Market Wrap For February 14: Markets End The Week Positive
U.S. stocks rose on Friday as investors were able to overlook some disappointing economic data as a result of cold weather.
Major indices showed signs of strength today as the Nasdaq continues to inch towards historical all time highs of 5,135.52 recorded on March 10,2000. Today, the index hit a 13.5 year high.
The markets will pause on Monday to observe Washington's Birthday. Trading will resume as normal on Tuesday.
- The Dow gained 0.79 percent, closing at 16,154.39.
- The S&P 500 gained 0.48 percent, closing at 1,838.63.
- The Nasdaq gained 0.08 percent, closing at 4,244.03.
- Gold gained 1.38 percent, trading at $1,318.00 an ounce.
- Oil gained 0.09 percent, trading at $92.93 a barrel.
- Silver gained 5.10 percent, trading at $21.43 an ounce.
News of Note
January Import Prices rose 0.1 percent, ahead of the consensus of -0.01 percent.
January Export Prices rose 0.2 percent, ahead of the consensus of 0.01 percent gain.
February Reuters/UofM Consumer Sentiment read 81.2, higher than the 80.0 expectation.
France's GDP grew 0.3 percent in the fourth quarter after contracting 0.1 percent in the third quarter.
Germany's GDP grew 0.4 percent in the fourth quarter after growing 0.3 percent in the third quarter.
China's CPI remained unchanged in January at +2.5 percent, but slightly exceeded the expectations of +2.3 percent.
India's wholesale-price index eased to +5.05 percent in January from +6.2 percent in December.
Equities-Specific News of Note
Analysts at Guggenheim upgraded Discovery Communications (NASDAQ: DISCA) to Buy from Neutral with a price target raised to $96 from a previous $89. The analysts noted “We believe that the YTD underperformance of shares relative to peers (-10.3% vs -2.5% for our universe) and the expectations reset provided in management's 2014 outlook provide an attractive buying opportunity. While the company saw disappointing domestic ratings in 4Q, it remains an industry leader in international channels growth. Shares gained 1.93 percent, closing at $80.83.
Analysts at William Blair raised Stratasys (NASDAQ: SSYS) to Market Perform from Underperform. The analysts noted that the company has shown strength in its core business, a successful integration of Objet and potential upsides for MakerBot. The company also has several new product launches ahead and the company could announce new partnerships. In terms of valuation, the analysts noted that at $118, shares would trade at 54 times their 2014 estimated EPS, a multiple above the long-term average associated with technology companies that shows similar growth paths and margin potentials. Shares gained 4.62 percent, closing at $123.69.
Analysts at Bernstein Research maintained an Outperform rating and $420 price target on Amazon.com. (NASDAQ: AMZN) The analyst noted “We believe slow growing categories make up a much large portion of 4Q GMV, particularly in North America, explaining the steep sequential deceleration. What we saw in 4Q13 is a very similar story to what happened in 4Q12, when Amazon missed revenue estimates by $1 billion and YoY revenue growth dropped about 500 bps sequentially. Despite the steep revenue deceleration in 4Q12, it was not an indication of the trajectory of the business going forward and revenue growth did not deteriorate at the same rate along 2013. In fact, we saw North America media and EGM revenues reaccelerate.” Shares lost 0.06 percent, closing at $357.00.
Analysts at Citigroup downgraded Dish Networks (NASDAQ: DISH) to Neutral from Buy with a $61 price target. The analysts noted “From here, Dish has several options. First, Dish could sell the spectrum. This seems unlikely because it would strand the core video business. Second, Dish could lease the spectrum. While possible, the lease payment would have to exceed $1.4B per year to match the spectrum value currently embedded in Dish's equity. Third, Dish could try to merge with DirecTV. This last option strikes us as the most reasonable. However, given risks associated with regulatory approval, the timing of any deal is uncertain. We think a new DoJ/FCC/FTC regime would improve the odds. And that's unlikely to occur until 2016 (at the earliest). Shares lost 2.45 percent, closing at $56.89.
Murphy Oil (NYSE: MUR) is considering selling off its Asian oil and gas assets worth as much as $3 billion. Shares gained 4.96 percent, closing at $60.06.
Occidental Petroleum (NYSE: OXY) said that it will spin off its California assets into a separately traded company. Shares gained 3.78 percent, closing at $95.76.
