MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Thursday, May 23, 2013
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10:02 AM Children's Place (PLCE +6.7%) posts strong gains after beating on both the top and bottom line. From the report: CEO Jane Elfers says — in what is now a familiar refrain from retailers this quarter — that the company "had a difficult start [before] April sales improved significantly." Comps growth was negative (-5.5%) as was sales growth (-3.5%). $56.2M remains under the company's share repurchase program. PLCE also raises its EPS guidance for FY13 to $3.05-3.20 against consensus of $3. (PR) Comment!
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10:01 AM Approach Resources (AREX -3.6%) reports a temporary curtailment of production due to a third-party facility power failure; as a result, AREX expects Q2 production of 8.7M-9.1M boe/day vs. prior guidance of 9.3M-9.6M boe/day. Comment!
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9:52 AM Rue21 (RUE +22.7%) trades just a shade under its buyout offer of $42 as the potential for competing bids keeps interest high. Of its retail peers, Zumiez (ZUMZ +0.7%) seems to be getting the biggest lift from the M&A buzz in the sector. Comment!
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9:48 AM Green Mountain Coffee Roasters (GMCR -7.3%) slumps again in early trading to briefly dip below $70. The report from the options pit is that action has intensified over the stock. Somewhere in the GMCR equation, the forecast for higher coffee commodity prices also needs to be factored in. Comment!
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9:37 AM Shares of Melco Crown (MPEL -4.5%) take a lashing in early trading on concerns growth in China will sputter. Citigroup's favorite gaming sector name trades at roughly 9X 2014 EBITDA estimates. Comment!
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9:22 AM Shares of Dollar Tree (DLTR) move 2.5% higher premarket as the retailer's "impressive" Q1 results brings in buyers. Margins improved slightly during the quarter and the company seemed to navigate around some of the tax refund and weather ripples that hit Wal-Mart and Target. Comment!
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9:21 AM WisdomTree (WETF) tumbles 5.2% premarket following Japan's overnight crash. The stock's more than a double this year as money has poured into its Japan Hedged Equity Fund (DXJ), which is off 7.3% premarket. Another yen-hedged Japan fund - Deutsche's far smaller DBX ETF Trust (DBJP) - is off 8.3%. Comment!
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9:03 AM Sanmina (SANM) -3.6% premarket after Deutsche Bank downgrades shares to Sell from Hold after rising 23% YTD "without a change in fundamentals or an improvement in profitability or revenue growth." The firm also is more conservative on a back-half recovery in the telecom and networking markets, which comprise ~50% of SANM's sales. Comment!
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8:57 AM More on GameStop (GME): The retailer says comparable store sales fell 6.7% Y/Y during Q1 with new hardware sales down 30.6% and pre-owned sales slipping 7.5%. Looking for channels for future growth? During Q1, mobile sales grew 290% to $46.8M and digital sales rose 47.3%. FY13 EPS is pegged at $2.90-$3.15 vs. $2.75-$3.15 previous and the company's outlook for comparable store sales is improved slightly. GME +1.5% premarket. (PR) 1 Comment
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8:54 AM Marathon Oil (MRO) -2.5% premarket after saying it failed to reach a deal with a prospective buyer for a portion of its 20% outside-operated interest in Alberta's Athabasca Oil Sands Project. MRO says its goal of divesting $1.5B-$3B in assets during 2011-13 remains intact. Comment!
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8:14 AM More on Ralph Lauren's (RL) Q1: An efficient quarter from the retailer but a tad light on revenue. The company says strong retail segment growth was offset in part by unfavorable currency swings and a dip in sales for its wholesale segment. Operating expenses as a percentage of sales were flat Y/Y and 50 bps lower M/M. Consolidated comparable store sales rose 3% during the period. The FY14 outlook includes a 4% to 7% forecast for revenue growth and capex spending of $350M-$450M. RL -3.8% premarket. (PR) Comment!
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6:31 AM Goldman drops a Sell rating on Realty Income (O): "We believe upside earnings surprise risk is larger in small-cap healthcare and traditional net lease REITs due to their smaller asset bases. Additionally, O trades at a 38% premium to our net lease and healthcare names on a 2013E AFFO multiple basis. Although we believe O's record of a sustainable and growing dividend will continue, we also think material dividend increases are more likely across the REIT sector (average AFFO payout of 77%) than for O (92%)." O fell 4.8% yesterday and is off 1.3% premarket. 2 Comments
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4:42 AM Even Japanese stocks are subject to the law of gravity (who knew?) as a confluence of factors sends the Nikkei (EWJ, DXJ) plunging 7.3% on the session (the swing from intraday high to low was ~9%). Yields on JGB 10s (JGBL) spiked above 1% at one point as an already skittish and volatile market was further rattled by what have generally been perceived as hawkish comments out of Ben Bernanke and other Fed officials on Wednesday. Yields pulled back in late trading. Compounding the problem for Japanese stocks was the yen (FXY), which has strengthened some 2% against the dollar to 101.16 most recently. (See also: China HSBC flash PMI shows contraction) 8 Comments
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3:08 AM Equity futures turn sharply lower overnight, possibly in reaction to weak manufacturing data out of China and a mini-crash in Japan that left the Topix -6.9%. Factory activity in China shrunk for the first time in 7 months, reflecting "slower domestic demand and ongoing external headwinds." S&P futures currently -1.1% to 1637.50 after dropping below 1634 when European markets first opened. 12 Comments
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Wednesday, May 22, 2013
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7:50 PM More on Pacific Sunwear (PSUN): Q1 beat across the board as total sales rose by 4.7% Y/Y. But net losses widened, as the retailer was hit by store-closure costs and losses on derivatives, which led to gross margins narrowing to 25.1% from 38.1%. The company offered a better picture for the current quarter however, now expecting its bottom line EPS to range between a loss of $0.05 and a profit of $0.02. It also projects revenue of $209M to $219M. Analysts were expecting a per-share loss of $0.04 a share on revenue of $198M. Shares +19.5% AH. Comment!
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6:37 PM In its earnings call today, Hewlett-Packard (HPQ) CEO Meg Whitman remarked that its position in the PC market has been boosted by recent efforts to sell tablets powered by Google's (GOOG) Android, thus allowing it to compete in tablets again after discontinuing its Palm/webOS TouchPad in 2011. "If we have the right product and the right price, the channel still loves H-P and they want to sell our products," Whitman said. "Frankly, having Android products helps a lot." (Webcast) Shares +13.3% AH. 2 Comments
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6:19 PM Apricus Biosciences (APRI) gets slammed in the post session after anouncing a public offering of common stock and warrants, with a 30-day option to purchase additional shares and warrants to cover over-allotments, if any. Lazard Capital Markets is acting as sole book-running manager. Shares -13% AH. Comment!
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