Market Wrap For February 13: Markets Close Higher; Nasdaq on a Six Day Winning Streak
U.S. stocks finished higher on Thursday after a bumpy start to the trading session.
“People want to buy the dips now because the market made a bottom after Feb. 3,” Donald Selkin, chief market strategist at National Securities Corp. told Bloomberg. “We got very oversold and now it's believed that the trend is turning back up. People feel like we've seen a near-term bottom in the market.”
Janet Yellen's scheduled appearance in front of the Senate Banking Committee has been postponed due to a heavy snow storm.
- The Dow gained 0.17 percent, closing at 15,991.44.
- The S&P 500 gained 0.22 percent, closing at 1,823.24.
- The Nasdaq gained 0.41 percent, closing at 4,218.64.
- Gold gained 0.53 percent, trading at $1,301.80 an ounce.
- Oil lost 0.06 percent, trading at $100.31 a barrel.
- Silver gained 0.78 percent, trading at $20.50 an ounce.
News of Note
Initial Jobless Claims rose 8,000 to 339,000, higher than the 330,000 expected. Continuing claims fell 18,000 to 2.97 million.
January Retail Sales declined 0.4 percent, more than the 0.0 percent expected.
The Bloomberg Consumer Comfort Index rose to -30.7 from -33.1.
December Business Inventories rose 0.5 percent to $1,707.9 billion, in-line with estimates.
EIA Natural Gas Inventory declined 237 bcf.
The American Bankers Association announced last night that it will drop its lawsuit to block parts of the Volcker Rule from going into effect after regulators modified what the group considered to be questionable or objectionable.
German CPI fell 0.6 percent in January following a 0.4 percent increase in December. On year, inflation fell to 1.3 percent from 1.4 percent.
Indian CPI fell to 8.79 percent in January from 9.87 percent in December. The decline in the CPI is due to the Reserve Bank of India dropping its key repo rate by 25 bps to eight percent at the end of January.
Italian Prime Minister Enrico Letta is setting down after being in power for less than one year.
Equities-Specific News of Note
Analysts at Credit Suisse reiterated an Outperform rating on Priceline (NASDAQ: PCLN) and increased the price target to $1,450 from a previous $1,275. The analysts noted “We reiterate our conviction in Outperform-rated Priceline as an open-ended growth story. Our proprietary work suggests significant runway remains, with share of fillable rooms from the 407k properties on the platform a modest ~7%, up from ~5% three years ago.” Shares hit new 52 week highs of $1,282.50 before closing the day at $1,276.07, up 2.36 percent.
Analysts at JMP Securities downgraded Avago Technologies (NASDAQ: AVGO) to Market Perform from Market Outperform with no set price target. The analysts noted “We continue to believe Avago is moving toward a more compelling and defensible margin structure driven by differentiated FBAR, networking, optical, and industrial solutions, but with the stock trading at all-time highs and increased uncertainty surrounding top-line growth we believe it is a good time to move to the sidelines. Our FY14/15 EPS estimates decrease from $3.75/$4.75 to $3.70/$4.65 (Street estimates of $3.37/3.81 not comparable due to our inclusion of LSI impact.) Shares gained 0.24 percent, closing at $59.08.
Cisco (NASDAQ: CSCO) reported its second quarter earnings last night which failed to impress investors. Analysts at Goldman Sachs said that the company's gross margin of 61.3 percent was below their consensus of 61.9 percent and product gross margin was hurt by declining sales and fell 210 bps year over year. MKM Partners cut their price target to $20 from a previous $24. Shares lost 2.54 percent, closing at $22.27.
Analysts at Morgan Stanley reiterated an Overweight rating on Walgreen (NYSE: WAG) but removed its $68 price target. The analysts noted “meetings with Alliance Boots (AB) management showcased an impressive executive team and gave us increased confidence in JV synergies, as well as a glimpse into front-end opportunities. Re-domiciling emerging as key debate with implications on tax rate and strategic direction.” Shares hit new 52 week highs of $67.16 before closing the day at $66.39, up 1.97 percent.
Comcast (NASDAQ: CMCSA) has confirmed reports that it has offered $45.2 billion, or approximately $158.82 a share, to acquire Time Warner Cable (NYSE: TWC). The deal would generate $1.5 billion in savings and will be accretive to Comcast's cash flow and will create a cable TV monster with 30 million subscribers.The merger would face serious regulatory hurdles but Comcast remains confident that the transaction would be finalized by the end of the year. Shares of Comcast declined 4.12 percent, closing at $52.97 while Time Warner hit new 52 week highs of $146.18 before closing the day noticeably lower than the take out price at $144.80, up 7.01 percent.
