Equities Sector Coverage: Stocks Fail to Recoup Losses to End Streak of Gains

Sector Recap |

Stocks Fail to Recoup Losses to End Streak of GainsDespite low mortgage rates, mortgage applications for re-financings and home purchases declined 4.5% last week. Existing Home Sales rose 4.3% in January to an annual rate of 4.57 million units. The inventory is down to 2.31 million, the lowest since March 2005. The price of a home continues to decline to $154,700 in January from $162,200 in December.

The Dow Jones Industrial Average traded around the flat line Wednesday morning between 12,939.81 and 12,977.91 then declined to 12,914.83 in afternoon trading. The NASDAQ opened lower then traded between 2937.74 and 2950.37 Wednesday morning then declined to 2929.68 in afternoon trading. The S&P 500, Dow Transports and Russell 2000 continue to lag their 2011 highs at 1370.58, 5627.85 and 868.57 respectively.

Asian stocks rebounded on Wednesday with the Nikkei 225 ending their session 9,554 – up 0.96% on the day. The Hang Seng ended their session at 21,549 – up 0.33% on the day. European stocks slipped lower on Wednesday on skepticism about the Greek bailout. The FTSE 100 ended their session at 5,917 – down 0.20% on the day, the DAX ended their session at 6,844 down 0.93% on the day, and the CAC 40 ended their session at 3,447 – down 0.52% on the day. The yield on the 10-Year US Treasury traded down from 2.080 percent to 1.997.

Gold continued to rally on Wednesday with strength reaching $1783.4 the Troy ounce. Crude oil traded up to $106.72 per barrel. The euro versus the dollar traded between 1.3214 and 1.3264.

Energy

Shell (RDS.A) offered to buy African explorer Cove Energy (CNVGF) for £994.4M ($1.6B) – (195 pence/share – a 26% premium) to expand its footprint in Mozambique and Kenya. Newfield Exploration (NFX) reported Q4 EPS of $0.95 and revenues of $677M (both well below analyst estimates). Range Resources (RRC) beat estimates by 2 cents and revenue by $34M. Chesapeake Energy (CHK) missed estimates by a penny and revenue by $275M. Nabors Industries (NBR): Q4 adjusted EPS from continued operations of $0.52 beats by $0.02. Revenue of $1.72B (+31% Y/Y) beats by $20M. Apache (APA), Anadarko Petroleum (APC), and Noble Energy (NBL) are all new Buys at Guggenheim. Newfield Exploration (NFX) is now Neutral from Buy at Citigroup and Hold from Buy at Deutsche Bank. Statoil ASA (STO) gets downgraded to Neutral from Overweight at HSBC Securities.

Energy Select Sector SPDR (XLE) was trading at $75.55 at 4:00 PM on Wednesday, up 0.23% on the day – up 9.29% year-to-date. The January change was +2.26%. The 2011 change was -1.29%

Big Movers: (NFX) -12.5%, (FST) -9.5%, (NBR) +9%, (CSIQ) +7.5%.

Materials

Ternium ADS (TX) missed estimates by 12 cents with revenue in-line with estimates. Mosaic (MOS) is moved to Buy from Hold at Canaccord Genuity. Dow Chemical (DOW) gets slashed to Sell from Hold at Gilford Securities. Akzo Nobel N.V. (AKZOY) is lowered to Hold from Buy at ING Groep. Kronos Worldwide (KRO) is cut to Hold from Buy at Deutsche Bank. Rockwood Holdings (ROC) is moved to Neutral from Overweight at JP Morgan.
The Materials Select Sector SPDR (XLB) was trading at $37.53 at 4:00 PM on Wednesday, down 0.16% on the day – up 12.03% year-to-date. The January change was +10.99%. The 2011 change was -12.78%.

Heavily Active Stocks: (CX) -2.4%, (AA) +0.6%.

Industrials

Genco Shipping & Trading (GNK) beat estimates by 6 cents and revenue by $6M. Multi-Color Corp (LABL) is assigned a new Neutral at Robert W. Baird, which sets a $26 target price. Air Lease Corp (AL) is resumed with a Buy recommendation and $30 target at Dahlman Rose. URS Corp (URS) is upgraded to Outperform from Neutral at Robert W. Baird, which takes its target up to $55.
The Industrial Select Sector SPDR (XLI) was trading at $37.37 at 4:00 PM on Wednesday, down 0.11% on the day – up 10.73% year-to-date. The January change was +7.32%. The 2011 change was -3.21%.

