Medco Health Net Falls 66%

Elena
05 May, 2006
New York City

Stocks surged at opening on weaker-than-expected employment data which helped to offset worries about interest rate increases. The Labor Department said the U.S. economy added 138,000 jobs in April, compared with a forecast of 200,000. In earnings news, El Paso reported Q1 net income rise to $346 million or 49 cents per share. Sanofi-Aventis reported Q1 net income advanced 54% on 9.6% sales rise. Medco Health Solutions posted a 66% slide in Q1 profit, hurt by a $100 million charge.

[R] 9:45AM Stocks opened higher on weak employment data.[/R]
Stocks surged at the start of Friday session as weaker-than-expected employment data helped to offset concerns about higher interest rates. Cooling oil prices also helped stocks higher, Rate-sensitive stocks provided a boost to the market, with the financial and utilities sectors showing strong upward moves. Dow Jones Utilities Average climbed 1.3%. Energy stocks showed a significant strength, as the price of oil has regained some ground after falling sharply in the two previous sessions. The brokerage, health insurance, and housing sectors also moved notably higher. Among housing stocks, Toll Brothers ((TOL)) gained 1.5%, despite lowered deliveries forecast. Warner Music Group Corp. reported Q1 net loss amid declining revenue from its music publishing business. However, record music sales rose 9%, led by a threefold jump in digital sales. Warner Music's stock rose 36 cents to $29.10. Medco Health Solutions Inc. ((MHS)) posted a 66% slide in Q1 profit, hurt by a $100 million charge to settle three legal matters. Medco rose $2.43 to $53.20. In the first hour of trading, the Dow Jones industrial average climbed 66.60, or 0.58%, to 11,505.46, a fresh six-year high and only 217 points away from its all-time high of 11,722.98. The Standard & Poor's 500 index was up 8.84, or 0.67%, and the Nasdaq composite index advanced 16.49, or 0.71%. Bonds recouped recent losses, with the yield on the 10-year Treasury note falling to 5.12% from 5.15% late Thursday.


[R]9:00 AM Stock futures indicated a positive market opening on economic data.[/R]
U.S. stock index futures moved higher on weaker-than-expected payrolls report which helped offset worries about interest rates increases. The Labor Department said the U.S. economy added 138,000 jobs in April, compared with a forecast of 200,000.

On the corporate front, insurance and investment firm Berkshire Hatahway Inc. will be in focus ahead of its annual general meeting. In a lighter earnings diary, natural gas producer El Paso Corp ((EP)) reported Q1 net income rise to $346 million or 49 cents per share from $106 million, or 17 cents per share last year. The stock gained 7.5%. Pharma benefits manager Medco Health Solutions ((MHS)) is the only other firm in the S&P's 500 Index reporting on the first quarter. After the bell, shares of casino operator Ameristar Casinos Inc. ((ASCA)) fell 6% after the company posted a sharp decline in quarterly profit. Semiconductor equipment maker Axcelis Technologies Inc. ((ACLS)) jumped more than 10% on lifted Q2 profit and revenue that would top estimates. S&P’s 500 futures rose 5.2 points, above fair value. Dow Jones industrial average futures were up 42 points, and Nasdaq 100 futures were up 7.25 points.

[R]Non-farm payroll employment grew at a slower-than-expected pace.[/R]
Friday morning, the Department of Labor released its report on the employment situation in the month of April. The report showed that that the U.S. economy added fewer jobs than economists had been expecting. The Labor Department said that non-farm payroll employment increased by 138,000 in April following a downwardly revised increase of 200,000 in March. Economists had expected an increase of 200,000 jobs compared to the increase of 211,000 originally reported for March. The report showed that notable job growth was shown by the financial activities, health care, and manufacturing industries. At the same time, the retail industry lost 36,000 during the month. The Labor Department added that the unemployment rate remained unchanged at 4.7 percent. Economists had expected the unemployment rate to stay unchanged. While the weaker than expected job growth may raise some concerns about the strength of the labor market, it has helped to offset recent worries about the outlook for interest rates.