J.C. Penney (NYSE: JCP) announced that its Chief Financial Officer, Ken Hannah will be leaving the company and will be replaced with Ed Record. Shares gained 0.34 percent, closing at $5.98.
Kinross Gold (NYSE: KGC) slashed its year-end 2013 gold reserves by 33 percent to 39.7 million ounces. Shares finished the day unchanged at $5.15.
A trust for creditors of Tronox (NASDAQ: TROX) told a bankruptcy judge that Anadarko Petroleum (NYSE: APC) should face penalties of $20.8 billion in environmental cleanup claims and not be allowed to cut the amount to $850 million. Shares of Tronox gained 0.09 percent, closing at $22.09 while Anadarko lost 0.32 percent, closing at $81.75.
Statoil (NYSE: STO) said that its Johan Sverdrup field could reach an initial output of 315K to 380K barrels per day and peak at 550K to 650K barrels per day. At these projections, the field has a lifespan of 50 years. Shares lost 0.69 percent, closing at $25.82.
Ford (NYSE: F) said that it will build a new version of its popular and high selling Edge SUV. shares gained 0.47 percent, closing at $15.07.
Celgene (NASDAQ: CELG) investors will vote at the company's annual general meeting to approve a proposed two-for-one stock-split. According to the company's CEO Bob Hugin, the move “reflects our continued confidence in the long-term outlook for the company.” Shares gained 2.59 percent, closing at $164.69.
Bill Ackman said that shares of Air Products (NYSE: APD) could double to more than $200 a share in the next few years with the right management team. Shares hit new 52 week highs of $117.04 before closing the day at $116.93, up 4.52 percent.
Netflix (NASDAQ: NFLX) inked a deal with Disney (NYSE: DIS) to add new episodes of Star Wars: The Clone Wars. Netflix receives exclusive rights to stream previously unaired episodes as well as the new episodes. Shares of Netflix hit new 52 week highs of $434.34 before closing the day at $432.89, up 0.57 percent.
Winners of Note
This morning, Orbitz Worldwide (NYSE: OWW) reported its fourth quarter results. The company announced an EPS of $0.05, beating the consensus estimate of $0.03. Revenue of $197.4 million beat the consensus estimate of $191.17 million. Gross bookings in the quarter rose four percent year over year and net revenue margin rose 30 bps year over year to eight percent. Standalone hotel revenue rose 18 percent, vacation packages rose 16 percent but standalone air revenue declined 11 percent. Investors found additional reasons to be optimistic from management's comments. The company's CEO Barney Harford said "Looking forward to 2014 and beyond, our strategic initiatives in the areas of loyalty, mobile and international expansion position us well to deliver continued strong growth in Adjusted EBITDA as we seek to make our brands the world's most rewarding places to plan and purchase travel on touch devices." Shares gained 28.65 percent, closing at $8.89.
This morning, Barrick Gold (NYSE: ABX) reported its fourth quarter results. The company announced an EPS of $0.37, missing the consensus estimate of $0.41. Revenue of $2.92 billion beat the consensus estimate of $2.90 billion. The company reported an unadjusted $2.83 billion loss in the quarter as it took $2.82 billion in after-tax impairment charges, including $896 million for its role in the Pascua-Lama project. The company anticipates 2014 gold production to be six million to 6.5 million ounces, lower than 2013's 7.2 million ounce projection. Barrick maintains one of the industry's lowest sustaining costs at $920 an ounce to $980 an ounce in 2014. Shares gained 5.90 percent, closing at $20.09.
This morning, TreeHouse Foods (NYSE: THS) reported its fourth quarter results. The company announced an EPS of $0.98, beating the consensus estimate of $0.91. Revenue of $660.3 million beat the consensus estimate of $657.32 million. Net income for the quarter totaled $22.8 million compared to $25.2 million in the same quarter last year. Shares gained 5.82 percent, closing at $68.59.
Fortress Investment (NYSE: FIG) will buy back the 12 percent stake in the company that Nomura owns at a 25 percent discount to last night's closing price. Shares of Fortress Investment gained 5.94 percent, closing at $8.47.
Decliners of Note
This morning, Cabela's (NYSE: CAB) reported its fourth quarter results. The company announced an EPS of $1.32, missing the consensus estimate of $1.23. Revenue of $1.19 billion missed the consensus estimate of $1.2 billion. Comparable-store sales fell 10.1 percent despite a surge in ammunition demand in the quarter. Net income rose to $94.7 million in the quarter, compared to $89.8 million in the same quarter last year. The company issued negative guidance and sees its first quarter EPS to be $1.32, lower than the consensus estimate of $1.41. Shares lost 7.96 percent, closing at $60.58.
