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JDS Uniphase reiterates 4Q revenue forecast -- JDS Uniphase Corp. (JDSU) reiterated its forecast for fiscal fourth-quarter revenue to be above the midpoint of the $160 million to $170 million range. The fiber-optic networking gear maker is scheduled to report its results on Aug. 18.
Greatbatch sees 2Q results higher than Wall St view -- Greatbatch Inc. (GB) forecast second-quarter earnings of 21 cents to 23 cents a share on sales of $63 million. The earnings forecast includes 6 cents a share in certain charges for its previously announced Carson City and Alden plant moves. The Clarence, N.Y.-based company cited strong market conditions in both its medical and commercial product lines, along with increased short-term implantable cardioverter defibrillator, or ICD, component demand for its outlook. Analysts surveyed by Thomson First Call currently expect earnings of 13 cents a share on revenue of $55 million.
Walgreen Co. raises dividend 23.8% -- Walgreen Co. raised its quarterly dividend 23.8% to 6.5 cents a share. The company's annualized dividend rate is now 26 cents a share. (WAG)
Chief of U.S. Ex-Im Bank to step down By Alexander Davis
SAN FRANCISCO (MarketWatch) -- Philip Merrill will step down as head of the U.S. Export-Import Bank when his term ends July 20, the bank said Wednesday. He was appointed by President Bush in 2002 to run the agency, which is the government's credit-export agency.
S&P: Technically this looks like a buy as long as the market remains above the minor Gann level of 1221.03. If the market continues up the very minor Gann resistance of 1227.10 (93.75%) or the major Fibonacci level of 1233.16 (100.00%) could well be tested soon.Above these levels there is a major (100.00%) Gann resistance at 1233.16.
Russell 2000:Technically this looks like a buy as long as the market remains above the major Gann level of 648.26. If the market continues up the minor Gann resistance of 661.29 (87.50%) or the major Fibonacci level of 674.33 (100.00%) could well be tested soon.
Nas 100:Technically this looks like a buy as long as the market remains above the very minor Gann level of 1570.65. If the market continues up the major Gann resistance of 1582.40 (100.00%) or the major Fibonacci level of 1582.40 (100.00%) could well be tested soon.The correspondence of the Gann and Fibonacci resistance levels makes it even more technically signficant.
DOW: Technically this looks like a buy as long as the market remains above the very minor Gann level of 10616.63. If the market continues up the major Gann resistance of 10657.70 (100.00%) or the major Fibonacci level of 10657.70 (100.00%) could well be tested soon.The correspondence of the Gann and Fibonacci resistance levels makes it even more technically signficant
DJ Comp[: The market has no clear direction but is generally positive and could look to test the very minor Gann level (93.75%) of 81.31. Above this, the next resistance levels are at: Gann(100.00%) = 82.15, and Fibonacci (123.60%) = 85.32.0
COMPX: Technically this looks like a buy as long as the market remains above the very minor Gann level of 2147.03. If the market continues up the major Gann resistance of 2164.18 (100.00%) or the major Fibonacci level of 2164.18 (100.00%) could well be tested soon.The correspondence of the Gann and Fibonacci resistance levels makes it even more technically signficant.
Netflix (NFLX) 16.21 -0.29: Since its inception in 1997, Netflix has become the world's largest on-line DVD rental service. It provides its subscribers with access and information to over 45,000 movie titles. For only $17.99 a month, it's as easy as creating a movie list on-line and walking to the mailbox a few days later to pick up your DVDs. You can view them at your convenience, without incurring any late fees, and then return them in the provided prepaid envelope when you're ready for the next movie on your list. Seems simple enough. But with increasing competitive pressures, the outlook is not as such.
Netflix has certainly been an extraordinary growth story over the years; however, with Amazon (00C0) threatening to enter the market and Blockbuster (BBI) aggressively cutting prices and increasing marketing spending, a lot remains to be questioned. Amazon has the ability to leverage its large consumer base and integrate DVD rentals with its existing platform to create cross-selling opportunities. Although the Internet giant has not confirmed its plans, it is anticipated that it will not stay on the sidelines for long. Blockbuster has also heightened pressures in the competitive environment as it continues to implement price changes and special offers to lure customers. The video retailer currently prices its services at $14.99 a month, a 20% discount to Netflix's price, making clear its attempt to gain market share at the expense of profits.
