Among the six homebuilders, only NVR had a significant jump in its target price since mid-October. The median target price for NVR is now $765, up from $728, and the stock price as of about noon today is $682.57, for an upside potential of 12.1%. That’s not a grand number, but it’s the best in the sector. Target prices for PulteGroup, D.R. Horton, Hovnanian, and Beazer did not change and the target price for Toll Brothers rose just $0.15, from $21.50 to $21.65. Not a big display of confidence in the sector.

Home Depot’s median target price rose from $40.00 to $42.00, and the stock’s current price of $40.51 implies a potential gain of 3.7%. Lowe’s median target price rose from $23.00 to $26.00, and at the current price of $25.13 the implied gain is 3.5%. Even though now is not a particularly good season for home improvement projects, either one or both of these stores could easily push through the new targets.

While the target prices did not change for five of the homebuilders, all but NVR saw share price gains of more than 30% in the last six weeks, with PulteGroup shares gaining 51%. Home Depot and Lowe’s shares are up 16% and 19%, respectively, in the same period. These share price rises for homebuilders indicate more investor interest in these stocks, analysts’ lack of enthusiasm indicates that caution remains the best policy.

None of these builders pays a dividend, with the exception of Beazer which offers investors a dividend yield of 1.2%. Home Depot’s dividend yield is 2.9%, and Lowe’s offers a dividend yield of 2.3%.

For investors who believe they have to participate in this sector, Home Depot remains the best choice, with Lowe’s the best alternative. Building — and selling — new houses is still a risky business.

Paul Ausick

Arch Coal, Inc. (NYSE: ACI) named as Bear of the Day with a $13.00 price target at Zacks.
American Tower Corporation (NYSE: AMT) Started as Outperform at Macquarie.
Berkshire Hathaway Inc. (NYSE: BRK.B) named as Bull of the Day with a $91.00 price target at Zacks.
Cliffs Natural Resources Inc. (NYSE: CLF) Raised to Outperform at Credit Suisse.
Crown Castle International Corporation (NYSE: CCI) Started as Outperform at Macquarie.
Deere & Company (NYSE: DE) named as value stock of the day at Zacks.
Domino’s Pizza, Inc. (NYSE: DPZ) Started as Hold at KeyBanc.
Guess? Inc. (NYSE: GES) Cut to Neutral at Citigroup.
Lowe’s Companies Inc. (NYSE: LOW) Raised to Buy at Goldman Sachs.
Lululemon Athletica Inc. (NASDAQ: LULU) Raised to Buy at KeyBanc.
Sina Corporation (NASDAQ: SINA) Raised to Buy at Deutsche Bank
Smith & Nephew plc (NYSE: SNN) Raised to Overweight at Morgan Stanley.
Western Refining Inc. (NYSE: WNR) Raised to Outperform at Credit Suisse.

Argus made changes to its institutional model portfolio: added shares of Walgreen Co. (NYSE: WAG) and sold out of shares of Sun Life Financial Inc. (NYSE: SLF).

Credit Suisse is out positive on generics saying that the news flow on generic Lipitor has obscured the bigger picture on Watson Pharmaceuticals, Inc. (NYSE: WPI) and Teva Pharmaceutical Industries Limited (NASDAQ: TEVA). The firm recommends buying WPI after its recent weakness as strong fundamentals just got cheaper.  It also recommends buying TEVA for the longer term and as a turnaround story for 2012.

Your email address

subscribe

terms and conditions

JON C. OGG

The unofficial closing bells put the DJIA up more than 17 points to 12,096.39 (0.14%), the NASDAQ rose nearly 29 points (1.09%) to 2,686.20, and the S&P 500 rose 0.48% or more than 6 points to 1,257.80.

There were several analyst upgrades and downgrades today, including Agilent Technologies, Inc. (NYSE: A) raised to ‘buy’ at BofA/ML. Other action included Salesforce.com (NYSE: CRM) reiterated at ‘neutral’ by Argus; Advance Auto Parts, Inc. (NYSE: AAP) cut to ‘hold’ at Argus; Lowe’s Companies Inc. (NYSE: LOW) target raised from $25 to $28 at Argus; Alimera Sciences Inc. (NASDAQ: ALIM) cut to ‘neutral’ with a $2 target at Credit Suisse.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Wal-Mart Stores, Inc. (NYSE: WMT) is down about -2.25%, at $57.57; Beazer USA Homes Inc. (NYSE: BZH) is down about -0.5%, at $2.21; Covidien plc (NYSE: COV) is up nearly 2.5%, at $48.44; Dick’s Sporting Goods, Inc. (NYSE: DKS) is up nearly 5.5%, at $41.73; TJX Companies, Inc. (NYSE: TJX) is up about 1% at $61.16; and Saks, Inc. (NYSE: SKS) is up 2.5%, at $10.46. For a more detailed look at today’s retail earnings, see our earlier story.

