Market Overview

Market Wrap For April 25: Markets Finish The Week In Negative Territory

Market Wrap For April 25: Markets Finish The Week In Negative Territory
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U.S. stocks declined as investors continue to follow the increasing tense situation in Ukraine as the markets pause for the weekend.

Ukraine forces reportedly killed up to five pro-Russia rebels as the Russian military continues to conduct drills close to the Ukraine border. Additionally, Russia's Gazprom issued a May 7 ultimatum for Ukraine to settle $3.5 billion in unpaid debts or else Gazprom will cease supplying the country with gas for domestic use.

Fear is present in the markets as the CBOE Volatility Index, or the "fear index" rose 7.4 percent to 14.31.

The Dow suffered a triple-digit point loss while the Nasdaq under-performed the other major indices with high-momentum stocks like Facebook, Tesla Motors, Priceline Group and Zillow declining more than usual.

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  • The Dow lost 0.85 percent, closing at 16,361.78.
  • The S&P 500 lost 0.81 percent, closing at 1,863.41
  • The Nasdaq lost 1.75 percent, closing at 4,075.56.
  • Gold gained 0.83 percent, trading at $1,301.30.
  • Oil lost 1.32 percent, trading at $100.59.
  • Silver lost 0.12 percent, trading at $19.67.

News of Note

U.S. April PMI Services Flash Index fell to 54.2 from 55.5 in March and missed the consensus of 56.2.

April Reuters/UofM Consumer Sentiment rose to 84.1 from 82.6 in March.

Japanese core inflation remained unchanged in March at 1.3 percent but came in below expectations of 1.4 percent.

S&P has reduced Russia's rating to BBB- which is one grade above junk level. The rating agency reaffirmed the country's outlook as ‘negative.'

Analyst Upgrades and Downgrades of Note

Analysts at CRT Capital maintained a Buy rating on American Airlines (NYSE: AAL) with a price target raised to $45 from a previous $40. Shares lost 3.38 percent, closing at $36.00.

Analysts at Stifel Nicolaus maintained a Buy rating on Baidu (NASDAQ: BIDU) with a price target lowered to $215 from a previous $238. Taking the opposite side, analysts at Deutsche Bank upgraded shares of Baidu to Buy from Hold with a price target raised to $229 from a previous $178. Shares gained 1.98 percent, closing at $162.91.

Analysts at Piper Jaffray upgraded Celgene (NASDAQ: CELG) to Overweight from Neutral with a $170 price target. Meanwhile, analysts at Nomura maintained a Buy rating on Celgene with a price target raised to $252 from a previous $248. Shares gained 0.57 percent, closing at $142.06.

Analysts at ISI Group upgraded D.R. Horton (NYSE: DHI) to Strong Buy from Buy with a $28 price target. Shares lost 2.75 percent, closing at $22.50.

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Analysts at Wedbush maintained a Neutral rating on LinkedIn (NYSE: LNKD) with a price target lowered to $185 from a previous $225. Shares lost 7.83 percent, closing at $158.15.

Analysts at Stifel Nicolaus maintained a Buy rating on Las Vegas Sands (NYSE: LVS) with a price target raised to $100 from a previous $92. Shares lost 3.11 percent, closing at $77.01.

Analysts at a Stifel Nicolaus upgraded Under Armour (NYSE: UA) to Buy from Hold with a price target of $65. Shares lost 3.99 percent, closing at $48.41.

Analysts at Barclays downgraded Unilever (NYSE: UL) to Equal-weight from Overweight. Shares gained 0.50 percent, closing at $43.83.

Equities-Specific News of Note

Google (NASDAQ: GOOG) has received a demand from the French government to pay hundreds of millions of euros in tax. In February, it was reported that the government could expect Google to pay up to one billion euros. Shares lost 1.71 percent, closing at $516.18.

Visa (NYSE: V) announced on Thursday during its quarterly report that that its 2014 revenue growth is estimated to be at ten percent to 11 percent. The company previously guided to ten percent to 13 percent growth. Analysts at Nomura maintained a Buy rating on Visa (NYSE: V) with a price target lowered to $228 from a previous $264. Shares lost 4.97 percent, closing at $199.0.

United Technologies (NYSE: UTX) disclosed that the SEC is investing one of its non-employee sales representatives related to a jet engine sale in China. Shares lost 1.48 percent, closing at $117.22.

Joe Ashton, Vice President of the United Automobile Workers (UAW) was nominated to a board seat at General Motors (NYSE: GM). The UAW is General Motors' single largest shareholder. Shares lost 1.32 percent, closing at $33.72.

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According to a leak on Thursday evening, the Department of Justice is seeking more than $13 billion from Bank of America (NYSE: BAC) in addition to the $9.5 billion the bank already agreed to pay to resolve FHFA claims. Shares lost 2.39 percent, closing at $15.95.

AOL (NYSE: AOL) announced that beginning this summer, content from AOL's library of brands (such as HuffPost) as well as partner sites like ESPN will be available on MSN and Bing Apps for Windows devices, including mobile. Shares gained 0.19 percent, closing at $42.01.

Winners of Note

During its fourth quarter results on Thursday, Deckers Outdoor (NASDAQ: DECK) saw its quarterly loss narrow to -$0.08, beating the consensus estimate of -$0.15. The company saw its revenue grow nearly 12 percent and projected its first quarter EPS to be in a range of -$1.33, worse than the consensus estimate of -$1.05. However, the company sees its revenue growing by 12 percent, more than the consensus estimate of nine percent. Finally, the company sees its fiscal 2015 EPS growth to be 13.5 percent, above the consensus estimate of 13 percent. Shares gained 5.90 percent, closing at $83.16.