In May, Walmart, the number three on-line DVD rental company, announced that it is withdrawing from the business and referring its subscribers to Netflix. Although the impact from the deal should have little impact on earnings, it marks a strategic victory for the company. Walmart's promotion of Netflix services on its website should help increase visibility and additional subscribers.
McDonald's Corp (MCD) 30.90 +1.30: Talk about "Supersize"! Shares in McDonald's soared over the golden arches on Friday after the company reported strong June system-wide sales including a recovery in its lagging European markets. Additionally, the company preannounced second quarter EPS guidance of approximately $0.53, excluding items, well above consensus of $0.48. MCD also stated it would repatriate $3.2 bln in foreign profits. The repatriation amount was much higher than the Street was expecting and could free up cash flows for possible use in share repurchases. All in all, the trifecta propelled MCD as the best performer in the Dow for the day.
McDonald's has been battling several forces as of late causing significant selling pressure in shares. For some perspective, the stock hit a low back in early 2003 around $12 per share. Since then the hamburger maker has been quite a good investment returning almost 150%. Shares reached a multi-year high in January at almost $35 subsequently igniting profit taking. General discontent has been the mood as of late as the market searched for a catalyst. There were several factors dictating price performance including 18-months of poor performance in Europe, a reversal in the dollar, and another incident of mad cow disease resulting in higher beef prices. Further, the market's view of the company had changed from a turnaround story to a maturing growth, dividend investment. But, Europe was the major overhang, as economic weakness caused a drag on sales. Meanwhile, the US operations were performing quite well. The company was expanding its menu to include healthier choices in response to change in consumer tastes. The Oak Brook, Illinois-based company put the full force of its enterprise behind new fruit and salad offerings. By all accounts, the new product offerings have been quite successful. With restaurants extending houses, monthly same-store sales results maintained a healthy pace up 5.4% in June, +4.2% in May, and +4.7% in April.
June results show more of the same in the US, but the surprise came from over the Atlantic. Europe posted an 1.3% gain vs the 0.21% Briefing.com consensus following several quarters of negative results. Management stated the gains were achieved through greater menu variety and compelling value propositions. Leading markets were France and Germany partly offsetting continued weakness in the United Kingdom. McDonald's has been aggressive in making management changes including a new head in Germany and a new European President, Dennis Hennequin. Systemwide same-store sales gained 3.8% vs the Briefing.com consensus of 3.0% including US up 5.4% vs 4.3% consensus. In the Asian markets comparable stores rose 2.9% vs +2.4% consensus. You can smell it in the air, the momentum has shifted for McDonald's. While this is just one month of sales in Europe, clearly this segment is gaining traction. If McDonald's can continue to build on its momentum in the US along with Asia and restore growth in Europe, it could reaccelerate profit trends. One factor sure to support share appreciation in the near-term was the announcement today of a appeals court overturning an injunction banning Canadian beef imports. While there will certainly be more legal maneuvering, confirmation the supply chain is in tack and subsequent trade resumption will provide relief in beef prices
The tone of the market is positive. And why not? Inflation is lower than expected, the economy continues to grow at a pace faster than historical norms, and earnings reports are coming in above expectations.
The summer doldrums may make it hard for a big rally to occur. But the fundamentals for the months ahead are undeniably improving.
The 10-year bond yield rose this past week from 4.10% to 4.17%. That hardly caused a stir. Oil prices dipped to $58.09 from $59.63.
The Earnings schedule is very heavy next week. If this week was any indication, second quarter reports will not disappoint.
Earnings reports this week were also good. Apple was the headline report. On Wednesday, they reported profits well above expectations as revenue was up 74.8% from last year. Other strong reports this week included Genentech, PepsiCo, Abbott Labs, Harley-Davidson, Advanced Micro Devices, Yum! Brands, Marriott, Novartis, UnitedHealth Group, and Tribune. General Electric reported in line with expectations, but per-share profits were up 15.7% from last year. The only real disappointment came from First Data, which reported profits a penny below expectations.
