US HOT STOCKS: Cisco, Allstate, Whole Foods, Alcatel-Lucent
Wall Street Journal, FEBRUARY 10, 2011, 1:19 P.M. ET
U.S. stocks traded lower Thursday as the Dow Jones Industrial Average lost 35 points to 12205, the Standard & Poor's 500 was off 2.1 points to 1319 and the Nasdaq Composite declined 3 points to 2786. Among the companies whose shares are actively trading in the session are Cisco Systems Inc. (CSCO, $19.05, -$2.99, -13.57%), Allstate Corp. (ALL, $31.07, -$1.29, -3.99%) and Whole Foods Market Inc. (WFMI, $59.95, +$6.20, +11.53%).
Cisco's (CSCO, $19.04, -$3.00, -13.61%) fiscal second-quarter profit declined 18% with margins sliding for a fourth consecutive quarter as the company faced increasing pricing pressure in its core products and sold less profitable consumer products.
Allstate (ALL, $31.07, -$1.29, -3.99%), the largest publicly traded home and auto insurer in the U.S., said its fourth-quarter profit fell 43% to $296 million due to an increase in disaster claims, primarily from a powerful hailstorm that struck Arizona in October. But shares fell as operating earnings missed analyst estimates.
Whole Foods Market's (WFMI, $59.95, +$6.20, +11.53%) fiscal first-quarter profit jumped 61% on same-store sales strength and new locations further boosting its top line. The results topped analysts' views and the company raised its forecast for the year.
Franco-U.S. equipment maker Alcatel-Lucent SA's (ALU, $4.29, +$0.73, +20.51%) shares surged after the company gave an upbeat outlook and posted a better-than expected increase in fourth-quarter revenue and earnings, signalling that it is on track to deliver on its turnaround targets.
Optical-component makers are benefiting from Alcatel-Lucent's upbeat 2011 outlook despite Cisco's news because Alcatel-Lucent is much bigger in the optical transport-equipment market, says B. Riley. JDS Uniphase Corp. (JDSU, $25.91, +$1.49, +6.10%) sees the biggest boost, hitting levels last reached five years ago. Finisar Corp. (FNSR, $41.07, +$1.05, +2.62%) and Oclaro Inc. (OCLR, $16.65, +$0.75, +4.72%) also gained.
PepsiCo Inc.'s (PEP, $63.14, -$1.28, -1.99%) fourth-quarter earnings fell 5% on acquisition-related charges as the food and beverage company saw strong sales growth at its domestic beverage business. The results beat analysts' expectations, but the company also projected 2011 earnings growth below Wall Street's views.
Other Stocks In Focus:
Activision Blizzard Inc.'s (ATVI, $10.49, -$1.20, -10.27%) fourth-quarter loss narrowed in the midst of lower charges, but the videogame publisher issued a disappointing 2011 outlook and said it will discontinue its "Guitar Hero" business unit.
Akamai Technologies Inc.'s (AKAM, $41.09, -$6.90, -14.38%) fourth-quarter profit rose 31%, with adjusted results topping its own forecasts, as the company continued its trend of higher revenue. But its first-quarter forecast disappointed, with its revenue view falling short of analysts' estimate.
Amkor Technology Inc.'s (AMKR, $7.26, -$0.93, -11.36%) fourth-quarter earnings slid 42% due to lower margins and charges from foreign exchange and taxes, although sales rose. Shares fell following a weak outlook for the current quarter from the provider of semiconductor assembly and testing equipment.
Needham Research raised its stock investment rating on Arris Group Inc. (ARRS, $14.12, +$0.93, +7.05%) to buy from hold, saying it thinks top-line growth, driven by a recovering base business and incremental revenue opportunities from new products, will drive future earnings growth.
Corporate Executive Board Co.'s (EXBD, $36.70, -$2.49, -6.35%) fourth-quarter revenue rose, but shares declined as the company's earnings fell slightly and the as the provider of research and analysis on everything from human resources to sales and marketing forecast per-share earnings for fiscal 2011 well below analysts' expectations.
Credit Suisse Group (CS, $43.30, -$3.34, -7.16%) Thursday reduced its dividend and lowered its profit outlook after fourth-quarter net profit missed analysts' forecasts on a slow quarter for fixed income, and as the strong Swiss franc ate into its private banking earnings.
Diodes Inc. (DIOD, $28.65, +$3.01, +11.74%) posted fourth-quarter earnings per share that exceeded analyst expectations as gross margin increased due to improved product mix, aggressive cost reduction and efficiencies at its manufacturing facilities. The semiconductor device maker's shares were also boosted by a stock-investment upgrade from Robert W. Baird to outperform from neutral.
