Analysts Forecast Year-on-Year Decline in IBM Second Quarter Sales

11:36 AM, Jul 18, 2017 — International Business Machines (IBM) is expected by analysts to report year-on-year declines in adjusted earnings per share (EPS) and revenue for the second quarter when the technology company releases the results after Tuesday’s market close.

For IBM’s second quarter adjusted EPS, the mean estimate of analysts polled by Capital IQ is $2.74, down from $2.95 a year earlier. The analysts’ mean estimate for the quarter’s revenue is $19.46 billion, down from the year-earlier period’s $20.24 billion.

Citing a “de-risked” outlook for the quarter and improved foreign-exchange backdrop, RBC Capital Markets said it expects IBM to report results in line with-to-modestly above the Street’s consensus earnings view. RBC’s estimate for adjusted EPS matches the Street view while its estimate for revenue is $19.3 billion, slightly below analysts’ consensus view.

RBC said it expects the focus to rest on four key factors: Performance of IBM’s “strategic imperatives,” stabilization of gross margins given six consecutive quarters of gross-margin declines, potential for changes and incremental details surrounding the 2017 outlook, and updates on the Watson/artificial intelligence opportunity.

The firm said while it is encouraged by a more favorable June-quarter setup and 2017 EPS guidance that reflects year-on-year pre-tax income growth, “we think investors may await more tangible signs of achieving these targets before getting positive on the name.” RBC thus maintained its investment rating on the stock at sector perform. Its price target on the stock is at $165 per share, which is above the stock’s Monday closing price of $153.01.

RBC’s overall investment summary on IBM is that the company “represents the best mix of technology businesses in the enterprise segment,” but its “top-line growth should remain limited near-term, which could result in the company’s focusing exclusively on share buybacks and margin mix to boost non-GAAP EPS growth.” The firm has been advising that its clients remain on the sidelines “until better signs of positive revenue growth emerge.”

Companies: International Business Machines Corporation
Price: 152.89 Price Change: -0.12 Percent Change: -0.08

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Target Raises Second-Quarter Profit Estimate; Forecasts Turnaround in Comparable Sales

10:59 AM, Jul 13, 2017 — US retailer Target (TGT) has adjusted its profit forecast for the second quarter and said it expects growth in comparable sales in the period after traffic and sales trends improved.

The Minneapolis-based company, which has 1,807 stores, said on Thursday it now expects adjusted and GAAP earnings per share (EPS) to be above the high end of its previously estimated range of $0.95 to $1.15. Analysts in a Capital IQ poll expected adjusted EPS of $1.06 before Thursday’s company statement.

Comparable sales are expected to see a “modest increase” in the quarter from a year earlier on better sales and customer traffic, it said. In May, after it published its first-quarter financial report it said it expected second-quarter same-store sales to decline by a low single digit percentage.

For the second quarter, both GAAP and adjusted EPS are expected to reflect a $0.05 to $0.09 benefit driven by the net tax effect of the company’s global sourcing operations. Also, GAAP EPS is expected to reflect $0.02 to $0.03 of pressure related to “the unfavorable resolution of tax matters,” it said.

Target is modernizing its stores and revamping its line of brands after competition from online retailers, such as Amazon resulted in a slump in comparable sales in the first quarter. In May, it projected a low single-digit decline in sales for the entire year. It reported a 1.3% drop in comparable sales in the first quarter.

In the first quarter, adjusted EPS was $1.21, down from $1.29 a year earlier, but better than the company’s own forecast range of $0.80 to $1.00.

The company plans to report earnings for the second quarter on Aug. 16.

Companies: Target Corporation
Price: 52.60 Price Change: +1.73 Percent Change: +3.41

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Stocks Recoup Sharp Losses in US After Trump Jr. Emails Release

12:53 PM, Jul 11, 2017 — Stocks in the US were recouping sharp losses made earlier in the session but still trading mostly in the red on Tuesday afternoon as investors were jolted by politics once again.

The Dow Jones Industrial Average plunged more than 100 points after Donald Trump Jr. released an email exchange he had last year which showed claims that a Russian government lawyer was offering the Trump presidential campaign damaging information about rival Hillary Clinton. The Nasdaq Composite and the Standard & Poor’s 500 also retreated on the news.

While the markets recouped some of their losses, the reemergence of talk about Russian involvement in the US election has once again jolted investors and led to fears that the intrigue will distract from the Trump administration’s policy plans, which had sent markets to record highs after his election last November.

Investors are also watching the start Wednesday of semiannual testimony by Federal Reserve Chair Janet Yellen to lawmakers, seeking indications about when the Fed will start to unwind purchases of securities made during the financial crisis.

