a report on gold released today.
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