Chicos Earnings Drive Stock Up 10%

123jump.com Staff
07 Mar, 2007
New York City

Market averages traded in a choppy manner on weak economic data, cautionary outlook in the housing market and falling crude oil inventories. A report from Federal Open Market Committee noted that the economic growth is likely to remain weak for the year and moderating inflationary pressures over a period of time. Cautious outlook from homebuilder D R Horton for the current year lowered the sector. Weekly supplies of crude oil report showed a decline in crude oil inventory.

[R]2:30PM NY, U.S. Market Movers[/R]

Avalon Pharmaceuticals ((AVRX)) shares soared 10.8% after the company said it will collaborate with Merck & Co., ((MRK)), on a cancer treatment. Merck could pay Avalon as much as $30 million if Merck backs the drugs Avalon develops. He kept his ""Buy"" rating and $13 price target on the shares. The deal''s terms provide for Avalon to potentially receive payments of more than $200 million as well as royalties on potential future products.

Chico''s FAS ((CHS)) rose 10.4% after the retailer posted better-than-expected fourth-quarter sales and said it is comfortable with analysts'' estimates for the current year. For the quarter, the women''s clothing seller earned $18.2 million, or 10 cents per share, including a charge of 3 cents per share. Sales totaled $446.3 million, topping Wall Street''s forecast of $442.6 million. In the year-earlier quarter, Chico''s earned $44.5 million, or 24 cents per share, on sales of $375.7 million.

Friendly Ice Cream Corp. ((FRN)) shares climbed 15.9% after the ice cream maker and restaurant operator, said it hired Goldman Sachs as financial advisor, and Weil, Gotshal & Manges as legal advisor, to assist the board in exploring strategic options, including a possible sale of the company. The company said that while it will review a wide range of options in consultation with its advisors, there can be no assurance of any particular outcome. Friendly said it does not expect to disclose further developments regarding the process until the review of strategic alternatives has been completed.

Hypercom ((HYC)) shares fell 10.3% after the payment technology company posted a fourth-quarter loss. The company reported a loss from continuing operations of $2.7 million, or 5 cents per share, on revenue of $64.8 million. During the year-earlier period, the company reported a loss of $3.3 million, or 6 cents per share, on revenue of $68.1 million.

Payless ShoeSource Inc. ((PSS)) shares rose 8.8% after the shoe retailer posted better-than-expected fourth-quarter results. For the quarter the company earned $24.6 million, or 37 cents per share, on revenue of $692.7 million. The results included a one-time gain of 22 cents per share related to the release of income tax reserves. During the year-earlier period, the company recorded a loss of $5.6 million, or 8 cents per share, on revenue of $611 million.

Tercica Inc. ((TRCA)) shares surged 23%, a day after a rival agreed to stop marketing a competing drug. Tercica and partner Genentech Inc. had sued a Glen Allen, Va.-based drug maker called Insmed Inc. Insmed makes Iplex, which treats growth disorders. Under a settlement announced late Wednesday, Insmed agreed to stop selling Iplex as a drug treating growth disorders.

Town Sports International Holdings Inc. ((CLUB)), health club operator, said that its fourth-quarter profit rose more than fivefold, driven by growing membership revenue and ancillary club revenue. Net income climbed to $6.6 million, or 25 cents per share, from $1.2 million, or 7 cents per share, a year ago. Quarterly revenue grew 12% to $110.2 million from $98.5 million, while comparable club revenue increased 7.9%.

CV Therapeutics Inc. ((CVTX)) shares plummeted 25.3% following mixed results from a late-stage study on its angina drug Ranexa, showing it met company’s safety goal but failed to show a benefit beyond its current indication. But the study failed to meet its primary goal, which measured the effectiveness of Ranexa as a treatment for acute coronary syndrome, or heart disease. The drug is currently approved for the second-line treatment of chronic angina, or angina in patients who have not responded to other treatments.

EFJ Inc. ((EFJI)) shares tumbled 18.6% after the wireless communications equipment company reported a fourth-quarter net loss of $7.79 million, or 30 cents per share compared with the same quarter last year when the company posted a net profit of $15.4 million, or 59 cents per share. Revenue declined to $23.9 million versus $29.8 million in the same period a year earlier.

