Stock Futures Lower Despite Strong Earnings. Stocks to Watch: AAPL, CMG, GE, GOOG, KYAK, MSFT, SNDK, SLB
Published on Friday, 20 July 2012 07:52 Written by Christopher Lynn
New York, July 20th (TradersHuddle.com) – Stock futures were pointing to a lower open amid weakness in overseas markets. European debt woes were pressuring risk assets, with the euro falling against the Dollar and Spanish bond yields moving higher. Earnings were once again in focus, with positive results from GE and Google, while Microsoft posted its first quarterly loss as a public company due to a one-time charge.
In Asia, stocks struggled after a new string of weak data in the U.S. amid renewed concerns over the European debt situation, with Spain’s yields hovering around 7%. The Nikkei lost 1.4%, pressured from poor performance from banks, which reacted to the weak earnings report from Morgan Stanley. Meanwhile, the Shanghai Composite lost 0.74%, logging its fifth consecutive week of losses.
In Europe, markets were trading lower despite European finance ministers getting ready to provide a green light to Spain’s banking bailout later today. Spanish yields moved higher, moving above the dreaded 7% level. Earnings were also in focus in the region, Vodafone fell after it posted a sharp drop in organic growth in the quarter, while Swedish truck maker Scania rallied nearly 5% after orders suffered a lower decline than expected.
The euro was losing against the Dollar, trading below the $1.23 level. Crude oil was falling 1.35% to $91.41 per barrel. Also in the energy complex, natural gas was climbing 0.30% to $3.008 per MMBtu. Gold was adding 0.04% to $1581.00 an ounce, and silver was slumping 0.67% to $27.035 an ounce. Meanwhile, copper was retreating 1.63%.
Today’s Stocks to watch: Apple (NASDAQ: AAPL), Chipotle Mexican Grill (NYSE: CMG), General Electric (NYSE: GE), Google (NASDAQ: GOOG), Kayak (NASDAQ: KYAK), Microsoft (NASDAQ: MSFT), SanDisk (NASDAQ: SNDK), and Schlumberger (NYSE: SLB).
Apple (NASDAQ: AAPL), the maker of iPads and iPhones, was flat in pre-market after climbing more than 1% to $614 in the prior session after Wedbush reaffirmed its Outperform rating and target price of $800 per share. The company’s latest iPad version finally made it into China’s stores after a lengthy delay over a trademark dispute that prevented the launch of the device that started selling in the U.S. in March. Apple staged a low-key launch in China, adopting an online reservation system that helped avoid the repeat of the riots outside the stores with the launch of the iPhone 4S. The company is scheduled to report its earnings on July 24th after the market closes. On average analysts expect a profit of $10.38 per share on revenue of $37.34 billion.
Chipotle Mexican Grill (NYSE: CMG), the owner and operator of Mexican quick serve restaurants, was plunging 14% to $347 in pre-market after a revenue miss and disappointing growth outlook. Chipotle beat earnings expectations, as it earned $2.56 per share, $0.26 better than consensus, on revenues that jumped 20.9% from a year ago to $690.9 million versus consensus of $706.29 million. The company said that the growth in revenue was the result of new restaurants not in the comparable base and an 8.0% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by the impact of menu price increases, most of which were taken in 2011, as well as from increased traffic. For the full 2012, management expects the following: 155-165 new restaurant openings, and mid-single digit comparable restaurant sales growth. The stock was downgraded to Hold from Buy at Deutsche Bank.
General Electric (NYSE: GE), the maker of medical devices and wind turbines, was gaining 1.2% to $20.03 after it topped earnings expectations on revenue that was inline with consensus. GE said that it was on track to deliver double-digit earnings growth in 2012. The company earned $0.38 per share, excluding non-recurring items, $0.01 better than consensus, on revenues that climbed 2.5% from a year ago to $36.5 billion. Revenues were negatively impacted by a currency exchange impact of $0.9 billion and further shrinkage of GE Capital business. Second quarter Industrial segment revenues increased 9% to $25.0 billion, while GE Capital revenues declined 8% to $11.5 billion.
Google (NASDAQ: GOOG), the owner of the largest Internet search engine in the world, was rallying 2.5% to $608.01 in pre-market after the company topped earnings and revenue expectations. The positive results were helped by strength in its core Internet business, as clicks surged offsetting falling advertising rates. Google earned $10.12 per share, $0.03 better than consensus, on revenues that jumped 39% from a year ago to $9.61 billion. In the conference call, the company said that Larry Page, its co-founder and CEO, was fine, but could not be in the call as he is unable to talk. This was the first earnings report for the company after acquiring Motorola Mobility.
Kayak (NASDAQ: KYAK), the online travel Company, will be in focus after it priced its initial public offering of 3.5 million shares at $26 per share. The IPO priced above the indicative range of $22 to $25 per share, with Kayak able to raise $91 million and providing a valuation for the company of $1 billion.
Microsoft (NASDAQ: MSFT), the world’s largest software publisher, was jumping 1.9% to $31.25 in pre-market after topping earnings expectations. Nevertheless, Microsoft reported its first quarterly loss as a public company after impacting results with a massive $6.2 million charge for writing down its struggling online business unit. The software publisher said that it earned $0.73 per share, excluding non-recurring items, $0.11 better than consensus, on GAAP revenues that climbed 4% from a year ago to $18.06 billion; non-GAAP revenues jumped 7% from a year ago to $18.6 billion, above consensus of $18.2 billion.
SanDisk (NASDAQ: SNDK), the provider of flash data storage products, was surging 11.2% to $39 in pre-market after the company’s quarterly results beat on both the top and bottom lines, while providing an upbeat revenue outlook for the current quarter. SanDisk earned $0.21 per share, $0.02 better than consensus, on revenues that jumped 25% from a year ago to $1.03 billion.
Schlumberger (NYSE: SLB), the provider of oilfield services to the international petroleum industry, was gaining 2.5% to $70.34 in pre-market after the company beat earnings expectations on revenues that were inline with Wall Street consensus. Schlumberger said it earned $1.05 per share on revenues that jumped 16.2% from a year ago to $10.45 billion.
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