The economic numbers were also flat out bullish. June retail sales were reported on Thursday to have surged 1.7%. The GM "employee discount" pricing helped boost the figure, but even excluding autos, the gain was a very solid 0.7%. Consumer spending is on track. So is the manufacturing sector. On Friday, June industrial production was reported to have surged 0.9%, backed by a jump in utility output. Manufacturing output was up a good 0.4%. That day, the July NY Empire State index came in at 23.9. That regional survey of manufacturing conditions is an early read on July. It was up sharply from 10.5 in June.
On Thursday, June CPI was reported as unchanged and the core rate up just 0.1%. The core rate has been up just 0.0%, 0.1%, and 0.1% the past three months. The PPI data Friday was just as bullish. The total PPI was unchanged, and the core rate was -0.1%. Core PPI is up just a net 0.5% the past five months. That is barely over a 1% annual rate. The recent inflation numbers have completely crushed the inflation concerns evident back in March.
It was a great week for the stock market. The S&P 500 index was up every day. That followed gains on Thursday and Friday of last week to create a seven day winning streak. There was plenty of good news to back up the move.
Popular Inc beats by $0.04 (BPOP):Reports Q2 (Jun) earnings of $0.48 per share, $0.04 better than the Reuters Estimates consensus of $0.44.
Harrington West Financial (HWFG) Sandler O'Neill initiates BUY. Target $19. Firm notes that the co has grown core EPS at a 5-year CAGR of 15% while growing both loans and deposits at 9.4% CAGRs. They also note that the co has successfully transformed its loan portfolio from that of a traditional thrift with a single-family, residential mortgage focus into a predominantly business oriented portfolio, while maintaining excellent credit quality.
National Financial Partners (NFP) Oppenheimer initiates BUY. Target $49. As the only publicly traded play on life insurance distribution, firm sees the co as a means of gaining exposure to the improving demographics in the life insurance industry, without taking on the balance sheet risks that often deter investors from investing in many of the life insurers they follow.
Target (TGT) CSFB reiterates OUTPERFORM. Target $53 to $66. CSFB says they believe the multiple history of LOW and HD could serve as a reasonable signpost of what to expect from the valuation relationship between TGT and WMT. LOW has traded as high as a 50% premium to HD and the firm believes the same scenario is possible for TGT-WMT. TGT has been able thus far to offset WMT's pricing on highly visible consumables while driving sales on more fashionable products. Furthermore, TGT continues to generate earnings outperformance through strong sales and gross margin expansion.
eBay (EBAY) Goldman Sachs resumes OUTPERFORM. Goldman Sachs reinstates EBAY saying they view the co as one of the top 3 cos' in their coverage universe and see 25%+ appreciation potential to their $45 implied value, vs 10% downside. While firm does not expect upside to 2Q05 estimates, they believe investors should buy the stock now with a focus on year-end performance, bucking conventional wisdom that suggests waiting to build positions until after the trough of summer seasonality in August.
Mack-Cali Realty (CLI) Ryan, Beck & Co upgrades Mkt Perform to OUTPERFORM. Target $42 to $51. Ryan Beck upgrades CLI as the stock has underperformed the office REITs and REIT sector and represents a current attractive value and yield. CLI is down 0.7% year to date, compared to the office REITs' average increase of 7%. Firm notes that CLI is one of only 3 REITs of the over 100 REITs the firm tracks with a market cap of $3.5 bln or higher; dividend yield above 5% and a 2005 AFFO payout ratio of less than 95%.
James River Coal (JRCC) Bear Stearns initiates OUTPERFORM. Target $48. Firm thinks the co has re-emerged into a very strong bituminous coal pricing environment. Firm believes its Central Appalachian operations are well-positioned to deliver improved operating margins as demand for high-BTU, low sulfur coal accelerates among Southeastern Electric Utilitie
Lear Corp (LEA) CSFB downgrades Outperform to NEUTRAL. CSFB downgrades LEA saying with the mkt already pricing-in $5.55 in 2007 earnings, they think the opportunity for further near-term upside in the stock will be limited. Firm also believes that a larger-than-expected downward revision to 2005 would hit 2006 and 2007 profit expectations, at best limiting further upside in the stock, and at worst, suggesting a few dollars of downside from here.