According to Reuters, Hong Kong based Brightoil has held talks with Anadarko Petroleum (NYSE: APC) and Newfield Exploration (NYSE: NFX) to buy their Chinese operations. Anadarko holds various stakes in China including a 50 percent interest in South China Sea exploration acreage. Shares of Anadarko gained 0.04 percent, closing at $81.55 while Newfield gained 1.53 percent, closing at $25.16.
Sinopec (NYSE: SNP) said that it has made a deep shale gas discovery that could produce 105,000 cubic meters in China's Guizhou province. The well is said to be the deepest in the country, making a technological breakthrough. Shares gained 1.60 percent, closing at $78.50.
Joseph. A. Bank (NASDAQ: JOSB) has agreed to acquire Everest Holdings, the parent company of the Eddie Bauer brand in a deal valued at $825 million. Jos. A. Bank retains the right to cancel any transaction if the company receives any offer that the Board determines will create a higher degree of shareholder value. Shares of Jos. A. Bank gained 0.29 percent, closing at $55.08 while Men's Wearhouse lost 5.29 percent, closing at $44.07.
Ford (NYSE: F) said that it increased sales in the top 20 European markets by 9.2 percent in January to 80,800. Sales in Germany rose 38 percent year over year in the month. Shares gained 0.99 percent, closing at $15.23.
Hasbro (NYSE: HAS) and 3D Systems (NYSE: DDD) announced a partnership to “co-develop, co-venture and deliver new immersive, creative play experiences powered by 3D printing for children and their families later this year.” Shares of Hasbro lost 0.21 percent, closing at $52.81 while 3D Systems gained 4.39 percent, closing at $73.77.
A 13F filing indicated that Kyle Bass has sold his Herbalife (NYSE: HLF) position in the fourth quarter. Shares lost 0.76 percent, closing at $66.39.
Sony's (NYSE: SNE) Senior Vice President stated that Play Station 4's January sales were nearly twice that of Microsoft's (NASDAQ: MSFT) Xbox One. Shares of Sony lost 0.81 percent, closing at $17.06 while Microsoft lost 0.81 percent, closing at $17.06
Johnson & Johnson (NYSE: JNJ) said that the FDA rejected its supplemental new drug application Xarelto. The drug is intended to reduce the risk of heart attacks or strokes in patients who suffer from acute coronary syndrome. Shares gained 0.23 percent, closing at $92.77.
Twitter's (NYSE: TWTR) lock-up period will expire tomorrow which allows non-executive staff who hold 9.87 million shares to sell their stock. Shares gained 1.35 percent, closing at $57.56.
According to the Wall Street Journal, Charter Communications (NASDAQ: CHTR) is unlikely to compete in the Time Warner (NYSE: TWC) sweepstakes due to the gap between Comcast's (NASDAQ: CMCSA) $158.82 bid and Charter's $132.50 bid. Shares of Charter gained 0.36 percent, closing at $129.38, Time Warner gained 0.81 percent, closing at $145.99 and Comcast gained 1.38 percent, closing at $53.69.
Winners of Note
This morning, Coty (NASDAQ: COTY) reported its second quarter results. The company announced an EPS of $0.28, in-line with the consensus estimate. Revenue of $1.32 billion beat the consensus estimate of $1.30 billion. The company said that it saw soft demand across the U.S. and was operating in an always challenging promotional environment. Revenue from emerging markets grew six percent with solid growth seen in Brazil, Southeast Asia and South Africa. Finally, the company announced a $200 million share repurchase program. Shares gained 7.51 percent, closing at $14.75.
Ciena (NASDAQ: CIEN) is partnering with Ericsson (NASDAQ: ERIC) to develop integrated ethernet/optical networking solutions and carrier software-defined networking offerings. Ericsson will resell Ciena's packet-optical systems and re-configurable optical switches. Shares gained 7.30 percent, closing at $24.99.
Magnum Hunter (NYSE: MHR) announced a discovery at its first dry gas well in the Utica shale. "Our first well on the Stalder Pad is the most eastern well and one of the most southern wells drilled to-date in the entire Utica Play of Ohio," said Chief Executive Officer Gary Evans. "The well's production is almost pure methane (97%) and therefore there is no need for processing, making it pipeline quality product. The benefit of owning the majority interest of our midstream division is that this well went directly through our gathering system to sales earlier this week. Therefore, we did not require any third-party to build a pipeline to this location." Shares hit new 52 week highs of $8.93 before closing the day at $8.69, up 6.50 percent.