Ebay Inc.'s (EBAY, $34.33, +$2.38, +7.45%) PayPal expects to generate $6 billion to $7 billion in revenues by 2013, reflecting the online payments business's strong growth trajectory, the unit's president said Thursday. The forecast suggests PayPal could double its revenue over the next three years.
Encana Corp.'s (ECA, $32.84, +$2.01, +6.52%) fourth-quarter results came in below year-earlier levels, hurt by another year of low gas prices, but the big gas producer said results were strong as it reduced operating costs and met cash flow targets. The results follow Encana's late Wednesday announcement of a massive $5.4 billion deal with PetroChina Co. (PTR, $132.53, -$3.13, -2.31%) to develop hard-to-reach natural-gas reserves.
EnerSys Inc.'s (ENS, $36.45, +$2.03, +5.90%) fiscal third-quarter profit jumped 45% as the industrial battery maker reported higher world-wide sales due to volume and pricing gains, helping results top expectations. EnerSys, which also makes chargers and battery accessories, issued a strong outlook for the current quarter.
Shares of global data center services provider Equinix Inc. (EQIX, $91.57, +$2.93, +3.31%) rose after Seven Networks, a provider of mobile solutions, selected Equinix's Silicon Valley data center to house its core infrastructure services.
Goodyear Tire & Rubber Co. (GT, $13.79, +$1.28, +10.23%) reported a fourth-quarter loss Thursday and said it will close its Tennessee plant affecting 1,900 workers. But excluding some costs, Goodyear posted a profit of 7 cents a share, beating analyst expectations of a loss of 7 cents a share.
Hanger Orthopedic Group Inc. (HGR, $27.06, +$4.30, +18.89%) posted fourth-quarter results that exceeded analyst expectations as same-center sales in its patient care segment grew 6.2%. The company also issued a first-quarter forecast above analysts' view.
Raymond James cut its stock investment rating on HNI Corp. (HNI, $31.27, -$2.48, -7.35%) to market perform from outperform, noting that while it expects the office-furniture and hearth maker's management to deliver sales growth and margin improvement, shares have approximately doubled the return of the S&P 500 since mid-March and appear to be fairly valued.
Idenix Pharmaceuticals Inc. (IDIX, $3.04, -$0.97, -24.19%) said it will discontinue development on one of its hepatitis-C drug candidates because of toxicity worries, although another drug for the disease is expected to move forward in trials soon. Additionally, the biopharmaceutical company also reported that a GlaxoSmithKline PLC (GSK, GSK.LN) unit told it their developmental HIV drug is also on clinical hold.
Laboratory Corp. of America Holdings' (LH, $87.55, -$3.19, -3.52%) fourth-quarter profit fell 7.6% as a larger provision for income taxes more than offset rising testing volume and revenue. Results beat Wall Street's expectations, and LabCorp, one of the biggest testing companies in the world, approved a new $500 million stock buyback program. But the company projected earnings for the year below analysts' expectation.
Louisiana-Pacific Corp.'s (LPX, $11.42, +$0.42, +3.82%) fourth-quarter loss narrowed on strong performance from its siding business and better overall margins, which helped the construction-materials company's results beat analysts' expectations.
Lufkin Industries Inc.'s (LUFK, $71.70, +$5.41, +8.16%) fourth-quarter revenue came in above Street estimates, and the supplier of oilfield and power-transmission products also reported a surge in oilfield bookings and gave bullish guidance for 2011.
MetLife Inc.'s (MET, $46.93, -$0.67, -1.41%) fourth-quarter profit fell 74% mostly because of wider derivative losses, but the biggest U.S. life insurer posted a stronger-than-expected gain in operating earnings. But shares slid on weakness in U.S. operations.
Molson Coors Brewing Co.'s (TAP, $45.95, -$1.62, -3.41%) fourth-quarter earnings fell 51% on prior-year tax impacts as the beer maker saw modest revenue growth and higher overhead and other expenses.
Nuance Communication Inc.'s (NUAN, $19.07, -$0.73, -3.69%) fiscal first-quarter loss narrowed as the speech-software company reported strong demand for its mobile and consumer offerings, as well as higher revenue in the health-care and imaging business lines. But the company's results missed analysts' expectations.
Orexigen Therapeutics Inc. (OREX, $3.23, -$0.21, -6.10%) said it will cut 23 jobs, resulting in a 40% reduction of its work force, in the wake of a recent regulatory rejection of its Contrave obesity drug.
