Stocks Stage Mid-Week Dip But Still Look Strong Near Term (ADBE, PMCS, KMX, BRK.B, JEF, TTPA)
Stocks fell back a bit as some weak guidance in the tech sector hurt the markets. Nonetheless, it was more of just a lackluster day then a big pullback, which still points to continued market strength in the near term.
Stocks dipped on the day, with the Dow off -22 points to 10,739. The S&P fell -6 points to 1,134, while the Nasdaq dropped -15 points to 2,335. Oil sunk -26 cents to $74.71 a barrel, while gold jumped $17.80 to $1,290.20 an ounce.
On the economic front, home prices slipped by -0.5% in July, according to the Federal Housing Finance Agency. It was the FHFA index’s lowest reading since September of 2004, and investors will be watching closely when the July numbers from the more widely accepted Case-Shiller home price index are released on Tuesday.
In earnings news, Adobe Systems (ADBE) plummeted by -19.0% after the company guided below expectations for the fourth quarter. In the third quarter ended September 3rd, Adobe earned $230.1 million, or 44 cents per share, compared to $136 million, or 26 cents per share, a year ago. After excluding certain items, adjusted earnings came to 54 cents per share, besting the analyst consensus by a nickel. Revenue was up by 42% to $990.3 million, which also topped the Street’s $985 million expectations. Adobe expects fourth-quarter revenue in the range of $950 million to $1 billion, which is below analysts’ $1.03 billion outlook. Heading into the second half, 28 asset managers counted Adobe shares among their top-15 U.S.-listed equity holdings, and 304 tickerspy members currently hold the stock in their portfolios.
Chip designer PMC-Sierra (PMCS) slipped by -6.0% after cutting its third-quarter outlook to below analyst expectations. The firm now anticipates between $161-$163 million in revenues for the period, compared to the prior forecast of between $169-$177 million. Analysts had expected $173 million, and the company didn’t provide a reason for the revised outlook.
Used car dealer CarMax (KMX) gained 8.5% after beating the consensus in the second quarter ended August 31st. The firm posted $107.9 million, or 48 cents per share, in net income, compared to $103 million, or 46 cents per share, in the same period last year. Revenue rose by 13% to $2.34 billion. Analysts were looking for 40 cents in EPS on $2.27 billion in sales. Twelve Pros including Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B) counted CarMax in their top-15 U.S.-listed equity holdings at the end of the second quarter, and 203 tickerspy members currently hold the stock in their portfolios.
In the financial space, Jefferies Group (JEF) slipped by -5.2% after missing expectations in its fiscal third quarter. The company earned $46.3 million, or 23 cents per share, in the three months ended August 30th, compared to $86.3 million, or 42 cents per share, in Q3 2009. Revenue slid by -22% to $609.3 million. The results were well below analyst expectations of 31 cents in EPS on $571.6 million in revenue.
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