Indus Int'l (IINT) Sun Trust Rbsn Humphrey initiates BUY. Target $3.5. Firm thinks the co has maintained leadership within the asset mgmt software mkt in spite of years of poor execution, disruptive restructuring, and lack of financial discipline. Also they think new mgmt and growth opportunities appear to be driving a renewed relevancy for the co. They believe an inflection point has been reached with the co's turnaround, inclusive of meaningful expense reduction and investment in new mkt opportunities.
Service Corp (SCI) Banc of America Sec initiates BUY. Target $10. BofA initiates SCI saying the co has yet to prove why its industry leading market share should translate into greater competitive advantage, but this should be more evident over the next few years as it accumulates additional share and profitability improves. They think in the interim, shareholders should benefit from a continuing focus on FCF, which the co is aggressively deploying on share repurchases and dividends
PriceSmart reports MayQ results (PSMT) 8.44 :Co reports Q3 (May) sales increase of 16.2% yoy to $169.6 mln. Co reports EPS of $(0.53), but this includes charges that are not broken out on a per share basis. There are no analyst estimates. Co operates 26 membership shopping warehouse clubs in Central America, the Caribbean, and the Philippines
Traffix reports Q2 revs up 82% to $16.6 mln; EPS $0.05 (TRFX) 5.52 :Co reports Q2 EPS of $0.05, vs $0.05 in the comparable quarter of fiscal 2004. Revs rose 82% to $16.6 mln, from $9.1 mln in the comparable quarter of fiscal 2004. Income from operations increased 176% to $1.1 mln, up from $0.4 mln in the comparable quarter of fiscal 2004. (No analysts cover the stock.)
Chiron reduces supply expectations for BEGRIVAC Influenza Virus Vaccine to Non-U.S Markets (CHIR) 37.27 :Company is working to cover BEGRIVAC vaccine shortfall with other non-U.S. influenza virus vaccines. No change to financial guidance. In conducting its regular internal quality assurance tests, Chiron identified a small number of lots of the BEGRIVAC vaccine that did not meet product sterility specifications. Chiron has taken presumptive corrective action, and is working closely with the German regulatory agency, the Paul Ehrlich Institute (PEI), to complete additional testing in order to determine the full extent of the issue. Chiron does not expect to record any sales of BEGRIVAC vaccine in the third quarter of 2005. However, Chiron still expects to be within the range of its updated 2005 financial guidance of income from continuing operations of between $1.20 and $1.45 per share on an adjusted (pro forma) basis and between $0.86 and $1.11 per share on a GAAP basis. Separately, CHIR announces that the FDA is currently conducting a full cGMP (current Good Manufacturing Practices) inspection of Chiron's Liverpool facility, which manufactures FLUVIRIN influenza virus vaccine. Following the on-site inspection, Chiron expects to respond to any observations noted by the FDA. Chiron expects that the FDA will then assess Chiron's response in conjunction with the agency's findings. Chiron will communicate the outcome of the full inspection once this process has concluded and the FDA has issued formal results, which may occur several weeks after the on-site inspection has ended.
WW Grainger beats by $0.08; raises FY05 guidance above consensus (GWW) :Reports Q2 (Jun) earnings of $0.89 per share, $0.08 better than the Reuters Estimates consensus of $0.81; revenues rose 9.3% year/year to $1.37 bln vs the $1.39 bln consensus. Co raises guidance above consensus for FY05, to EPS of $3.40-3.60 from $3.20-3.45 vs. $3.37 consensus.
Tribune downgraded to Peer Perform at Thomas Weisel (TRB) Thomas Weisel downgrades TRB to Peer Perform from Outperform, given a lack of positive catalysts and a string of issues that could continue to dampen the co's outlook. Firm says that while TRB mgmt has done a good job of getting in front of many of the issues by communicating effectively and proactively cutting costs, they think it may not be enough to combat declining circulation, which could limit ad rate increases and, hence, advertising growth, as well as other non-operating issues such as the Matthew Bender lawsuit, FCC regulation, and Nielsen's Local-People-Meters.
