Target and Medtronic Beat Estimates

Elena
23 May, 2007
New York City

Wall Street opened higher amid deal speculations in the metals and media sectors. Retailers posted gains on strong earnings. Target advanced 3.3% after the retailer posted better-than-expected Q1 earnings of 75 cents a share and revenue of $14.04 billion which came in below analyst estimates. Medtronic rose 5.2% after it said Q4 earnings and revenue beat expectations. The Medical device maker said quarterly profit rose 10% despite sluggish sales of implantable heart devices.

[R]9:45AM U.S market averages opened up, helped by deal news and strong retail earnings.[/R]

Wall Street opened higher amid deal speculations in the metals and media sectors. Alcan ((AL)) rose 3.4% after it rejected the $27 billion hostile offer from Dow-component Alcoa. Alcoa ((AA)) gained 2.9%. BHP Billiton ((BHP)) added 2.4% on speculations that it is in talks with Alcan. Further in M&A action, Russia's Norilsk Nickel made a new $6.25 billion offer for Canadian miner LionOre, oitbidding Xstrata's offer by 10%. In the media sector, the Bancroft family, which controls Dow Jones (DJ)) are reportedly due to discuss the News Corp. ((NWS)) takeover bid at a meeting.

Retailers posted gains on strong earnings. Target ((TGT)) advanced 3.3% after the retailer posted better-than-expected Q1 earnings of 75 cents a share and revenue of $14.04 billion which came in below analyst estimates. Medtronic ((MDT)) rose 5.2% after it said Q4 earnings and revenue beat expectations. The Medical device maker said quarterly profit rose 10% to 70 cents per share on 7% revenue increase, despite sluggish sales of implantable heart devices.

On the side of the losers, Analog Devices ((ADI)) dropped 8.6% after reporting a 14% profit decline and projecting current quarter earnings below market estimates. The Dow Jones was up 47.79 points, or 0.35%, at 13,587.74. The Standard & Poor's 500 was up 6.05 points, or 0.40%, at 1,530.17. The Nasdaq Composite was up 8.64 points, or 0.33%, at 2,596.66.


[R]9:30AM China rallies Wednesday, Japan, South Korea advance, HK declines.[/R]

Asian markets mostly advanced on Wednesday. Chinese Shanghai Composite index ended at 4,173.70, 1.5% higher. Among the advancers in Shanghai were China Vanke, the largest property developer by market value in the country, surged 4.9%, while Shanghai Lujiazui Finance & Trade Zone Development soared 4.6%. Financial firms rose on expectations of strong earnings. The Bank of China ended up 1.2% and Citic Securities gained 1.3%.

Chinese Shanghai Composite index ended at 4,173.70, 1.5% higher. Among the advancers in Shanghai were China Vanke, the largest property developer by market value in the country, surged 4.9%, while Shanghai Lujiazui Finance & Trade Zone Development soared 4.6%. Financial firms rose on expectations of strong earnings. The Bank of China ended up 1.2% and Citic Securities gained 1.3%.

In Japan, the Nikkei 225 added 0.1% to end at 17,705.12. Banks rose again after Tuesday gains tracking a strong earnings forecast from Sumitomo Mitsui Financial Group, with Mitsubishi UFJ Financial Group increasing 4.4% and Sumitomo Mitsui 4.5% higher after 5.7% jump on Tuesday. Among exporters, Toyota added 1.2% on expectations of a recent weakness in the yen which would improve its earnings.

Hong Kong Hang Seng index closed down 0.2% at 20,798.97. Other indices finished higher. Australian S&P/ASX 200 closed 0.3% higher at 6,355.10, Seoul Kospi edged up 0.2% to 1,646.59 and Singapore Straits Times index gained 0.5% to 3,559.01.


