From Briefing.com: The broader market posted another day of gains. The three major US indices were led by the Nasdaq Composite which added 98.11 points (+2.21%) today to close 4535.06. The S&P 500 was higher by 31.24 points (+1.65%) to 1926.82. Rounding out the trio was the Dow Jones Industrial Average which was higher by 257.42 points (+1.59%) to 16453.83.
In market data today, the MBA Mortgage Index showed a seasonally adjusted increase of 8.2% in mortgage applications. The Producer Price Index (PPI) for final demand increased 0.1% in January after a 0.2% decline in December. Housing starts declined 3.8% in January as building permits slipped 0.2% to an annualized rate of 1.202 million, with single family permits down 1.6% and multi-unit permits up 2.1%. Industrial production was up 0.9% in January, slightly hindered by a large winter storm late in the month. Total industry capacity utilization rate increased to 77.1% in January.
Technology (XLK 40.78, +0.81 +2.03%) was also higher when the session was done. Shares of bellwether names like AAPL +1.53%, MSFT +2.60%, GOOG +2.52%, FB +3.53% led the sector higher. Other sectors finished Wednesday XLE +3.28%, XLY +2.15%, XLB +1.97%, IYZ +1.90%, XLI +1.54%, XLF +1.34%, XLV +1.27%, XLP +1.03%, XLU -0.20% led by an advance in Energy and the sole laggard of the day being Utilities.
Software (IGV 90.22, +2.77 +3.17%) names were some of the best performers today as component Zendesk (ZEN 17.45, +1.54 +9.68%) reported better than expected revenues for the Q4 period and gave better than expected Q1 and FY16 revenue guidance. Other IGV names which were higher today included WDAY +8.41%, IMPV +7.68%, SPLK +7.07%, CRM +6.31%, NOW +6.19%, HUBS +5.99%, ELLI +5.80%, CTXS +5.41%, MANH +5.36%.
Internet (FDN 63.32, +1.91 +3.11%) stocks were also strong today following component Priceline's (PCLN 1235.56, +124.88 +11.24%) quarterly results which beat Street expectations on the top and bottom lines. Other FDN names which posted solid gains today included EIGI +11.55%, P +11.50%, DWRE +7.65%, TWTR +6.72%, NFLX +6.41%, CSOD +5.62%, EXPE +5.16%, LNKD +4.73%.
In the S&P 500 Information Technology sector (673.27, +15.29+ 2.32%), action spent the entire session in the green. Shares of semi name Qorvo (QRVO 41.59, +0.81 +1.99%) were particularly strong as the company announced a $500 million accelerated share repurchase program with Bank of America (BAC 12.57, +0.34 +2.74%). Other stocks which finished in the green included MU +5.74%, TDC +4.70%, ADSK +3.97%, RHT +3.92%, ADBE +3.77%, SWKS +3.69%, INTU +3.15%, HPQ +2.75%, IBM +2.74%, ORCL +2.61%, MSI +2.57%, APH +2.54%, PYPL +2.54%.
Other news items among sector components:
In addition to reporting quarterly results, Analog Devices (ADI 52.73, +0.66 +1.27%) increased its quarterly dividend to $0.42 per share from $0.40 per share. The company also increased its share buyback to $1 billion.
Harris (HRS 74.26, +0.82 +1.09%) was awarded a contract by Rockwall County, Texas to enhance its county-wide public safety and public service radio system. The contract was awarded during the second quarter of Harris' fiscal 2016.
Electronic Arts (EA 59.84, +0.48 +0.81%) announced a public offering of senior notes. EA intends to use the net proceeds from this offering for general corporate purposes, including but not limited to, the payment of amounts due upon conversion, maturity or repurchase of EA's 0.75% Convertible Senior Notes due 2016, and the repurchase of EA shares, including under the new $500 million stock repurchase program contingent upon the launch of the senior notes offering.
Qorvo (QRVO) entered into a $500 million accelerated share repurchase program with Bank of America (BAC).
