Markets Mostly Higher As Earnings Season Continues To Impress

July 24, 2014

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U.S. stocks were mostly higher as investors and traders continue to weigh in on earnings from large-cap companies like Apple, Microsoft, Facebook, and momentum high-flyers like Chipotle Mexican Grill and Intuitive Surgical.

Despite geopolitical concerns, the S&P 500 managed to close at a record high and continues to inch toward the 2,000 level.

The Dow lost 0.16 percent, closing at 17,086.63.
The S&P 500 gained 0.18 percent, closing at 1,987.01.
The NASDAQ gained 0.40 percent, closing at 4,473.70.
Gold lost 0.05 percent, trading at $1,306.20 an ounce.
Oil gained 0.60 percent, trading at $103.00 a barrel.
Silver lost 0.13 percent, trading at $20.95 an ounce.

News Of Note

MBA Mortgage Composite Index rose 2.4 percent after declining 3.6 percent last week.

MBA Mortgage Refinance Index rose 4.1 percent after declining eight percent last week.

MBA Mortgage Purchase Index rose rose 0.3 percent after declining 0.1 percent last week.

EIA Crude Inventories declined 4.0 million barrels, more than the decline of 2.5 million barrels expected.

EIA Gasoline Inventories rose 3.4 million barrels, more than the expectations for a gain of 0.9 million barrels.

EIA Distillates Inventories rose 1.6 million barrels, less than the expectations for a gain of 1.9 million barrels.

The IMF lowered its full-year 2014 U.S. growth forecast to 1.7 percent from 2.0 percent, but noted that growth up to three percent is possible over the next 18 months.

Russia's President Vladimir Putin suggested that the Russian government grant authorization for other companies to export Siberian gas, thereby ending Gazprom's monopoly.

Analyst Upgrades And Downgrades Of Note

Analysts at Cowen & Co downgraded 21st Century Fox (NASDAQ: FOX) to Market Perform from Outperform. Shares lost 1.92 percent, closing at $32.70.

Analysts at Jefferies upgraded Allscripts Healthcare Solutions (NASDAQ: MDRX) to Buy from Hold with a price target raised to $21 from a previous $15. Shares gained 0.93 percent, closing at $16.75.

Analysts at Macquarie maintained an Outperform rating on Apple (NASDAQ: AAPL) with a price target raised to $102 from a previous $95. Also, analysts at Raymond James maintained an Outperform rating on Apple with a price target raised to $104 from a previous $102, while analysts at Nomura maintained a Neutral rating on Apple with a price target raised to $95 from a previous $88.71. Shares hit new 52-week highs of $97.88 before closing the day at $97.20, up 2.62 percent.

Analysts at Macquarie maintained an Underperform rating on CIT Group (NYSE: CIT) with a price target raised to $47 from a previous $44. Meanwhile, analysts at Citigroup maintained a Buy rating on CIT Group with a price target raised to $56 from a previous $54. Shares lost 0.49 percent, closing at $48.47.

Analysts at Barclays maintained an Equal-weight rating on Chesapeake Energy (NYSE: CHK) with a price target raised to $33 from a previous $26. Shares gained 0.86 percent, closing at $27.08.

Analysts at Nomura maintained a Buy rating on Coca-Cola (NYSE: KO) with a price target lowered to $53 from a previous $54. Shares lost 0.92 percent, closing at $40.81.

Analysts at Raymond James maintained a Strong Buy rating on Comcast (NASDAQ: CMCSA) with a price target raised to $63 from a previous $61. Shares gained 0.15 percent, closing at $54.71.

Analysts at JPMorgan initiated coverage of Cooper Tire & Rubber (NYSE: CTB) with a Neutral rating and $36 price target. Shares lost 0.92 percent, closing at $30.28.

Analysts at JPMorgan maintained an Overweight rating on Cree (NASDAQ: CREE) with a price target raised to $62 from a previous $61. Shares lost 2.28 percent, closing at $48.95.

Analysts at Barclays maintained an Equal-Weight rating on Domino's Pizza (NYSE: DPZ) with a price target raised to $80 from a previous $77. Shares lost 0.89 percent, closing at $75.43.

Analysts at JPMorgan downgraded Du Pont (NYSE: DD) to Neutral from Overweight with a price target lowered to $67 from a previous $74. Meanwhile, analysts at Citigroup maintained a Buy rating on Du Pont with a price target lowered to $75 from a previous $76, while analysts at Barclays maintained an Equal-Weight rating on Du Pont with a price target raised to $70 from a previous $68. Shares gained 0.65 percent, closing at $65.37.

Analysts at Barclays maintained an Equal-Weight rating on Harley-Davidson (NYSE: HOG) with a price target lowered to $66 from a previous $70. At the same time, analysts at JPMorgan maintained an Overweight rating on Harley-Davidson with a price target lowered to $71 form a previous $78. Shares gained 1.80 percent, closing at $64.60.

Analysts Raymond James upgraded Intuitive Surgical (NASDAQ: ISRG) to Outperform from Market Perform with a $500 price target. Also, analysts at Stifel Nicolaus upgraded Intuitive Surgical to Buy from Hold with a $600 price target. Shares gained 17.71 percent, closing at $461.63.

