Bulls Still Hanging Tough, but Potential Speedbumps Ahead (NKE, GES, GME, TEVA, PFE, CIGX)
While the S&P was down a sliver, stocks continue to trade well, with the Dow now up 8-straight days. Following an approximately -8% dip earlier this year, stocks have been on a steady, slow rise with little volatility. There could be potential speed bumps down the road, including the pace of the economic and jobs recovery, government policy, and the potential for higher interest rates, but in the near term, things are looking good for stocks. We remain cautiously optimistic.
Stocks ended the day mixed, with the S&P the lone loser, down less than a point to close at 1,166. The Dow added 46 points to 10,779, while the Nasdaq tacked on 2 points. Oil fell -93 cents to $82.00 a barrel, while gold was up $3.40 at $1,127.40 an ounce.
On the economic front, the Labor Department reported that the consumer price index was flat in February, while core CPI, which excludes food and energy costs, rose 0.1%. In a separate report, the Labor Department announced that weekly jobless claims fell -5,000 to a seasonally adjusted 457,000. Economists were looking for 455,000 claims.
In earnings news, shares of Nike (NKE) jumped 5.3% after the athletic apparel company’s fiscal Q3 results dashed past analyst estimates. For the quarter, the company earned $496 million, or $1.01 per share, more than double the $244 million, or 50 cents per share, it made a year earlier when it recorded a $241 million charge. Revenue rose 7% to $4.7 billion. The Wall Street consensus was for EPS of 89 cents on sales of $4.6 million. Forty-five pro investors counted the stock among their top-15 holdings at the start of Q1, while over 300 tickerspy members included the stock in their portfolios.
Guess (GES) shares rose 1.4% after the apparel maker crushed analyst estimates. For Q4, the company posted a profit of $86.6 million, or 93 cents per share, up 80% from $47.9 million, or 51 cents per share, a year ago. Adjusted EPS was 96 cents, which was well ahead of the 81-cent consensus. Sales increased 14% to $642 million. For Q1, the company guided for EPS of between 46-48 cents, compared to estimates of 46 cents.
Shares of GameStop (GME) climbed 6.6% after the video game retailer topped Q4 estimates and offered a solid 2010 outlook. For the quarter ended January 30th, the company recorded a profit of $215.9 million, or $1.29 per share, down -7% from $232.3 million, or $1.39 per share, last year. Revenue inched up 1% to $3.52 billion, as same-store sales fell -7.9%. Analysts were looking for EPS of $1.27 on sales of $3.45 billion. For 2010, the company forecast EPS of $2.58-$2.68, above the $2.57 consensus. Fourteen pro investors counted the stock among their top-15 holdings at the start of Q1, while over 300 tickerspy members included the stock in their portfolios.
In M&A news, generic drugmaker Teva Pharmaceutical (TEVA) announced it will purchase German generic drugmaker Ratiopharm Group International for 3.63 billion euros ($4.97 billion). The company supposedly beat out pharmaceutical giant Pfizer (PFE) to acquire the firm. The deal is expected to close at the end of the year. The stock rose 3.5%.
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