IBM (IBM 126.10, +3.36 +2.74%) and GBM Corporation announced a strategic partnership to accelerate the use of IBM's Watson cognitive computing capabilities in Latin America.
Elsewhere in the tech space:
Hortonworks' (HDP 9.51, +0.52 +5.78%) CEO Robert Bearden voluntarily cancelled a stock option to purchase 1,185,000 shares dated September 12, 2014.
Cheetah Mobile (CMCM 16.99, +1.74 +11.41%) named Charles Fan as Chief Technology Officer.
Booz Allen Hamilton (BAH 26.80, +0.21 +0.79%) received a $115 million three-year task order to provide support to the Department of Veterans Affairs.
Vishay (VSH 11.71, +0.19 +1.61%) increased its quarterly dividend to $0.0625 per share from $0.06 per share.
FICO (FICO 94.35, +0.37 +0.39%) was awarded 2 new patents related to cyber-security and utility network protection.
Live Nation's (LYV 20.32, +0.17 +0.84%) Canada unit acquired the festival portfolio of Union Events.
Mentor Graphics (MENT 18.01, +0.31 +1.75%) signed a multi-year subscription agreement with ARM Holdings (ARMH 39.87, +1.36 +3.53%) to enable early access to a broad range of ARM intellectual property and related technologies.
Nuance Communications (NUAN 18.35, +0.70 +3.97%) filed an application to cease to be a reporting issuer in Canada.
In reaction to quarterly results:
Priceline (PCLN) reported better than expected Q4 EPS and revenues of $12.63 and $2 billion, respectively. Also, the company guided Q1 EPS of $9.00-9.60, slightly worse than expected at the mid-point. PCLN sees revenues of $2.01-2.14 billion for Q1.
T-Mobile US (TMUS 36.85, +0.40 +1.10%) reported better than expected Q4 EPS of $0.34 on revenues which rose 1.1% year-over-year to $8.25 billion. TMUS also guided FY16 capex in the range of $4.5-4.8 billion. The company added 2.1 million net customers in the period.
Analog Devices (ADI) reported better than expected Q1 EPS and revenues of $0.56 and $769.4 million, respectively. The company also guided Q2 EPS in-line at $0.58-0.66 and revenues in-line at down 2% to up 4%.
Agilent (A 37.87, +0.79 +2.13%) reported better than expected Q1 EPS of $0.46 on revenues which were worse than expected at $1.03 billion. The company also guided Q2 EPS and revenues worse than expected at $0.37-0.39 and $965-985 million, respectively. The company also expects in-line FY16 EPS of $1.81-1.87 on in-line revenues of $4.10-4.12 billion.
Rackspace (RAX 18.71, +0.53 +2.92%) reported better than expected Q4 EPS of $0.31 on revenues which rose 10.7% year-over-year to $522.8 million. RAX also guided Q1 and FY16 revenues worse than expected at $517-521 million and $2.08-2.16 billion, respectively.
Zendesk (ZEN 17.45, +1.56 +9.82%) reported in-line Q4 EPS at a loss per share of $0.07 on better than expected revenues which rose 62.9% year-over-year to $62.7 million. ZEN also guided Q1 and FY16 revenues better than expected at $65-67 million and $290-300 million, respectively.
Shopify (SHOP 22.37, +1.90 +9.28%) reported better than expected Q4 EPS at a loss of $0.01 per share on better than expected revenues which also rose 99.4% year-over-year to $70.2 million. The company also guided Q1 and FY16 revenues better than expected at $65-67 million and $320-330 million, respectively.