Several other standouts from today are as follows…

Moneygram International, Inc. (NYSE: MGI) is up about 616%, at $18.68. The company announced a 1-for-8 reverse stock split this morning, shrinking the number of outstanding shares from 1.3 billion to 162.5 million. The stock closed yesterday at $2.61, and posted a new 52-week high this morning of $19.61.

Pacific Ethanol Inc. (NASDAQ: PEIX) is up nearly 30%, at $1.31. There is no direct news from the company, but the price jump is very likely related to an announcement yesterday from Archer Daniels Midland Co. (NYSE: ADM) that it was building a new plant in Canada that would double its annual production of ethanol.

Netlist, Inc. (NASDAQ: NLST) is up more than 24%, at $2.92. The company has signed deals with both IBM Corp. (NYSE: IBM) and Hewlett-Packard Co. (NYSE: HPQ) under which Netlist’s cloud memory product undergo qualification testing for use with the two companies’ servers.

FriendFinder Networks, Inc. (NASDAQ: FFN) is down more than -20%, at $1.50, after posting a new 52-week low of $1.42. The company has been notified of a class-action lawsuit charging that it made false statements related the number of shares of stock subject to the 180-day lock-up period following the company’s IPO last May.

Meritor, Inc. (NYSE: MTOR) is down more than -17%, at $6.58. The company reported solid earnings today, but cut next year’s revenue guidance by about 10%.

Stay tuned for Wednesday. Richmond Federal Reserve Bank president Jeffrey Lacker and Boston Fed president Eric Rosengren are giving speeches tomorrow. Here’s a list of other noteworthy events (all times Eastern):

• 7:00 a.m. – Mortgage purchase applications
• 8:30 a.m. – Consumer price index
• 9:15 a.m. – Federal Reserve industrial production index
• 10:00 a.m. – Housing market index
• 10:30 a.m. – EIA weekly petroleum status report

Your email address

subscribe

terms and conditions

Paul Ausick

The world’s largest retailer managed to beat revenue expectations, but missed EPS estimates by a penny. Walmart posted revenue of $110.2 billion, up more than 8% from the same period a year ago and about 2% higher than estimates of $108.1 billion. The consensus EPS estimate called for $0.98, about 10% below EPS in the 2010 third quarter, but Walmart managed only $0.97. One bright spot for the company is that same-store sales for the quarter rose 1.3%, nearly double estimates of 0.7%.

Home Depot beat both EPS and revenue expectations, posting EPS of $0.60 on revenue of $17.3 billion. Consensus estimates called for EPS of $0.58 on revenue of $17.1 billion. The company also boosted its dividend, from an annual rate of $1/share to $1.16, up 16%. Home Depot also raised EPS guidance from $2.34 to $2.38. Home Depot’s report stands in stark contrast to competitor Lowe’s Companies Inc. (NYSE: LOW), which disappointed analysts on same-store sales and expenses related to store closures. Home Depot also reported quarterly same-store sales growth of 4.2%, far better than Lowe’s 0.7% rise.

High-end retailer Saks reported revenue for its third quarter of $692.3 million, lower than the consensus estimate of $695.1 million. EPS totaled $0.11, beating expectations of $0.09. Same store sales rose 5.8% for the quarter and 10.3% for the nine months. The company forecast same-store sales growth in the fourth quarter in the ‘mid-to-high single digit range.’ However gross margin is expected to decline by 0.5%. Gross margin in the third quarter rose by 1.6% year-over-year, and the decline is mostly due to expected promotional pricing.

TJX Companies missed on revenues, but did meet EPS estimates. The company reported this morning that EPS came in at $1.06, exactly on the consensus estimate, while revenue of $5.8 billion was below the estimate of $5.85 billion. Same-store sales were up 3% year-over-year. The company forecast full-year EPS of $3.94-$3.97, compared with the current analysts’ estimate of $3.97. The fourth-quarter EPS estimate was unchanged, at $1.19-$1.23. TJX raised its same-store sales guidance from 1%-2% to 2%-3%, but gave no guidance on gross margins, which came in at 28.1% in the third quarter.

