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Earnings Season Boosts Confidence; S&P Trades At Record Highs

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Earnings Season Boosts Confidence; S&P Trades At Record Highs
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U.S. stocks rose as earnings season continues to impress with companies like Comcast, Chipotle Mexican Grill and Verizon reported positive results.

The National Association of Realtors reported existing home sales rose better than expected. helping propel stocks higher despite global uncertainty.

  • The Dow gained 0.36 percent, closing at 17,113.54.
  • The S&P 500 gained 0.50 percent, closing at 1,983.53.
  • The NASDAQ gained 0.71 percent, closing at 4,456.02.
  • Gold lost 0.55 percent, trading at $1,307.30 an ounce.
  • Oil lost 0.47 percent, trading at $102.38 a barrel.
  • Silver lost 0.27 percent, trading at $20.92 an ounce.

News Of Note

ICSC Retail Store Sales declined 0.4 percent week over week after gaining 0.1 percent last week.

June Consumer Price Index rose 0.3 percent, in-line with expectations, but lower than May's 0.4 percent gain. Core CPI rose 0.1 percent, below the 0.2 percent expected.

May FHFA Housing Price Index rose 0.4 percent month over month, in line with estimates.

Redbook Chain Store Sales rose 3.7 percent year over year after rising 4.1 percent last week.

June Existing Home Sales rose to 5.04 million from 4.91 million in May. June's figure came in above estimates of 4.99 million.

June Richmond Fed Manufacturing Survey rose to +7 from +5 in May.

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Argentina's lawyers placed a new request for the U.S. district judge handling the country's bond situation to put a stay on a ruling that requires the country to pay holdout investors $1.33 billion and interest.

Russian separatist leaders handed over the black box of downed flight MH17 to Malaysian authorities.

Saudi Arabia plans to open up its stock market with a total market capitalization of $530 billion to foreign investors.

Analyst Upgrades And Downgrades Of Note

Analysts at UBS upgraded Allergan (NYSE: AGN) to Buy from Neutral. Meanwhile, analysts at Jefferies maintained a Hold rating on Allergan with a price target rasied to $174 from a previous $160. Also, analysts at JPMorgan maintained an Overweight rating on Allergan with a price target raised to $200 from a previous $190. Shares lost 0.41 percent, closing at $170.43.

Analysts at CICC upgraded Baidu (NASDAQ: BIDU) to Buy from Accumulate. Shares hit new 52-week highs of $200.05 before closing the day at $198.43, up 0.36 percent.

Analysts at Raymond James maintained an Outperform rating on Chipotle Mexican Grill (NYSE: CMG) with a price target raised to $725 from a previous $675. Also, analysts at JPMorgan maintained an Overweight rating on Chipotle with a price target raised to $670 from a previous $575. Meanwhile, analysts at Jefferies maintained a Hold rating on Chipotle with a price target raised to $600 from a previous $535. Shares hit new 52-week highs of $667.90 before closing the day at $659.77, up 11.84 percent.

Analysts at B. Riley maintained a Buy rating on Deckers Outdoor (NASDAQ: DECK) with a price target raised to $106 from a previous $83.82. Shares gained 0.36 percent, closing at $84.12.

Analysts at Citigroup maintained a Buy rating on Ford Motor (NYSE: F) with a price target raised to $21 form a previous $19. Shares gained 0.68 percent, closing at $17.82.

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Analysts at upgraded Hasbro (NYSE: HAS) to Overweight from Equal-Weight with a price target raised to $59 from a previous $58. Shares lost 0.25 percent, closing at $51.65.

Analysts at JPMorgan maintained an Overweight rating on Netflix (NASDAQ: NFLX) with a price target raised to $550 from a previous $500. Meanwhile, analysts at FBR Capital maintained a Market Perform rating on Netflix with a price target raised to $440 from a previous $393. Taking the opposite side, analysts at Jefferies maintained an Underperform rating on Netflix with a price target raised to $350 from a previous $300. Shares lost 4.62 percent, closing at $431.09.

Analysts at Citigroup maintained a Neutral rating on Owens Corning (NYSE: OC) with a price target lowered to $40 from a previous $43. Shares lost 0.08 percent, closing at $36.96.

Analysts at JPMorgan maintained an Overweight rating on TRW Automotive Holdings (NYSE: TRW) with a price target raised to $109 from a previous $97. Shares gained 0.23 percent, closing at $104.20.

Equities-Specific News Of Note

According to the Wall Street Journal, Apple (NASDAQ: AAPL) has finalized an order for 70 million to 80 million 4.7 inch and 5.5 inch iPhone 6 units to be manufactured by the end of the year. Shares gained 0.83 percent, closing at $94.72.