Prestige Brands (NYSE: PBH) has agreed to acquire privately held Insight Pharmaceuticals for $750 million in cash. Through the acquisition, Prestige Brands gains exposure to Insight's Monistat, a yeast infection treatment, a home pregnancy test and several other feminine care products. Shares surged 18.16 percent, closing at $32.27.

Decliners of Note

Pandora (NYSE: P) reported its first quarter results on Thursday after market close which include an EPS of -$0.13 which beat the consensus estimate of -$0.15 and revenue of $180.1 million which beat the consensus estimate $174.94. Investors were clearly not pleased with the company's second quarter guidance in which it is projecting revenue of $213 million to $218 million, below the consensus estimate of $219.3 million. EPS is guided to be in a range of $0.00 to $0.03, below the consensus estimate of $0.05. Full year revenue guidance is expected to be in a range of $880 million to $900 million versus a consensus estimate of $892.3 million. EPS is guided to be in a range of $0.14 to $0.18 versus a consensus estimate of $0.16. Analysts at CRT Capital maintained a Fairly Valued rating on Pandora Media (NYSE: P) with a price target lowered to $32 from a previous $33. Analysts at Needham reiterated a Buy rating on Pandora with a $41 price target. Shares plunged 16.63 percent, closing at $23.51.

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Amazon.com (NASDAQ: AMZN) reported its first quarter results on Thursday after market close which included an EPS of $0.23 that fell short of the consensus estimate of $0.24. Revenue of $19.74 billion beat the consensus estimate of $19.42 billion but its operating margin declined 40 bps year over year to 1.1 percent. Amazon projects its second quarter revenue to be $18.1 billion to $19.8 billion versus a consensus estimate of $19.0 billion, however the company is projecting an operating loss of up to $455 million. Analysts at Cantor Fitzgerald maintained a Buy rating on Amazon.com (NASDAQ: AMZN) with a price target raised to $425 from a previous $415. Meanwhile, at Credit Suisse maintained an Outperform rating with a price target reduced to $439 from a previous $449. Also, analysts at Raymond James downgraded Amazon to Outperform from Strong Buy with a price target lowered to $391 from a previous $443. Shares lost 9.88 percent, closing at $303.83.

Earnings of Note

This morning, Covidien (NYSE: COV) reported its second quarter results. The company announced an EPS of $0.96, beating the consensus estimate of $0.95. Revenue of $2.59 billion missed the consensus estimate of $2.61 billion. Net income for the quarter rose to $441 million from $439 million in the same quarter last year as the company saw sales of its surgical solutions division rise four percent year over year to $1.2 billion, sales of vascular therapies rose one percent to $409 million and respiratory and patient care sales rose two percent to $976 million. Shares lost 2.20 percent, closing at $69.40.

This morning, Whirpool (NYSE: WHR) reported its first quarter results. The company announced an EPS of $2.20, missing the consensus estimate of $2.33. Revenue of $4.4 billion beat the consensus estimate of $4.3 billion. Operating profit for the quarter rose to $281 million from $254 million in the same quarter a year ago as the company noted it experienced higher sales, favorable product price and mix, ongoing cost productivity and the benefit of cost and capacity-reduction initiatives. The company reaffirmed its prior guidance for full year net earnings per share of $11.05 to $11.55. shares gained 0.50 percent, closing at $155.43.

This morning, Ford (NYSE: F) reported its first quarter results. The company announced an EPS of $0.25, missing the consensus estimate of $0.31. Revenue of $35.9 billion beat the consensus estimate of $34.06. Net income for the quarter fell to $989 million from $1.61 billion in the same quarter a year ago as the company added $400 million in warranty reserves for older vehicles. The company also spent $100 million for higher freight and other items as a result of poor weather earlier in the year. The company also disclosed expenses of $400 million due to currency devaluation in Venezuela. On the positive side, Ford announced that its European division reduced its loss by more than half and wholesale volume and revenue increased from a year ago as the company continued to gain market share in Asia Pacific, driven by record market share in China. Shares lost 3.28 percent, closing at $15.78.

This morning, AbbVie (NASDAQ: ABBV) reported its first quarter results. The company announced an EPS of $0.71, beating the consensus estimate of $0.68. Revenue of $4.56 billion beat the consensus estimate of $4.33 billion. Operating earnings for the quarter rose to $1.35 billion from $1.31 billion in the same quarter a year ago as growth was driven primarily by sales of HUMIRA which increased 17.5 percent to $2.64 billion. The company made no changes to its previous full year EPS guidance to be $3.00 to $3.10 and expects its full year revenue to be around $19 billion. Shares lost 0.34 percent, closing at $49.15.

Quote of the Day

"Let's go back to what I said, so there is no misunderstanding. We've been approached by tech companies and national retailers as to whether or not we would consider licensing or white-labeling the Starbucks' mobile platform. I think you have to ask yourself, why are they asking us to do this? We have such a significant lead. There isn't a company that we can identify that is processing anything close to a million transactions a week, and we're now way over five million. Most of the national retailers did not invest ahead of the growth curve. They do not have the capability in-house at this point to really execute this and to fully understand it." - Starbucks CEO Howard Schultz speaking during Thursday's conference call.

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