Staples reported EPS of $0.47, as expected, but revenue of $6.6 billion failed to meet expectations of $6.7 billion. The company forecast fourth-quarter EPS of $0.39-$0.43, while analysts are expecting $0.43. Full-year adjusted EPS is forecast at $1.35-$1.39, compared with an estimate of $1.39. The full-year EPS forecast declined from a previous range of $1.39-$1.45. The company also tried to sweeten the news by boosting its full-year share buyback total from $300-$500 million to $600 million.

J.C. Penney posted an EPS loss of -$0.67 after the markets closed yesterday, but adjusted for certain items, EPS came in at $0.11, considerably better than the consensus call for an EPS loss of -$0.12. The company guided fourth quarter adjusted EPS at $1.05-$1.15, where analysts had expected $1.15. Same-store sales fell in the quarter, by -1.6%, and total sales fell year-over-year by -4.8%. The new CEO, Ron Johnson who came from Apple Inc. (NASDAQ: AAPL), started work on November 1st and promises a strategy review in time for the company’s investor meeting in January.

Urban Outfitters posted disappointing results after markets closed yesterday, even though EPS beat expectations by a penny. Same-store sales were off by -7%, and revenues of $610 million missed estimates of $614 million. Gross margins fell by nearly -6%.

A capsule review of these earnings reports points to a relatively flat fourth-quarter, with the exceptions of Home Depot and Saks. Home Depot has managed its operations better than has Lowe’s and its dividend boost is the second this year. Saks benefits from its position in the luxury retail sector, which is were the money and the growth are. For the others, the predicted 1%-2% holiday season sales boost means only that competition will be even more fierce, putting pressure on margins and profits.

Shares of Saks are up about 1.75%, at $10.38 in a 52-week range of $7.67-$12.97. Walmart shares are down about -2.3%, at $57.52, in a 52-week range of $48.31-$59.40. Home Depot is up about 1%, at $38.63, in a 52-week range of $28.13-$39.38. Urban Outfitters is down more than -3.25%, at $25.95, after posting a new 52-week low of $25.69 earlier this morning. Staples is down more than -4.25%, at $14.72, in a 52-week range of $11.94-$23.75.

Paul Ausick

Advance Auto Parts Inc. (NYSE: AAP) Cut to Hold at Argus.
Agilent Technologies Inc. (NYSE: A) Raised to Buy at BofA/ML.
Alimera Sciences, Inc. (NASDAQ: ALIM) Cut to Neutral with $2 target at Credit Suisse.
CenterPoint Energy, Inc. (NYSE: CNP) Cut to Neutral at BofA/ML.
Chimera Investment Corporation (NYSE: CIM) Reiterated Outperform at Credit Suisse.
Coldwater Creek Inc. (NASDAQ: CWTR) Added to Strong Sell List at Zacks.
Goodyear Tire & Rubber Co. (NYSE: GT) named Bull of the Day at Zacks.
Kellogg Company (NYSE: K) Cut to Sell as Bear of the Day at Zacks.
Lowe’s Companies Inc. (NYSE: LOW) Raised target to $28 from $25 at Argus.
Macy’s Inc. (NYSE: M) named value stock of the day at Zacks.
Northeast Utilities (NYSE: NU) Raised to Buy at BofA/ML.
NSTAR (NYSE: NST) Raised to Buy at BofA/ML.
Salesforce.com Inc. (NYSE: CRM) Reiterated Neutral at Credit Suisse.
Sourcefire, Inc. (NASDAQ: FIRE) Initiated as Buy at BofA/ML.