Jupitermedia Corp. ((JUPM)) said it has ended talks to be bought by Getty Images Inc. ((GYI.N)), sending Jupitermedia shares plunging as much as 16.9%.Getty spokeswoman Deb Trevino declined to say why the companies ended the talks.

Plato Learning Inc. ((TUTR)) slumped 17.5% after the provider of computer-based educational products posted disappointing first-quarter results. For the period the company posted a loss of $4.5 million, or 19 cents per share, on revenue of $17 million. During the year-earlier period, the company reported a loss of $3 million, or 14 cents per share, on revenue of $23.5 million.

Rocky Brands Inc. ((RCKY)), footwear company, reported a fourth-quarter net loss of $77,875, or a penny a share compared with a year-ago quarter when Rocky Brands posted a net profit of $2.61 million, or 46 cents per share. Revenue declined to $70.6 million against $74.9 million in the same period a year earlier. Shares fell 17.5%.

Insmed Inc. ((INSM)), biopharmaceutical company, said that it is laying off its sales and marketing staff and cutting back production following a lawsuit settlement. The company did not detail the terms of the settlement with Tercica Inc. and Genentech Inc. However, Tercica said Tuesday that Insmed will stop selling its Iplex to treat growth disorders. Insmed said it will lay off 34% of its work force. With 150 employees, that amounts to 51 workers. Shares fell 42.4%.

[R]1:00PM NY European markets finished modestly higher.[/R]
European stocks finished modestly higher on Wednesday, supported by gains in the shares of truck maker Scania on merger-and-acquisition speculation. Stocks traded mostly flat on cautiousness ahead of key interest-rate decisions. Both the European Central Bank and the Bank of England announce interest-rate decisions on Thursday. Scania climbed 3.7% after Volkswagen lifted its stake in the Swedish truck maker, thus putting pressure on Scania to merge with Germany''s Man AG. Man climbed 3.1% in Frankfurt. Volkswagen shares rose 2.5%. Among other movers today, Carrefour reversed earlier gain to close down 2% after its chairman Luc Vandevelde resigned. Earlier in the day shares rallied after Groupe Arnault and Colony Capital said they bought a 9.8% stake. Other European food retailers gained, with shares in Britain''s Morrison Supermarkets, up 1.7% and shares of Germany''s Metro, up 1.1%. The German DAX 30 closed up 0.3% at 6,617.75, the French CAC 40 rose 0.3% to 5,455.07, and the U.K. FTSE 100, in which a number of companies traded without dividend rights, also added 0.3% to 6,156.50.

Crude oil prices jumped $1 on data showing an unexpected drop in crude oil inventories. Light, sweet crude April delivery rose $1.13 to $61.82. Heating oil added 2 cents to $1.7679. Natural gas fell to $7.463 per 1,000 cubic feet. London Brent jumped $1.13 to $62.52. The U.S. dollar traded down against its major currency rivals. The euro was quoted at $1.3147, up from $1.3121. The dollar bought 116.48 yen, down from 116.67. The British pound was quoted at $1.9307, up from $1.9292. European gold prices rose. In London gold traded at $647.50 per troy ounce, up from $641.60. In Zurich, the precious metal traded at $648.60, up from $642.30. Silver rose to $12.94, up from $12.72.

[R]11:30AM Stock averages traded lower. Rising oil weighed on the Dow.[/R]
U.S. stock markets traded in a tight range Wednesday. The Dow erased earlier gains to join the Nasdaq and S&P 500 in the negative territory. The blue-chip average decline followed a notable increase by the oil price. Crude oil rose 91 cents to $61.60 after weekly inventory data showed an unexpected drop in oil supplies last week. Shares of major energy companies advanced, including Exxon Mobil, up nearly 1%. The oil and gas producer said it is planning to start up more than 20 new projects in the next three years. Among other oil majors, Valero ((VLO)) advanced 2.5% and ConocoPhillips ((COP)) advanced 1.9%. Other notable gainers in the oil service sector included Weatherford ((WFT)), up 2.8% and Global Industries ((GLBL)), rising 3.6%. In the housing sector, Toll Brothers ((TOL)) moved 1.1% higher.

