Tag Archives: stocks

Verizon Earnings Call: Yahoo, Frontier Deal, Strike, Wireless War

Verizon Communications ( VZ ), on the hunt for Internet pioneer  Yahoo ( YHOO ), is expected to update 2016 guidance when it reports Q1 earnings on Thursday, in the wake of selling wireline assets in three states to Frontier Communications ( FTR ). Verizon and AT&T ( T ) were among the best performing large-cap stocks in the S&P 500 in the March quarter. AT&T reports Q1 results on April 26. Verizon sold wireline assets in California, Florida and Texas to Frontier for $10.5 billion. The deal closed in early April. Aside from Verizon’s stated interest in acquiring Yahoo , analysts may ask for management views on how a strike by 39,000 wireline workers will impact Verizon’s FiOS business. “We expect Verizon to update 2016 guidance post the recent close of the Frontier deal, including clarity around EBITDA (earnings before interest expenses, taxes, depreciation and amortization) guidance and subsequent cost cuts, which we believe management has thus far conservatively guided,” said Colby Synesael, an analyst at Cowen & Co., in a report. “While it’s likely someone will bring up Yahoo during Q&A, it’s unlikely management provides much of a response.” Analysts polled by Thomson Reuters expect Verizon’s Q1 profit to rise 4% to $1.06 per share, with revenue growing 2%; these predictions include Verizon’s June 2015 acquisition of AOL. Wireless competition remained intense in Q1 amid a flurry of video-related promotions, analysts say. UBS analyst John Hodulik forecasts that Verizon will lose postpaid phone subscribers in Q1, as it did in the March quarters in 2014 and 2015.

J&J Earnings Beat Estimates; Guidance Raised As FX Headwinds Ease

Medical giant Johnson & Johnson ( JNJ ) beat Q1 estimates and raised guidance Tuesday morning, sending its stock to its fifth recent record high. J&J reported earnings of $1.68 a share, up 8% from the year-earlier quarter and beating analysts’ consensus by 3 cents, according to Thomson Reuters. Sales rose 0.6% to $17.48 billion, matching consensus. J&J said that the foreign-exchange impact knocked 6.6 percentage points off sales growth. Nonetheless, the forex headwinds finally seem to be abating. J&J cited the improved forex outlook as the reason it was raising full-year sales guidance by $400 million, to $71.2 billion to $71.9 billion. It also added 10 cents to EPS guidance, now $6.53 to $6.68. IBD’s Take: Johnson & Johnson rated No. 1 in its group, but CR is iffy . “Our Pharmaceuticals business continues to deliver impressive levels of growth, we have steady improvement in our Consumer business, and we are seeing momentum in our Medical Devices businesses, all of which are fueling our optimism for the full-year ahead,” J&J CEO Alex Gorsky said in a statement. J&J stock was up 2% in early trading on the stock market today , touching a record high of 113.60 intraday. The stock is up more than 10% for the year so far, and it is the first of three medical stocks that are hitting new highs  and are reporting this week, the others being Intuitive Surgical ( ISRG ) this evening and Stryker ( SYK ) late Wednesday. “This morning, J&J continued the growth momentum the company has seen in recent quarters, again delivering organic sales growth acceleration and its second consecutive quarter of double-digit EPS growth on an adjusted, operational basis,” wrote Leerink analyst Danielle Antalffy in a research note. She noted that, excluding the impact of foreign exchange, M&A activity and shrinking sales of hepatitis C drug Olysio — which was made obsolete when Gilead Sciences ( GILD ) released Harvoni in late 2014 — sales rose 6.9%. Operating EPS growth was just above 10%. Credit Suisse analyst Vamil Divan wrote that the pharma sales beat was driven by the immunology franchise — Remicade, Simponi and Stelara — as well as its stroke prevention treatment Xarelto. But another top seller, diabetes drug Invokana, missed consensus by 19%. Investors had been wondering if Invokana would take a hit from Eli Lilly ‘s ( LLY ) Jardiance, which last September proved that it could dramatically cut deaths from heart failure but didn’t get a sales bump from this in Q4.

Market Lab Report – Premarket Pulse 4/19/16

Major averages recovered from their gaps lower on news of the failed Doha talks by major oil producers, and managed to finish higher on mixed volume. Oil also gapped lower by some 4% but managed to recover much of this drop on news of the oil strike in Kuwait as well as short-covering. MDM and VVM both went to cash at yesterday’s open. As we know, the last couple of years have been quite challenging, thus at certain junctures, profit taking can be prudent especially when risk/reward favors it. And protecting profits while minimizing risk has been essential. The number of various recent headwinds adds weight to the risk side of the equation. Such headwinds include the ongoing lackluster performance of leading stocks as well as the rallies in the major indices that are getting long in the tooth as this is the longest, sharpest rally in the NASDAQ Composite without any minor correction since early 2012. The current rally even beat out, just barely, the rally that started in Nov 2012 which marked the anticipation then the start of QE3. Another factor is that oil has correlated closely with equities especially this year. With oil gapping lower by 4% before yesterday’s open due to the failed Doha talks by major oil producers, the start of a sharp correction could have occurred, thus boosting risk in continuing to remain on a buy signal in the MDM and a sell signal in the VVM. Of course, QE continues en masse so the capital has to go somewhere, thus yesterday’s action certainly shows the resilience of the markets. Still, QE has been with us since late 2008, yet markets always still undergo some sort of correction, however mild, which the current rally has yet to undergo. With the US having exited its QE program quite some time ago, this somewhat counters the QE moves by other central banks. Nevertheless, some trends can go a lot further than expected, so the models could go back into the market depending on risk/reward as it evolves.