The second month of the year has been good for stocks, with the
S&P 500 remaining above the key 1500 level for the majority of
February. Going into the final week of the month, can the market
hold onto its recent gains?
Investors will get earnings from a number of key companies,
including retailer JC Penney (NYSE:
), daily deal website Groupon (NASDAQ:
), cloud services company salesforce.com (NYSE:
), and electronics store RadioShack (NYSE:
RadioShack is set to release its earnings Tuesday. Analysts
currently expect the company to post a loss of $0.05 on revenue of
$1.36 billion. Shares of RadioShack have performed extremely well
over the last quarter, rallying about 45% in the last month
However, analysts at Wedbush are concerned. The firm has an
Underperform rating and $1 price target on RadioShack. Wedbush
cites margin erosion and an "ill-advised" growth strategy.
"We expect further margin erosion," Wedbush writes. "Management
forecasted weak sales [on its last earnings call] and said it
expected gross margin compress to continue."
Groupon will follow on Wednesday. Like RadioShack, shares have
runup significantly -- more than doubling since setting an all-time
low in mid-November.
Barrington Research is cautious on the company with a Market
"We expect in line results," Barrington notes. "We suspect the
company's Goods business benefitted from the Holiday season, but we
continue to worry about its lack of visibility and international
difficulties, which represents about half of its business."
Retailer JC Penney is also set to post earnings Wednesday.
Analysts currently expect the company to report a loss of $0.14 per
share on revenue of $4.10 billion. The company has been a
controversial stock over the last year, as CEO Ron Johnson's
turnaround strategy has led to a steady decline in sales.
Deutsche Bank has a Hold rating on JC Penney and a $17 price
target. Analysts remain cautious, noting that the company has had
to abandon many of the radical changes it made to its pricing model
"The changes suggest CEO Ron Johnson has embraced promotions as
a necessary evil to re-engage the core JCP customer; but with our
checks indicating traffic has only experienced modest improvement
in recent weeks, we believe the return of coupons may be next."
Salesforce.com will report Thursday. Analysts anticipate the
cloud computing pioneer to post earnings of $0.40 per share on
revenue of $830.8 million. Since hitting a recent low November 14,
shares are up over 20%.
Analysts at Piper Jaffray are bullish on Salesforce, with an
Overweight rating and $208 price target. "We believe CRM remains a
core long-term holding for its prominent role in the cloud
computing mega-trend," Piper Jaffray notes.
In the U.S., investors will get data on new home sales on
Tuesday, followed by durable goods orders Wednesday. On Thursday,
the GDP report will be released, along with the Chicago purchasing
manager index. Friday will be the biggest day, with data on
personal income and spending, along with the ISM manufacturing
index and the University of Michigan's consumer sentiment.
Internationally, Wednesday will bring the GDP report for the
U.K. and Japanese Industrial production. Thursday will have a
variety of economic reports, including Indian and Swiss GDP, German
unemployment data, Eurozone and German CPI and the Chinese
manufacturing PMI. The Eurozone unemployment rate and Brazil's GDP
will come out Friday.
March 1 -- Friday -- will mark the deadline for the budget
sequester. If Congress doesn't act to avert it, $85 billion will be
cut from a variety of both defense and non-defense agencies.
President Obama has warned that it could have a damaging effect on
the economy, while others have downplayed its severity.
Going into the end of the week, the market could see some
volatility ahead of the deadline. Still, it doesn't appear to be as
significant of a factor as the fiscal cliff was at the end of last
Earnings from: 3D Systems (NYSE:
), Vivus (NASDAQ:
), Hertz Global (NYSE:
Earnings from: AMC Networks (NASDAQ:
), Dreamworks (NASDAQ:
), RadioShack, Priceline (NASDAQ:
), MetroPCS (NYSE:
) Swiss Employment Level, South African GDP, U.S. New Home Sales,
New Zealand Trade Balance, Japanese Retail Sales
Earnings from: Universal Display (NASDAQ:
), Groupon, Mylan (NASDAQ:
), JC Penney U.K. GDP, U.S. Core Durable Goods, U.S. Pending Home
Sales, South Korean Industrial Production, Japanese Industrial
Earnings from: Universal Health Services (NYSE:
), Kodiak Oil (NYSE:
), Sandridge Energy (NYSE:
), Salesforce Indian GDP, Swiss GDP, French Consumer Spending,
German Unemployment, Eurozone CPI, German CPI, U.S. GDP, U.S.
Chicago PMI, Chinese Manufacturing PMI
South Korean Markets Closed for Holiday, Eurozone Unemployment
Rate, Brazilian GDP, U.S. Personal Spending, U.S. University of
Michigan Consumer Sentiment, U.S. ISM Manufacturing Index
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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