Schaeffer's Trading Floor Blog

Tech Earnings on Deck: ARM Holdings plc (ADR), Electronic Arts Inc., and Juniper Networks, Inc.

Taking a closer look at ARMH, EA, and JNPR ahead of their earnings results

by 7/21/2014 2:29 PM
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The thick of earnings season is upon us, and this week, a number of notable blue chips, as well as an onslaught of tech names, will be hitting the confessional. Representing technology firms on the earnings stage will be semiconductor concern ARM Holdings plc (ADR) (NASDAQ:ARMH), video game maker Electronic Arts Inc. (NASDAQ:EA), and network infrastructure operator Juniper Networks, Inc. (NYSE:JNPR). Here's a quick look at this trio of names as earnings approach.

  • ARMH has exceeded analysts' bottom-line estimates in each of the past eight quarters, resulting in an average single-session post-earnings gain of 3.3%. Ahead of tomorrow morning's event, Citigroup said the company could surprise to the upside with its second-quarter results, but the analysts expect challenges in the current quarter due to royalties. This skepticism on the part of Citigroup has had little impact on ARMH in today's session, with the shares up 1% to trade at $42.77. For tomorrow's results, analysts, on average, are calling for a second-quarter profit of 26 cents per-share for ARMH -- 3 pennies more than what the company earned last year.

  • EA is 0.3% higher today to linger near $38.49 -- and tagged a five-year high of $38.62 moments ago -- after Credit Suisse this morning raised its price target for the stock by $4 to $42. If past is prologue, the security could be poised to add significantly to these gains in the wake of tomorrow night's earnings report. Specifically, over the past eight quarters, EA has, on average, added 8.5% in the session subsequent to its report -- including a 21% surge in early May. What's more, additional price-target hikes could help the equity add to its already impressive 68% year-to-date gain. Currently, the stock's consensus 12-month price target of $37.24 stands at a discount to present trading levels. For Electronic Arts Inc.'s fiscal first quarter, analysts have forecast a per-share loss of 4 cents -- a 36-cent improvement over EA's year-ago results.

  • JNPR is bucking the broad-market trend lower today, after Barron's gave a positive outlook for the company's share price over the weekend. With less than two hours left in today's session, the stock was up 2.3% at $24.56. Looking ahead to tomorrow night's quarterly earnings report, the consensus estimate is for a per-share profit of 38 cents, which is 9 cents more than what Juniper Networks, Inc. earned one year ago. Over the past eight quarters, the company has matched or exceeded analysts' profit estimates each time, and another earnings win could prompt a round of upgrades from the brokerage bunch. At present, 60% of covering analysts maintain a "hold" or "sell" recommendation toward the stock.

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Stocks on the Move: E-Commerce China Dangdang Inc (ADR), Extreme Networks, Inc, and Steel Dynamics, Inc.

DANG, EXTR, and STLD are moving sharply in Monday's trading

by 7/21/2014 1:31 PM
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Heading into the final few hours of today's trading, three of the top market movers are Chinese Internet issue E-Commerce China Dangdang Inc (ADR) (NYSE:DANG), network infrastructure supplier Extreme Networks, Inc (NASDAQ:EXTR), and steel producer Steel Dynamics, Inc. (NASDAQ:STLD). Here's a quick roundup of how this trio of names is performing on the charts so far.

  • DANG has been making some big moves over the past two weeks, thanks to a couple of sharp bounces off its 50-day moving average. The equity is continuing this upward momentum today, up 2.2% to trade at $12.76. Year-to-date, the stock has rallied almost 34%, yet 62% of covering analysts maintain a "hold" or "sell" recommendation toward E-Commerce China Dangdang Inc (ADR). What's more, the consensus 12-month price target of $12.30 stands at a discount to present trading levels. Should DANG continue to make its way up the charts, a re-evaluation of ratings from the skeptical brokerage bunch could help fuel the security's fire.

