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- The looming DOJ settlement is temporarily depressing the stock price, despite tailwinds forming.
- Expect strong growth from the global wealth and investment management segment.
- Project New BAC's further integration should improve profitability in the earnings release.
BlackBerry (NASDAQ:BBRY) - long - Chris Lau (long BBRY)
- Shares dropped 4% AH after Apple (NASDAQ:AAPL) and IBM (NYSE:IBM) partnered up. The pair plans to develop enterprise apps, cloud services on mobile, while infringing on BlackBerry’s MDM (mobile device management) turf.
- Partnership likely to face integration issues and delays: BlackBerry is still two years ahead in MDM.
- Sell-off opens up buying opportunity for those missing the last run-up; MobileIron (NASDAQ:MOBL), a clear short sell, will be hurt the most. Expect no impact on BlackBerry’s BES 12 and EZ Pass positive momentum.
- Shares fell after an enterprise mobility partnership was formed between Apple and IBM.
- With shares up nearly 52% so far in 2014, this might be a reason to take profits.
- Bear camp has been looking for an excuse to send this stock back to single-digits.
BlackRock (NYSE:BLK) - long - Kristian Kolding (no position or plans)
- BLK is reporting its Q2 earnings. Analysts consensus is EPS of $4.45 and revenue of $2.7 billion.
- The stock is currently at an all-time high, but has only gained around 3.5% so far this year. Although the stock is not cheap, it is a solid company with consistent revenue and EPS growth as well as a yield of 2.4%.
- Out of the 4 last quarters, BLK has surprised 3 times and reported earnings in line with estimates 1 time. Out of 13 analysts, 4 rate the stock as a "strong buy", 3 as a "buy", and 6 as a "hold". Analysts' 12-month price target consensus is $353. The stock has a limited upside, but should gain moderately after earnings release.
- Setting a good benchmark for railroad sector results, second quarter results (revenues of $3.2 billion and EPS 53 cents) came in slightly better than estimates.
- Improving economy, intermodal and oil & gas markets driving the volume growth.
- Expectations of margin expansion and increasing capital expenditure should boost investor confidence.
Dupont (NYSE:DD) - short - Brad Kenagy (no position, no plans)
- Dupont stock fell significantly in late June because the company warned that its agricultural business would lead to lower earnings than last year.
- Since that warning, the share price for Dupont has slowly drifted downward towards its 200 day moving average at $64.28, which is slightly below its current price of $64.58. Dupont is reporting earnings before the open on July 22nd, and I expect that running up to the earnings report or after the earnings report the stock will cross below its 200 day moving average.
- If the earnings report for Dupont comes in worse than the warning it gave, the stock is likely to see a large number of downgrades for stock rating and price targets.
Lorillard (NYSE:LO) – long – Jordan Flannery (no position)
- After yesterday’s announcement that Reynolds American (NYSE:RAI) would be buying Lorillard for $50.50 in cash and 0.2909 of a Reynolds American share per Lorillard share, Lorillard's stock tanked by 10.5% in the trading session.
- Many had hoped for a higher acquisition price. Adjusted to today’s closing price, Lorillard is trading at an 11% discount to the purchase price. While some discount is warranted due to the regulatory risk and time value of money related to when the acquisition will close, look for shares of Lorillard to rebound tomorrow as the discount to the purchase price narrows.
- For further information, check out my article published yesterday titled, Lorillard Shareholders May Be Disappointed By Acquisition Price, But Consideration Will Likely Be Final.
- Shares fell on Monday as investors didn't seem to appreciate the Reynolds takeover price.
- Based on current deal terms, shares are undervalued by more than $7.
- Like BlackBerry, could be negatively impacted by Apple/IBM deal.
- Shares tumbled below IPO price on Tuesday.
- Stock could see another new low.
- Company missed on revenues and earnings, plus issued weaker than expected revenue guidance.
- Alibaba IPO terms revised, Yahoo now does not need to sell as many shares.
- For short term, investors seem to be focusing on results and not the Alibaba windfall.
Yahoo (YHOO) - avoid - Pat Stout (no position)
- Agreed to sell fewer shares of Alibaba, resulting in less money to be returned to shareholders.
- Acquired its own shares during Q2 at $34.24 versus Q1 at $37.65.
- Revenue and income from operations fell.