European Markets are Mixed as Economic Outlook Remains Unclear
European Markets are Mixed as Economic Outlook Remains Unclear
Illumina Plummets on Weak Sales Forecast; Biotech Stocks Fall
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European markets were mixed this morning as worries continued over the Eurozone economy. With inflation stable at 0.5% in June, some fear the single currency area is still perilously close to deflation. Yet Goldman Sachs analysts have lifted their outlook for growth in the U.K. economy to 3.4% this year and 3%, the next, raising the chances of an early interest rate rise. London-listed Pharmaceuticals company Shire announced a $410 million Canadian tax rebate, which may strengthen its hand as it fights a $45 billion takeover bid from Chicago’s AbbVie. Dutch electronics and healthcare company Philips will spin out its LED and Automotive lighting businesses into a separate unit and may seek outside investors for the business. Danish wind turbine maker Vestas announces big orders from projects in the U.S. French bank BNP Paribas may get time to prepare for a dollar dealing ban in the U.S.
DNA sequencing company Illumina (ILMN) plummeted in midday trading Tuesday after reporting disappointing preliminary sales for its third quarter. The company said weak instrument sales performance in Europe and the Asia-Pacific was to blame. Stocks moved lower as the biotech sector suffered another selloff. Biotech stocks have suffered from massive declines over the past two weeks after Democratic presidential candidate Hillary Clinton vowed to address industry price gouging. The Container Store (TCS) slumped after missing quarterly estimates on its top- and bottom-lines. Earnings fell 62% over the quarter, weighed on by increased promotional spending. Total revenue increased just over 1%.
In Tuesday's Analysts' Actions, Twitter's (TWTR) outlook seems cheery while CBS (CBS) and Skyworks Solutions (SWKS) have their price targets cut at one Wall Street firm. Twitter was upgraded to BUY from HOLD at Topeka Capital Markets Tuesday morning. Analysts approve Jack Dorsey as its permanent CEO. It appears that Twitter now has the potential to move forward. Another positive is the announcement that Adam Bain is its new Chief Operating Officer. He will help run the microblogging service as Dorsey juggles his CEO roles at two companies. The firm is keeping its $35 price target. Meanwhile, analysts at Topeka trimmed CBS' price target to $65 from $67. The reason for this is that $80 million of revenue will be moved out of its third quarter entertainment line, into its fourth quarter. This reflects the timing of its new streaming deal with Amazon (AMZN). The two recently announced the extension of their current content licensing agreement. The firm is still keeping its BUY rating on the stock. The same firm lowered Skyworks Solutions' price target to $100 from $120, citing near term uncertainty. But, analysts are keeping their BUY rating as the company announced plans to acquire semiconductor company PMC-Sierra (PMCS). The firm added that Skyworks is trying hard to achieve scale. TheStreet’s U-Jin Lee reports in New York.
PepsiCo (PEP) posted 3rd quarter profit that topped analysts' estimates and raised its forecast for the year after the company's North American snack and beverage businesses were helped by higher prices. PepsiCo now anticipates a 9% increase in 2015 core earnings per share growth versus the previous estimate of 8%. Meanwhile, a major scandal is erupting in the multi-billion dollar industry of fantasy sports. The New York Times report the online and unregulated business in which players assemble their fantasy teams with real athletes. Regulators are asking for information from employees of FanDuel and DraftKings about whether they are taking information--that only they know--and using it to make money on other fantasy sports sites. Volkswagen's CEO says massive cost cuts are needed to manage the emissions scandal but promised to limit the impact on jobs.
In Monday's analysts' actions, AutoZone (AZO) and Delta Air Lines (DAL) are getting some positive nods from Wall Street firms, while Union Pacific (UNP) sees its ratings lowered. Oppenheimer upgraded AutoZone to OUTPERFORM from PERFORM with a $850 price target. Analysts said the company is one of the 'best-run and most return disciplined retailers.' Looking ahead, Oppenheimer noted that sales will be boosted by better product availability. The firm is especially bullish on the company's new strategic initiatives. In another note, Deutsche Bank lifted Delta Air Lines' price target to $51 from $50 due to lower fuel prices. Analysts said the company reported better-than-expected revenue trends for the month of September. The firm is keeping its BUY rating on the stock, but some risks include economic uncertainty and government regulation. Meanwhile, analysts are not so optimistic on Union Pacific's path. The railroad company was downgraded at Barclays to EQUAL WEIGHT from OVERWEIGHT and its price target dropped to $92 from $108. Some industrial headwinds include the strong U.S. dollar and higher relative inventory levels. Adding to that, analysts cited softer trucking data. TheStreet’s U-Jin Lee reports from New York.
Car companies delivered a solid September. Detroit's Big Three automakers -- General Motors (GM), Ford (F) and Fiat Chrysler (FCAU) -- each reported double-digit percentage increases over the month. Sales were boosted by cheaper gas, a stronger economy and a later Labor Day weekend that made year-ago comparisons favorable. Stocks were modestly lower, though trading remained cautious ahead of Friday's release of the nonfarm payrolls report. The latest check on the manufacturing sector in the U.S. showed activity teetering near contraction. The measure showed growth at its slowest pace in more than two years as a stronger dollar and weaker global demand stunted exports.
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