Bulls Take Charge In An Oversold Market (PSS, JOSB, SNIC, DIVX, AMGN, USU)
Stocks had a strong day, bouncing back from yesterday’s late-day tumble. While the pending home sales data was good, it looks like the rally was largely the result of an oversold market. We would expect the recent market volatility to continue in the short term, with a bias still towards the downside.
Stocks surged, with the Dow rising 226 points to 10,250. The S&P gained 2 points to 1,098, while the Nasdaq climbed 59 points to 2,281. Oil edged up 28 cents to $72.86 a barrel, while gold fell -$4.20 to $1,220.60 an ounce.
On the economic front, the National Association of Realtors said that its pending home sales index increased 6% month over month in April, and up 22% from last year. The number was positively impacted by federal tax subsidies that expire at the end of this month.
In earnings news, shares of Collective Brands (PSS) tumbled -7.2% after the company reported mixed Q1 results. For the quarter, net income was $54.2 million, or 83 cents per share, compared with $38.0 million, or 59 cents per share, last year. Revenue rose slightly to $878.8 million, while same-store sales slipped -1.2%. Analysts were expecting EPS of 75 cents on revenue of $888.2 million. A total of 7 pro investors counted the stock among their top 15 holdings at the start of Q2, while 26 tickerspy members included the stock in their portfolios.
Jos. A. Bank Clothiers (JOSB) saw its shares drift 3.8% higher on news the clothing maker posted a 38% jump in its Q1 net income. For the period ended May 2nd, the company earned $15.8 million, or 85 cents a share, easily topping the 71-cent consensus. A year earlier net income was $11.5 million, or 62 cents a share. Revenue grew 10% to $178.1 million, as comparable-store sales climbed 10.4%. A total of 5 pro investors counted the stock among their top 15 holdings at the start of Q2, while over 60 tickerspy members included the stock in their portfolios.
In M&A news, digital media firm Sonic Solutions (SNIC) announced it will acquire codec software maker DivX (DIVX) in a cash and stock deal worth $323 million. Expected to close in September, the deal values DivX’s stock at about $9.83 a share, a premium of 41% over its closing price on Tuesday of $6.95. Sonic will pay $3.75 per share in cash and 0.514 shares for each share of DivX. Shares of Sonic dropped -9.5% on the news, while shares of DivX surged 26.5%.
Shares of biotechnology company Amgen (AMGN) rose 10.5% after the FDA gave early approval to Prolia, a bone drug intended for postmenopausal women that is injected twice a year. The company said it plans to launch the drug next week. It is also seeking FDA approval for Prolia to be used by cancer patients suffering from bone damage.
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