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Last night, Cliffs Natural Resources (NYSE: CLF) reported its fourth quarter results. The company announced an EPS of $1.22, beating the consensus estimate $0.82. Revenue of $1.52 billion beat the consensus estimate of $1.46 billion. Despite beating the consensus estimates, the company's revenues fell 1.3 percent year over year due to a lower market pricing and sales volume for met coal products. Looking forward, the company expects an accelerating economic growth in the U.S. as well as a continued expansion in China to support steel production. Shares gained 5.75 percent, closing at $23.16.
Decliners of Note
Last night, Weight Watchers International (NYSE: WTW) reported its fourth quarter results. The company announced an EPS of $0.54, missing the consensus estimate of $0.61. Revenue of $366.1 million beat the consensus estimate of $357.98 million. The company issued a weak guidance and expects its EPS to be $1.30 to $1.60, far below the consensus estimate of $2.78. Shares hit new 52 week lows of $21.95 before closing the day at $22.12, down 27.67 percent.
Last night, Trulia (NASDAQ: TRLA) reported its fourth quarter results. The company announced an EPS of $0.03, missing the consensus estimate of $0.07. Revenue of $49.7 million beat the consensus estimate of $49.39 million. The company said that its marketplace revenue rose 190 percent year over year in the quarter to $42.2 million after growing 96 percent in the third quarter. Monthly unique visitors rose 49 percent year over year to 35.3 million and mobile monthly users rose 86 percent to 14.3 million. Analysts at RBC Capital commented that they would have liked to have seen the company report higher revenues but the long-term fundamentals remain intact. Shares lost 17.57 percent, closing at $30.03.
Earnings of Note
V.F. Corporation (NYSE: VFC) reported its fourth quarter results. The company announced an EPs of $0.82, missing the consensus estimate of $0.84. Revenue of $3.29 billion missed the consensus estimate of $3.34 billion. Net income grew seven percent to $368 million in the quarter, compared with $344 million in the same quarter last year. V.F. Corporation reported that its North Face brand surpassed $2 billion in global revenues for the first time during the fiscal year. Revenue from the Vans brand surpassed $1.7 billion. Direct to consumer and international business also showed signs of strength. The company issued guidance and sees its full year fiscal 2014 EPS to be $3.00 to $3.05, lower than the $3.10 consensus estimate. Shares lost 5.08 percent, closing at $56.85. Shares lost 5.08 percent, closing at $56.85.
This morning, J.M. Smucker (NYSE: SJM) reported its third quarter results. The company announced an EPS of $1.66, missing the consensus estimate of $1.68. Revenue of $1.47 billion missed the consensus estimate of $1.53 billion. The company said that its U.S. retail coffee segment's revenue fell eight percent to $578.9 million. Revenue also declined at its retail consumer foods segment by 4 percent at $557.8 million and international sales fell six percent to $328.8 million. The company issued guidance and sees its 2014 EPS to be $5.55 to $5.60. Shares lost 3.50 percent, closing at $91.81.
This morning, TRW Automotive (NYSE: TRW) reported its fourth quarter results. The company announced an EPS of $1.84, beating the consensus estimate of $1.66. Revenue of $4.5 billion beat the consensus estimate of $4.22 billion. Operating income for the quarter was $336 million (margin of 7.5 percent) compared to $295 million (margin of 7.3 percent) in the same quarter last year. The company said that it plans to increase its share repurchase program to $2 billion. "TRW's successes in 2013 highlight the Company's strong market position as our achievements were accomplished against a backdrop of challenging economic conditions, especially in our largest market, Europe," said John C. Plan, Chairman of Chief Executive Officer of TRW in a press release. Shares hit new 52 week highs of $81.37 before closing the day at $79.81, up 4.55 percent.
This morning, Campbell Soup (NYSE: CPB) reported its second quarter results. The company announced an EPS of $0.76, beating the consensus estimate of $0.71. Revenue of $2.28 billion beat the consensus estimate of $2.27 billion. The company said that soup sales rose five percent while its simple meals segment saw a seven percent revenue gain. The company reaffirmed its prior guidance despite foreign exchange issues that have plagued other multinationals. Shares gained 4.95 percent, closing at $43.00.
Quote of the Day
"I hope I shall possess firmness and virtue enough to maintain what I consider the most enviable of all titles, the character of an honest man." - George Washington
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