Southwestern Energy (NYSE:SWN) is initiated with an Outperform rating and a $50 share price target, implying a potential ~57% gain, at Imperial Capital, which believes SWN is positioned as one of the lowest-cost producers in the U.S. and potentially taking market share in the midst of a major step-up in U.S. demand for natural gas the firm sees as likely in the 2016-17 period.
As a low-cost producer, SWN is one of the few U.S. E&P companies with the potential to flourish in a low $4.00/Mcf U.S. natural gas price environment the firm expects over the next few years.
A recent $5.4B property acquisition in the southwest Marcellus and Utica play region from Chesapeake Energy fits what SWN does best and can become a third low-cost core growth area, Imperial adds.
In addition to beating Q3 estimates, Control4 (NASDAQ:CTRL) guided for Q4 revenue of $41M-$43M and EPS of $0.16-$0.22, in-line with a consensus of $41.7M and $0.18. With shares having gone into earnings down 23% YTD, that was well-received.
The home automation tech provider saw gross margin rise 120 bps Y/Y to 51.9%. GAAP opex rose 13% to $17.1M.
At the same time, Q3 earnings reports have been surprisingly healthy; with 360 companies reporting, the S&P 500 is on pace to grow earnings 7.5% in the quarter, better than the 4.5% expected before the start of reporting season.
"A lot of the fears that led to the sell off in the middle of October turned out to be unfounded, and U.S. interest rates are even lower than when we started, which makes the case for equities even stronger," says J.P. Morgan Funds chief market strategist David Kelly.
The energy sector (+2%) started slowly but gathered strength as Exxon and Chevron posted better than expected earnings; techs were broadly higher as LinkedIn and GoPro reported above consensus earnings.
The dollar hit a six-year high vs. the Japanese yen, while safe-haven assets such as Treasury bonds and gold tumbled; Treasurys ended in the red with the 10-year yield up 3 bps at 2.33%, while gold futures plunged to four-year lows.
Participation was strong, with more than a billion shares changing hands at the NYSE.