The Dow Jones Industrial Average is off 250 points this morning following Gary Cohn's resignation, but there's more news than that. In today's Morning Movers, we...
•...consider whether Cohn's departure really matters; •...highlight earnings from Dollar Tree (DLTR), Ross Stores (ROST), and Urban Outfitters (URBN), and a Netflix (NFLX) cut; •...and the View From Silicon Valley examines efforts to bring tech startups to middle America.
Stocks are sinking this morning after Gary Cohn, economic advisor to President Donald Trump, resigned last night, a sign that tariffs are moving closer to reality.
But how damaging is his departure, really? Earlier, we highlighted the view that it's quite damaging because Cohn was a supporter of free trade and a voice of moderation in the White House. Not everyone agrees with that point of view. Rhino Trading's Michael Block, for one, notes that Cohn wasn't exactly the president's most trusted advisor, and his departure shouldn't have come as much of a surprise.
Just because Cohn's departure isn't a worry, however, doesn't mean tariffs aren't. We're now hearing chatter about possible tariffs on Chinese goods, and China is said to be readying countermeasures. "Personal Consumption, the thing that makes up 70% of GDP in the U.S., is threatened with less access to market pricing on goods now," Block writes. "That's a problem even if Cohn actually leaving is perhaps not."
Time to go shopping? - Ben Levisohn
Abercrombie & Fitch (ANF) has climbed 4.7% to $22.35 on its fourth-quarter earnings. The apparel retailer earned $1.38 a share on revenue of $1.19 billion. Analysts were looking for earnings of $1.10 a share on revenue of $1.17 billion. Comparable sales rose 9% in the quarter. For the full year, Abercrombie expects sales of $3.49 billion, compared to the $3.46 billion consensus.
Autodesk (ADSK) has surged 10.7% to $132.72 on its fourth-quarter earnings. The design software firm said it lost 9 cents a share on revenue of $554 million, while analysts had predicted an 11 cent per-share loss on revenue of $544.74 million. For the full year, it expects to earn between 77 cents and 95 cents a share, while consensus calls for earnings of $1.24 a share. "The results and guidance should be sufficient to rebut the more bearish view of shares, in our view," writes Evercore ISI analyst Ken Talanian.
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Dollar Tree (DLTR) has tumbled 10.1% to $93.85 on its fourth-quarter earnings. The discount retailer said it earned $1.89 a share on revenue of $6.36 billion, while analysts had expected earnings of $1.90 a share on revenue of $6.39 billion. For the full year, it expects to earn between $5.25 and $5.60 on revenue of $22.7 billion to $23.12 billion. Analysts expected earnings of $5.72 a share on revenue of $23.1 billion. Loop Capital's Anthony Chukumba writes that while the forecast was disappointing, it's largely due to the company's decision to reinvest its tax savings in the business, which he thinks is a good move. "While Dollar Tree's F2018 earnings guidance was below expectations, we believe this was largely driven by management's plans to reinvest $100M of Tax Cuts and Jobs Act (TCJA) tax savings back into the business-which we view as the correct strategic move," writes Loop Capital Markets analyst Anthony Chukumba.
Guidewire Software (GWRE) has gained 3.1% to $87.86 on its fiscal second quarter earnings. The software company earned 33 cents a share on revenue of $163.8 million, while analysts were looking for earnings of 19 cents a share on revenue of $154,34 million. For the full year, it sees earnings per share of 98 cents to $1.04, on revenue of $644 million to $650 million, compared to the 88 cents per-share earnings and $639.02million consensus.
H&R Block (HRB) has climbed 4.8% to $27 on its third-quarter earnings. The tax preparer lost $1.16 a share, on revenue of $488 million. Analysts had forecast a loss of $.129 a share on revenue of $459.14 million. It said total return volume in the U.S. increased 3.4% through the end of February. "Investors' focus with regard to any of the company's 3Q reports is almost always on its volume performance through the first half of the tax season," writes BTIG analyst Mark Palmer. "HRB also outperformed in that regard, beating the IRS's reported e-filing statistics through February 23 in both the assisted and do-it-yourself (DIY) categories."