In Snap (SNAP) dropped 7.9% after Morgan Stanley downgraded the shares to equal weight from overweight and slashed its price target to $16 from $28. Michael Kors (KORS) slid 7.5% after it was started with a sell rating at MKM Partners with a $26 price target.

RCI Hospitality Holdings (RICK) gained 2.1% after saying third quarter total club and restaurant sales rose to $36.9 million from $33.1 million a year earlier. Masimo (MASI) rose 1.5% after its shares were initiated at Stifel Nicolaus with a buy rating and a $105 price target, while the average rating is a hold and an $83 target.

In afternoon trading, the S&P 500 was down 0.2% while the Dow and the Nasdaq were little changed.

Globally, the Hang Seng jumped 1.5%, the Nikkei 225 gained 0.5%, the FTSE 100 fell 0.6% and the Shanghai Composite slipped 0.3%.

 

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Alphabet's Google Fined $2.72 Billion by European Union for Breaching EU Antitrust Rules

Alphabet’s Google Fined $2.72 Billion by European Union for Breaching EU Antitrust Rules

11:48 AM, Jun 27, 2017 — European Union antitrust regulators imposed a 2.42 billion euro ($2.72 billion) fine on Alphabet’s Google, saying the search engine abused its dominant position by favoring its own comparison shopping service over competitors in search results.

Google was given 90 days to end the practice or it could face penalty payments of up to 5% of the average daily worldwide turnover of its parent Alphabet, according to a statement issued on Tuesday by the European Commission, which oversees competition policy for the trading bloc.

“Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors,” Margrethe Vestager, EU commissioner in charge of competition, said. “What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”

Google said it’s considering appealing against the decision, Reuters reported, citing Kent Walker, Google’s general counsel.

“We respectfully disagree with the conclusions announced today,” Walker said, according to the report. “We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”

The commission ordered Google to give equal treatment to rival comparison shopping services and its own service by applying the same processes and methods to position and display rival comparison shopping services in Google’s search results pages as it gives to its own comparison shopping service.

Google has other two ongoing investigations at the commission. The regulator said in earlier preliminary decisions that Google abused its dominance regarding its the Android operating system and AdSense advertizing platform.

Companies: Alphabet Inc.
Price: 941.81 Price Change: -10.46 Percent Change: -1.10

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Oil Prices Slump to 10-Month Low as US Domestic Production Rises, Traders Digest Saudi Royal Reshuffle

Oil Prices Slump to 10-Month Low as US Domestic Production Rises, Traders Digest Saudi Royal Reshuffle

2:09 PM, Jun 21, 2017 — Oil futures prices were trading at levels last seen almost a year ago in recent trade after US government data showed an increase in domestic production of petroleum last week although overall US stockpiles of crude oil were lower for the second week in a row.

West Texas Intermediate (WTI) crude oil, the main US benchmark, was trading 2.9% lower at $42.27 per barrel recently, while Brent crude, the international gauge, was 3.1% lower at $44.59 per barrel. The last time Brent crude traded lower than this was in August 2016 while WTI crude last traded lower than its present level in July last year.

US domestic production of petroleum rose by 20,000 barrels per day to 9.35 million barrels per day in the week ended June 16, according to the Energy Information Administration’s (EIA) weekly oil report, published on Wednesday. The EIA’s data also showed that US inventories of crude oil declined by 2.5 million barrels to 509.1 million barrels last week. The drop surpassed the 1.7 million barrel weekly decline registered the previous week but was a lesser drop than the 2.7 million barrel drop which had been projected by the American Petroleum Institute (API) on Tuesday.

Total motor gasoline inventories fell by 0.6 million barrels, having increased by 2.1 million barrels a week earlier. Distillate fuel inventories rose by 1.1 million barrels having risen by 0.3 million barrels in the prior week, and propane/propylene inventories increased by 1.8 million barrels, having expanded by 2.4 million barrels a week earlier. Commercial petroleum inventories decreased by 1.9 million barrels, compared to a jump of 6.8 million barrels a week earlier.

Also feeding into trading sentiment was news of a change in positions for two of Saudi Arabia’s most senior officials. Home to one of the world’s largest reserves of oil and a key member of the Organisation of Petroleum Exporting Countries (OPEC), any changes to key government roles in Saudia Arabia stand to have potential implications on oil policy and, by extension, the price of oil.

Multiple news agencies reported on Wednesday that Saudi Arabia’s King had opted to promote his son, Mohammed bin Salman, to the role of crown prince, replacing Mohammed bin Nayef, his cousin, who was also removed from his post as interior minister. The Financial Times newspaper credited Mohammed bin Salman as having been the “driving force” behind Saudi Arabia’s plan to overhaul its oil-dependent economy, including the planned partial privatization of Saudi Aramco.

