Time to Accumulate on Weakness? (GPS, LCAPA, KNXA, KIRK, CRM, ARUN, BKS)
Some poor results in the retail sector and renewed concerns about Greece, which saw its debt downgraded again, sent stocks tumbling on the day. With earnings season winding down, we don’t see a lot of catalysts and still expect a relatively weak summer for stocks. However, we think this could be a good time to look to accumulate shares on weakness, as we’re expecting a stronger fall.
The Human Resources and Talent Management Software Stocks Index was the top performing tickerspy Index on the day, led by Kenexa (KNXA) with a 17% gain. The Home Furnishing Retailer Stocks Index was the day’s worst performing tickerspy Index, with Kirkland’s (KIRK) down -10%.
Stocks fell on the day, with the Dow closing -93 points lower to 12,512. The S&P dropped -10 points to 1,333, while the Nasdaq lost -20 points to 2,802. Oil rose $1.05 to $99.49, while gold climbed $16.50 to $1,508.90 an ounce.
In earnings news, shares of software as a service provider Salesforce.com (CRM) jumped 8.0% after the company’s adjusted fiscal first-quarter profit beat Wall Street estimates. For the quarter, Salesforce earned $530,000, or breakeven per share, compared with $17.7 million, or 13 cents a share, a year earlier. Revenue surged 34% to $504.4 million. Excluding one-time items, the company earned 28 cents a share. Analysts were expecting 27 cents a share on revenue of $482.6 million. The company expects an adjusted second-quarter profit of 29-30 cents on revenue of $526-$528 million. Analysts were expecting a profit of 27 cents on $506 million. For the full-year, Salesforce expects to earn $1.30-$1.32 on an adjusted basis and is forecasting revenue of $2.15-$2.17 billion. Analysts were expecting net income of $1.29 on $2.11 billion in revenue. Nearly 30 pros held Salesforce in their portfolios at the end of Q1 and nearly 600 tickerspy members own the stock in their portfolios.
Shares of wireless network equipment provider Aruba Networks (ARUN) plunged -17.1% after the company issued conservative guidance. The company reported a fiscal third-quarter profit of $3.2 million, or 3 cents a share, compared with a loss of -$5.3 million, or-6 cents per share, a year earlier. Revenue climbed 53% to $105.8 million. Excluding one-time items, Aruba earned 16 cents a share. Analysts were expecting a profit of 15 cents on revenue of $98 million.For the July quarter, Aruba forecast a profit of 16-17 cents on revenue of $107-$109 million. Analysts were forecasting a profit of 16 cents on revenue of $105.5 million. Twelve pros counted Aruba among their top holdings at the end of Q1 and more than 240 tickerspy members own the stock in their portfolios.
Shares of apparel retailer Gap (GPS) plummeted -17.5% after the company said its fiscal first-quarter profit fell to $233 million, or 40 cents per share, from $302 million, or 45 cents per share, a year earlier. Revenue fell -1% to $3.29 billion. Analysts were looking for a profit of 39 cents on sales of $3.27 billion. The company slashed its full-year profit guidance to $1.40-$1.50 a share from $1.88-$1.93. Analysts were expecting $1.84 a share.
Shares of bookstore operator Barnes & Noble (BKS) surged 29.9% after the company received a $1 billion takeover offer from John Malone’s Liberty Media (LCAPA), though some analysts said Barnes & Noble could be worth more. The company’s board has not commented on the deal yet. New York-based Barnes & Noble has over 700 stores across the country and almost 640 college bookstores.
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