Your email address

subscribe

terms and conditions

JON C. OGG

Angela Merkel says Europe may face its greatest crisis since World War II. (Reuters)

Italy’s Monti will discuss what cuts the nation faces when he meets with other senior party officials. (Reuters)

The IMF says there is a danger of asset bubbles in China. (Reuters)

Amazon.com (NASDAQ: AMZN) ships its Kindle Fire early as more competition enters the market. (Reuters)

Congress reaches a compromise to keep the federal government operating until mid-December. (Reuters)

Warren Buffett puts $10.7 billion into IBM (NYSE: IBM) shares. (WSJ)

UBS (NYSE: UBS) names its interim CEO to the position permanently. (WSJ)

Burberry profits rise on demand for luxury goods. (WSJ)

Parts shortages due to floods in Asia and lower demand for mainstream PCs challenge Dell (NASDAQ: DELL). (WSJ)

Italy’s UniCredit posts a large loss. (WSJ)

The Federal Housing Administration’s cash reserves reach dangerous lows. (WSJ)

TransCanada (NYSE: TRP) says it may have a deal with Nebraska to move the route of its Keystone XL pipeline, which would allow the project to go forward. (WSJ)

Companies find it is more difficult to recruit e-commerce executives to run complex internet platforms. (WSJ)

Anadarko (NYSE: APC) raises estimates of production from its Colorado oil fields. (WSJ)

Lowe’s (NYSE: LOW) drops sales estimates as it closes stores. (WSJ)

The new head of JCPenney (NYSE: JCP), recruited from Apple (NASDAQ: AAPL), says he will “reimagine” the chain’s stores. (WSJ)

The Commodity Futures Trading Commission will get less budget money than it requested, which will make it more difficult to implement Dodd-Frank regulations. (WSJ)

China’s demand for copper falls. (WSJ)

Many partners at Goldman Sachs (NYSE: GS) will retire this year. (WSJ)

Data for the third quarter show unexpected economic expansion in Germany and France. (FT)

The yields of Spain’s and Italy’s bonds rise sharply. (FT)

The IMF warns that China’s banks may face trouble if they do not set more flexible exchange rates. (FT)

Volkswagen nears a deal to buy Porsche. (Bloomberg)

Douglas A. McIntyre

The unofficial closing bells put the DJIA down more than 74 points to 12,079.29 (-0.61%), the NASDAQ fell more than 21 points (-0.80%) to 2,657.22, and the S&P 500 fell -0.94% or nearly 12 points to 1,251.88.

There were several analyst upgrades and downgrades today, including Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) cut to ‘hold’ at Argus. Other changes included Lululemon Athletica Inc. (NASDAQ: LULU) reiterated ‘neutral’ with a $59 price target at Credit Suisse; Annaly Capital Management, Inc. (NYSE: NLY) started as ‘overweight’ at JPMorgan; Macy’s Inc. (NYSE: M) named ‘Bull of the Day’ at Zack’s; and Hershey Co. (NYSE: HSY) cut to ‘hold’ at Argus.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Cyanotech Corp. (NASDAQ: CYAN) is up more than 9% at $5.50; Global Ship Lease Inc. (NYSE: GSL) is down almost -17% at $1.75; Ivanhoe Mines Ltd. (NYSE: IVN) is up more than 2% at $21.03; J.C. Penney Co. (NYSE: JCP) is down almost -3% at $32.93; Lowe’s Companies Inc. (NYSE: LOW) is up more than 1.5%, at $23.49; and ZBB Energy Corp. (AMEX: ZBB) is down about -7.5%, at $0.71.

Several other standouts from today are as follows…

Daquo New Energy Corp. (NYSE: DQ) is down about -3%, at $2.73. The company makes wafers for solar PV cells and badly missed expected earnings. Net margins have fallen from 36.3% in the same period a year ago to 20.3%.

Bluegreen Corp. (NYSE: BXG) is up more than 44%, at $2.94. The resort time-share company has agreed to be acquired by BFC Financial Corp. (OTC: BFCF) for shares of BFC valued at $4.56.

Verifone Systems Inc. (NYSE: PAY) is up nearly 8%, at $44.03. Verifone has agreed to acquire a Norwegian company that is the largest provider of payment and gateway services in northern Europe. The price totals about $815 million, including debt.

China Shen Zhou Mining & Resources, Inc. (NYSE: SHZ) is up more than 18%, at $2.57. The company, which is China’s leading producer of fluorite, reported that it had nearly doubled revenues in the third quarter compared to the same period a year ago.

Cadence Pharmaceuticals, Inc. (NASDAQ: CADX) is down nearly -22%, at $3.97, after posting a new 52-week low of $3.95 earlier today. The company announced a $75 million secondary stock offering this morning.

JinkoSolar Holding Co. Ltd. (NYSE: JKS) is down more than -13%, at $6.75. The solar panel maker significantly reduced shipment and revenue forecasts for the third quarter.