Heavily Traded Stocks: (GE) -0.4%, (GLW) -1.2%, (CSX) +0.8%, (XRS) +0.7%.

Consumer Discretionary

PSA Peugeot Citroen (PEUGY) is in advanced alliance talks with GM (GM), according to French online newspaper LaTribune.fr, with sources saying the two could join forces on development and production in Europe. Comcast (CMCSA) announced Streampix, a subscription-based VOD service aimed at Netflix (NFLX). Ford (F) is going to pump $3.8B into its global pension plan this year and invest the plan's assets more heavily in bonds as the automaker tries to minimize its pension risks in a shaky market. TJX Companies (TJX) reported Q4 EPS of $0.62 (in-line) on revenue of $6.71B (in-line). Lamar Advertising (LAMR) beat estimates by 6 cents and revenue by $4M. Dollar Tree Stores (DLTR) beat estimates by 2 cents with revenue in-line with estimates. Garmin (GRMN) beat estimates by 31 cents and revenue by $140M. Garmin's Q4: Posted revenue gains across all segments (automobile/mobile +4% Y/Y, outdoor +35%, and fitness +17%). Gross margin rose to 48%, from 45% a year ago. The company sets 2012 guidance for revenue of $2.7B-$2.8B and EPS to fall in a range of $2.45-$2.60. Zale (ZLC) beat estimates by a penny and revenue by $7M. Chico's FAS (CHS) beat estimates by 4 cents and revenue by $22.5M. Toll Brothers (TOL) missed estimates by 4 cents and revenue by $38.8M. The Cheesecake Factory (CAKE) beat estimates by a penny and revenue by $6M. The company guides on its Q4 earnings call (webcast) for revenue of $435M-$440M and EPS of $0.34-$0.36 (below a consensus of $443.8M and $0.40). Papa John's International (PZZA) beat estimates by 4 cents, while missing revenue by $5M. La-Z-Boy (LZB) beat estimates by a penny and revenue by $9M. Jefferies initiates Buys on TAL Education (XRS), New Oriental Education & Technology (EDU), and Ambow Education (AMBO). Tesla Motors (TLSA) is a new Buy at ThinkEquity Partners. Urban Outfitters (URBN) is raised to Outperform from Market Perform by BMO Capital. Hibbett Sportings (HIBB) is now Hold from Buy at Needham due to valuation.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $42.70 at 4:00 PM on Wednesday, down 0.26% on the day – up 9.43% year-to-date. The January change was +5.89%. The 2011 change was +4.30%.

Big Movers: (CETV) -19.5%, (LL) -9.5%, (PZZA) -8.75%, (CHS) +17%, (GRMN) +8%.

Consumer Staples

Anheuser-Busch (BUD), on the lookout for assets in faster-growing markers, is eying up Czech brewer StarBev in a deal that could be valued as high as $3B. Others with interest: SABMiller (SBMRY), Heineken (HINKY), and Molson Coors (TAP). Winn-Dixie Stores (WINN) missed estimates by 11 cents with revenue in-line with estimates. Wal-Mart (WMT) gets downgraded to Market Perform from Strong Buy at Raymond James this morning. Philip Morris International (PM) is now Reduce from Neutral at Nomura. Tesco PLC (TSCDY) is moved to Underperform from Neutral by Bank of America-Merrill Lynch.

The Consumer Staples Select Sector SPDR (XLP) was trading at $32.78 at 4:00 PM on Wednesday, down 0.27% on the day – up 0.89% year-to-date. The January change was -1.42%. The 2011 change was +10.85%.

Heavily Traded Stocks: (WMT) -2.3%, (KFT) -1.5%, (MO) +0.2%, (TJX) -0.2%, (WAG) +0.9%.

