A Europe-Led Reversal (JAKK, PDLI, VPRT, WINN)
After a positive start to the trading day, stocks reversed course mid-morning, ending the day decidedly lower. Comments from European Central Bank President Mario Draghi that the ECB won’t increase its bond buying program to help stem the EU’s sovereign debt crisis appears to be the catalyst for the reversal. Banking stocks led the way lower, and comments out of Europe continue to drive the market. We are currently cautious on the market overall.
The Grocery Store Stocks Index was the top performing tickerspy Index on the day, led by Winn-Dixie Stores (WINN) with a 70% gain. The Toys and Game Stocks Index was the day’s worst performing tickerspy Index, with Jakks Pacific (JAKK) down -20%.
Stocks fell on the day, with the Dow down -100 points to 11,766. The S&P dropped -14 points to 1,205, while the Nasdaq lost -32 points to close at 2,523. Oil edged up 35 cents to $93.88 a barrel, while gold fell -$1.20 to $1,596.70 an ounce.
In economic news, the National Association of Home Builders said homebuilder sentiment rose to 21 in December from 19 in November, good for the third consecutive month of gains. Economists had expected a December reading of 20.
In earnings news, shares of specialty retailer Jakks Pacific plunged -20.2% after the company said it expects to earn 37-40 cents per share on revenue for $660 million for the full year. That compares with previous guidance of $1.32-$1.35 a share on revenue of $770-$775 million. Analysts were expecting a profit of $1.31 on revenue of $768.3 million for the year.
Shares of PDL BioPharma (PDLI) slid -4.0% after the company said it expects fourth-quarter revenue will fall -5%. The company forecast full-year revenue of $361 million. Analysts were expecting $371.8 million. PDL forecast fourth-quarter revenue of $72 million, well below the $78 million analysts were expecting.
Shares of Vistaprint (VPRT) tumbled -7.7% after the company said it will acquire privately held Webs Inc. for $117.5 million in cash and stock. The deal is expected to close in a month, and be dilutive to adjusted EPS in both 2012 and 2013. Six pros counted Vistaprint among their top holdings at the end of Q3 and nearly 120 tickerspy members own the stock in their portfolios.
Shares of Winn-Dixie surged 70.2% after the company agreed to be acquired for $560 million, or $9.50 a share, in cash by privately held Bi-Lo LLC. The deal values Winn-Dixie at a 75% premium to Friday’s closing price. The combined company will have about 690 stores and 63,000 workers in eight states in the southern U.S. Two pros counted Winn-Dixie among their top holdings at the end of Q3 and more than 50 tickerspy members own the stock in their portfolios.
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