Pacer International Inc. (PACR, $5.51, -$1.38, -20.03%) swung to a fourth-quarter loss as revenue dropped and the prior-year results included an intermodal segment gain on a Union Pacific Corp. (UNP, $96.16, +$0.31, +0.32%) contract. The freight transportation company's adjusted results missed analysts' expectations, and it issued a weak profit outlook for the current year.
Prudential Financial Inc.'s (PRU, $64.58, +$1.45, +2.30%) operating profit in its financial-services business rose more than analysts expected.
Select Comfort Corp.'s (SCSS, $11.76, +$1.27, +12.11%) fourth-quarter profit fell 80% as the bed retailer's prior-year results benefited from an income-tax benefit, but it reported improvement in revenue and margin. Results exceeded Wall Street's expectations.
Sequenom Inc. (SQNM, $7.25, +$0.54, +8.05%) shares gained after positive data on its non-invasive Down's syndrome test were published. The study evaluated 480 blood plasma samples from high-risk pregnant women, with 449 being usable. All 39 cases with the extra chromosome that causes the condition were detected while one was misclassified. Ladenburg Thalmann says the data supports its thesis that Sequenom's testing could become the standard for screening about 750,000 high-risk pregnancies in the U.S., which it estimates is a $750 million market.
Funeral and cemetery services provider Service Corporation International (SCI, $10.44, +$1.35, +14.85%) reported better-than-expected fourth-quarter earnings-per-share, with improving cemetery margins and ongoing capital deployment helping to drive the results. The company also raised its guidance, a move that Raymond James said suggests underlying industry fundamentals remain strong.
Sprint Nextel Corp.'s (S, $4.52, +$0.17, +3.79%) fourth-quarter loss narrowed slightly as the company added contract customers for the first time in more than three years.
SuccessFactors Inc.'s (SFSF, $34.58, +$4.48, +14.88%) fourth-quarter loss widened despite a strong jump in revenue as margin deteriorated and it spent more on marketing and other operating expenses. The employee-evaluation software company also gave an optimistic revenue outlook.
Shares of Tekelec (TKLC, $10.05, -$1.68, -14.32%) fell as the broadband data management company posted a fourth-quarter loss per share that was slightly wider than analysts' estimate and also projected 2011 adjusted earnings well below analysts' forecast.
Teradata Corp. (TDC, $47.40, +$2.50, +5.56%), a business-data storage company, saw its fourth-quarter profit rise 1.2% on rising margins and revenue growth in the Americas region and European, the Middle East and Africa.
Staffing firm TrueBlue Inc. (TBI, $17.00, -$1.89, -10.01%) saw revenue rise 19% in the fourth-quarter but its earnings per share fell short of analysts' estimates. The company also issued a weak first-quarter estimate.
Talbots Inc. (TLB, $5.76, -$0.11, -1.87%), in the midst of trying to shake off its own missteps and the weak economy, is losing the seasoned executive who ran its stores and outlets. The women's apparel retailer said in a regulatory filing that John Fiske is departing as chief stores officer to pursue other opportunities.
Taleo Corp. (TLEO, $33.30, +$2.62, +8.54%) reported fourth-quarter revenue below analysts' expectations, but its earnings-per-share beat estimates. Pacific Crest raised its price target on the human-resources software maker's shares, noting that bookings for the quarter were "impressive."
TriQuint Semiconductor Inc.'s (TQNT, $12.78, -$0.88, -6.44%) fourth-quarter earnings more than doubled as revenue jumped by nearly one-third, but results still fell short of analysts' forecasts.
UBS cut its stock-investment rating on Wal-Mart Stores Inc. (WMT, $55.49, -$1.24, -2.19%) to neutral from buy, saying the retail giant is likely to show a same-store sales decline for the fourth quarter when it reports later this month. The more negative view is based in part on UBS' "proprietary parking lot analysis."
Watts Water Technologies Inc. (WTS, $39.08, +$1.76, +4.72%) said it plans to acquire Danfoss Socla, a French-based manufacturer of flow control for water distribution. Brean Murray Carret raised its stock investment rating on the company, which manufactures and sells valves used in water control applications, to buy from hold, noting that the product lines to be acquired appear to be an "excellent fit" for Watts' existing offerings and should provide scale to an already sizeable European distribution and manufacturing footprint.
-By Dow Jones Newswires; write to .(JavaScript must be enabled to view this email address)