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MARKET CURRENTS
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Thursday, May 23
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8:37 PM More on Zumiez' (ZUMZ) Q1: Revenues rise 14.3% Y/Y, even as comps drop 0.7% (comps growth was 12.9% in Q1 2012). CEO Rick Brooks reminds investors that the operating environment in Q1 was "more challenging" than it was in the same period a year ago and notes that "business improved throughout the quarter driven by strong full price selling during" March and April. For Q2 ZUMZ sees EPS of $0.12-0.14 (including a ~$0.04/share hit from the Blue Tomato acquisition) on revenue of $155-158M — consensus is for $0.17/share on sales of $156.79M. Shares -3.09% AH. (PR) Comment!
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8:20 PM More on Aeropostale's (ARO) Q1: Revenues and comps fall 9% and 14% Y/Y respectively. The company cites a "weak macroeconomic environment [and] unseasonably cool weather" — so, the usual suspects — as negative factors. E-commerce revenues (included in the comps calculation) rise 13%. CEO Thomas Johnson says visibility is "limited" going forward but expresses confidence in the company's strategic initiatives to transform the brand and "develop growth drivers." For Q2, ARO sees a loss of $0.15-0.20/share versus consensus of a $0.06 per share loss. Shares -4.49% AH. (PR) Comment!
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8:04 PM More on Infoblox (BLOX): FQ3 beats across the board as total revenue ramps up 34% Y/Y. Net losses narrowed as the data-center technology company benefited from growing product demand across all regions. The company also raised its FY13 revenue expectations, now expecting between $220M to $221M, versus previously targeted revenue of $216M to $219M. For Q4, the company projected earnings of $0.08 - $0.09 a share on revenue of $58M to $59M. Analysts forecast an EPS of $0.07 on revenue of $58M. Shares +14% AH. Comment!
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7:23 PM Sears Holdings (SHLD) gets slammed in after-hours trade following a disappointing first quarter that was much worse than analysts expected. In its conference call, CEO Eddie Lampert says the performance is "not acceptable,” adding that “a company of our size and with our assets should be generating a significant profit.” Shares -12% AH. 5 Comments
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6:21 PM AVEO Pharmaceuticals (AVEO) has been informed by its partner, Astellas Pharma (ALPMY.PK), that it no longer intends to submit a Marketing Authorization Application to the European Medicines Agency for tivozanib, its treatment for advanced renal cell carcinoma, nor does not intend to fund any future trials under its strategic collaboration agreement. AVEO says it's evaluating the impact of the news and its options for the drug going forward. AVEO -14.7% AH. Comment!
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6:15 PM Titan Machinery (TITN) -12.4% AH after warning of a loss in the April quarter, hurt by lower sales in its agriculture and construction business. Sees FQ1 EPS loss of $0.01-$0.03 vs. $0.18 gain consensus estimate, and revenues of ~$440M vs. $480M consensus. See FY 2014 EPS of $1.70-$2.00 vs. prior $2.00-$2.30 and $2.15 consensus. Comment!
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4:48 PM More on Marvell (MRVL) 2014 FQ1 earnings: FQ2 revenue guidance of $770M-$810M, non-GAAP gross margin of 51.5%-53.5%, non-GAAP operating expenses of $305M-$325M, non-GAAP EPS of $0.17-$0.21. Consensus revenue is $763M, EPS is $0.18. Company puts earnings beat on better than normal seasonal demand and share gains in storage and networking end markets. "We expect growth to be driven by increased traction in areas such as mobile handsets, tablets, connectivity, and SSDs." CC at 4:45 ET. Shares +7.2% AH. (PR) Comment!
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4:47 PM More on Nordson (NDSN): FQ2 comes in short of the mark despite a 21% rise in total sales. Organic sales volume grew in all three operating units and every region, with strong margin performance in every segment; Adhesive Dispensing Systems +1%, Advanced Technology Systems +14%, Industrial Coating Systems +13%. Backlog totalled approximately $200M, +3% Y/Y. Looking forward the company sees Q3 EPS of $1.00 - 1.09, below the consensus of $1.15, on revenue of $404M - $419M, also below the consensus call for sales of $429.9M. Shares -3.6% AH. Comment!