  • EXTR has surged roughly 14% today, nearly filling in its earnings-induced bearish gap from early May. Today's burst of buying power comes after the company reported preliminary fiscal fourth-quarter earnings results this morning that were well above consensus estimates. At last check, the stock was trading at $4.97, but was still 51% below the average 12-month price target of $7.50. Elsewhere, all but one of the six covering analysts maintain a "buy" or "strong buy" recommendation toward EXTR, despite the stock's roughly 29% year-to-date deficit. Extreme Networks, Inc will unveil its full quarterly report after the market closes on Thursday, Aug. 14.

  • Similar to sector peer AK Steel Holding Corporation (NYSE:AKS), STLD is getting a boost today amid word that Russian steel company Severstal has sold its two North American plants to the domestic steel suppliers for a reported $2.33 billion. At last check, shares of STLD were up 6.9% at $19.87 -- easily toppling previous congestion in the $19.50 area, and earlier tagging a three-year peak of $20.10. Today's option players are responding in kind, scooping up the contracts at a rate 30 times the intraday average. A number of option bulls are targeting a move north of $21, with the stock's September 21 and November 21 calls apparently seeing buy-to-open activity. Elsewhere on the fundamental front, Steel Dynamics, Inc. (NASDAQ:STLD) will take its turn in the earnings confessional after tonight's close. After matching or exceeding analysts' bottom-line estimates in each of the past eight quarters, the stock has gone on to average a single-session post-earnings gain of 1.3%.

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Analyst Update: Cisco Systems, Inc., Monster Beverage Corp, and Glu Mobile Inc.

Analysts weighed in on CSCO, MNST, and GLUU

by 7/21/2014 12:59 PM
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U.S. stocks are in the red at midday, as traders exercise caution amid geopolitical tensions in Ukraine and Gaza. Meanwhile, among the equities in focus are tech titan Cisco Systems, Inc. (NASDAQ:CSCO), drink maker Monster Beverage Corp (NASDAQ:MNST), and mobile game maker Glu Mobile Inc. (NASDAQ:GLUU), which have all attracted analyst attention.

  • CSCO is fractionally lower at $25.84, despite a pre-market price-target boost to $28 from $24 at RBC. The brokerage firm also reiterated its "outperform" rating for Cisco Systems, Inc., which has tacked on more than 15% in 2014. In fact, the stock is knocking on the door of four-year highs, but is struggling to surmount the $26-$26.50 region -- home to its mid-2013 peak.

  • MNST is 3.7% lower at $65.28, after Morgan Stanley downgraded the shares to "equal weight," cut its price target to $75 from $82, and said data checks point to a second-quarter slowdown in sales growth. "This is concerning as easier comparisons, favorable [year-over-year] weather and less-negative press should have all buoyed the results," the analysts wrote. Monster Beverage Corp is one of the worst-performing S&P 500 Index (SPX) components so far today, and is in danger of ending south of its 200-day moving average for the first time since November.

  • Finally, GLUU is bucking the broad-market trend lower, up 9.1% at $7.41. Earlier in the session, the stock touched a six-year peak of $7.58, after Cowen and Company upped its target to $10 from $6, underscored its "outperform" rating, and boosted its full-year earnings and sales estimates. Glu Mobile Inc. hasn't explored double-digit territory since November 2007, but another stronger-than-expected second-quarter earnings report next Wednesday, July 30, could bolster the shares. The company has exceeded the Street's bottom-line projections in each of the past eight quarters.

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Blue-Chip Earnings Preview: McDonald's Corporation, United Technologies Corporation, and Microsoft Corporation

Taking a closer look at MCD, UTX, and MSFT ahead of their earnings reports

by 7/21/2014 11:43 AM
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Blue-chip earnings will be in focus this week, with a number of Dow components slated to take the stage. Kicking things off bright and early tomorrow morning will be fast food giant McDonald's Corporation (NYSE:MCD) and aerospace issue United Technologies Corporation (NYSE:UTX). Meanwhile, software concern Microsoft Corporation (MSFT) is scheduled to unveil its results after Tuesday's close. Here's a quick look at this trio of names as earnings approach.