Ross Stores (ROST) has slumped 4.4% to $76.97 on its fourth-quarter earnings. The discounter said it earned $1.09 a share, on revenue of $4.07 billion, while analysts had forecast earnings of 93 cents a share on revenue of $3.96 billion. Comparable sales rose 5% in the quarter, compared to a 4% rise in the year-ago period. For the full year, it expects to earn between $3.86 and $4.03 a share, below the $4.15 per share consensus estimate. Susquehanna's Bill Dreher writes that Ross's same-store sales are some of the most impressive in his coverage, and he thinks that the market is mistakenly focusing too much on operating margin pressure. "We expect the stock to react unfavorably near-term...and would view any weakness as a buying opportunity," writes MKM Partners analyst Roxanne Meyer.
Urban Outfitters (URBN) has fallen 2.7% to $36 on its fourth-quarter earnings. The apparel retailer earned 69 cents a share on revenue of $1.09 billion, while analysts were looking for earnings of 63 cents on revenue of $1.08 billion. Comparable sales rose 4% in the quarter. However, Wells Fargo's Ike Boruchow was impressed writing that the company is putting up "some of the best fundamental performance we have seen in years," although he's still on the sidelines. "Early indications of a stronger fashion cycle, coupled with URBN's strong brands, should lead to improved comps and margins in 2018," writes analyst B. Riley FBR analyst Susan Anderson.
Weight Watchers (WTW) has dropped falling 4.1% to $56.05 on news that Oprah Winfrey, a Weight Watchers board member, exercised a portion of her options and sold some of her holdings in the company. She attributed the move to portfolio diversification, and said that she still owns 75% of her Weight Watchers stake, and will not sell any more shares this year. - Teresa Rivas
Chesapeake Energy (CHK) has fallen 2.3% to $3.04 after UBS initiated coverage with a Sell rating.
Gogo (GOGO) has dropped 6.2% to $8.75 after Guggenheim cut it to Neutral. Analyst Robert Gutman said that the stock will be limited until management provides more clarity on the impact of the new business model on key metrics.
Netflix (NFLX) has slipped 1.5% to $320.20 after Stifel downgraded to Hold. Analyst Scott Devitt said that while he still likes the business and competitive position, he's concerned that Netflix's share price has "sprinted ahead of fundamentals," at least in the short-term.
Vodafone (VOD) has ticked up 0.5% to $28.71 after BNP Paribas upgraded it to Outperform. - T.R.
RENO, Nev. - A fascinating conference here, which explores the creation of high-paying tech jobs in the heartland, prompted a turn of phrase from Nevada Gov. Brian Sandoval on describing Reno's growing influence.
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"Some are calling it Silicon Bridge," he said Tuesday, highlighting Tesla's (TSLA) nearby 5.8-million-square-foot "Gigafactory," Apple's (AAPL) new warehouse downtown and Amazon's (AMZN) fulfillment center on the edge of town. Alphabet (GOOGL) is also expanding operations.
Sandoval, keynote speaker at VentureBeat's inaugural event, BLUEPRINT, spread the message of how tech contributed in large part to Nevada's economic renaissance, as representatives from nearly 40 states -- many of them in economic development departments - raptly listened.
A recurring theme at BLUEPRINT is investment and opportunity in areas that have been historically ignored or underserved by the venture community.
Reno's relatively close proximity to the San Francisco Bay Area has provided a literal bridge between Silicon Valley and the Silver State, drawing start-ups from around the nation. (The state's business-friendly climate of lower taxes and streamlined regulation also help.)
"It's close enough to Silicon Valley without the costs and traffic," says Jim Sacherman, director of the Innevation Center (cq) at the University of Nevada, Reno, which acts as an incubator and accelerator for start-ups. "There is a work-life balance."
To make his point, Sacherman - a Bay Area transplant from a few years ago - grabbed several entrepreneurs to share their stories.
Daniel Price, Chief Executive Officer of software firm Breadware, said it relocated from Santa Barbara, Calif., to take advantage of its location near Silicon Valley, early-stage investment community, status as a shipping hub and work-life balance. His company had also scouted Boulder, Colo., and Seattle as possible destinations.
Heather Goldman, CEO of Capstak, moved across the country from New York. Her commercial real estate tech company is part of what she calls "the movement" to Reno. "We are living at San Francisco's backdoor," she said, pointing out the window at the spectacular sight of Slide Mountain. "Why not enjoy its benefits with this beautiful scenery as home?" -Jon Swartz
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
