Stock Futures Mixed on Weak Earnings. Stocks to Watch: AAPL, BA, BRCM, CAT, COP, LLY, F, JNPR, NFLX, TRIP
Published on Wednesday, 25 July 2012 07:18 Written by Christopher Lynn
New York, July 25th (TradersHuddle.com) – Stock futures were pointing to a mixed open amid a flurry of earnings reports. NASDAQ futures were under pressure after its biggest listing, Apple, delivered a big earnings miss, as iPhone sales in the quarter were worse than expected. Euro zone woes continued, but speculation over steps to boost the firepower of the permanent bailout fund eased pressure on the euro and borrowing costs in the periphery.
In Asia, stocks fell once again as borrowing costs climbed in Spain, deepening worries that the fourth largest economy in the euro zone will need a sovereign bailout. Speculation that the IMF will stop financial aid to Greece, as the country seems unlikely to meet the terms to its aid package weighed on sentiment and spurred a risk off trade. Disappointing results from Apple also weighed on technology stocks in the region. The Nikkei fell 1.4%, closing at 7-week low, with Japanese suppliers and other consumer electronic makers were hit in the session. Meanwhile, the Shanghai Composite fell to its lowest level since March 2009, amid reports that Beijing might raise transaction fees and taxes for sales of existing homes.
In Europe, markets were recovering from earlier losses and moving into higher ground after a member of the European Central Bank raised the prospects of giving the new permanent bailout fund a banking license to increase its firepower. Japan release trade data that signaled exports declined in every region outside the U.S., while Germany released a report showing that business sentiment dropped in July, which was weaker than expected. Additionally, the U.K. released a worse than expected reading on its second quarter GDP. According to the latest reading, the economy in the U.K. contracted 0.7% in the second quarter, significantly missing expectations.
The euro was jumping against the Dollar, trading above the $1.21 level. Crude oil was climbing 0.02% to $88.52 per barrel. Also in the energy complex, natural gas was sliding 0.72% to $3.164 per MMBtu. Gold was gaining 0.72% to $1587.60 an ounce, and silver was adding 0.70% to $27.00 an ounce. Meanwhile, copper was advancing 0.25%.
On economic news, at 10 am, New home sales data will be released and at 10:30 am, the Energy Department will release its weekly report on crude oil and distillates inventories.
Today’s Stocks to watch: Apple (NASDAQ: AAPL), Boeing (NYSE: BA), Broadcom (NASDAQ: BRCM), Caterpillar (NYSE: CAT), ConooPhillips (NYSE: COP), Eli Lilly (NYSE: LLY), Ford (NYSE: F), Juniper Networks (NASDAQ: JNPR), Netflix (NASDAQ: NFLX), and TripAdvisor (NASDAQ: TRIP).
Apple (NASDAQ: AAPL), the maker of iPads and iPhones, was tumbling 4.81% to $572.00 in pre-market after the company delivered a big earnings miss in the second quarter on weaker than expected iPhone shipments. The company also issued downside guidance for the current quarter, which seemed particularly low for its conservative standards, with the company citing product transition and stronger Dollar impacts. Apple said it earned $9.32 per share, $1.06 per share worse than consensus, on revenues that climbed 22.6% from a year ago to $35.02 billion, which was below consensus of $37.35 billion. The company recorded 26 million iPhones sold in the quarter versus expectations of 29 million; iPads sold were better than expected at 17 million; while it sold 4 million Macs versus 4.5 million that was widely expected. CEO Tim Cook said that iPhone sales in Europe were essentially flat year over year, representing an area of weakness for the company, while iPhone anticipation might be impacting demand. Jim Cramer defended the stock, saying its time to buy Apple and accept some short-term pain to get the longer-term gain of the new iPhone and new iPads and the iTV, while Piper Jaffray Gene Munster said the miss presents a rare chance to buy Apple at a discount, but the ISI Group lowered its target price to $710 from $750.
Boeing (NYSE: BA), the world’s second largest commercial aircraft maker, was climbing 0.79% to $72.60 in pre-market ahead of the company reporting its quarterly results before the opening bell. On average analysts expect a profit of $1.12 per share on revenues of $19.37 billion. The highest earnings estimate is $1.25 per share. Last quarter, the company posted a 29.8% upside earnings surprise as it earned $1.22 per share.
