Steady Rates Please The Street, But Mixed Reports Could Follow (ATHN, DSW, FDS, HOG, KIRK)
Stocks rose moderately on a day the Fed held rates steady and didn’t change its mantra of keeping them low for an extended period of time. Meanwhile, Bernanke and company’s language about the economy keeps painting a slightly improved picture. We expect the economic news to continue to remain mixed, and are cautiously optimistic on the market in the near term.
Stocks rose on the day, with the Dow up 44 points to 10,686. The S&P climbed 9 points to 1,159, while the Nasdaq rose 2,378. Oil jumped $1.90 to $81.70 a barrel, while gold added $17.10 to $1122.20 an ounce.
Topping today’s economic news, the Federal Reserve kept interest rates unchanged, and was more upbeat on the economy, saying the jobs market was stabilizing. Nonetheless, the Fed said it will continue to keep rates low for an “extended period.” Elsewhere, the Commerce Department reported that housing fell to a seasonally adjusted annual rate of 575,000 units, slightly better than the 570,000 economists had expected.
In earnings news, AthenaHealth (ATHN) reported a -83% drop in its Q4 profit to $4.3 million, or 12 cents per share, from $26.8 million, or 77 cents per share, a year ago when it booked a large tax benefit. Adjusted EPS came in at 17 cents, in line with estimates. Revenue jumped 33% to $54.4 million, coming up just shy of the $55.0 million consensus. The company also announced it had completed an internal review and will now amortize its implementation revenue over a period of 12 years, which is the expected life of a customer, as opposed to one year, which is the length of a contract. As a result, the company also restated its past results from 2005 through Q3 2009. The stock climbed 6.5%. Seven pro investors counted the stock among their top-15 holdings at the start of Q1, while 57 tickerspy members included the stock in their portfolios.
Shares of DSW (DSW) fell -10.5% after the shoe retailer missed Q4 EPS estimates and offered a cautious outlook. For Q4 ended January 30th, the company posted a profit of $13.4 million, or 30 cents per share, compared to a loss of -$7.5 million, or -17 cents per share, a year earlier. Adjusted EPS was 32 cents. Revenue climbed 16% to $402.6 million, as same-store sales rose 12.9%. The Wall Street consensus was for EPS of 32 cents on sales of $384.5 million. For the current year, the company guided for EPS of between $1.35-$1.45, while analysts were looking for $1.40.
Net income at financial analytics firm FactSet (FDS) rose 5% to $36.1 million, or 75 cents per share, from $34.6 million, or 71 cents per share, for its fiscal Q2 ended February 28th. Revenue inched up less than 1% to $157.3 million. Analysts were looking for EPS of 74 cents per share on sales of $156.4 million. For the third quarter, FactSet forecast earnings between 75-77 cents per share on revenue between $157-$161 million, bracketing analyst estimates for a profit of 76 cents per share on sales of $158 million. The stock rose 3.2%.
Shares of Harley-Davidson (HOG) jumped 7.0% after the motorcycle maker was rumored to be a leveraged buyout target. The stock is the latest in a string of names to be mentioned as an LBO candidate. According to Reuters, private equity firm Kohlberg Kravis Roberts was considered to be a possible bidder for the company. Six pro investors counted the stock among their top-15 holdings at the start of Q1, while over 250 tickerspy members included the stock in their portfolios.
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