Financial services stocks were leading losers on the S&P 500 index, with shares of Bank of America ((BAC)) falling 0.9%. Weakness was also visible in the biotechnology sector. Drug company CV Therapeutics Inc. ((CVTX)) weighed heavily on the Nasdaq with a decline of 25% as its angina drug ranolazine did not meet the primary efficacy endpoint in a late stage study. In late morning trading, the Dow Jones industrial average fell 20.75, 0.17%. The Standard & Poor''s 500 index fell 4.27, or 0.31%, to 1,391.14, and the Nasdaq composite index rose 11.72, or 0.49%, to 2,373.42. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.51% from 4.53% from late Tuesday.


[R]9:45AM U.S. stock markets opened little changed, looking for direction.[/R]
U.S. stock markets opened little changed Wednesday, looking for direction after heavy recent losses and the partial recovery in the previous session''s rally. Investors were also cautious ahead of the release of February employment report on Friday. On the one hand, the Dow was weighed by AT&T ((T)) and American Express ((AXP)), each falling over 1%, but on the other hand, it was supported by gains for industrial shares, including Coca-Cola ((KO)), Boeing ((BA)) and Caterpillar ((CAT)), each rising 1.2%. Clothing retailer American Eagle Outfitters ((AEOS)) fell 3.7% after the company''s Q4 report failed to impress investors. BJ''s Wholesale Club ((BJ)) rose 2% after the retailer posted Q4 earnings drop of 77% to 18 cents a share, down from 76 cents a year ago hurt by special items.

Among companies driven by analyst comments, Deere & Co. ((DE)) climbed 4% after Lehman Bros. lifted its rating on the stock to overweight. Kellogg ((K)) gained 1% after it was upgraded to buy from neutral by Goldman. on the side of the losers, Campbell Soup ((CPB)) lost 1.5%, following a downgrade to sell from neutral at Goldman Sachs. In corporate news, CV Therapeutics ((CVTX)) fell 26% after the drug maker said its only approved drug failed to show adequate improvement over a placebo at treating heart disease. In midmorning trading, the Dow Jones industrial average rose 12.25, 0.10%, to 12,219.84. The Standard & Poor''s 500 index fell 0.96, or 0.07%, to 1,394.45, and the Nasdaq composite index rose 2.81, or 0.12%, to 2,382.33. Bonds were little changed, with the yield on the benchmark 10-year Treasury note flat at 4.53%from late Tuesday.

[R]Crude oil and gasoline inventories declined.[/R]
Government data released Wednesday showed that crude oil inventories dropped in the most recent week, reversing some of the gains posted in the previous couple weeks. Meanwhile, gasoline and distillate stockpiles continued to slide. The Department of Energy''s Energy Information Administration said that crude oil inventories fell 4.8 million barrels in the week ended March 2. Specifically, the measure dropped to 324.2 million barrels from the previous week''s level of 329 million barrels. This followed an increase of 1.4 million barrels recorded in the previous week and an advance of 3.7 million barrels in the week before that. Oil inventories for the week were 5.1% below last year''s level. Meanwhile, gasoline inventories showed a week-over-week decline of 3.8 million barrels. This added to a recent streak of declines, including a slide of 1.9 million barrels in the previous week. The level of gasoline inventories was 3.9% below last year. Distillate fuel oil had an inventory decline during the week ended March 2 as well. Stockpiles of these products, which include heating oil, slipped by 1.3 million barrels. This added to recent declines, with a draw down of 3.8 million barrels taking place in the previous week.


[R]9:30AM UK market trades slightly lower on Wednesday on ex-dividend stocks.[/R]
The UK market was lower on Wednesday by mid-day. The FTSE 100 was off 14 points at 6,125.8 having been more than 30 points lower earlier in the session.

Advancers

Property stocks were higher in London on JP Morgan decision. British Land gained 2.4% and Great Portland advanced 3.1%, while Hammerson gained 3 %. Resolution added 3% as news of a change of top management at the closed life fund consolidator boosted hopes of a takeover.

Severn Trent also advanced 2.8% as Merrill Lynch upgraded the utility from hold to buy. Merrill Lynch also upgraded Kelda Group, up 1.8%.Among the mid-caps, PartyGaming surged 8.4% on bid news raising hopes of consolidation in the sector. Sportingbet rallied 12.2% as it confirmed that it had been approached.

