Stock Futures Higher on Earnings and EU Optimism. Stocks to Watch: AAPL, BAC, EBAY, EK, FFIV, FCX, GOOG, MS

Published on Thursday, 19 January 2012 07:41 Written by Christopher Lynn

New York, January 19^th (TradersHuddle.com) – Stock futures were pointing to higher open amid solid earnings reports from Bank of America and Morgan Stanley and upside momentum in overseas markets. The euro was gaining on the Dollar after successful bond auctions in the euro zone and reports of possible increased lending from the IMF were supporting the risk on trade.

In Asia, stocks closed higher hitting their highest level in 2- months following news that the IMF is seeking to boost its lending programs by raising $600 billion in new resources to help countries deal with the euro zone debt crisis. In Japan, the Nikkei climbed 1%, logging a 5-month high and passing thru key technical level. A strengthening euro helped lift exporters; while in China, the Shanghai Composite gained 1.3%.

In Europe, equity markets were in positive territory, trading near their 5-½ month high, as participants focus on the talks between Greece and private bondholders, which aim to avoid a disorderly default. Successful bond auctions and news that the IMF wants to raise funds to boost lending programs was also impacting trade, as report suggested the United States and other countries were pushing for European member states to come up with the funds. 

The euro was gaining 0.4% against the Dollar, trading just above the $1.29 level. Crude oil was gaining 1.15% to $101.75 per barrel. Natural Gas, which has been under major pressure, was falling 2.06% to $2.421 per MMBtu. Gold was adding 0.25% to $1664.1 an ounce and silver was climbing 0.51% to $30.70 an ounce. Meanwhile, copper was gaining 1.53%.

On economic news, at 8:30 am, the Labor Department will release its Consumer Price Index (CPI), with economists expecting an uptick of 0.1%, while Core CPI is also expected at 0.1%. At the same time, the Weekly Jobless Claims report will also be available, with economists on average expecting 385,000 initial claims. Also at 8:30 Housing Starts and Building Permits for December will be available. At 10 am, the January Philadelphia Fed will release its activity index, while at 11 am, crude oil inventory data will be available.

Today’s Stocks to watch: Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), Eastman Kodak (NYSE: EK), eBay (NASDAQ: EBAY), F5 Networks (NASDAQ: FFIV), Freeport McMoRan (NYSE: FCX), the Google (NASDAQ: GOOG), and Morgan Stanley (NYSE: MS).

Apple (NASDAQ: AAPL), the maker of iPads and iPhones, was gaining 0.3% to $430.40 in pre-market, trading at new all-time high territory. Apple jumped to an all-time high close of $429.11 and intraday hit $429.47 after RBC Capital bumped its target price to $525 from $500, citing their expectations of a first quarter beat and healthy guidance for the second quarter. The firm expects the tech giant to have shipped 32 million iPhones during the Holiday quarter. Earlier in the week, Cannacord Genuity said that it expects Apple to launch new products soon. The firm noted Apple’s strong position for this calendar year, driven by new products, including the pending refresh of MacBook Air, the iPad 3 launching this spring, the LTE iPhone 5 likely mid-year, and potentially Apple TV. Last week, Goldman Sachs and Needham upped estimates. Goldman boosted its target price to $550 from $520 and Needham maintained its Buy rating and target price of $540, while citing blow out iPhone sales. Needham raised its EPS estimate to $10.85 per share for the quarter from $9.55.

Bank of America (NYSE: BAC) was rallying 6.18% to $7.22, trading above calculated resistance at $7.02 following positive reaction to its quarterly results. The Charlotte, NC based lender posted earnings of $0.15 per share, inline with consensus, on revenues that climbed 10.9% year over year to $25.1 billion, above consensus of $24.12 billion. Regulatory capital ratios increased significantly year over year and sequentially during the quarter, with the Tier 1 common equity ratio at 9.86%, and the Tangible common equity ratio at 6.64%. The company continued to prudently manage its sovereign and non-sovereign exposures in Europe. Total exposure to Greece, Italy, Ireland, Portugal, and Spain; excluding net credit default protection, declined to $14.4 billion. BofA said that it saw solid business activity by companies of all sizes, with commercial and industrial loan balances rising 13% from the fourth quarter of 2010, and small business loan originations increasing approximately 20% in calendar year 2011, reflecting a gradually improving economy.

Eastman Kodak (NYSE: EK), the struggling maker of maker of digital cameras, film and printers, was plunging 29.7% to $0.39 in pre-market, following news that the iconic company filed for chapter 11 reorganization, culminating the long slide in which the company tried to diversify and adjust to the digital age. The company said that it had obtain DIP financing of $950 million from Citigroup that will allow it to operate and look to ways to extract value to an extensive patent portfolio.

eBay (NASDAQ: EBAY), the owner of paypal and operator of an auction marketplace, will be in focus after seeing more than 2% upside in extended hours on initial reaction to its earnings report. eBay posted earnings that were better than expected helped by revenues that also beat estimates. The company provided downside guidance for the current quarter, saying it expects both top and bottom lines just below consensus, while for the full 2012 year, the company expects EPS slightly below consensus on revenues that are seen above consensus. The company noted strong growth from its Paypal unit, saying registered accounts climbed 13% year over year, while revenue for the unit in the quarter jumped 28% year over year. eBay earned $0.60 per share, $0.03 better than consensus, on revenues that jumped 35.5% year over year to $3.38 billion.

F5 Networks (NASDAQ: FFIV), the application delivery networking Company, will be in focus after jumping more than 6% in extended hours following investor response to a better than expected earnings report. The company said that for its fiscal first quarter it earned $1.03 per share, $0.02 better than consensus, on revenues that jumped 19.9% year over year to $322.4 million. F5 also issued current quarter upside guidance, with both earnings and revenues expected to be above consensus, while it said that it sees sequential revenue growth throughout 2012, with product revenue as the primary driver in the current quarter. The ISI Group raised its target price to $130 from $110, citing the business momentum. Meanwhile, Mizuho bumped its target price to $137 from $127 and Bank of America Merril upgraded it to a Buy from Neutral.

Freeport McMoRan (NYSE: FCX), the world’s largest publicly traded copper producer, will be in focus after reporting its quarterly results later this morning, with analysts on average expecting a profit of $0.64 on revenues of $3.85 billion. Freeport surged past calculated resistance at $42.69 in the prior session, as copper prices continued to strengthen amid euro strength. Copper climbed to a four-month high in London, lifted by news that the IMF was seeking to raise funds to tackle the euro zone debt crisis.

Google (NASDAQ: GOOG), the owner of the largest Internet search engine, was adding 0.32% to $634.94 in pre-market, as participants wait for the company’s results scheduled for after the closing bell. Google on average is expected to report a profit of $10.48 per share on revenues of $8.4 billion. The highest estimate is for Google to earn $11 per share. The stock logged a new 52-week high earlier in the year, hitting $670.25. Yesterday, Wells Fargo downgraded the stock to Market Perform from Outperform.

Morgan Stanley (NYSE: MS), the operator of a global securities business, was jumping 4% to $18.3 on positive reaction to its earnings report. The company posted inline earnings ex items on revenues that were better than consensus. Morgan posted a loss of $0.15 per share, including the MBIA settlement and beating consensus of a loss of $0.62 per share. Revenues were also better than expected, with the company said fourth quarter revenue hit $5.71 billion.