Health Care

Johnson & Johnson (JNJ) CEO Bill Weldon announced his retirement, following an embarrassing stretch of product recalls and speculation in winter 2010 that he would step down within the year. Medicines Company (MDCO) beat estimates by 28 cents and revenue by $7M. Biomarin Pharmaceuticals (BMRN) is begun with a Buy rating and $45 price objective at Citigroup, which also adds it to their Top Pick Live list. Dendreon (DNDN) is a new Neutral at Citigroup. Rigel Pharmaceuticals (RIGL) is raised to Buy from Neutral at Citigroup. Medtronic (MDT) is moved to Hold from Buy at Deutsche Bank and to Neutral from Outperform at Credit Suisse. Human Genome Sciences (HGSI) is reduced to Sector Perform from Outperform at RBC Capital. Gilead Sciences (GILD) is taken to Market Perform from Outperform by Sanford Bernstein. WebMD Health (WBMD) is slashed to Sell from Neutral at Goldman.
The Health Care Select Sector SPDR (XLV) was trading at $35.98 at 4:00 PM on Wednesday, unchanged on the day – up 3.72% year-to-date. The January change was +3.20%. The 2011 change was +10.32%.

Big Movers: (CYH) +14.5%, (GNOM) +7%, (MOH) -7%, (HGSI) -6.5%.

Financials

With no end in sight to Fannie Mae (FNMA.OB) and Freddie Mac's (FMCC.OB) drain on taxpayers, the two mortgage giants need to rein in their rising legal costs. At present, Fannie and Freddie are spending tens of millions of dollars defending former execs facing private lawsuits and government investigations. Citigroup (C) is facing a potential multibillion-dollar write-down as it begins unwinding its minority investment in the Morgan Stanley Smith Barney brokerage. Accounting complications and a reduced valuation could leave Citi facing an after-tax hit of up to $1.8B, more than it earned in Q4. Wells Fargo (WFC) agreed to buy an energy loan portfolio with a face value of $11B from BNP Paribas (BNPQY). Eaton Vance (EV) beat estimates by 4 cents with revenue in-line with estimates. Interactive Brokers (IBKR) is a fresh Outperform with Wells Fargo. Apollo Global Management (APO) and Blackstone Group (BX) both get Buy-from-Neutral boosts at Goldman Sachs. DDR Corp (DDR) is lifted to Buy from Neutral at Bank of America-Merrill Lynch. Barclays PLC (BCS) is moved to Underperform from Neutral at Macquarie. BlackRock (BLK) is move to Neutral from Buy at Goldman.
The Financial Select Sector SPDR (XLF) was trading at $14.585 at 4:00 PM on Wednesday, down 1.29% on the day – up 12.19% year-to-date. The January change was +8.12%. The 2011 change was -18.50%; the weakest performing sector for the year.

Heavily Traded Stocks: (BAC) -1.2%, (C) -2.7%, (TWO) -3.1%.

Information Technology

Dell (DELL) reported Q4 EPS yesterday afternoon of $0.51 (missing by a penny) and revenue of $16.03B (beating by $70M). The company expects FY13 EPS to exceed $2.13 (consensus is for $2.04) but it expects FQ1 revenue to fall 7% Q/Q (implied level of $14.9B, below $15.2B consensus). Alibaba (ALBCF) bid as much as HK$19.6B ($2.5B) to take Alibaba.com private, offering minority shareholders HK$13.50/share for the 27% of shares it doesn't already own. Anadigics (ANAD) missed estimates by 2 cents and revenue by $1M. Intuit (INTU) beat estimates by 6 cents with revenue in-line with estimates. The company sets FY12 revenue guidance of $4.185B-$4.285B and raises its FY12 EPS guidance to between $2.90 - $2.97 per share. Sonus Networks (SONS) beat estimates by a penny and revenue by $2M. Brocade Communications Systems (BRCD) beat estimates by 7 cents and revenue by $18M. Maxim Integrated (MXIM) is launched with a Buy at Capstone Investments. Dell Inc (DELL) is cut by both Citigroup (Neutral from Buy) and Needham (Hold from Buy). Yahoo (YHOO) is cut to Underperform from Buy at Crédit Agricole. WebMD Health (WBMD) is slashed to Sell from Neutral at Goldman.
The Technology Select Sector SPDR (XLK) was trading at $28.54 at 4:00 PM on Wednesday, down 0.35% on the day – up 12.14% year-to-date. The January change was +6.21%. The 2011 change was +1.03%.

Big Movers: (FIRE) +25.25%, (MOTR) +9.5%, (ENER) -12%, (CELL) -11%, (TRAK) -9.5%.

Telecommunication Services

Cogent Communications Group (CCOI) beat estimates by 9 cents with revenue in-line with estimates.
The NASDAQ Telecommunications Index (IXTC) was trading at $216.86 at 4:00 PM on Wednesday, down 0.81% on the day – up 10.12% year-to-date. The January change was +6.67%. The 2011 change was -12.62%.