Companies reporting quarterly results tonight/tomorrow morning: ARRS BRCD CSLT ELNK EPAM GLOB GDDY ITRI JIVE LSCC MANT NTAP NVMI NVDA SPRT SNPS TYL UNTD/CBB DISCA DISH EIGI IQNT IDCC LDOS SYNT TVPT VPG
Analyst actions:
RAX was upgraded to Sector Perform from Underperform at FBN Securities,
DISH was upgraded to Hold from Sell at Wunderlich,
SEMI was upgraded to Neutral from Sell at Goldman;
RAX was downgraded at Pacific Crest, Stifel and Credit Suisse,
CCO was downgraded to Sell from Buy at Topeka Capital Mkts
4:50 pm Ingram Micro: Additional color on IM buyout at premium valuation ( IM) :
As mentioned in our 16:25 comment, IM agreed to be acquired by Tianjin Tianhai for $38.90/share in cash, representing a 31% premium to today's closing price and the highest valuation since the tech-bubble. Upon close of the merger, IM will become a part of HNA Group, a Hainan-based Fortune Global 500 enterprise group and a "leader in aviation, tourism and logistics" and the largest stockholder of Tianjin Tianhai.Ingram Micro's executive management team will remain in place, with Alain Moni continuing to lead as CEO.For background, IM is a wholesale technology distributor and involved in supply chain management and mobile device lifecycle services. IM distributes and markets a large variety of technology and mobility products from companies such as Acer, Apple, Cisco, Citrix, Hewlett-Packard, IBM, Lenovo, Microsoft, Samsung, Symantec, VMware and many others. Competitors aren't reacting much in after-hours, but could see some positive read-through from the premium valuation paid for IM.IM notes that within its Technology Solutions business, it competes against broad-based IT distributors such as Tech Data (TECD) and Synnex (SNX). IM also notes other specialized competitors such as Avnet (AVT) and Arrow (ARW) in components and enterprise products; Westcon in networking and security; D&H Distributing, ADI, and Petra in consumer electronics; and ScanSource (SCSC), BlueStar and Jaritech in AIDC/POS products.
4:25 pm Ingram Micro enters into agreement to be acquired by Tianjin Tianhai for $38.90/share in cash; co suspends quarterly dividend & share buyback ( IM) :
Transaction valued at ~$6.0 bln, or $38.90/shareIngram Micro will continue to be headquartered in Irvine, California, operating as a subsidiary of Tianjin Tianhai Transaction will enable Ingram Micro to accelerate strategic investments, adding expertise, capabilities and geographic reach according to IngramTransaction represents a premium of ~39% over the average closing share price of Ingram Micro for the 30 trading days ended Feb 16, 2016Expected to close in second half of 2016Co suspends quarterly dividend and share buyback prior to closing the transaction
4:24 pm NVIDIA beats by $0.08, beats on revs; guides Q1 revs above consensus ( NVDA) :
Reports Q4 (Jan) earnings of $0.52 per share, excluding non-recurring items, $0.08 better than the Capital IQ Consensus of $0.44; revenues rose 12.0% year/year to $1.4 bln vs the $1.31 bln Capital IQ Consensus. Co issues upside guidance for Q1, sees Q1 revs of $1.235-1.285 bln vs. $1.23 bln Capital IQ Consensus; non-GAAP gross margin 57-58%.For fiscal 2017, NVIDIA intends to return ~$1.0 billion to shareholders through ongoing quarterly cash dividends and share repurchases.
4:12 pm Marvell and Carnegie Mellon University have settled their patent infringement lawsuit; MRVL to pay $750 mln to university (shares halted) ( MRVL) :
The parties have resolved the case on mutually acceptable terms, including an aggregate payment by Marvell to CMU of $750 million, with no ongoing royalty payments.
As of January 30, 2016, MRVL's cash and short term investments exceeded $2.3 billion. Marvell had previously recorded approximately $388 million for litigation reserves in fiscal 2016 related to CMU.
