Morning Movers: Market Contemplates No NoKo Nukes

The S&P 500 is up 0.20% to 2726.50, the Dow Jones Industrials Average is flat at 24,870.25 and the Nasdaq Composite is up 1.57% to 7,372.15

The market is trading on reports that North Korea's Kim Jong Un might be ready to discuss getting rid of its nukes. In today's Morning Movers we discuss...

•...whether investors should chase the rally; •...why Target (TGT) is tumbling and United Parcel Service (UPS) is rising; •...whether Netflix's (NFLX) one Oscar win was enough in today's View From Silicon Valley.

Next you'll be telling me Santa Claus is real.


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So what should we make up that surprising news? Not much, says Peter Boockvar, Bleakley Advisory Group's chief investment officer. While he doesn't downplay its importance from a global political standpoint, even at the height of the tensions North Korea was good for only a day or two of declines before being set aside. "Thus, don't make buy and sell decisions today on this news." Boockvar writes. "Focus on the real market movers of rates, monetary policy and trade tariffs. Throw in earnings and growth expectations."

Sounds about right. - Ben Levisohn

Ascena Retail Group (ASNA) is down 13.2% to $2.10 following its fiscal second-quarter earnings. The company said it lost 12 cents a share on revenue of $1.72 billion, while analysts were looking for losses of 9 cents a share on revenue of $1.65 billion. For the third quarter, it expects to lose between 7 cents and 12 cents on revenue of $1.48 billion to$1.52 billion, compared to the6 cent profit and $1.49 billion in revenue analysts are forecasting.

Ciena (CIEN) is up 2.7% to $23.99 after its fiscal first-quarter earnings. The fiber optic networking company earned 15 cents a share on revenue of $646.14 million, while analysts expected 12 cents a share on revenue of $641.77 million.

Nordstrom (JWN) is down 1.2% to $51.30 after saying it received and rejected a $50 per share buyout offer from the Nordstrom family. Investors have been expecting the department store to go private for some time.


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Target (TGT) is down 1.4% to $74.06 following its fourth-quarter earnings. The retailer said it earned $1.37 a share on revenue of $22.77 billion. Analysts were expecting earnings of $1.38 on revenue of $33.56 billion. Comparable sales rose 3.6% in the quarter on a 3.2% increase in traffic. For the full year, Target is forecasting earnings of $5.15 to $5.45 a share, compared to the $5.26 per share consensus, on a low-single digit same-store sales increase. Credit Suisse's Seth Sigman reiterated an Outperform rating on the shares, writing that the sales strength was a key takeaway from the quarter, while QuoVadis Capital's John Zolidis writes that the results show that Target appears to have "turned the corner on the top-line," although that came at a cost. Target's pre-announcement easily beat consensus estimates, and analysts have been getting more bullish on Target, arguing that it looks more attractive than Walmart (WMT) and has a dominant place in the future of retail. - Teresa Rivas

Canadian National Railway (CNI) is down 1.1% $73.97 after Bank of America Merrill Lynch downgraded it to Underperform from Neutral at BofA Merrill Lynch.

GrubHub (GRUB) has dropped 2.3% to $99.59 after getting cut to Neutral from Buy at BofA Merrill Lynch.

Herbalife (HLF) has gained 2.2% to $96.38 after getting raised to Buy from Neutral at Citigroup.

Mylan (MYL) has gained 3.5% to $42.98 after Morgan Stanley upgraded it to Overweight from Equal Weight.

TD Ameritrade (AMTD) is up 1% to $58.76 after Keefe, Bruyette & Woods upgraded it to Outperform from Market Perform.

United Parcel Service (UPS) is up 2% to $107.90 after Stifel upgraded it to Buy. Analyst David Ross writes that the package and general freight markets remain strong, and after the stock's selloff, its valuation is attractive. - T.R.

Netflix (NFLX) picked up an Academy Award for the documentary Icarus on Sunday night but lost in seven other categories, not the best of winning percentages.

That's the short-term view. Long-term? It's poised to win big.


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The video-streaming service/fledgling studio plans to spend extravagantly-$8 billion on 700 new and original TV shows this year, Chief Financial Officer David Wells said at the recent Morgan Stanley Technology, Media & Telecom Conference. Netflix left no doubt to its ambitions, when it signed American Horror Story and Glee producer Ryan Murphy to a 5-year, $300 million deal.

It's part of a content push that widens its competitive advantage, according to recent notes from UBS, Macquarie and GBH Insights.

"Increasingly building out its global production muscle and focusing on content that travels internationally, Netflix has emerged as a content power house that is actively building a global moat," wrote UBS analyst Eric Sheridan, who raised his price target for Netflix to $345 from $290. "With a strong foothold in North American markets, the company is increasingly looking to international markets for the next leg of subscriber growth."

Netflix is also positioned to benefit as some of its more than 100 million subscribers pay a premium for its ultra-HD content with the growing adoption of 4K TVs. Macquarie estimates the prevalence of the high-definition TVs in North America could reach 50% by 2020, compared with 12% in 2016. As a result, Macquarie raised its 12-month price target on Netflix to $330.

Netflix shares rose 4.6% to $315 on Monday. For the year, they're up 64%. - 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.

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