URS (NYSE: URS) issued negative guidance after the close yesterday. The company expects its EPS to be $3.20 to $3.30 a share in 2013, lower than its previous guidance of $4.10 and $4.25. Shares lost 13.89 percent, closing at $42.51.
On Wednesday, Whole Foods (NYSE: WFM) disappointed investors when it reported a weak first quarter results and for the second time in four months, cut its forecasts. The company sees its EPS to be $1.58 to $1.65, lower than its previous guidance of $1.65 to $1.69. Sales are expected to rise 11 percent to 12 percent, down from its previous guidance for a rise of 11 percent to 13 percent. Shares lost 7.21 percent, closing at $51.46.
Itron (NASDAQ: ITRI) on Wednesday reported its fourth quarter results, which failed to impress investors. The company announced an EPS of $0.72, missing the consensus estimate by three cents. Revenue of $524 million fell $2.94 million short of the consensus estimate. Itron guided its full year 2014 year EPS to be $1.30 to $1.80, 47.5 percent below the consensus estimate of 2.95. Shares hit new 52 week lows of $32.30 before closing the day at $33.64, down 14.16 percent.
Earnings of Note
This morning, Agnico-Eagle Mines (NYSE: AEM) reported its fourth quarter results. The company announced an EPS of $0.25, beating the consensus estimate of $0.19. Revenue of $437.24 million beat the consensus estimate of $410.9 million. Net income for the quarter totaled $44.2 million, lower than the $82.8 million the company reported in the same quarter last year. Shares lost 1.35 percent, closing at $33.61.
This morning, Himax Tech (NASDAQ: HIMX) reported its fourth quarter results. The company announced an EPS of $0.10, in-line with the consensus estimate. Revenue of $195.2 million beat the consensus estimate of $193.31 million. Net income for the quarter rose 7.2 percent from the same quarter last year to $15.8 million. The company maintained a positive full year 2014 outlook and expects to continue revenue and earnings growth. Shares gained 1.87 percent, closing at $14.13.
This morning, PepsiCo (NYSE: PEP) reported its fourth quarter results. The company announced an EPS of $1.05, beating the consensus estimate of $1.01. Revenue of $20.12 billion missed the consensus estimate of $20.16 billion. Net income for the quarter rose five percent from the same quarter in 2012 to $1.754 billion. Organic volume was up three percent for the Snacks division and one percent for beverages. Pepsi said that it will maximize shareholder value by retaining the North American beverage business in its current structure and will raise its dividend payout rate to $2.62 a share and raise its buyback program to close to $5 billion. Shares lost 2.21 percent, closing at $79.69.
This morning, Burger King Worldwide (NYSE: BKW) reported its fourth quarter results. The company announced an EPS of $0.24, beating the consensus estimate of $0.23. Revenue of $265.2 million missed the consensus estimate of $267.25 million. Comparable-store sales rose overall to 1.7 percent in the quarter, with growth in the U.S. weak at 0.2 percent. Asia and Europe picked up the slack demonstrating a stronger demand. Shares hit new 52 week highs of $26.24 before closing the day at $25.38, up 0.24 percent.
This morning, Melco Crown Entertainment (NASDAQ: MPEL) reported its fourth quarter results. The company announced an EPS of $0.43, beating the consensus estimate of $0.38. Revenue of $1.39 billion beat the consensus estimate of $1.36 billion. Net income for the quarter was $223.2 million, compared to $108.0 million in the same quarter last year. The company plans to begin paying out 30 percent of net income in the form dividends to shareholders. Shares lost 0.28 percent, closing at $42.24.
After the market closed, American International Group (NYSE: AIG) reported its fourth quarter results. The company announced an EPS of $1.15, beating the consensus estimate of $0.96. Net income for the quarter totaled $1.98 billion, compared with a loss of $3.96 billion in the same quarter last year. The company said that it will boost its quarterly dividend by 25 percent to $0.125 per share and raise its buybacks by $1 billion, bringing the total authorization to $1.4 billion. Shares were trading higher by 1.63 percent at $50.40 following the earnings report.
Quote of the Day
"In our view, the main risk to the gold is the risk posed by a significant strengthening of the US$ and higher US Treasury yields, especially if it is accompanied by low inflation and a significant weakening of a number of the currencies of a number of emerging market economies that are major consumers of the metal. The risks of this were demonstrated in 1998 when the Asian Tiger Currency Crisis resulted in a significant increase in scrap supply from these nations, and a pull back in gold prices." - RBC Capital Markets analysts Jonathan Guy and Ioannis Masvoulas. Comments made on January 10
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