4:11 pm SunPower beats by $0.20, beats on revs; guides Q1 revs below consensus; lowers FY16 guidance ( SPWR) :
Reports Q4 (Dec) earnings of $1.73 per share, $0.20 better than the Capital IQ Consensus of $1.53; revenues rose 123.7% year/year to $1.36 bln vs the $1.28 bln Capital IQ Consensus.Gross Margin 28.8% compared to 17.7% in Q3 and 20.4% in prior year; Q4 financial results reflected a shift of approximately $65 million in EBITDA originally forecasted to be recognized in fiscal year 2016.Co issues downside guidance for Q1, sees Q1 revs of $290-340 mln vs. $694.99 mln Capital IQ Consensus Estimate.Gross margin of 12 percent to 13 percent, EBITDA of $0 to $25 million and megawatts deployed in the range of 315 MW to 340 MW.Co issues guidance for FY16, lowers FY16 non-GAAP revs to $3.2-3.4 bln from $3.3-3.5 bln vs. $3.36 bln Capital IQ Consensus Estimate.As a result of this ~$65 million EBITDA shift, the company now expects 2016 EBITDA to be in the range of $450 million to $500 million compared to previous guidance of $515 million to $565 million.Gross margin of 14 percent to 16 percent, capital expenditures of $210 million to $240 million and gigawatts deployed in the range of 1.7 GW to 2.0 GW.For 2017, the company believes that with the ITC extension, further investment in the U.S. market and a strong global project pipeline, it is well positioned to sustainably grow its EBITDA.
4:06 pm Anadigics declares a competing bidder's proposal to acquire the co for $0.78/share a 'superior offer' to the previously announced offer of $0.66/share ( ANAD) : Party B has offered to acquire all of the outstanding shares of ANAD common stock on a fully-diluted basis for $0.78/share net in cash, pursuant to an all-cash one-step merger.The co's Board of Directors, after consultation with its financial and legal advisors, has unanimously determined in good faith that the Feb 16, 2016 Party B merger agreement is an constitutes a 'Superior Offer', as those terms are defined in the previously announced Jan 15, 2016 agreement and plan of merger pursuant to which an affiliate of II-VI has offered to acquire all of the outstanding shares of ANAD common stock on a fully diluted basis for $0.66/share net in cash, pursuant to an all-cash tender offer and second-step merger.
4:06 pm NetApp beats by $0.02, misses on revs; guides Q4 EPS below consensus, revs below consensus ( NTAP) :
Reports Q3 (Jan) earnings of $0.70 per share, $0.02 better than the Capital IQ Consensus of $0.68; revenues fell 10.6% year/year to $1.39 bln vs the $1.45 bln Capital IQ Consensus. Co issues downside guidance for Q4, sees EPS of $0.55-0.60 vs. $0.73 Capital IQ Consensus Estimate; sees Q4 revs of $1.35-1.50 bln vs. $1.51 bln Capital IQ Consensus Estimate."We launched a transformation program designed to streamline the business and reduce our cost structure, while at the same time, maintaining our ability to invest in strategic opportunities."
4:02 pm Brocade beats by $0.05, beats on revs -- Guides on call at 16:30 ( BRCD) :
Reports Q1 (Jan) earnings of $0.29 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $0.24; revenues fell 0.3% year/year to $574 mln vs the $561.29 mln Capital IQ Consensus.
4:15 pm : The major averages ended their Wednesday affair on a higher note, rallying throughout the day alongside crude oil. Adding to today's positive sentiment was sustained sector leadership from the heavily-weighted technology (+2.3%) and consumer discretionary spaces (+2.1%), dovish commentary from Boston Fed President Rosengren. The Nasdaq Composite (+2.2%) ended in the lead while the S&P 500 (+1.7%) and the Dow Jones Industrial Average (+1.6%) followed.
Throughout today's session oil climbed on speculation that OPEC ministers would convince Iran to cooperate on a production freeze. However, while Iran voiced support for market stabilization efforts, the country has yet to agree to take part in yesterday's proposed production freeze. Nevertheless, WTI crude ended its day higher by 5.5% at $30.65/bbl.
In central bank news, the minutes from the FOMC's January meeting echoed a dovish tone that was voiced yesterday by Boston Fed President and FOMC voter Eric Rosengren. The minutes reported concerns over a potential drag on the U.S. economy from larger-than-expected slowdowns in China and other emerging markets. On that note, Fed President Rosengren argued for a more gradual approach to hiking rates in response to headwinds from abroad.