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4:39 PM More on Sears Holdings' (SHLD) Q1 results: Domestic comparable store sales fell 3.6%, comprised of decreases of 4.6% at Kmart and 2.4% at Sears U.S., blamed on weather related declines in lawn and garden; excluding that category, comp store sales would have gained 0.3%. Online business rose 20% Y/Y. Says it may put its service agreement business up for sale to raise cash. Shares -13% AH. 10 Comments
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4:38 PM More on Pandora (P) 2014 FQ1 earnings: FQ2 revenue guidance of $155M-$160M, EPS of a loss of $0.02 to profit of $0.01 vs. consensus of $149.7M and $0.01 profit. FY14 revenue guidance of $615M-$635M, EPS of a loss of $0.02 to profit of $0.08 vs. consensus of $616.7M and $0.01 profit. FQ1 non-GAAP mobile revenue of $86.7M up 101% Y/Y vs. mobile listener growth of just 47% (improved monetization). Total listen hours of 4.18B up 35%. Share of total U.S. radio listening is 7.33%, up from 5.86% a year ago. CC at 5 ET. Shares +8.5% AH. (PR) 1 Comment
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4:27 PM More on Salesforce.com (CRM) 2014 FQ1 earnings: FQ2 revenue guidance of $931M-$936M and EPS of $0.11-$0.12 vs. consensus of $935M and $0.12. Deferred revenue balance of $1.73B up 30% Y/Y. Unbilled deferred revenue balance - business contracted but not yet billed - of $3.6B up 33% Y/Y. CC at 5 ET. Shares -5.9% AH. (PR) 2 Comments
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4:06 PM Salesforce.com (CRM): Q1 EPS of $0.10 in-line. Revenue of $893M (+28% Y/Y) beats by $5.92M. Shares -4.2% AH. (PR) 5 Comments
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4:00 PM Inspire MD (NSPR -14%) gets smacked down today, flying in the face of largely posititve results from six-month trials of its MGuard Embolic Protection Stent that showed a lower mortality rate. The MGuard EPS uses a micro-net mesh sleeve to prevent unstable arterial plaque and clots that cause heart attack blockage from breaking off and exacerbating damage. Comment!
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3:46 PM Echo Therapeutics (ECTE +12.8%) move up on the Street's upbeat take on its Symphony CGM System, a needle-free continuous glucose monitoring system which the company unveiled and demonstrated in a webcast yesterday. CEO Patrick T. Mooney, M.D., commented that Symphony can effectively "improve glucose monitoring in hospitals and help alleviate the burden on both patients and caregivers," Patrick T. Mooney, M.D., chairman and CEO said in a statement released today. Comment!
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3:25 PM China's exports of rare earth metals have rallied in recent months, a trend attributed to low rare earth prices and Japanese demand. But Molycorp (MCP -2.9%), whose shares have jumped 30% in the past two weeks, says it might be premature to assume a firm turnaround in global demand: "Inventories have been built up over the past several years, and they are returning to more normal levels now." 4 Comments
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3:16 PM Toro (TTC +3.7%) moves up today after posting a better than expected FQ2. Net earnings rose 14% Y/Y on sales strength in its professional segment, which helped offset a 13% decline in residential sales. The company says that although it backs current earnings guidance, it's lowering revenue growth expectations to between 3% and 4%, compared with its February forecast of a 5% revenue increase. Gross margin improved to 35.8% from 34%. Comment!
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3:15 PM ReneSola (SOL -5.3%) is downgraded to Underperform from Neutral with a lower $1.50 target price at Credit Suisse based mostly on rising costs including increases via outsourcing; SOL won't get much of a break in China, where wafer and module costs may slip only $0.01 in Q2 and may be flat in H2. Also, the firm doesn't expect progress in tariff talks between Europe and China. Comment!
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2:57 PM Even as H-P (HPQ +15.6%) shares enjoy another big rally in the wake of last night’s quarterly results, Topeka Capital's Brian White sees only a "sugar high... not a sustainable trend." While the upside excites bulls in the short-term, the fact remains that H-P’s profits and sales have dropped for seven quarters in a row, he says, maintaining his Sell rating and $12 price target. 9 Comments
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2:57 PM Apricus Biosciences (APRI -19.4%) tanks after pricing 6M common shares at $2.85, a 13% discount to the closing price of $3.30 on Wednesday. The company also sold warrants to purchase up to 3M shares of common stock and plans to raise a total of $15.8 million net of expenses. The shares of stock and warrants are immediately separable and will be issued separately. The warrants are exercisable immediately upon issuance, have a five-year term and an exercise price of $3.40 per share. Comment!