Stay tuned for Tuesday. St. Louis Federal Reserve Bank president James Bullard and Chicago Fed president Charles Evans are giving speeches in the morning. Three other Fed presidents are also speaking tomorrow. Here’s a list of other noteworthy events (all times Eastern):

• 7:45 a.m. – ICSC-Goldman Sachs store sales report
• 8:30 a.m. – Producer price index released
• 8:30 a.m. – October retail sales
• 8:30 a.m. – Empire State manufacturing survey
• 10:00 a.m. – Business inventories

Your email address

subscribe

terms and conditions

Paul Ausick

We have given some earnings previews containing the Thomson Reuters consensus estimates for the past quarter and the current quarter which will be reported on in about three months.  We have also added in some color on each as well as consensus price targets and what to look for elsewhere after each report.

Home Depot Inc. (NYSE: HD) reports on Tuesday morning and this is on the heels of a positive reception from what really looked like a lackluster report from Lowe’s Companies, Inc. (NYSE: LOW) if you were just looking at the past reports as a comparison.

Thomson Reuters has estimates for the home improvement retail giant of $0.58 EPS and $17.1 billion in revenues; next quarter estimates are $0.40 EPS and $15.5 billion in revenue.  Shares trade around $38.50, its 52-week trading range is $28.13 to $39.38 and the consensus price target from Thomson Reuters is listed as $39.81.

All that can really be said is that Home Depot faces an incredibly poor housing market and a softening retail sales growth.  The company has only had one major storm in about three years now as well that would have contributed a significant amount to earnings.  And to top it off, shares are close to a cycle peak despite the negative headwinds.

Gold is at $1,782, down 0.36%.

Hong Kong’s Hang Seng closed up 1.94% to 19,508.

Japan’s Nikkei closed higher by 1.05% to 8,604.

The U.S. 10-year is at 2.09%, up $0.o3.

The FTSE is down 0.19% to $5,535.

The DAX is down 1.05% to $5,994.

Ctrip.com International, Ltd. (NASDAQ: CTRP) is down nearly 12% before market open to $30.25, relative to a 52-week range of $29.59 – $50.57.

J.C. Penney Company (NYSE: JCP) is down 2.45% to $33.15, relative to a 52-week range of $23.44 – $41.00.

Lowe’s Companies (NYSE: LOW) is down 1.6% before market open to $23.48, relative to a 52-week range of $18.07 – $27.45.

Groupon (NASDAQ: GRPN) will make a major holiday effort to drive extra revenue. (Reuters)

Appetite for Olympus shares may keep it from a delisting. (Reuters)

Amazon.com (NASDAQ: AMZN) will bolster its Prime business, which uses loyalty programs to increase sales. (WSJ)

Investors remain concerned that bank efforts to get free of eurozone debt will not work. (WSJ)

Cities use road and sewer funds to help general budget problems. (WSJ)

Canada says it will sell more oil to Asian markets now that a pipeline through the U.S. has been delayed. (WSJ)

Anticlotting drug rivaroxaban, made by Johnson & Johnson (NYSE: JNJ), may help heart attack victims. (WSJ)

A decision on the deficit may push the tax reform debate into 2012. (WSJ)

Analysts expect small sales improvements at Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW) despite trouble in the housing market. (WSJ)

A crash of General Motors’ (NYSE: GM) Chevy Volt causes a fire in government tests. (WSJ)

A Universum study shows graduates want to work at Facebook, Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL). (WSJ)

New data shows advertising spending has begun to slow. (WSJ)

Competition between Bloomberg and Thomson Reuters will increase as Wall St. cuts jobs. (WSJ)

Banks continue to find ways to increase fees to consumers. (NYT)

The focus on sovereign debt problems begins to shift from Italy to France. (NYT)

Experts say superfast networks could hurt operations of the internet. (NYT)

Japan’s economy grew at a 6% annual rate last quarter. (NYT)

The ECB may not become the lender of last resort, a move that could worsen perception of eurozone sovereign debt. (FT)

An increase in LNG prices increases demand for freighters. (FT)

Obama attacks China again on the weak yuan. (Bloomberg)

New orders push Boeing (NYSE: BA) well ahead of Airbus. (Bloomberg)

Apple faces a difficult search for someone to run its retail unit. (Bloomberg)

Douglas A. McIntyre