Broadcom (NASDAQ: BRCM), the provider of chips that enable broadband digital data transmission, will be in focus after reporting better than expected quarterly results and issuing inline guidance for fiscal third quarter. Broadcom earned $0.72 per share, $0.05 better than consensus, on revenues that climbed 9.7% from a year ago to $1.97 billion versus consensus of $1.95 billion. The company expects third quarter non-GAAP product gross margins to remain roughly flat sequentially, with revenues of $2 to $2.15 billion. Mizuho lowered its target price to $40 from $45.
Caterpillar (NYSE: CAT), the world’s largest earthmoving equipment maker, was jumping 1.3% to $82.50 in pre-market ahead of the company reporting its quarterly results before the opening bell. On average analysts expect a profit of $2.28 per share on revenues of $17.11 billion. The highest earnings estimate is $2.41 per share. Last quarter, the company posted an 11.3% upside earnings surprise as it earned $2.37 per share.
ConooPhillips (NYSE: COP), the third largest U.S. energy company and the fifth largest refiner in the world, will be in focus as the company is scheduled to report its quarterly results later this morning. On average analysts expect a profit of $1.17 per share on revenues of $9.07 billion. The highest earnings estimate is $1.20 per share, while the lowest is $1.11 per share. Last quarter, the company posted a 2.9% downside earnings surprise as it earned $2.02 per share.
Eli Lilly (NYSE: LLY), the pharmaceutical company maker of Prozac, will be in focus after the company beat earnings expectations on revenues that were inline with consensus. The company raised its full year EPS guidance above consensus, while reaffirming its full year revenue guidance. Eli Lily said it earned $0.83 per share, excluding non-recurring items, $0.07 better than consensus, on revenues that fell 10.4% from a year ago to $5.6 billion. The company added that after 2014, it anticipates a return to income and revenue growth fueled in large part by its drug development pipeline.
Ford (NYSE: F), the Dearborn, MI based automaker, was climbing 2.32% to $9.27 in pre-market, on early reaction to its quarterly results. The company beat earnings expectations on revenues that were shy of consensus. The automaker said it earned $0.30 per share, $0.01 better than consensus, on revenues of $31.4 billion. Ford said that it expects full year operating pre-tax profit to be strong but lower than in the prior year.
Juniper Networks (NASDAQ: JNPR), the provider of Internet infrastructure solutions, would be in focus after the company posted better than expected quarterly results, but disappointed with its downside guidance for the current quarter. Juniper said it earned $0.19 per share, $0.03 better than consensus, on revenues that fell 4.1% from a year ago to $1.07 billion. The company sees both EPS and revenues below consensus for the current quarter, as the guidance reflects ongoing near-term macro economic uncertainty; despite that demand for high-performance networking remain solid. The ISI Group lowered its target price to $28 from $30.
Netflix (NASDAQ: NFLX), the online video rental subscription service, was plunging 18.45% to $65.56 in pre-market, near its 52-week low of $60.70, on reaction to its quarterly results. The company swung to a profit from the prior quarter, beating earnings expectations on revenues that were inline with consensus, while issuing inline guidance for the current quarter. Still the report and metrics disappointed investors, which had expected that higher viewing hours could have translated on bigger gains in subscribers. Netflix earned $0.11 per share, $0.06 better than consensus, on revenues that climbed 12.8% from a year ago to $889 million. The company reported that Domestic streaming subscribers reached 23.94 million, which was midpoint in its guidance, while international streaming subscribers reached 3.62 million, also midpoint in the guidance; domestic DVD subscriptions came in at 9.24 million. The stock was downgraded to a Neutral at Piper Jaffray.
TripAdvisor (NASDAQ: TRIP), the online travel research company, will be in focus after plunging nearly 15% to $37 in after hours on negative reaction to its quarterly results. The travel site posted earnings of $0.41 per share, inline with consensus, but its revenues fell short of expectations, as they climbed 16.5% from a year ago to $197.1 million. TripAdvisor said it’s tracking very well towards its 2012 goals, adding that non-U.S. revenue in the quarter was 49% of total revenue. The company reaffirmed 2012 total revenue growth in the high teens, while current consensus calls for a year over year jump of 21.4%.
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