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2:46 PM Gold's sharp rise today can be attributed to the dollar's drop vs. the yen; when the dollar drops, gold should rise, as their correlation during the past 24 days has hit -86%. A stock sector that's standing out is emerging market gold miners: South Africa’s Sibanye (SBGL), Harmony (HMY) and AngloGold (AU), plus Peru's Buenaventura (BVN) are stronger, even as their corresponding country ETFs (EZA; EPU) are in the red. 5 Comments
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2:29 PM Sempra Energy (SRE -3%) digs out of session lows but remains the S&P 500's worst performer after cutting the top end of guidance for 2013 and offering a weak outlook for 2014. SRE says it is seeking to further optimize its capital structure through additional subsidiary debt and equity issuances, including a possible MLP using Cameron liquefaction as a foundation. Comment!
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2:18 PM Shanda Games (GAME +16.4%) rips higher despite a subdued Q1 earnings report. During an earnings call, the company highlighted its mobile game launch progress, saying Million Arthur launched already in Korea, and in Taiwan on the Android and iOS platforms and will hit Mainland China and Singapore this summer. (transcript) Comment!
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2:07 PM Boeing (BA +1.7%) updates its Orders and Deliveries page for the week, saying that since its last update it has received 107 new orders consisting of six 777s and 101 737s. In the Changes category, it reduced 737 net orders by 24. Additionally, the company says that Chinese regulators have cleared local airlines to fly the 787 Dreamliner, and are expected to allow them to launch overseas flights within a matter of months. Comment!
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1:55 PM Omeros (OMER +1.6%) trades up today after saying its investigational new drug application for the evaluation of OMS824, its treatment for Huntington's disease, has been cleared by the FDA. Comment!
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1:25 PM Elan's (ELN +3%) board has rejected the sweetened takeover bid from Royalty Pharma, saying it "continues to grossly undervalue" the company, with board chairman Robert Ingram adding that it's "no more than an opportunistic attempt to acquire our company at a substantial discount at our shareholders' expense." It urges shareholders to reject the offer, noting also that it's reducing the acceptance threshold to 50% plus one share from 90%. 1 Comment
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1:13 PM Revett Minerals (RVM -20.3%) plunges after providing an update on the Troy Mine. RVM says the "unexpected discovery of ground fall" in the "A Drive" and the projected time frame for establishing alternative development have necessitated an "immediate and significant reduction" in the Troy Mine workforce."The realization that the recommencement of underground mining operations will not resume by the end of the second quarter as planned has forced us to take difficult cost reduction measures," CEO John Shanahan says. (PR) Comment!
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1:04 PM Halcon Resources (HK -9.4%) falls sharply midday as investors don't seem impressed with an operational update the company provided regarding its acreage in the Utica/Point Pleasant play. Updates were given on the Philips 1H, the Allam 1H, the Brugler 1H, the Yoder 2H, and the Kibler 1H wells. The company says the delineation process will be substantially complete by Q4. (PR) 10 Comments
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12:50 PM Hi-ho, hi-ho, its off to work we go as Highway Holdings (HIHO +34%) soars to new highs after the company announced a multi-year order for vacuum cleaner components from an undisclosed leading international appliance manufacturer. The company says that production has already commenced, and an initial order of approximately three million components have already been delivered to the customer. 1 Comment
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12:45 PM Kindred Healthcare (KND +2.5%) rallies for a second day on the back of Susquehanna's upgrade to Positive yesterday. The firm says the stock should continue to trade higher as the company exits its underperforming nursing care centers and free cash flow continues to rise. Comment!
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12:27 PM New Gold (NGD +1.8%) is initiated with a Buy rating and $9.50 price target at Global Hunter. NGD is a mid-cap gold producer with four operating mines which also gets a significant portion of its revenue and earnings power from copper and silver exposure, which the firm believes gives it an advantage over peers in a declining gold price environment. 1 Comment
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12:17 PM Cirrus Logic (CRUS -17.2%) plummets after an investment presentation (Barclays Global Tech, Media, and Telecommunications Conference) in which it mentions "increased pricing pressures in the smartphone markets" and says "revenue for the fiscal year [will] likely [be] impacted by an expected decline in average selling prices" (slide 18). 4 Comments
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12:13 PM Dover (DOV +4.8%) is upgraded to Buy from Neutral with a $90 price target at BAML following news it is spinning its Knowles and Sound Solutions businesses into a new public company. The firm had been concerned about DOV's exposure to Nokia (NOK) and Blackberry (BBRY) platforms as well as the pace of the value ramp up on Apple's (AAPL) iPhone. Comment!