OPEC members collectively generate around one third of the world’s oil supplies and last month the bloc agreed to extend a curb on oil output for another nine months in an effort to ease the global glut in supply which had eroded prices severely in 2016 and the latter half of 2015.

Price: 6.49 Price Change: -0.04 Percent Change: -0.61

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Stocks Mostly Weaken as Amazon's Whole Foods Buy Weighs on Retailers

Stocks Mostly Weaken as Amazon’s Whole Foods Buy Weighs on Retailers

12:46 PM, Jun 16, 2017 — Stocks in the US were mixed to lower on the last trading day of the week, as economic data weighed and consumer names retreated after Amazon.com’s (AMZN) move to purchase food retailer Whole Foods Market (WFM) sparked competition worries.

Consumer staples dropped 1.3% in the steepest decline on the Standard & Poor’s 500, with the food and staples retailing sub-group retreating 4.7%. Kroger (KR) plunged 11%, extending Thursday’s losses to hit the lowest in more than three years.

Supervalu (SVU) dropped 13% and Sprouts Farmers Market (SFM) fell about 5%. Whole Foods Market surged 27% and Amazon gained 2.9% after the $13.7 billion transaction was announced.

Economic releases also dampened sentiment. Housing starts declined 5.5% in May to a seasonally-adjusted annual rate of 1.092 million, missing expectations for an increase of 4.3%. April was revised downward to 1.156 million from 1.172 million. Permits were also lower in May, down 4.9% to a SAAR of 1.168 million, missing expectations for a modest gain of 1.6% to 1.249 million. Action Economics called the numbers “disastrous”.

In company news, Booz Allen Hamilton (BAH) plunged 19% after saying late Thursday that the US Department of Justice is conducting a civil and criminal investigation of its unit, Booz Allen Hamilton Inc, relating to certain elements of cost accounting and indirect cost charging practices with the government.

Lithia Motors (LAD) fell 8.2% after it was downgraded at Bank of America Merrill Lynch to underperform from neutral. Gener8 Maritime (GNRT) jumped 9.5% after Dow Jones said the company is in early talks to be bought by Frontline (FRO).

In afternoon trading, the Nasdaq Composite fell 0.2%, the S&P 500 slipped 0.1% and the Dow Jones Industrial Average was up 0.1%.

Globally, the FTSE 100 and the Nikkei 225 each rose 0.6%, the Hang Seng added 0.2% and the Shanghai Composite slipped 0.3%.

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Sears Canada Shares Plunge to New Low Amid Doubts it Can Continue as Going Concern

10:43 AM, Jun 13, 2017 — Sears Canada (SRSC) shares fell to their lowest level ever after the company said there is “significant doubt” as to its ability to continue as a going concern.

SRSC was down 31% at $0.59 recently, trading in a new 52-week range between $0.40 and $3.41.

It said it continues to face a “very challenging environment” and would need to obtain additional sources of liquidity to implement its business plans. Current and forecasted cash flow will not be enough to meet obligations coming due over the next 12 months.

The company said it recently started a process to address the liquidity situation and to source and structure financial solutions and strategic alternatives to continue to finance its business and preserve and grow its franchise and brand reinvention. Such alternatives may include a financial restructuring or sale.

On Tuesday, Sears also reported a fiscal Q1 loss of $1.42 a share, compared to a net loss of $0.62 a share a year earlier, while revenue in the quarter ended April 29 was $505.0 million, down from $595.9 million a year earlier. Same-store sales rose 2.9%. Analysts’ consensus forecasts weren’t available for comparison.

Companies: Sears Canada Inc.
Price: 0.59 Price Change: -0.27 Percent Change: -31.86

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Stocks Head Higher as Investors Eye Former FBI Director’s Testimony

12:34 PM, Jun 8, 2017 — US markets strengthened on Thursday as investors kept a close eye on testimony by former FBI director James Comey, and other major events.

In the highly anticipated remarks to the US Senate Intelligence Committee, Comey, who was fired by Donald Trump, said he kept notes on conversations he had with the president because he thought the leader might lie. While markets initially fluctuated, they added to gains as Comey wasn’t seen as offering a so-called smoking gun that might hinder Trump and his policy plans.

Investors are also monitoring other key events, including a decision by the European Central bank to hold interest rates while raising growth forecasts and lowering the inflation outlook, and a general election in the UK.