First Niagara beats by a penny, guides in line (FNFG) 14.44 :Company reports Q2 (June) EPS of $0.22, $0.01 better than consensus of $0.21, up 38% yr/yr. "Second quarter results were very good, reflecting the benefits of the continuing expansion of our commercial loan portfolio and deposit base, the ongoing integration of Hudson River Bancorp, acquired in January of this year, and the initial implementation of our Strategic Blueprint". Co sees Y05 EPS, excluding a $0.01 charge, of $0.84-0.85 vs consensus of $0.84
A.O. Smith beats by $0.02, ex items; reaffirms FY05 guidance (AOS) :Reports Q2 (Jun) earnings of $0.48 per share, excluding non-recurring items, $0.02 better than the Reuters Estimates consensus of $0.46; revenues rose 0.1% year/year to $437.7 mln vs the $444.5 mln consensus. Co issues reaffirms guidance for FY05, sees EPS of $1.60-1.80, ex items vs. $1.64 consensus.
Dura Automotive Systems upgraded to Outperform at CSFB (DRRA)CSFB upgrades DRRA to Outperform from Neutral and raises tgt to $6 from $4. Firm thinks the co provides a high-octane way to participate in the recent drop in steel prices. They note that DRRA was was one of the first cos to be hurt by rising steel prices in 2004, and thus may be one of the first to benefit from the recent fall in that commodity.
Citigroup earnings estimates cut at Merrill -- Merrill Lynch cut its second-quarter earnings estimate for Citigroup, Inc. (C: news, chart, profile) to $1.04 from $1.09 a share and slashed its fiscal 2005 earnings estimate to $4.07 from $4.26 a share, citing higher funding rates and loan loss provisions in Cards. Lower debt/equity underwriting and lower commissions in Capital Markets and Banking also contributed to the estimate cut, Merrill said.
AMD, which reports earnings July 13, is expected to lose 6 cents a share on revenue of $1.2 billion, according to analysts polled by Thomson First Call. That compares with a profit of 9 cents a share on revenue of $1.26 billion in the year-ago period.
Sunnyvale, Calif.-based AMD (AMD: news, chart, profile) has been hurt this year by its flash-memory chip unit due to persistent pricing pressure in the market for a certain type of memory chip -- known as NOR flash -- used to store data on electronic devices.
In the first quarter, AMD swung to an unexpected loss of 4 cents a share due to deteriorating selling prices for flash-memory chips used in mobile phones and DVD players. Not much is expected to change in the latest quarter.
AMD "is probably having another good quarter for processor sales, but we believe NOR flash losses will continue to push AMD's bottom line to a loss," commented Paul McWilliams, who runs the tech newsletter NextInning.com and does not own AMD shares.
Its memory-chip problems have undercut better sales of chips used to power PCs and corporate servers. AMD, which filed an antitrust suit against Intel Corp. (INTC: news, chart, profile) last week, is the second-largest maker of chips used in PCs behind Intel.
ThinkEquity analyst Eric Ross said AMD should show gains in the sales of desktop PC chips in emerging markets like China, Malaysia and Indonesia.
Ross, who estimates the company will report a profit of 1 cent a share, said he is not expecting much strength from AMD's sales of laptop chips, a market segment where Intel is gaining more share.
AMD hopes to spin off Spansion in an initial public offering later this year to focus on personal computer and server chips. Spansion, which chalked up an operating loss of $110 million in the first quarter, makes up about 43% of AMD's total revenue.
But some observers wonder whether the IPO will be pulled off due to conditions in the NOR flash market. See full story.
"We believe there is material risk that the IPO will at a minimum be delayed," wrote UBS analyst Tom Thornhill, who think such an event could negatively impact AMD's shares. UBS has an $11 price target and sell rating on the stock.
Still, W.R. Hambrecht analyst Daniel Amir suggests that fundamentals should improve in the NOR flash market because prices for the chips have hit a low point.
Parkway Prop, Ohio pension group to form $500M fund -- Parkway Properties Inc. (PKY) said it has signed a limited partnership agreement for the formation of a $500 million discretionary fund with Ohio Public Employees Retirement System for the purpose of acquiring high-quality multitenant office properties. Ohio PERS will be a 75% investor in the fund, while Parkway will take a 25% stake. It will be capitalized with $200 million of equity capital and $300 million of non-recourse, fixed-rate first mortgage debt and will target properties with a cash-on-cash return of more than 7% and a leveraged internal rate of return of greater than 11%.