High-Beta Stocks Coming Back to Earth, Fast (FFIV, XLNX, UNH, MS, DDS, MNKD)

Stocks fell on the day, with the Nasdaq once again leading the market lower. High-beta stocks that had been market leaders have been hit particularly hard, and this very well could be beginning of the pullback we said we’ve been expecting. We’d keep some cash on the sidelines to look for some good opportunities that could pop up if the market continues to drift lower.

The Department Store Stocks Index was the top performing tickerspy Index on the day, led by Dillard’s (DDS) with a 12% gain. The Diabetes Stocks Index was the day’s worst performing tickerspy Index, with MannKind (MNKD) down -32%.

Stocks dropped on the day, led lower once again by the Nasdaq, which fell -21 points, or -0.8%, to 2,704. The Down and S&P each fell -2 points to 11,823 and 1,280, respectively. Oil fell -$2.00 to $88.86 a barrel, while gold dipped -$23.70 to $1,346.50 an ounce.

In economic news, the Labor Department said initial claims for jobless benefits declined to 404,000 last week from a revised reading of 441,000 the previous week, good for the biggest drop since February 2010. Continuing claims fell to 3.86 million, the lowest point in two years.

The National Association of Realtors said December existing home sales surged 12.3% to a seasonally adjusted 5.28 million units. That’s compared with a November reading of 4.68 million units. Economists had been expecting the December number to come in at 4.8 million units.

The Conference Board’s December reading of leading economic indicators rose 1% after gaining 1.1% in November, a sign that the U.S. economic recovery may accelerate this year. Economists were expecting a December reading of 0.6%. Leading economic indicators have now risen for six straight months.

In earnings news, shares of F5 Networks (FFIV) plunged -21.4% after the application delivery networking company said it expects to post revenue of $275-$280 million for the fiscal second quarter, below Wall Street estimates of $280.7 million. The Seattle-based company also said it expects an adjusted profit of 84-86 cents per share for the quarter. Analysts were expecting 85 cents per share on an adjusted basis. For fiscal Q1, the company reported earnings of $55.7 million, or 68 cents a share, compared with $29.3 million, or 36 cents a share, a year earlier. Adjusted EPS was 88 cents, topping the 83-cent consensus. Revenue rose 40% to $268.9 million, but fell just short of analyst expectations of $270.3 million.
Twenty five pros owned F5 Networks in their portfolios at the end of the third quarter and 360 tickerspy members own the stock in their portfolios.

Xilinx (XLNX) shares rose 0.8% after the maker of programmable computer chips said it earned $152.3 million, or 58 cents per share, in the December quarter compared with $106.9 million, or 38 cents per share, a year earlier. Revenue jumped 10% to $567.2 million from $515.3 million a year earlier. Analysts were expecting a profit of 53 cents a share on sales of $573.4 million. For the current quarter, Xilinx said revenue could be flat or grow as much as 5% on a sequential basis, putting the high end of estimates at $595.6 million. Analysts were forecasting sales of $574.0 million.

Shares of United Health (UNH) fell -0.6% after the health insurance provider said it earned $1.04 billion, or 94 cents per share, in the December quarter compared with $944 million, or 81 cents per share, a year earlier. On an adjusted basis, the company earned $1.05 a share. Revenue surged 10% to $24.03 billion. Analysts were expecting a profit of 84 cents a share on revenue of $23.37 billion. Premium revenue increased by 10% to $21.69 billion.

Morgan Stanley (MS) shares soared 4.6% after the Wall Street Bank said it earned $836 million, or 41 cents a share after the payment of preferred dividends, in the fourth quarter, compared with $617 million, or 29 cents a share, a year earlier. Revenue surged 14% to $7.81 billion. Analysts were expecting a profit of 35 cents a share on revenue of $7.35 billion. Investment banking revenue climbed to $1.8 billion, up 5% from a year earlier and up 44% from the third quarter, while revenue in Morgan Stanley institutional securities business, including investment banking, sales, and trading, jumped 12% to $3.6 billion. Twenty pros held Morgan Stanley in their portfolios at the end of the third quarter and more than 1,000 tickerspy own the stock in their portfolios.

Tags: DDS, FFIV, MNKD, MS, UNH, XLNX