Heavily Traded: (S) -2%, (FTR) -1.1%, (T) +0.1%, (CLWR) -3%, (WIN) -3.1%, (VOD) -1.5%, (VZ) -0.7%.

Utilities

El Paso Electric (EE) missed estimates by 6 cents and revenue by $56M. PG&E Corp (PCG) is moved to Neutral from Buy at Goldman.

The Utilities Select Sector SPDR (XLU) was trading at $34.96 at 4:00 PM on Wednesday, up 0.11% on the day – down 2.83% year-to-date. The January change was -3.61%. The 2011 change was +14.81%; the strongest performing sector for the year.

Heavily Traded: (GEN) +3.4%, (DUK) +0.3%, (EXC) +0.9%, (PPL) +1.3%, (NI) -0.6%.

STOCKS: RDS.A, CNVGF, NFX, RRC, CHK, NBR, APA, APC, NBL, NFX, STO, TX, MOS, DOW, AKZOY, KRO, ROC, GNK, LABL, AL, URS, GE, GLW, CSX, XRS, PEUGY, GM, CMCSA, NFLX, F, TJX, LAMR, DLTR, ZLC, CHS, TOL, CAKE, PZZA, LZB, EDU, AMBO, TLSA, URBN, HIBB, CETV, LL, BUD, SBMRY, HINKY, TAP, WINN, WMT, PM, TSCDY, KFT, MO, TJX, WAG, JNJ, MDCO, BMRN, DNDN, RIGL, MDT, HGSI, GILD, WBMD, CYH, GNOM, MOH, HGSI, FNMA.OB, FMCC.OB, C, WFC, BNPQY, EV, IBKR, APO, BX, DDR, BCS, BLK, BAC, C, TWO, DELL, ALBCF, ANAD, INTU, SONS, BRCD, MXIM, YHOO, FIRE, MOTR, ENER, CELL, TRAK, CCOI, S, FTR, T, CLWR, WIN, VOD, VZ, EE, PCG, GEN, DUK, EXC, PPL, NI