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12:11 PM Shares of small-cap, generic pharmaceutical maker Lannett Company (LCI +5%) get a boost today after being initiated at Needham with a Buy rating and a price target of $15. The firm calls FY13 a transition year for LCI as its operations are positioned for strong future growth, with potentially significant upside coming from additional generic approvals/product launches, and progress around key product filings. Technical note: The stock is currently in the process of breaking out of its 52-week range of $3.72 - $12.57. Comment!
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11:59 AM Apache (APA -2.1%) should sell its assets in Egypt, which have dragged the company’s valuation by 20%-30% and is likely to get worse given the country’s "dysfunctional government, deteriorating economy, polarized society and exploding population," Oppenheimer says, adding APA should use the proceeds to buy back 15% of its shares and reduce debt. 1 Comment
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11:46 AM HEICO (HEI +10.8%) jumps to new 52-week highs today, after the company reported late Wednesday FQ2 earnings that easily topped Street estimates. Revenue grew by 10% Y/Y, driven by strong organic growth in both its Flight Support and Electronic Technologies segments, as well as better margins. Looking ahead, the company says it sees increases in airline capacity and maintenance spending to yield moderate organic growth, and it raises FY13 growth guidance from around 6% to 8% to between 8% and 10%. Comment!
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11:36 AM ING. U.S. (VOYA +1.3%) is reiterated a Buy with $31 price target at BTIG following earnings. Analyst Mark Palmer holds that retirement services and asset management - not life insurance - are VOYA's dominant businesses (they command a higher multiple) and he's impressed 76% (vs. his modeled 70%) of adjusted operating earnings came from those units. ROE was up 120 bps to 9.5%, ahead of a 110 bp management goal. Comment!
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11:11 AM The broad selloff isn't touching H-P (HPQ +14.2%) following last night's earnings. Jefferies' Peter Misek weighs in with an upgrade from Sell to Hold. He praises H-P for having the discipline to sacrifice PC market share to retain profitability (unlike DELL; Whitman (transcript): "Maybe that's what you do when you're about to go private.") Misek also likes the cash flow guidance of $7.5B - "(it) materially changed our view of H-P margin, cash flow, and EPS prospects." 2 Comments
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10:59 AM Chembio Diagnostics (CEMI +0.2%) bucks a weak tape after saying it won a $750K cooperative research agreement with a US government agency to develop rapid point-of-carediagnostic tests for five infectious diseases associated with febrile illness and to multiplex them into one assay. The eight-month project also hopes to optimize the test for use with a mobile reader that incorporates cell phone technology to enable the results to be recorded, transmitted and monitored remotely via a cloud system, in real-time. 1 Comment
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10:36 AM Shares of Stemline Therapeutics (STML -2.2%) slip this morning after Jefferies and Aegis Capital announced an exercise of their option to purchase around 620K additional shares in connection with STML's previously announced 4.1M share public offering. The option's exercise at $14.50 per share will add around $69M in total gross proceeds to STML's coffers before deducting underwriting discounts and commissions. Closing is expected on or about May 28. 2 Comments
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10:35 AM Art meets Finance: Lions Gate (LGF +2.4%) trades higher as enthusiasm builds for the company's prospects after a strong performance at the Cannes Film Festival. The crown jewel for the studio this year will be the release of The Hunger Games: Catching Fire next November and in a nice little twist of cross-selling the movie's teaser trailer displays the LGF stock symbol at the closing. (trailer) Comment!
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10:25 AM Quality Systems (QSII -6%) slips after its FQ4 missed across the board earlier this morning. Total sales grew by 2% Y/Y, but net earnings took a hit from reorg charges and a goodwill impairment charge for the quarter due to an operational review of its hospital unit. Separately, the company says it's appointed Michael Aghajanian to its Board of Directors, effective immediately. Aghajanian fills one of the two vacancies on the Board after recent resignations. Comment!
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10:10 AM Perry Ellis (PERY -3.3%) slides after the company misses on the top line in Q1. Management reaffirms its FY14 outlook for revenue growth of 3-5% and for adjusted EPS of $1.50-1.60, but cuts guidance slightly for GAAP earnings to $1.58-1.68 versus a previous range of $1.60-1.70. (PR) Comment!
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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 power failure at the Phillips 66 Sweeny refinery; as a result, AREX expects Q2 production of 8.7M-9.1M boe/day vs. prior guidance of 9.3M-9.6M boe/day. Power has been restored to the affected fractionation units at Sweeny, and AREX expects a full return to service by the end of this week. 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. 2 Comments
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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) 2 Comments
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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) FQ4: 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. 4 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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