Crude oil prices rose aback above $70 after the sharp fall on gasoline inventories increase. Light sweet crude June delivery gained 68 cents to $70.62 a barrel. Gasoline added 2.5 cents to $2.0200, while heating oil rose 2 cents to $1.9570. Natural gas futures climbed 21 cents to $7.120 per 1,000 cubic feet. London Brent rose to $71.18. European gold futures hit new 25-year highs. In London the precious metal rose to $681.70 per troy ounce, up from $673.35. In Zurich gold fell to $672.05, down from $673.85. Silver opened unchanged at $13.90. The U.S. dollar rose in European trading. The euro traded at $1.2695, down from $1.2715. The dollar bought 113.84, up from 113.38 yen. The British pound was quoted at $1.8499, down from $1.8542.


Allete, ((ALE)), energy services firm, reported Q1 net income advanced to 68 cents a share, up from 64 cents a share in the year-earlier period. The company added that revenue dropped to $192.5 million from $193.3 million amid record warm temperatures in the Midwest. Allete missed analysts’ estimate for earnings of 79 cents a share.

Sanofi-Aventis, ((SNY)), French drugmaker, reported Q1 adjusted net income advanced 54% to 2.17 billion euros, with sales up 9.6% to 7.04 billion euros. The profit was lifted by the sale of Exubera rights to Pfizer, and otherwise would have been a 20% improvement, the company added. The company topped analysts’ views for earnings of 1.84 billion euros on sales of 6.73 billion euros.

El Paso Corp, ((EP)), energy firm, announced that Q1 net income tripled to 49 cents a share, from 17 cents a share in the year-earlier period. The company added that earnings from continuing operations advanced to 52 cents a share from 18 cents a share. The company topped analysts’ estimate for earnings of 27 cents a share.

THQ Inc, ((THQ)) interactive games maker, reported that it reversed to a Q4 loss of 12 cents a share, from net income of 16 cents a share a year ago. Q4 includes a total of 14 cents a share in expenses connected with the cessation of the development of wrestling games and higher-than-anticipated price protection and software development expenses. Revenue dropped to $148.1 million from last year's $171.9 million. The company missed analysts’ estimate for a loss of 9 cents a share. and revenue of $144.7 million, on average.

Live Nation Inc, ((LYV)), digital content distributor, reported that it reversed Q1 net income of $1.1 million, or 2 cents a share, from a loss of $22.7 million a year-earlier. The company didn't post a loss per share in the year-ago period, as it was not publicly traded at that time. Revenue advanced to $516.6 million from $444.5 million in the same period a year earlier.

Four Seasons Hotels Inc, ((FS)), hotel chain operator, reported its net income advanced to 36 cents a share, up from 14 cents a share a year earlier. Revenue for the period advanced to $57.6 million from $63.1 million a year ago. The company beat analyst estimates for earnings, of 34 cents a share.

Ultra Petroleum Corp., ((UPL)), oil and gas producer, reported Q1 earnings of 41 cents a share, up from a profit of 23 cents a share a year-ago on revenue growth to $151.3 million from $89.4 million in the same period a year ago. The company topped analysts’ estimate for a profit of 36 cents a share.


[R]8:15AM European markets advanced at mid-day on merger deals.[/R]
European markets traded in the positive at mid-day, lifted by strong U.S. markets close Thursday, merger-and-acquisition news and oil prices below $70 a barrel. Stocks traded in a tight range ahead of U.S. economic data on April nonfarm payrolls and unemployment rate. Deal talk provided a boost to the market sentiment, with banking group Alliance & Leicester, up 6.7% on speculation that the company is in bid talks with Spain's Banco Santander Central Hispano. Dutch media company VNU gained 4.8% after a consortium of private-equity firms upped their bid for the company to $11 billion. The German DAX 30 rose 0.4%, the French CAC 40 climbed 0.6%, and London FTSE 100 advanced 0.6%.


[R]7.30AM Australia advanced on commodities, Taiwan up on tech stocks.[/R]
Asian markets closed higher today, with a great part of the markets closed for public holidays. Shares in Australia gained on strong commodities, the Australian index S&P/ASX 200 advanced 1.28% to 5,255.40. The rally was spurred by Bulliton’s optimistic outlook on the copper market, which caught short-seller off-guard on Thursday. Taiwan’s Weighted index finished 0.3% higher to 7,370.44, mainly on tech stock and financial shares, amid the positive revision of Credit Suisse‘s year-end target for Taiwan's stock index from 7,300 to 8,000 on positive earnings outlook and less political risks. Southeast Asia ended up mixed. Shares in Malaysian advanced 0.76%, while Indonesia shed 0.09%. The Singapore Straits Times Index declined 0.46%. New Zealand’s shares also finished lower, the benchmark NZX-50 Index edging down 1.1%.