Market Wrap For February 28: Markets Unable To Hold On To Gains
U.S. stocks were mixed despite the S&P 500 hitting new all time highs of 1,867.92. Rumors surrounding Russian military involvement in Ukraine naturally presented investor concerns and fear in the market.
The market was boosted by a positive consumer sentiment and a steady existing-home sales. GDP figures, coming in within consensus contributed to early gains in the market that reversed course in a late afternoon sell-off.
- The Dow gained 0.30 percent, closing at 16,321.71.
- The S&P 500 gained 0.28 percent closing at 1,859.45.
- The Nasdaq lost 0.25 percent, closing at 4,308.12.
- Gold lost 0.48 percent, trading at $1,325.40 an ounce.
- Oil lost 0.04 percent, trading at $102.36 a barrel.
- Silver lost 0.90 percent, trading at $21.16 an ounce.
Speaking on CNBC, St. Louis Fed Chief James Bullard said that recent soft economic data hasn't altered his generally strong outlook for the economy.
News of Note
Fourth Quarter GDP rose 2.4 percent, below the 2.5 percent consensus.
February Chicago PMI read 59.8, higher than the 56.4 consensus.
February Reuters/UofM Consumer Sentiment read 81.6, higher than the 81.5 consensus.
January Pending Homes Sales rose 0.1 percent to 95.0, below an expectation for a 2.3 percent gain.
The U.S. budget deficit for 2013 fell to $680 billion from $1.1 trillion in 2012. The fall was due to an increase in federal tax revenues and a fall in spending.
Japanese industrial production grew four percent in January after dropping 0.9 percent in December. Inflation fell to 1.4 percent in the month from 1.6 percent in December. Core CPI which excludes food and energy remained at 0.7 percent, a 16 year peak.
Mt. Gox has filed for bankruptcy protection with debts of approximately $63.6 million following an alleged massive security breach that involved the theft of close to 750,000 bitcoins.
According to New York University's Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, managing director at Moody's Investors Services, the price has gold has been fixed and manipulated for a decade. “The structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality,” the two wrote in a yet un-published study.
Analyst Upgrades and Downgrades of Note
Analysts at Credit Suisse reiterated a Neutral rating on Lululemon (NASDAQ: LULU) with a price target lowered to $46 from a previous $53. Shares lost 4.93 percent, closing at $50.30.
Analysts at Goldman Sachs resumed coverage of Signature Bank (NASDAQ: SBNY) with a Buy rating and $148 price target. Shares hit new 52 week highs of $131.47 before closing the day at $130.93, up 1.62 percent.
Analysts at BNP Paribas downgraded Baidu (NASDAQ: BIDU) to Reduce from Hold with a price target of $180. Shares lost 4.60 percent, closing at $170.69.
Analysts at Susquehanna upgraded TripAdvisor (NASDAQ: TRIP) to Neutral from Negative with a price target raised to $90 from a previous $67. Shares hit new 52 week highs of $102.83 before closing the day at $100.24, up 0.52 percent.
Analysts at JMP Securities upgraded Whitestone REIT (NYSE: WSR) to Market Outperform from Market Perform with a price target of $16. Shares gained 2.71 percent, closing at $14.38.
Equities-Specific News of Note
According to the Financial Time's, Tesla (NASDAQ: TSLA) has successfully raised over $2 billion in what turned out to be the largest U.S. convertible bond offering in over two years. Shares lost 3.06 percent, closing at $244.80.
Mattel (NYSE: MAT) has agreed to purchase Canadian based Mega Brands for approximately $460 million. In 2013 Mega Brands sold its products in over 100 countries and collected $405 million in revenue. Shares gained 0.43 percent, closing at $37.31.
Fortress Investment (NYSE: FIG) disclosed a mark-to-market loss of $3.7 million $20 million of bitcoin purchased in 2013. Shares gained 1.34 percent, closing at $8.69.
Citi (NYSE: C) announced it will adjust downward its fourth quarter and full year 2013 results which were reported on January 16 by an estimated $235 million after-tax ($360 million pre-tax) due to fraudulent activities in its Mexican subsidiary. The fraud relates to loans made to a Mexican oil services company through an accounts receivable financing program. Banco Nacional de Mexico, or Bananex, had loaned $585 million in short-term money to the Mexican oil services which has been suspended by the government from being awarded new contracts. Shares lost 0.14 percent, closing at $48.62.
Bill Ackman's Pershing Square has scheduled a conference call for March 11 to report on his firms investigative research related to Herbalife's (NYSE: HLF) business practices in China. “The report will show that Herbalife's business in China operates much like the company's business in the rest of the world as a pyramid scheme,” Ackman said. Shares of Herbalife lost 0.57 percent, closing at $66.60.
Chesapeake Energy (NYSE: CHK) said that it has sold its midstream compression assets for $520 million as the company continues to improve its balance sheet with “minimal impact” on 2014 cash flow guidance. Shares gained 0.04 percent, closing at $25.91.
Apple (NASDAQ: AAPL) said that it sold over $1 billion worth of Apple TVs in 2013 sales. Shares lost 0.26 percent, closing at $526.30.
Sears Holdings (NASDAQ: SHLD) said that it has launched an investigation to determine if the company has become a victim of a security breach. Shares gained 4.05 percent, closing at $44.75.
Total (NYSE: TOT) plans to sell its 10 percent stake in Azerbaijan's Shah Deniz II gas field as lower Russian gas prices are making the source less desirable to hold on to. Shares hit new 52 week highs of $64.97 before closing the day at $64.84, up 2.05 percent.