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BX The Blackstone Group L.P. Representing Limited Par 27.53 0.98 3.69 3,240,103
GLW Corning Incorporated 24.25 0.26 1.08 1,419,707
XRS TAL Education Group American Depositary Shares eac n/a n/a n/a n/a
EV Eaton Vance Corporation 42.28 0.52 1.25 206,476
GEN Genesis Healthcare Inc. 3.61 -0.02 -0.55 23,086
NBR Nabors Industries Ltd. 16.49 -0.58 -3.40 3,251,332
FTR Frontier Communications Corporation 3.67 0.14 3.97 5,580,161
GE General Electric Co 31.11 -0.06 -0.19 11,038,299
BRCD Brocade Communications Systems Inc. 12.44 0.03 0.20 1,555,085
NI NiSource Inc 21.61 0.14 0.63 1,143,348
MOS Mosaic Company (The) 29.70 0.32 1.09 1,297,986
PCG Pacific Gas & Electric Co. 58.95 0.57 0.98 332,714
JNJ Johnson & Johnson 109.75 -2.31 -2.06 4,783,910
WMT Wal-Mart Stores Inc. 70.00 0.14 0.20 1,927,844
CSX CSX Corporation 36.39 0.34 0.96 3,323,619
RIGL Rigel Pharmaceuticals Inc. 2.51 -0.11 -4.20 180,401
HGSH China HGS Real Estate Inc. 2.00 0.00 0.00 30,207
CHS Chico\'s FAS Inc. 15.99 0.20 1.27 520,098
MO Altria Group Inc. 64.74 0.44 0.68 1,917,678
WBMD WebMD Health Corp 53.20 -0.34 -0.64 384,956
BCS Barclays PLC 11.78 0.19 1.60 5,742,543
C Citigroup Inc. 58.40 0.48 0.82 11,651,517
AL Air Lease Corporation Class A 36.36 0.06 0.17 130,511
S Sprint Corporation 8.62 0.45 5.45 25,063,964
PPL PPL Corp 33.04 0.34 1.02 1,097,599
DDR DDR Corp. 15.52 0.26 1.70 1,487,104
GILD Gilead Sciences Inc. 72.58 0.11 0.15 5,295,697
EDU New Oriental Education & Technology Group Inc. Spo 43.55 -0.67 -1.52 605,149
CCOI Cogent Communications Holdings Inc. 37.95 0.50 1.34 51,975
VOD Vodafone Group Plc 24.74 0.24 0.98 2,140,547
TOL Toll Brothers Inc. 32.32 0.39 1.22 1,320,486
MDCO The Medicines Company 32.65 -1.89 -5.47 529,383
TJX TJX Companies Inc. (The) 77.51 0.07 0.09 712,076
VZ Verizon Communications Inc. 50.82 0.46 0.90 4,192,728
LAMR Lamar Advertising Company 66.61 0.77 1.17 82,825
GM General Motors Company 35.82 0.75 2.14 8,460,350
DLTR Dollar Tree Inc. 87.47 -0.46 -0.52 1,389,773
MDT Medtronic plc. 71.53 -0.59 -0.81 2,502,929
BAC Bank of America Corporation 22.09 -0.08 -0.34 54,354,116
GNK Genco Shipping & Trading Limited New (Marshall Isl 7.87 0.19 2.47 30,134
SONS Sonus Networks Inc. 6.27 0.06 0.89 45,469
APO Apollo Global Management LLC Class A Representing 19.25 -0.03 -0.16 222,005
BUD Anheuser-Busch Inbev SA Sponsored ADR (Belgium) 104.27 0.22 0.21 805,497
ANAD ANADIGICS Inc. n/a n/a n/a 0
APA Apache Corporation 65.42 -0.93 -1.40 863,175
LABL Multi-Color Corporation 75.15 0.30 0.40 9,029
INTU Intuit Inc. 115.06 0.53 0.46 163,538
CYH Community Health Systems Inc. 5.74 0.01 0.09 860,010
APC Anadarko Petroleum Corporation 68.42 0.21 0.31 1,096,790
KRO Kronos Worldwide Inc 11.98 -0.19 -1.56 170,506
URBN Urban Outfitters Inc. 33.94 0.30 0.89 813,510
RRC Range Resources Corporation 38.89 0.50 1.29 1,601,043
WIN Windstream Holdings Inc. 7.61 0.12 1.60 454,876
EE El Pasoectric Company 45.90 0.50 1.10 48,779
HIBB Hibbett Sports Inc. 41.90 -0.40 -0.95 89,891
MXIM Maxim Integrated Products Inc. 38.75 0.18 0.45 440,957
PM Philip Morris International Inc 88.82 0.64 0.72 1,279,415
F Ford Motor Company 12.75 0.19 1.47 11,460,517
TWO Two Harbors Investment Corp 8.88 0.08 0.91 716,235
TX Ternium S.A. American Depositary Shares (each repr 26.19 0.71 2.79 351,505
WFC Wells Fargo & Company 56.20 0.65 1.17 14,827,686
CAKE The Cheesecake Factory Incorporated 63.39 0.85 1.36 311,067
NFLX Netflix Inc. 123.87 -0.70 -0.56 3,642,967
YHOO Yahoo! Inc. 40.18 0.21 0.53 1,634,823
NBL Noble Energy Inc. 39.32 -0.55 -1.38 650,502
IBKR Interactive Brokers Group Inc. 37.98 -0.06 -0.16 99,584
CETV Central European Media Enterprises Ltd. 2.80 0.00 0.00 12,491
STO Statoil ASA 17.79 0.11 0.62 792,419
NFX Newfield Exploration Company 47.16 -0.02 -0.04 672,931
BMRN BioMarin Pharmaceutical Inc. 80.60 -2.39 -2.88 832,358
EXC Exelon Corporation 33.47 0.42 1.26 1,764,580
T AT&T Inc. 39.93 0.58 1.46 9,011,082
PZZA Papa Johns International Inc. 86.50 0.45 0.52 202,631
DUK Duke Energy Corporation (Holding Company) 74.63 0.77 1.04 924,780
LL Lumber Liquidators Holdings Inc 18.00 0.23 1.28 178,186
MOH Molina Healthcare Inc 53.42 -0.26 -0.48 179,684
CHK Chesapeake Energy Corporation 7.77 0.19 2.51 34,479,195
LZB La-Z-Boy Incorporated 31.43 0.43 1.37 114,734
CMCSA Comcast Corporation Class A Common Stock 68.77 0.07 0.10 2,296,385
TAP Molson Coors Brewing Company Class B 96.48 1.00 1.05 524,388

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