Energy (+2.9%) and technology led the other sectors while materials (+2.0%) and consumer discretionary jockeyed one another. On the flipside, countercyclical utilities (-0.2%), telecom services (+0.3%),consumer staples (+1.0%), and health care (+1.3%) rounded out the board.
The commodity-sensitive energy space topped the leaderboard thanks to the rebound in crude oil. Energy giant Chevron (CVX 88.31, +3.50) climbed 4.1% to outperform the broader sector. Conversely, natural gas company Devon Energy (DVN 20.33, -0.93) surrendered 4.4% after reporting below-consensus revenue in Q4 and announcing a 75.0% dividend cut.
Separately, Salesforce.com (CRM 63.49, +3.77) showed relative strength in the technology sector. The company outperformed after Mizuho issued bullish commentary on the company when previewing Salesforce.com's Q4 earnings (February 24th). Large-cap Facebook (FB 105.19, +3.58) was able to recover from early relative weakness while Apple (AAPL 98.12, +1.48) ended its session behind the broader sector.
Priceline (PCLN 1,235.56, +124.88) outperformed in the consumer discretionary space after reporting above-consensus earnings prior to today's open. Meanwhile, fellow sector heavyweight Disney (DIS 95.50, +2.59) climbed 2.8%. The discretionary group has climbed 4.6% over the last two days, but remains lower by 1.7% for the month.
In the health care space, Johnson & Johnson (JNJ 102.50, +0.18) and Pfizer (PFE 29.63, -0.18) weighed on the broader sector while biotechnology outperformed today, evidenced by a 2.9% increase in the iShares Nasdaq Biotechnology ETF (IBB 266.32, +7.60).
Treasury yields traded higher throughout today's session as the rally in equities continued, but an afternoon bid in the Treasury complex pressured yields from their highs. The yield on the 10-yr note ended the day higher by four basis points at 1.81%.
Today's participation was true to the recent average with more than 1.2 billion shares changing hands at the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index, January PPI, January Housing Starts, January Building Permits, the January Industrial Production Report, Capacity Utilization, and thee FOMC's January Minutes.
- MBA Mortgage Index was reported at 7:00 ET, showing a seasonally adjusted increase of 8.2% in mortgage applications.
- The Producer Price Index (PPI) for final demand increased 0.1% (Briefing.com consensus -0.2%) in January after an unrevised 0.2% decline in December.
- Excluding food and energy, final demand prices increased 0.4% (Briefing.com consensus 0.0%) on top of an upwardly revised 0.2% increase (from 0.1%) in December.
- A 0.5% increase in prices for final demand services drove the uptick in the PPI for final demand. That overrode a 0.7% decrease in prices for final demand goods, which flowed from a 5.0% decline for final demand energy goods.
- With the January reading, total PPI is down 0.2% year-over-year on an unadjusted basis while core PPI is up 0.6%. There is still much room for improvement, yet January's readings would seem to have PPI headed in the right direction in the Fed's mind.
- Housing starts declined 3.8% in January to an annualized rate of 1.099 million units (Briefing.com consensus 1.171 mln), as single-family starts dropped 3.9% and multi-units starts fell 3.7%.
- Single-family starts in the South were flat in January; otherwise, there were declines in all other regions with the Northeast down 14.1%, the West down 10.0%, and the Midwest down 3.8%.
- The number of housing units under construction at the end of the period stood at 978,000 versus 976,000 at the end of December and the fourth quarter average of 962,000. This should be a slight positive as it relates to first quarter GDP computations.
- Building permits slipped 0.2% to an annualized rate of 1.202 million (Briefing.com consensus 1.200 mln), with single-family permits down 1.6% and multi-unit permits up 2.1%.
- There was an outsized 55.4% decline in total permits for the Northeast region, which was likely due to the expiration of tax credits for building multi-family properties in New York City.
- That decline was offset by a 26.5% increase for total permits in the Midwest and a 24.5% increase for total permits in the West.