Blackstone (NYSE: BX) has agreed to acquire Max Property, a U.K. based real estate business that flips buildings for $707 million in cash. Shares hit new 52-week highs of $35.89 before turning negative and closing the day at $35.57, down 0.14 percent.

Credit Suisse (NYSE: CS) announced it will quit commodities trading following a fine from U.S. authorities. Shares lost 1.93 percent, closing at $28.50.

Sinopec (NYSE: SNP) reported that its oil and gas production rose eight percent from a year ago to 237 million barrels following its output doubling. Shares gained 3.05 percent, closing at $96.77.

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Analysts at Deutsche Bank speculated that Jana Partners $1 billion stake in Apache Management (NYSE: APA) will not result in a “hard conversation,” and that Jana Partners will encourage the company to focus on its U.S. business. Shares hit new 52-week highs of $104.00 before closing the day at $103.12, up 4.63 percent.

IMAX (NYSE: IMAX) reached an agreement with a Chinese film company Shanghai Film to open 19 new theaters in the country by the second half of 2015 with 246 screens to be added over the next five years. Shares lost 0.16 percent, closing at $25.27.

Winners Of Note

This morning, Centene Corp (NYSE: CNC) reported its second quarter results. The company announced an EPS of $0.79, beating the consensus estimate of $0.72. Revenue of $4.02 billion beat the consensus estimate of $3.66 billion. Net earnings for the quarter rose to $47.2 million from $40.3 million in the same quarter a year ago as the company continues to execute its growth and diversification strategy. Premium revenues rose 48.5 percent from a year ago to $3.741 billion beacuse of an expansion in Florida, growth in the AcariaHealth business, the addition of the California contract, the expansion in Ohio and the company's Health Insurance Marketplaces. The company's Health Benefits Ratio improved to 88.9 percent from 88.4 percent a year ago because of an increase in higher acuity membership. Shares hit new 52-week highs of $81.98 before closing the day at $79.98, up 5.82 percent.

After plunging around 11 percent on Monday, shares of Herbalife (NYSE: HLF) soared following Bill Ackman's presentation on why he believes the company's Nutrition Clubs are just as fraudulent as Enron's trading rooms. Ackman, who admittedly spent $50 million of investors' money to prove Herbalife is a pyramid scheme looked into more than 240 Nutrion Clubs, which represents 33 percent to 41 percent of the company's total earnings but may be as high as 50 percent. Ackman argued that the company would face near disaster if it would be shut down by governments. Finally, Ackman referred to the company's CEO Michael Johnson as a predator and criminal. Despite the presentation, Ackman clearly failed at convincing his short position. Shares surged 25.45 percent, closing at $67.77.

CIT Group (NYSE: CIT) has agreed to merge with IMB Holdco, the parent company of OneWestBank for $3.4 billion. OneWestBank operates more than 70 retail branches in Southern California with $23 billion in assets and $15 billion in deposits. IMB Holdco shareholders will receive $2 billion in cash in addition to approximately 31.3 million shares of CIT Group stock. CIT Group expects the deal to be accretive by 20 percent to its 2016 EPS and will generate an IRR of 15 percent. Shares gained 10.83 percent, closing at $48.71.

After being halted on Monday, Crocs (NASDAQ: CROX) reported a better than expected second quarter results and announced a “strategic performance improvement initiatives,” which include an exit on 75 to 100 leases and the termination of certain brands in its product line. The company expects the initiatives will result in a reduction of annual revenue by $35 million to $50 million with growth resuming in 2016. Shares gained 12.40 percent, closing at $16.68.

Decliners Of Note

This morning, Harley-Davidson (NYSE: HOG) reported its second quarter results. The company announced an EPS of $1.62, beating the consensus estimate of $1.46. Revenue of $2.00 billion beat the consensus estimate of $1.84 billion. Net income for the quarter rose to $354.2 million from $271.7 million in the same quarter a year ago, as the company saw a nine percent increase in motorcycle shipments worldwide to 92,217 from a year ago. However, the company lowered its fiscal 2014 shipment guidance to 270,000 to 275,000 from a previous guidance of 279,000 to 284,000 due to prolonged poor weather across the U.S. that delayed new bike production. New bikes did not appear in showrooms until late June as opposed to original expectations of the bikes available in May. Shares lost 5.40 percent, closing at $63.46.