Financials led gains on the Standard & Poor’s 500, rising 1.3% to pull the overall index slightly higher in the early afternoon. Utilities fell 1.4% in the steepest decline. On the Dow Jones Industrial Average, bank heavyweights topped the advancers, with JPMorgan Chase (JPM) rising 1.8% and Goldman Sachs (GS) increasing 1.5%.

Nvidia (NVDA) posted one of the best increases on Nasdaq, rising 5.6% after Citigroup reportedly said the shares could climb another 21% the next 12 months.

In company news, Vail Resorts (MTN) shed 3% after reporting fiscal third quarter earnings and revenue that missed Wall Street estimates, while lowering its full year net income guidance. Alibaba (BABA) surged 11% after CFO Maggie Wu said the company expects revenue growth between 45% and 49% in fiscal 2018, Reuters reported.

Urban Outfitters (URBN) slid 7.6% after the apparel retailer said its comparable retail segments net sales for the current fiscal second quarter are high single-digit negative. Nordstrom (JWN) rallied 11% after saying it’s exploring a going-private transaction with members of the Nordstrom family.

Economic data showed initial jobless claims were lower by 10,000 in the week to June 3 at 245,000, but that was higher than the 241,000 expected.

In afternoon trading, the Dow rose 0.3% while the Nasdaq and S&P 500 were both up about 0.2%.

Globally, the FTSE 100 and the Nikkei 225 both fell 0.4%, while the Shanghai Composite and the Hang Seng added 0.3%.

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United Arab Emirates Says Qatar Has Undermined Regional Security

7:24 AM, Jun 5, 2017 — The United Arab Emirates said Monday that Qatar has “undermined regional security and stability and failed to honor international agreements” and as a result the UAE has decided to sever all relations and gives Qatari diplomats 48 hours to leave the country.

“Qatari nationals may not enter into the UAE and Qatari residents and visitors are given 14 days to leave the country,” the UAE said. “UAE nationals are also banned from traveling or staying in Qatar. Closure of airspace and seaports for all Qataris in 24 hours.”

UAE imports 2 billions of cubic feet of gas per day of gas from Qatar via the Dolphin pipeline, operated by Dolphin Energy, in which Occidental (OXY) has a 24.5% equity stake. The Qatar index has plummeted since opening by as much as 8% at one point.

Companies: Occidental Petroleum Corporation
Price: 61.00 Price Change: +0.30 Percent Change: +0.49

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Oil Prices Advance After Eighth Consecutive Week of Declines in US Stockpiles

Oil Prices Advance After Eighth Consecutive Week of Declines in US Stockpiles

11:57 AM, Jun 1, 2017 — Oil futures prices were trading higher around midday on Thursday after government data showed an eighth consecutive week of declines in US inventories of the hydrocarbon commodity as well as a slump in its commercial petroleum stockpiles.

West Texas Intermediate (WTI) crude oil, the main US benchmark, was trading 1.0% higher at $48.78 per barrel recently, while Brent crude, the international gauge, was 0.6% higher at $51 per barrel. Earlier in the day WTI and Brent crude had been ricocheting between gains and declines.

US inventories of crude oil declined by 6.4 million barrels to 509.9 million barrels in the week ended May 26, according to the Energy Information Administration’s (EIA) weekly oil report, published on Thursday. This compared to a 4.4 million barrel weekly decline registered the previous week and an 8.7 million barrel drop which had been projected by the American Petroleum Institute (API) on Wednesday.

Total motor gasoline inventories fell by 2.9 million barrels, having decreased by 0.8 million barrels a week earlier. Distillate fuel inventories rose by 0.4 million barrels having fallen by 0.5 million barrels in the prior week, and propane/propylene inventories increased by 1.3 million barrels, having expanded by 1.5 million barrels a week earlier. Commercial petroleum inventories decreased by 5.2 million barrels, compared to a drop of 3.5 million barrels a week earlier.

Also feeding into trading sentiment was a slightly higher greenback and the decision by OPEC last week to extend a curb on oil output. The Dollar Index, which tracks the value of the US currency against a basket of foreign currencies, was 0.14% higher at the time of writing. As a dollar denominated commodity, a more expensive buck tends to make oil less affordable to international buyers.

Members of OPEC, which collectively generate around one third of the world’s oil supplies, originally agreed on December 10, 2016 to lower oil output by approximately 1.8 million barrels per day, starting on January 1 for at least six months. This was part of an effort to lower the global glut in oil supply and facilitate a recovery in prices, which had been severely eroded by overproduction in the prior two years. Last week, OPEC members agreed to extend the curb until the end of the first quarter of 2018.

Price: 6.76 Price Change: -0.16 Percent Change: -2.31

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