3 Unsuspected Rallies on Bad News

The market saw a big rally in Thursday morning’s trading, and it seems that even some stocks’ bad news has resulted in a positive reaction. In the noon hour, the Dow Jones Industrial Average was up over 1% and the S&P 500 was up over 1% as well, following a couple of back-to-back bad trading days.

24/7 Wall St. has selected a few companies that have released some not-too-favorable news but that have made huge gains in trading despite that. Speculatively and based on the news, these companies’ should have dropped but trading in greater volumes has pushed the prices even higher.

Urban Outfitters Inc. (NASDAQ: URBN) reported that same-store sales are up by a “low single-digit” percentage. Seemingly this would be positive on the surface because the company reported in its third-quarter earnings that same-store sales dropped 1%. However investors should not be overly excited because looking at Urban Outfitters historically they would be wary and know that “low single-digit” percentages are lame for this hip clothing business. Shares of Urban Outfitters were up 10% at $33.12 in the noon hour. The stock has a consensus analyst price target of $34.25 and a 52-week trading range of $27.89 to $40.67.

Lululemon Athletica Inc. (NASDAQ: LULU) reported its third-quarter financial results of $0.42 in earnings per share, compared to consensus estimates calling for $0.38 per share. The same period in the previous year had $0.45 in earnings per share. The company may have beat earnings, but the Lululemon guided lower for the fourth quarter in a range of $0.65 to $0.69 for earnings per share and $570 million to $585 million in revenues. Consensus estimates expect $0.72 in earnings per share and $593.54 million in revenue. Shares of Lululemon were up almost 9% at $50.78 in the noon hour. The consensus analyst price target is $45.79, and the 52-week trading range is $36.26 to $64.38.

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Ciena Corp. (NYSE: CIEN) reported its fourth-quarter results as a -$0.08 in earnings per share, missing the consensus estimate of $0.13 per share. This is a difference of $0.21 per share, on a company with a market cap of nearly $2 billion. Investors may have expected the share price to swing in another direction, as was indicated in premarket trading. Shares of Ciena were up over 9% at $18.58 in the noon hour. The consensus price target is $24.50, and the 52-week trading range is $13.77 to $27.16.