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Closing Update: Strong Earnings, Deal-Making Add Up to Another Winning Day for Stocks

By: MT Newswires
Posted: 4/22/2014 4:15:00 PM
Referenced Stocks: NVS;GSK;LLY;NFLX;CMCSA

Stocks extended their rally to a sixth day, drifting off their best levels in afternoon trade and led by broad gains for healthcare stocks following a $28.5 million asset swap between Novartis AG ( NVS ), GlaxoSmithKline Plc ( GSK ), and Eli Lilly and Co ( LLY ). Market-friendly data along with strong earnings by Netflix ( NFLX ) and Comcast ( CMCSA ) and a positive outlook by McDonald's (MCD) also kept the major market gauges on positive ground.

Deal-making among pharmaceutical companies helped propel healthcare stocks to a market-leading position Tuesday. In pair of transactions, NVS will sell most of its animal-health division to LLY for $5.4 billion while also selling most of its vaccines division to GSK for $7.1 billion. In return, NVS will pay up to $16 billion to acquire new cancer drugs from the other two firms.

Also today, AstraZeneca PLC (AZN) AZN slipped about 3% - giving back a portion of Monday's 8% advance - after reportedly rebuffing a $100 billion takeover offer by Pfizer (PFE). Neither company has commented on the market rumors.

Eearlier today, the Commerce Department reported existing home sales fell 0.2% in March to a seasonally-adjusted annual pace of 4.59 million, still better than the 0.8% drop the Street was expecting. Also, the Richmond Fed manufacturing index today reversed a 7.0 decline last month to record a 7.0-point rise in April, beating expectations for the index to rise to a 0.0 reading this month.

Commodities were mostly higher although crude oil for May delivery settled $2.24 lower at $102.13 per barrel in moderate profit-taking after the front-month contract hit a year-to-date high yesterday. May natural gas was up 4 cents to finish at $4.74 per 1 million BTU. June gold fell $7.10 to $1281.10 per ounce while May silver added 2 cents to $19.36 per ounce. May copper settled a penny higher at $3.05 per pound.

Here's where the U.S. markets stood at end-of-day:

Dow Jones Industrial Average up 65.12 (+0.40%) to 16,514.37

S&P 500 up 7.66 (+0.41%) to 1,879.55

Nasdaq Composite Index up 39.91 (+0.97%) to 4,161.46

GLOBAL SENTIMENT

Hang Seng Index down 0.13%

Shanghai China Composite Index up 0.34%

FTSE 100 Index up 0.85%

UPSIDE MOVERS

(+) RCII, Posts Q1 EPS of $0.57 per share, ex items, beating the Capital IQ consensus by $0.02 per share. Revenue rose 1.7% year over year to $833 million, narrowly trailing the Street view by $7.77 million.

(+) CNC, Per-share Q1 net income of $0.57 bests Capital IQ consensus by $0.12 per share. Revenue rose 31.9% year over year to $3.35 billion, exceeding expectations by around $100 million.

(+) NFLX, Q1 adjusted earnings of $0.86 per share top estimates by $0.04. Revenue climbs 24.0% year over year to $1.27, matching consensus. Projected Q2 EPs of $1.12, ex items, beats by $0.13 per share.

DOWNSIDE MOVERS

(-) MDSO, Q1 earnings of $0.11 per share miss the Capital IQ consensus for Q1 by $0.05 per share. Revenue rose 21% over year-ago levels to $76.6 million, trailing the Street view by $2.95 million.

(-) LXK, Forecasts 2% to 4% decline in revenue during the current quarter, resulting in adjusted earnings of $0.85 per share to $0.95 per share. Analysts are looking for Q2 EPS of $0.94 per share on $856.08 million in revenue.

(-) BEBE, Warns of a steeper Q2 net loss than previous expected after cold weather in many parts of the U.S. hampered sales. Now expects $0.29 per share loss, $0.14 wider than the analyst consensus.