Earnings Of Note

This morning, E.I. du Pont (NYSE: DD) reported its second quarter results. The company announced an EPS of $1.17, in line with the consensus estimate. Revenue of $9.70 billion missed the consensus estimate of $9.86 billion. Net income for the quarter rose to $1.074 billion from $1.034 billion in the same quarter a year ago, as the company saw strong operating growth in the quarter led by the Nutrition & Health division, whose earnings rose 72 percent from a year ago to $105 million, and Industrial Biosciences saw its earnings grow 37 percent over the same time period to $59 million. However, the company's largest segment (Agriculture) saw its earnings fall 11 percent from a year ago to $836 million because of lower corn seed volumes, lower North America herbicide volumes and higher seed inventory write-downs. The company noted that it continues to see strong science-driven growth over the long term. The company also announced it will raise its quarterly dividend to $0.47 in the third quarter from $0.45. Shares lost 0.90 percent, closing at $64.95.

This morning, Verizon (NYSE: VZ) reported its second quarter results. The company announced an EPS of $0.91, beating the consensus estimate of $0.90. Revenue of $31.50 billion beat the consensus estimate of $31.12 billion. Net income for the quarter rose to $4.21 billion from $2.25 billion in the same quarter a year ago, as the company added 1.4 million net retail connections in addition to a 5.3 percent increase in retail service revenues from a year ago to $17.3 billion. At the end of the quarter the company's total retail connections rose 4.6 percent from a year ago to 104.6 million, of which 98.6 million are postpaid. In the quarter, retail postpaid churn was 0.94 percent, down 13 basis points sequentially but up one basis point year over year. The company also added 100,000 FiOS TV subscribers, bringing its total base to 5.4 million, and added 139,000 Internet subscribers, bringing its total base to 6.3 million subscribers. The company reaffirmed prior guidance and expects its total 2014 capex to be $16.5 billion to $17.5 billion versus $16.6 billion in 2013. Shares gained 0.55 percent, closing at $50.98.

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This morning, Coca-Cola (NYSE: KO) reported its second quarter results. The company announced an EPS of $0.64, beating the consensus estimate of $0.63. Revenue of $12.57 billion fell short of the consensus estimate of $12.82 billion. Net income for the quarter fell to $2.61 billion from $2.69 billion in the same quarter a year ago, as North American sales were flat in the quarter despite increased marketing around the World Cup and the “Share a Coke” campaign. Global unit case volume grew three percent from a year ago. However, the company's gross margin improved to 61.7 percent because of lower costs. Coca-Cola said that its earnings will be negatively impacted by $0.02 in the second half of the year because of restriction of its Russian juice operations and the separation of its Brazilian bottling operation. Shares lost 2.85 percent, closing at $41.19.

This morning, McDonald's (NYSE: MCD) reported its second quarter results. The company announced an EPS of $1.40, missing the consensus estimate of $1.44. Revenue of $7.18 billion missed the consensus estimate of $7.28 billion. Net income for the quarter fell to $1.387 billion from $1.396 billion in the same quarter a year ago as global comparable sales were relatively flat, reflecting a higher average check and negative guest traffic in all major segments. Same-store-sales in the U.S. fell 1.5 percent, while same-store-sales in Europe fell one percent. Asia/Pacific same-store sales rose 1.1 percent, as China sales remained strong in the quarter. Shares lost 1.31 percent, closing at $96.27.

After the market closed, Electronic Arts (NYSE: EA) reported its first quarter results. The company announced an EPS of $0.19, beating the consensus estimate of -$0.04. Revenue of $775.00 million beat the consensus estimate of $709.15 million. Shares were trading higher by 1.54 percent at $39.01 following the earnings report.

After the market closed, Intuitive Surgical (NASDAQ: ISRG) reported its second quarter results. The company announced an EPS of $3.73, beating the consensus estimate of $2.88. Revenue of $507.00 million fell short of the consensus estimate of $511.29 million. Shares were trading higher by 10.43 percent at $433.05 following the earnings report.

After the market closed, Microsoft (NASDAQ: MSFT) reported its fourth quarter results. The company announced an EPS of $0.55, missing the consensus estimate of $0.61. Revenue of $23.38 billion beat the consensus estimate of $23.11 billion. Shares were trading higher by 0.45 percent at $45.03 following the earnings report.

Quote Of The Day

"You're going to learn why Herbalife is going to collapse. And that's a pretty strong statement but this is the largest fraud -- public fraud in terms of scale, of countries involved, harm to people. But we're going to show you with particularity, okay, and we have hundreds of hours of recorded video, audio. We have internal documents that were given to us by some employees that felt it was in the best interests of the world to know what's really not going on at the company." - Bill Ackman speaking to CNBC prior to his presentation, which supports his view that Herbalife is operating a pyramid scheme.

Posted-In: AllerganEarnings News Guidance Econ #s Economics After-Hours Center Movers Best of Benzinga

 

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