Decliners

Leading banks moving ex-dividend, were the main drag, including Lloyds TSB and Royal Bank of Scotland. Lloyds was off 4.2%, RBS shed 2.2%, Barclays retreated 1.7% and Standard Chartered dropped 1.2%.

Other stocks moving ex-dividend included cigarette maker BAT, down 1.9%, and Diageo, off 1.2%. Other decliners included ITV, off 1.4% as the commercial broadcaster posted lower annual profits and weaker revenue.

J Sainsbury slipped 1% a day after hectic trading in the grocer was powered by news that property entrepreneur Robert Tchenguiz had increased his stake to just over 3% and on market speculation that the CVC-led consortium was close to unveiling its offer for the company.


[R]9:00AM U.S. stock futures pointed lower on strengthening yen.[/R]
Following a sharp rebound in the previous session, U.S. stock futures pointed to the downside on Wednesday, reflecting a mixed performance in overseas markets and renewed strength in the Japanese currency against the dollar. In economic news, U.S. private sector employment added 57,000 in February, marking the weakest growth since July 2003. Investors also awaited news on the economy''s health with the Fed''s Beige Book release. Among pre-market highlights, American Eagle Outfiiter ((AEOS)) said February same-store sales rose 6% and projected Q1 earnings in the range of 31 to 33 cents a share. The stock dropped 5.4% in pre-market trading. Again in the retail sector, BJ Wholesale ((BJ)) reported Q4 earnings decline, with adjusted results missing analyst forecasts. The stock lost 1% in the pre-open.

Avalon Pharmaceuticals ((AVRX)) was a notable gainer with shares soaring 25% ahead of the open after the company said it entered into a collaboration agreement with Merck ((MRK)). Among companies driven by analyst comment, Google ((GOOG)) rose nearly 1% after the Internet search giant was upgraded by UBS to buy from neutral, due to valuation. Deere & Co. ((DE)) was also upgraded by Lehman Bros. to overweight from equal weight. Company''s shares rose 1.3%. S&P 500 futures fell 2.00 points to 1,393.40 and Nasdaq 100 futures slid 4.50 points to 1,740.50. Dow industrial futures shed 25 points to 12,190.


[R]8:15AM U.S. Google and Deere & Co. gained in the pre-open on brokerage upgrades.[/R]
Google ((GOOG)) was upgraded to buy from neutral at UBS, citing valuation. According to analysts, returns in longer-term initiatives, including payments, mobile, video, and other forms of advertising, could take a long time to develop, whereas the company’s fundamentals as an online search engine provide good basis for a buy recommendation at current levels. The stock closed Tuesday up $16.61 at $457.55, but was still down 11% from its Jan. 16 high of $513. Google’s shares traded up 1% in the pre-open.

Deere & Co. ((DE)), agricultural and construction equipment maker, was upgraded to overweight from equal weight at Lehman Bros. The broker lifted its rating on the stock, due to increased confidence about the durability of higher agricultural prices and the company''s ability to leverage high end market demand. Shares of the company edged up 0.4% in pre-market trading. They have lost 8.1% since hitting an all-time high of $116.50 on Feb. 22, but are still up 13% since the end of 2006.


[R]8:00AM NY-7:00PM Mumbai Sensex tumbles Tuesday on heavy selling.[/R]
The Sensex on BSE finished 117.34 points, or 0.92%, lower at 12,579.75. The market saw a very volatile session as it traded within a range of 512 points. The market-breadth was very weak with more than three decliners for every advancer. For 1,959 stocks that declined, 579 advanced and 41 were unchanged. Of the 30 stocks in the Sensex, 21 declined, while the rest advanced. The turnover on BSE was Rs 4,327.59 crore, compared with Rs 3,816 crore on Tuesday. On NSE, the turnover was Rs 8,881.84 crore, higher than Rs 8,361.27 crore on Tuesday.

Economic news

The Bombay Stock Exchange Ltd announced on Wednesday that it was selling a 5% stake to Singapore Exchange for $42.7 million, following a similar deal with Deutsche Boerse last month.

Commerce and Industry Minister Kamal Nath said on Wednesday that India may consider banning cement exports if such a move will help cool prices.