According to Chinese media reports and confirmed by Fox Business News, Alibaba is planning to go public in the U.S. instead of Hong Kong.
Winners of Note
This morning, Central European Media Enterprises (NASDAQ: CETV) reported its fourth quarter results. The company announced an EPS of -$0.72 and revenue of $237.91 million. There was no consensus estimate. Net loss for the quarter totaled $281.53 million, compared to a net loss of $546.39 million in the same quarter last year. The company announced that it has reached an agreement with its main shareholder Time Warner to secure the company's financing needs. Shares of Central European Media surged 73.80 percent, closing at $4.71.
This morning, 58.com (NASDAQ: WUBA) reported its fourth quarter results. The company announced an EPS of $0.13, beating the consensus estimate of $0.05. Revenue of $45.3 million beat the consensus estimate of $42 million. Net income for the quarter rose to $10.8 million from a net loss of $4.8 million in the same quarter last year. Gross margin rose to 95.4 percent from 89.1 percent in the same time period. The company issued upside guidance and sees its first quarter revenue to be $43 million to $45 million, above the consensus estimate of $40.8 million. Shares hit new 52 week highs of $50.12 before closing the day at $47.16, up 12.31 percent.
Riverbed (NASDAQ: RVBD) said that Elliott Management's $21 offer for the company “undervalues the Company and is not in the best interest of shareholders.” Shares hit new 52 week highs of $22.76 before closing the day at $22.28, up 7.89 percent.
According to Bloomberg, Fred's (NASDAQ: FRED) has approached Walgreen, (NYSE: WAG) Dollar General (NYSE: DG) and CVS Caremark (NYSE: CVS) over a sale of the company. Shares of Fred's hit new 52 week highs of $20.29 before closing the day at $19.93, up 10.17 percent.
According to Marbridge Daily, Sohu (NASDAQ: SOHU) CEO Charles Zhang has discussed a potential merger of the company's online video unit with Tencent to better compete against the market leader Baidu. Shares of Sohu gained 7.90 percent, closing at $84.99.
Decliners of Note
Pier 1 (NYSE: PIR) issued downside guidance and sees its fiscal 2014 EPS to be $1.00 to $1.01 compared to previous guidance of $1.07 to $1.12. The company also projected sales growth of 5.5 percent, below the six percent growth rate that analysts had expected. Shares hit new 52 week lows of $18.05 before closing the day at $18.94, down 5.58 percent.
Last night, Deckers Outdoor (NASDAQ: DECK) reported its fourth quarter results. The company announced an EPS of $4.04, beating the consensus estimate of $3.80. Revenue of $736 million beat the consensus estimate of $711.47. Things turned ugly when Deckers guided its first quarter EPS to a loss of $0.16 compared to a consensus estimate of a profit of $0.10. Revenue is expected to rise only six percent year over year below a consensus of 11.6 percent growth. Full year the company is guiding for ten percent revenue growth, below a 10.4 percent consensus estimate. EPS is guided to grow by eight percent, below the consensus estimate for a 12 percent rise. Shares lost 12.19 percent, closing at $74.35, down 12.19 percent.
Last night, Medivation (NASDAQ: MDVN) reported its fourth quarter results. The company announced an EPS of $0.03, beating the consensus estimate of -$0.08. Revenue of $96.6 million beat the consensus estimate of $72.68 million. Net income for the quarter totaled $2.8 million, compared with a net loss of $31.7 million in the same quarter last year. Medivation issued guidance and sees its full year sales for Xtandi to be $500 million to $535 million in 2014. The sales projection prompted analysts at Jefferies to comment that the revenue guidance implies only modest growth and Xtandi is not on the same trajectory of growth as previously assumed. Shares lost 14.92 percent, closing at $71.91.
According to Bloomberg, The FDA said that it is investing Questcor's (NASDAQ: QCOR) Achtar gel following Citron Research's detailed 24 page report released yesterday. Citron claimed there is no detectable amounts of the hormone ACTH, which the company has said it believes is the primary active ingredient within Achtar. Shares lost 9.96 percent, closing at $60.75.
Earnings of Note
This morning, 3D Systems (NYSE: DDD) reported its fourth quarter results. The company announced an EPS of $0.19, missing the consensus estimate of $0.20. Revenue of $154.8 million missed the consensus estimate of $154.98 million. Net income for the quarter totaled $11.22 million compared to $10.91 million in the same quarter last year. Gross margin profit for the quarter remained flat compared to last year at 53 percent. The company issued guidance and expects its 2014 revenue to be in a range of $680 million to $720 million versus a consensus estimate of $698.41 million. The company expects its EPS to be in a range of $0.73 to $0.85, versus a consensus estimate of $0.80. Shares gained 1.74 percent, closing at $75.96.
This morning, Endo Health Solutions (NASDAQ: ENDP) reported its fourth quarter results. The company announced an EPS of $0.96, beating the consensus estimate of $0.92. Revenue of $585 million missed the consensus estimate of $549.1 million. Net loss for the quarter rose to $776 million from $716 million in the same quarter last year. The company issued downside guidance and sees its full year 2014 EPS to be $3.40 to $3.65 below the consensus estimate of $3.93. Revenue is guided to be $2.50 billion to $2.62 billion versus consensus estimate of $2.56 billion. Shares hit new 52 week highs of $80.15 before closing the day in negative territory at $79.82, down 2.05 percent.
Quote of the Day
"For most Americans, Friday afternoons are filled with positive anticipation of the weekend. In Washington, it's where government officials dump stories they want to bury. Good news gets dropped on Monday so bureaucrats can talk about it all week." - Former Republican Senator John E. Sununu, comments made on December 26, 2011.
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