Daily Wrap
DJIA +75.65 (+0.50%) to 15,300.34;S&P 500 +11.86 (+0.72%) to 1,652.32;NASDAQ +19.43 (+0.56%) to 3,504.26
Some don’t think it is the right way to start the season but Alcoa ( AA ) still is known for kicking off earnings and this much maligned stock and company. AA reported EPS that beat analysts expectations (7c vs 6c) on just slightly lower than expected revenue ($5.8B vs $5.83B). After reporting last night, AA closed almost exactly flat today but considering AA recently bounced I would say it held the recent move. Is the bottom in AA in? It could be. Everyone that has thought that in the past has been wrong but there is always that turn. I think someone looking to take a trade in AA has a very clear stop which is just below the recent lows of 7/3/13 at a price of $7.63.
A big name moving today and on rumors was FedEx ( FDX ). Following up on a Bloomberg report yesterday that activist investor Bill Ackman was looking to raise capital for a special fund to buyout an existing public company was the rumor that FDX could be the target. The rumor helped FDX gain over 4% on the day but it closed well off its highs. FDX doesn’t have a bad tone but I wouldn’t be playing it for Ackman. If I were going to look at FDX for a position, I might give it a few days to cool off and see if it holds the recent gains and/or consolidates and then might provide a better technical picture for an entry.
FDX wasn’t the only name in the news tied to takeovers. What I found most interesting is two acquirers in today’s news also went higher which is not always the case. First Prestige Brands ( PBH ) gained nearly 11% on news they are acquiring Care Pharmaceuticals of Australia and then Kroger ( KR ) gained over 2% after announcing the acquisition of Harris Teeter ( HTSI ). HTSI gained a small roughly 1.5% but had been on a good tear closing up over 28% YTD including today’s move. Lastly, Health Management ( HMA ) gained over 8% on a report from Reuters that they are fielding calls from potential suitors.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: FAST, FDO, MSM, SYRG, MASC
In analyst notes today, Hewlett-Packard (HPQ) was upgraded to Buy at Brean Capital. International Rectifier (IRF) was upgraded to Strong Buy at Raymond James and Royal Bank of Scotland (RBS) was upgraded to Buy at Goldman. On the downside, Intuitive Surgical (ISRG) received multiple downgrades and lower price targets after a negative pre-announcement. IBM (IBM) was downgraded to Neutral at Goldman and DuPont (DD) was downgraded to Neutral at Macquarie.