- Industrial production increased a robust 0.9% in January and could have bee a little bit stronger if not for a big winter storm late in the month, according to the Federal Reserve.
- The January reading was much stronger than the Briefing.com consensus estimate of +0.3% and the downwardly revised 0.7% decline (from -0.4%) in December. On a year-over-year basis, total industrial production is still down 0.7%.
- Following unseasonably warm weather in December, proper winter temperatures arrived in January and cranked up the demand for heating. That demand fueled a 5.4% increase in the index for utilities, which interrupted a string of three straight monthly declines. A 0.5% increase in manufacturing output was another big driver of the headline surprise. That increase was a byproduct of near 0.5% increases for both nondurables and durables.
- The durables increase was powered by a 2.8% increase for motor vehicles and parts. On a related note, total motor vehicle assemblies increased 4.0% month-over-month to a seasonally adjusted annual rate of 12.11 million units. Mining output was surprisingly unchanged in January as substantial decreases for oil and gas well drilling and servicing, for coal mining, and for nonmetallic mineral mining were offset by increases for oil and gas extraction and for metal ore mining. That was the first time since August 2015 that mining output has not declined.
- Separately, the total industry capacity utilization rate increased to 77.1% in January from a downwardly revised 76.4% (from 76.5%) in December. The bulk of that improvement stemmed from capacity utilization for utilities increasing to 77.5% from 73.6%.
St. Louis Fed President and FOMC voting member James Bullard will be speaking at 18:00 ET.
Tomorrow's economic data will be limited to the weekly initial claims (Briefing.com consensus 274k) and the February Philadelphia Fed Survey (Briefing.com consensus -2.9) with both reports set to cross the wires at 8:30 ET.
- Russell 2000 -11.0% YTD
- Nasdaq -9.5% YTD
- S&P 500 -5.7% YTD
- Dow Jones -5.6% YTD
DJ30 +257.42 NASDAQ +98.11 SP500 +31.24 NASDAQ Adv/Vol/Dec 2307/2.109 bln/774 NYSE Adv/Vol/Dec 2575/1.186 bln/521
3:40 pm :
- Energy futures rallied today, some extending recent gains
- Mar crude oil futures rallied today, closing the session +5.5% at $30.65/barrel
- Mar heating oil futures rallied as well, rising +7% to $1.10/gallon, while Mar RBOB gasoline rose 3.1% to $1.00/gallon
- In other energy, Mar natural gas gained some steam, closing today's session +2.1% at $1.94/MMBtu
- Metals climbed higher today as well, but showed much smaller gains
- Apr gold rose 0.3% to $1211.20/oz, while Mar silver rose 0.3% to $15.38/oz
- Copper gained three cents to end at $2.08/lb.
11:12 am Rackspace: Huge reversal in RAX (+4%) after stock gapped down 16% to a six year low following downside Q1/FY16 guidance ( RAX) :
8:04 am Analog Devices beats by $0.03, beats on revs; guides Q2 EPS in-line, revs in-line; raises quarterly dividend 5% to $0.42/share, Board approves an increase in its share repurchase authorization to $1 bln ( ADI) :
Reports Q1 (Jan) earnings of $0.56 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.53; revenues fell 0.3% year/year to $769.4 mln vs the $755.02 mln Capital IQ Consensus.ADI also announced on February 16, 2016 that its Board of Directors has approved a $0.02 increase in its quarterly dividend, from $0.40 to $0.42 per outstanding share of common stock. The dividend will be paid on March 8, 2016 to all shareholders of record at the close of business on February 26, 2016In addition, the Board of Directors approved an increase to the Company's share repurchase authorization to $1 billion. Co issues in-line guidance for Q2, sees EPS of $0.58-0.66, excluding non-recurring items, vs. $0.63 Capital IQ Consensus Estimate; sees Q2 revs in the range of down 2% to +4%, sequentially, which calculates to ~$754.0-800.2 mln vs. $793.39 mln Capital IQ Consensus Estimate. |
