Europe Fears or Just Profit Taking? (DOW, GLW, MHS, CMCSA, GMCR, ISSI)
Stocks staged a rebound after yesterday’s rout. The Greek debt crisis and Europe’s handwringing over what to do about it was the catalyst for Tuesday’s selling, but some of the piling on was undoubtedly profit-taking given the strong run for stocks since February. Some solid earnings reports helped today and there wasn’t much reaction to the Fed’s decision to keep rates low for an extended period as it was largely expected. We still think a modest summer pullback is possible, but that could be good for the long run as it would open up opportunities that are getting harder to find. After today’s closing bell, Green Mountain Coffee Roasters (GMCR) announced earnings and said it would split its stock 3-for-1.
The market bounced back today as the S&P moved up 8 points, or 0.7%, to 1,191, while the Dow climbed 53 points, or 0.5%, to 11,045. The Nasdaq remained flat at 2,472. Meanwhile, gold increased $9.60 to $1,171.30 an ounce, and oil rose 78 cents to reach $83.22 a barrel.
On the economic front, in a 9-1 vote the Federal Reserve announced that it will continue to hold interest rates at record lows for an “extended period.”
In earnings news, shares of Dow Chemical (DOW) rose 5.9% after the chemical maker posted strong Q1 results. For the quarter, Dow earned $466 million, or 41 cents per share, up from $24 million, or 3 cents per share, a year earlier. Adjusted EPS was 43 cents, easily beating the 30-cent consensus. Revenue soared 48% to $13.42 billion. The company said cutting costs and its acquisition of Rohm & Haas last year saved it $275 million during the period. A total of 25 pro investors counted the stock among their top 15 holdings at the start of Q1, as did nearly 750 tickerspy members.
Shares of Corning (GLW) inched down -0.3% even after the company reported that its Q1 profit surged due to higher sales of LCD glass. It also raised its outlook for glass volumes in 2010. For the quarter, net income was $816 million, or 52 cents a share, up from $14 million, or 1 cent a share, a year ago. Analysts were expecting EPS of 42 cents. Sales grew 57% to $1.55 billion from $989 million. Looking forward, Corning said it expects volume to reach 2.9-3.1 billion square feet in 2010, up from its previous forecast of 2.8-3 billion square feet.
Despite announcing that its Q1 profit had risen 10% from a year ago, shares of MedcoHealth Solutions (MHS) slipped -3.9%. For the period ended March 27th, the pharmacy benefits manager said it earned $320.5 million, or 67 cents per share, up from $291 million, or 58 cents per share, last year. Adjusted EPS came in at 73 cents, topping the Street’s estimate by a penny. Revenue climbed 10% to $16.31 billion. For Q2, Medco guided for adjusted EPS of 77 cents, lower than the 81-cent consensus. For the full year, the company reiterated its forecast of adjusted EPS in the range of $3.28-3.38. Analysts are looking for EPS of $3.36.
Shares of Comcast (CMCSA) moved up 1.9% after the company reported a 12% increase in its Q1 profit and noted a rebound in advertising revenue, which rose 23.5% to $360 million. For the January-March period, the cable TV provider earned $866 million, or 31 cents a share, compared with $772 million, or 27 cents a share, the prior year. Analysts had expected EPS of 30 cents. Revenue increased 3.8% to $9.2 billion, while free cash flow jumped 38% to $1.89 billion. A total of 39 pro investors counted the stock among their top 15 holdings at the start of Q1, as did 284 tickerspy members.
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