The government on Wednesday hinted at a reduction in tariffs on imported wines and spirits in view of demand from trading partners such as the EU who have threatened to activate the dispute settlement mechanism at the WTO.

Finance Minister P Chidambaram on Wednesday said he was in favor of withdrawal of most tax exemptions in future except for those given to promote R&D, knowledge areas and for the welfare of senior citizens.

Advancers

Indian drug large-cap Cipla led the gainers, up 4.99% to Rs 232.7, on a volume of 3.45 lakh shares. The stock had also surged to an intraday high of Rs 236.50. Dr Reddy’s was up 2.2% to Rs 634.4, Tata Motors gained 2% to Rs 740.6, and Reliance Communications advanced 2.5% to Rs 411.

Engineering and construction large-cap L&T added 1.9% to Rs 1,454.3, on reports that the company was in talks with Japanese Toshiba Corporation for a joint venture for power plants and equipments in India.

Decliners

Cement stocks were the worst hit in the wake of the government announcement of a possible cement export ban. Gujarat Ambuja crashed 8.5% to Rs 104, and ACC tumbled 4.7% to Rs 814. Other cement stocks also followed suit. UltraTech Cement Company was down 1.86% to Rs 805.55, Shree Cement was off 2.51% to Rs 1,138, India Cements lost 5.75% to Rs 152.50) and Birla Corporation dipped 2.60% to Rs 219.

Wipro and Ranbaxy plunged around 4% each to Rs 557 and Rs 310, respectively. ICICI Bank shed 3% to Rs 827. The State Bank of India shed 2.7% to Rs 965. The State Bank of India on Wednesday announced it will soon lift car and other personal loan rates, excluding housing and education, by an average of 0.75%.

Hindalco and ITC slipped 2.5% each to Rs 127 and Rs 158, respectively. HDFC Bank and HLL declined over 2% each to Rs 916 and Rs 168, respectively. Maruti and Tata Steel dropped around 1.5% each to Rs 777 and Rs 413, and Infosys and Grasim were down 1% each at Rs 2,092 and Rs 2,104.


[R]6:30AM European markets were higher on Tuesday on M&A and retail stocks.[/R]
European stock markets were higher on Tuesday. By mid morning, Frankfurt Xetra Dax added 0.3% to 6,615.78, the CAC 40 in Paris climbed 0.3% to 5,455.81 and the FTSE 100 in London rose 0.2% to 6,148.0.

Advancers

Carrefour, the French retailer, was up 2.6% after two investment groups announced they had jointly acquired 9.1% of the company. Groupe Arnault and Colony Capital said the move was a long-term strategic and industrial investment.

The retail sector was boosted by the development and domestic rival Casino Guichard rose 3.4%, while Metro of Germany climbed 2.6%. Bid speculation lifted Dutch bank ABN Amro 1.5% as an increasing chorus of hedge fund investors suggested the bank would deliver better shareholder returns if it merged with another large group.

Volkswagen, the German carmaker, is a step closer to its hope of integrating the European truckmaking sector after it raised its stake in Sweden’s Scania to just over 20% of share capital and 35% of voting rights. Shares in Volkswagen gained 1.5 %, while Scania added 1% and MAN gained 2.7%.

Decliners

Vallourec, the French maker of steel tubes, fell 5.2% after its 2006 net profit fell shy of market expectations. A number of heavily-weighted British banks which went ex-dividend capped gains. Lloyds TSB fell 3.8%, Barclays lost 2% and Royal Bank of Scotland shed 2.2%.

Oil and gold

Crude oil advanced on speculation that greater gasoline demand in the U.S. will cause inventories to drop as the summer driving season approaches. Crude oil for April delivery rose as much as 33 cents, or 0.5%, to $61.02 a barrel on the New York Mercantile Exchange and was at $60.90 in early trade in London. Brent crude gained 55 cents, or 0.9%, to $61.94 a barrel on the ICE Futures exchange and traded at $61.79 in London. Gold traded in London at $646.35 per troy ounce, up from $641.60 late Tuesday.

Currencies

The U.S. dollar was lower against other major currencies in European trading Wednesday morning. The euro traded at $1.3125, up from $1.3121 late Tuesday in New York. The British pound traded at $1.9300, up from $1.9292. The dollar bought 116.44 Japanese yen, down from 116.67.