Stock Futures Higher on Earnings and Spain's Auction. Stocks to Watch: AXP, AAPL, BAC, DO, DD, EBAY, FFIV, MS, YUM
Published on Thursday, 19 April 2012 07:42 Written by Christopher Lynn
New York, April 19th (TradersHuddle.com) – Stock futures were pointing to a higher open after solid earnings from Bank of America and a better than expected bond auction in Spain boosted investor sentiment. The gains come amid a busy earnings reporting morning and ahead of weekly jobless claims data.
In Asia, stocks closed mixed as jittery participants traded cautiously ahead of a key Spanish bond auction. In Japan, the Nikkei slid 0.8%, reversing the prior session gains. In China, the Shanghai Composite lost 0.1% amid some profit taking following the best single session percentage gain in more than two months. Financial stocks were outperformers amid chatter over possible measures to increase liquidity via open market operations and cuts to bank’s reserve requirements.
In Europe, markets were jumping following the better than expected results of a key Spanish bond auctions. Despite yields ticking higher from prior auctions, the auction showed solid demand, which eased worries over Spain’s ability to finance its debt. Helping boost confidence, a bond auction in France also saw strong demand.
The euro was falling against the Dollar, trading below the $1.31 level. Crude oil was climbing 0.50% to $103.18 per barrel. Also in the energy complex, natural gas was adding 0.05% to $1.9452 per MMBtu. Gold was gaining 0.33% to $1645.00 an ounce, and silver was jumping 0.55% to $31.66 an ounce. Meanwhile, copper was advancing 0.45%.
On economic News, at 8:30 am the Labor Department will release its weekly Jobless Claims report, with economists expecting 375,000 initial claims for unemployment benefits filed last week. At 10 am, March existing home sales data will be available along with April Philadelphia Fed Index and March Leading Economic Indicators.
Today’s Stocks to watch: American Express (NYSE: AXP), Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC) Diamond Offshore (NYSE: DO), DuPont (NYSE: DD), eBay (NASDAQ: EBAY), F5 Networks (NASDAQ: FFIV), Morgan Stanley (NYSE: MS), and Yum! Brands (NYSE: YUM).
American Express (NYSE: AXP), the credit card issuer, will be in focus after its earnings beat expectations on revenues that were inline with consensus. The company said it earned $1.07 per share, $0.07 better than consensus, on revenues that climbed 8.3% from a year ago period to $7.61 billion. FBR Capital raised its target price on the stock to $65 from $58, saying that it expects positive operating leverage via a combination of revenue growth and expense controls; however, it forecast slowing billed business growth, reflecting tougher comparisons and slowing global economic growth.
Apple (NASDAQ: AAPL), the maker of iPads and iPhones, was falling 0.16% to $607.35 in pre-market, as the stock seems to have stabilized following the volatility in the recent week. Worries that wireless carriers cut iPhone subsidies amid pressure in margins weighed on the stock, particularly after the sharp run up so far this year. Yesterday, Goldman Sachs raised its target price to $750 from $700, and earlier in the week Raymond James initiated coverage with a Strong Buy and a target price of $800. Apple is scheduled to report its quarterly results on April 24th, with analysts on average expecting a profit of $9.99 per share on revenues of $36.64 billion. Earlier this week, Mizuho said that it expects upside to revenues and earning with iPhones being the primary source of upside, while Telsey Advisory Group said that it anticipates solid earnings and revenue growth thanks to the launch of the iPhone 4S in China and the new iPad.
Bank of America (NYSE: BAC) was jumping 5.27% to $9.39 in pre-market on initial reaction to its quarterly results. BofA earned $0.03 per share on revenues that fell 17% from a year ago period to $22.48 billion, above consensus of $22.38 billion. Results include negative valuation adjustments related to changes in the company's credit spreads of $4.8 billion pretax, or $0.28 a share. Excluding the valuation adjustments from both periods, revenue was down 3% to $27.3 billion. The lender said that its Tier 1 capital ratio was 13.37% in the first quarter of 2012, compared to 12.40% in the fourth quarter of 2011 and 11.32% in the first quarter of 2011. The provision for credit losses declined 37% from the same period a year ago, reflecting improved credit quality across all major consumer and commercial portfolios and the impact of underwriting changes implemented over the past several years.
Diamond Offshore (NYSE: DO), the deep-water oil and natural gas driller, was jumping 2.8% to $68 after it posted better than expected earnings and issued a special cash dividend of $0.75 per share along with its quarterly dividend of $0.125 per share, both payable on June 1st o shareholders of record on May 1, 2012. Diamond said it earned $1.33 per share, $0.33 better than consensus, on revenues that fell 4.7% from a year ago period to $768.6 million.
DuPont (NYSE: DD), the life sciences company and third largest U.S. chemical maker, will be in focus after the Dow component reported its quarterly results. DuPont posted earnings that beat expectations on revenues that were inline with consensus, while reaffirming its fiscal 2012 EPS guidance. The company said it earned $1.61 per share, excluding non-recurring items, $0.06 better than consensus, on revenues that climbed 11.9% from a year ago period to $11.18 billion. DuPont reported higher prices in all regions, while it noted that its 2% drop in volume was mainly due to weak volume on all segments in Asia, which offset strong Agriculture segment volume gains in all regions.
eBay (NASDAQ: EBAY), the owner of paypal and operator of an auction marketplace, was jumping 8.73% to $39 in pre-market, trading at a new 52-week high, after it reported quarterly results that beat earnings expectations, while providing mixed guidance. The company earned $0.55 per share, $0.04 better than consensus, on revenues that jumped 28.7% to $3.28 billion versus consensus of $3.15 billion. eBay issued mixed guidance for the quarter and the rest of the year. For the current quarter the company sees EPS inline with consensus on revenues that are slightly below consensus. For 2012, it expects EPS to beat expectations on revenues that are inline with estimates. The stock was upgraded to Overweight from Neutral at Piper Jaffray
F5 Networks (NASDAQ: FFIV), the application delivery networking Company, will be in focus after posting a better than expected earnings report, while providing a cautious outlook with inline guidance for the current quarter. The company earned $1.09 per share, $0.02 better than consensus, on revenues that jumped 22.3% from a year ago period to $339.6 million. F5 earnings jumped 24% as increased network spending by customers boosted the Internet traffic service provider's bottom line. The ISI Group raised its target price to $150 from $135, saying the company delivered a balanced quarter, which showed its ability to grow revenue above 20%.
Morgan Stanley (NYSE: MS), the operator of a global securities business, was jumping 5.6% to $18.65 in pre-market on positive reaction to its quarterly results. The company reported earnings of $0.71 per share, excluding DVA, better than consensus of $0.43 per share, on revenues of $8.91 billion, also above consensus of $7.36 billion.
Yum! Brands (NYSE: YUM), the Pizza Hut, KFC, and Taco Bell restaurant chains owner and operator, will be in focus after its earnings report beat expectations and the company issued 2012 EPS guidance slightly below consensus as economic challenges in China pose a threat to its profitability. Yum said it earned $0.76 per share, $0.03 better than consensus, on revenues that climbed 13.1% from a year ago period to $2.74 billion.
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