  • Over the past eight quarters, MCD has missed analysts' bottom-line expectations five times, resulting in an average single-session post-earnings loss of 1.5%. For the company's second quarter, Wall Street is calling for a per-share profit of $1.44 -- a 6-cent improvement over MCD's year-ago results. Ahead of tomorrow's report, MCD is fielding a fundamental folly -- and over the weekend, issued an apology to China for its questionable meat supplier on the mainland. At last check, the stock was down 1.1% to trade at $97.92, and could be poised to extend this decline, should a poorly received earnings report spark a re-evaluation of ratings among analysts. At present, McDonald's Corporation's 12-month price target of $106.69 stands in territory yet to be charted, and not a single one of the 26 covering analysts maintain a "sell" or worse suggestion toward MCD.

  • UTX is down 0.8% to trade at $112.69 today, due in part to broad-market headwinds. The stock could be poised to pare a portion of these losses in the near term, should UTX's post-earnings history repeat itself. After exceeding consensus earnings estimates in each of the past eight quarters, the security has gone on to average a gain of 0.3% in the subsequent session -- which widens to 0.4% when going out one week. For United Technologies Corporation's second quarter, analysts are expecting a profit of $1.71 per share -- one penny more than what the company earned last year. On the charts, UTX has been testing support atop its 200-day moving average in recent weeks, but today's pullback has the stock trading south of this trendline, which is currently located at $113.27.

  • MSFT has been a standout on the charts in 2014, with the shares up nearly 19% to trade at $44.51. Over the past three quarters, the stock has performed well in the wake of its bottom-line wins, and has averaged a single-session post-earnings pop of 2.7%. Another well-received quarterly report could have more brokerage firms jumping on the bullish bandwagon. Currently, 68% of covering analysts maintain a "hold" or "sell" suggestion on the outperforming equity, while the consensus 12-month price target of $43.52 stands at a discount to Microsoft Corporation's current price.

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Buzz Stocks: EMC Corporation, Hasbro, Inc., Reynolds American, Inc., and General Motors Company

Today's stocks to watch in the news are EMC, HAS, RAI, and GM

by 7/21/2014 9:29 AM
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U.S. markets are signaling a slower start this morning, as geopolitical concerns weigh on investor sentiment. In company news, here are some stocks to watch today:

  • Elliot Management Corp. announced over the weekend it has taken a more than $1 billion stake -- or roughly 2% -- in EMC Corporation (NYSE:EMC). By becoming EMC's fifth-largest shareholder, the hedge fund is hoping to convince the data storage supplier to spin off VMware, Inc. (NYSE:VMW) -- of which EMC holds an 80% stake. (MarketWatch)

  • Hasbro, Inc. (NASDAQ:HAS) has teamed up with 3-D printing firm Shapeways to allow fans of My Little Pony to design figurines of their favorite characters. While HAS is initially starting with five chosen artists, the company is hoping to expand its roster down the road, as well as include additional brands and materials. The news comes in conjunction with Hasbro's second-quarter earnings results. (The New York Times; FOX Business)

  • A jury in Florida on Friday slapped R.J. Reynolds Tobacco Co. -- a subsidiary of Reynolds American, Inc. (NYSE:RAI) -- with $23.6 billion in punitive damages in a lawsuit filed by a woman whose husband died of lung cancer. In response, an R.J. Reynolds Tobacco Co. exec said, "We plan to file post-trial motions with the trial court promptly, and are confident that the court will follow the law and not allow this runaway verdict to stand." (USA Today)

  • A filing released on Friday revealed that General Motors Company (NYSE:GM) vehicles made prior to 2003 may have been serviced with faulty parts, as a result of mislabeling after the company redesigned ignition switch parts in 2003 and 2004. However, while older parts were potentially used to replace the ignition switches, a GM spokesman said, "nothing in our data suggests that there is a danger out there." (Reuters)

  • Also, reporting quarterly earnings were Allergan, Inc. (NYSE:AGN) and Halliburton Company (NYSE:HAL). (MarketWatch)

  • Finally, McDonald's Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM) have issued apologies to consumers in China, amid speculation that one of their suppliers on the mainland was providing their chain restaurants with expired meat. The supplier -- Shanghai Husi Food Company, owned by Illinois-based OSI Group -- has since been shut down. (Marketplace)

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