Analysts at Bank of America downgraded King Digital Entertainment (NYSE: KING) to Neutral from Buy. Shares lost 5.57 percent, closing at $19.50.

Analysts at Susquehanna downgraded McDonald's (NYSE: MCD) to Neutral from Positive with a price target lowered to $98 from a previous $109. Also, analysts at Baird downgraded McDonald's to Neutral from Outperform with a price target lowered to $98 from a previous $104, while analysts at Sterne Agee downgraded McDonald's to Neutral from Buy while removing a previous $107 price target. Analysts at JPMorgan maintained an Overweight rating on McDonald's with a price target lowered to $103 from a previous $106, while analysts at Deutsche Bank maintained a Buy rating on McDonald's with a price target lowered to $105 from a previous $115. Shares lost 0.96 percent, closing at $95.35.

Analysts at Bank of America upgraded Microsoft (NASDAQ: MSFT) to Neutral from Underperform with a price target raised to $47 from a previous $35. Analyst at Pacific Crest also upgraded Microsoft, but to Outperform from Sector Perform with a $54 price target. Analysts at Credit Suisse maintained an Outperform rating with a price target raised to $50 from a previous $47.50. Shares gained 0.09 percent, closing at $44.87.

Analysts at Northland Securities upgraded QUALCOMM (NASDAQ: QCOM) to Outperform from Market Perform with a price target raised to $90 from a previous $82.50. Shares hit new 52-week highs of $81.97 before closing the day at $81.60, up 0.09 percent.

Analysts at Northcoast Research upgraded TJX Companies (NYSE: TJX) to Buy from Neutral. Shares gained 1.18 percent, closing at $53.10.

Analysts at Raymond James maintained an Outperform rating on Verizon Communications (NYSE: VZ) with a price target raised to $55 from a previous $54. Also, analysts at JPMorgan maintained an Overweight rating with a price target raised to $59 from a previous $58. Shares lost 0.14 percent, closing at $50.91.

Equities-Specific News Of Note

Sony (NYSE: SNE) plans to invest $345 million in image sensors for smartphones and tablets because of the rising popularity of “selfies.” Shares gained 1.20 percent, closing at $16.89.

Caterpillar (NYSE: CAT) disclosed its total retail sales of machines for the three-month period ending in June fell 10 percent after falling 12 percent in the three months ending in May. Shares lost 1.53 percent, closing at $108.38.

Broadcom (NASDAQ: BRCM) announced it will wind down its baseband chip unit after failing to find a buyer. Shares lost 1.55 percent, closing at $38.15.

Freeport McMoRan (NYSE: FCX) plans to sell $4 billion to $5 billion in onshore assets to reduce debt and have a cash reserves for investments in the Gulf of Mexico. Shares lost 0.44 percent, closing at $38.55.

Yum! Brands (NYSE: YUM) terminated all ties with OSI China following a new round of scares involving its meat in China. Shares lost 0.17 percent, closing at $74.71.

Yingli Solar (NYSE: YGE) will supply 32MW of modules in 2015 for a solar project in Japan. Shares gained 3.19 percent, closing at $3.56.

The Obama administration proposed a phasing out of thousands of older railroad tank cars that carry crude oil within two years as part of a safety upgrade. This would benefit directly American Railcar (NASDAQ: ARII) whose shares rose 3.00 percent, closing at $69.72.

Winners Of Note

This morning, Biogen (NASDAQ: BIIB) reported its second quarter results. The company announced an EPS of $3.49, beating the consensus estimate of $2.80. Revenue of $2.40 billion beat the consensus estimate of $2.14 billion. Net income for the quarter rose to $714.51 million from $490.67 million in the same quarter a year ago, as the company saw sales growth across all of its products. Sales from Avonex rose 3.9 percent from a year ago to $773.8 million, while sales of Tysabri rose 37.9 percent to $533.4 million, Tecfidera sales surged 144.6 percent to $700.4 million, sales of Fampyra rose 32.7 percent to $22.3 million and sales of Fumaderm rose 1.1 percent to $16.0 million. The company revised its guidance and sees its revenue growth to a range of 38 percent to 41 percent from a previous range of 26 percent to 28 percent. The company also updated its EPS guidance to a new range of $11.26 to $11.46 from a previous range of $9.85 to $9.95. Separately, the European Commission approved Biogen's Plegridy as a treatment for adults with relapsing-remitting multiple sclerosis. Shares gained 11.17 percent, closing at $337.60.

Decliners Of Note

ValueAct lowered its stake in Dresser-Rand (NYSE: DRC) to 2.6 percent from 6.6 percent. Shares lost 5.42 percent, closing at $63.30.

During Juniper Networks (NYSE: JNPR) second quarter results, the company issued downside guidance and sees its third quarter revenue to be $1.15 billion to $1.2 billion, below the consensus estimate of $1.26 billion. The company also guided its EPS to be $0.35 to $0.40, below the consensus estimate of $0.44. The company noted that the downside guidance is because of “customer-specific dynamics.” During the conference call, the company noted that “market dynamics including M&A activity” are affecting the timing of carrier projects. Shares lost 9.63 percent, closing at $22.43.

Earnings Of Note

This morning, B/E Aerospace (NASDAQ: BEAV) reported its second quarter results. The company announced an EPS of $1.13, beating the consensus estimate of $1.07. Revenue of $1.09 billion beat the consensus estimate of $1.01 billion. Net earnings for the quarter rose to $108.6 million from $92.4 million in the same quarter a year ago marking what the company described as the best quarterly results in its history because of record revenue, operating earnings that grew 24.8 percent from a year ago to $198.1 million and an operating margin of 18.2 percent. Shares lost 3.26 percent, closing at $91.99.

This morning, Thermo Fisher Scientific (NYSE: TMO) reported its second quarter results. The company announced an EPS of $1.72, beating the consensus estimate of $1.62. Revenue of $4.32 billion beat the consensus estimate of $4.25 billion. Net income for the quarter rose to $278.5 million from $277.4 million in the same quarter a year ago, as the company achieved solid progress on its Life Technologies integration with synergies tracking ahead of plan. The company saw an impressive 509 percent revenue growth from a year ago in its Life Sciences division to $1.103 billion, while Analytical Instruments saw a 43 percent revenue growth to $793.4 million. Specialty Diagnostics saw a 7.7 percent revenue boost to $855.1 million, while Laboratory Products & Services saw its revenue grow 6.5 percent to $1.699 billion. The company updated its guidance and sees its full-year 2014 revenue being in a range of $16.86 billion to $16.98 billion from a previous guidance of $16.84 billion to $17.00 billion. The company also updated its EPS guidance to a range of $6.85 to $6.97 from a previous range of $6.80 to $6.95. Shares gained 0.76 percent, closing at $124.00.

This morning, PepsiCo (NYSE: PEP) reported its second quarter results. The company announced an EPS of $1.32, beating the consensus estimate of $1.23. Revenue of $16.89 billion beat the consensus estimate of $16.79 billion. Net income for the quarter fell to $1.98 billion from $2.03 billion in the same quarter a year ago, as carbonated soft drink volume in the North American region fell two percent while non-carbonated beverages saw a one percent volume growth. In total, beverage sales in the Americas rose to $5.281 billion from $5.26 billion a year ago. Frit-Lay North America saw its revenue grow to $3.387 billion from $3.332 billion, while Quaker Foods North America saw its sales drop to $564 million from $577 million a year ago. Europe saw its sales slightly rise to $3.657 billion from $3.653 billion while Asia, Middle East and Africa sales rose to $1.883 billion from $1.869 billion a year ago. As a whole, gross margin rose to 54 percent from 53 percent while input costs fell 1.5 percent to $7.78 billion. Shares hit new 52-week highs of $93.09 before closing the day at $90.82, up 1.85 percent.

This morning, Boeing (NYSE: BA) reported its second quarter results. The company announced an EPS of $2.24, beating the consensus estimate of $1.99. Revenue of $22.05 billion fell short of the consensus estimate of $22.44 billion. Net earnings for the quarter rose to $1.653 billion from $1.088 billion in the same quarter a year ago, as the company marked its 8,000th 737 delivery and the first 787-9. Commercial Airplane revenue rose five percent to $14.3 billion, while the company booked 264 net orders. Backlog remains strong with more than 5,200 airplanes with a total value of $377 billion. Defense, Space & Security revenue fell to $7.75 billion in the quarter, but Boeing did end the quarter with a backlog of $63 billion, of which 36 percent represents orders from international customers. Boeing raised its EPS guidance to a range of $7.90 to $8.10 from a previous $7.15 to $7.35. Shares lost 2.34 percent, closing at $126.71.

After the market closed, AT&T (NYSE: T) reported its second quarter results. The company announced an EPS of $0.62, missing the consensus estimate of $0.65. Revenue of $32.60 billion missed the consensus estimate of $33.36 billion. Shares were trading lower by 1.64 percent at $35.29 following the earnings report.

After the market closed, QUALCOMM (NASDAQ: QCOM) reported its third quarter results. The company announced an EPS of $1.44, beating the consensus estimate of $1.22. Revenue of $6.80 billion beat the consensus estimate of $6.53 billion. Shares were trading lower by 3.25 percent at $78.95 following the earnings report.

After the market closed, Facebook (NASDAQ: FB) reported its second quarter results. The company announced an EPS of $0.42, beating the consensus estimate of $0.32. Revenue of $2.91 billion beat the consensus estimate of $2.81 billion. Shares were trading higher by 4.05 percent at $74.18 following the earnings report.

After the market closed, Gilead Sciences (NASDAQ: GILD) reported its second quarter results. The company announced an EPS of $2.36, beating the consensus estimate of $1.79. Revenue of $6.53 billion beat the consensus estimate of $5.86 billion. Shares were trading lower by 0.10 percent at $90.25 following the earnings report.

Quote Of The Day

"Money's only something you need in case you don't die tomorrow…" – Carl Fox in the 1987 film Wall Street.

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