[R]9:00AM Stock futures pointed to a higher opening, supported by deal speculations.[/R]

U.S. stock market futures moved higher on Wednesday after, boosted by speculations that Canada''s Alcan may involve rival aluminum producer Alcoa into a bidding war. Alcan is reportedly in talks with global mining concern BHP Billiton after rejecting an unsolicited takeover bid from Alcoa on Tuesday and said it is in discussions with third parties. Alcoa ((AA)) gained 2.7% before the bell, while U.S.-listed shares of Alcan ((AL)) were up 3.7%. In other deal news, Payless ShoeSource Inc. ((PSS)) said it had agreed to acquire Stride-Rite Corp. ((SRR)) for $800 million.

On the earnings news front, Target Corp. ((TGT)) rose 3.7% before the bell after the discount retailer reported better-than-expected earnings. Medtronic ((MDT)) rose 2.6% after the company posted quarterly earnings and revenue above analyst estimates. Analog Devices ((ADI)) reported a 14% profit decline and projected current quarter earnings would come below market estimates. Abercombie & Fitch ((ANF)) and Limited Brands ((LTD)) are also due to report quarterly results. S&P 500 futures were up 6 points. Dow Jones industrial average futures rose 51 points, and Nasdaq 100 futures gained 6 points.


[R]8:15AM Crescent Real Estate Equities agreed to be acquired by a unit of Morgan Stanley for about $6.5 billion including debt.[/R]

Real estate investment trust Crescent Real Estate Equities Co. ((CEI)) announced on Tuesday it agreed to be acquired by a unit of Morgan Stanley for about $6.5 billion including debt. The real estate investment firm, Morgan Stanley Real Estate will buy the company for $22.80 per share, according to Crescent, which has about 102.8 million shares outstanding. The deal includes the assumption and refinancing of about $3.1 billion of the company''s outstanding and unconsolidated debt and redemption of some $440 million in preferred shares. Crescent said the purchase price is a 12% premium over its prior 30-day average closing share price and a 6% premium to Tuesday''s closing price of $21.62. The transaction is expected to complete by the third quarter.


[R]8:30AM NY-7:30PM Sensex ends lower Wednesday on selling pressure in large-caps.[/R]

The Sensex on BSE finished Tuesday 90.46 points, or 0.63%, lower at 14,363.26.

The market-breadth was sharply negative with almost two decliners for every advancer. As 928 stocks advanced, 1,638 declined and only 76 stocks remained unchanged. Of the 30 stocks in the Sensex, 11 advanced, 18 declined and one stock remained unchanged. The turnover on BSE was Rs 5,290 crore, compared to Rs 5,180 crore on Tuesday. On NSE, the turnover was Rs 10,715.85 crore, lower than Rs 11,375.26 crore on Tuesday.


Economic news

Finance Minister P Chidambaram announced today that the new Direct Tax Code Bill is to be proposed in Parliament by this December.

For the third time this month and second day in a row, the Reserve Bank of India intervened in the forex market at the end of trade to prevent the rupee from advancing above the 40.50-mark against the dollar.

Trading highlights

Reliance Capital was the most active stock with a turnover of Rs 205 crore followed by Educomp Solutions and HDFC.

Advancers

Tata Steel soared 5% to Rs 659 on high volumes of 25.85 lakh shares in anticipation of firm prices. Tata Steel has received permission from government of Vietnam to work with Vietnam Steel Corp on a $3.5 billion steel complex in the country.

Reliance Energy surged 3.5% to Rs 570. Hindustan Lever rallied over 2% to Rs 198. BHEL advanced 1.5% at Rs 2,718, and Hero Honda added 1% to Rs 694. Housing finance large-cap HDFC gained 0.32% to Rs 1,800.25 on high total volumes of 10 lakh shares. Two block deals were traded on BSE. One block deal of seven lakh share was struck at Rs 1,818 per share, while the other of one lakh shares was executed at Rs 1,785 per share.

Decliners

Reliance Communications shed 2.5% to Rs 511, led the decliners. Bharti Airtel was also down 1.13% to Rs 849. on reports that it would also announce price cuts within the next couple of days.

Maruti shed 1.8% to Rs 815. Gujarat Ambuja, ONGC lost around 1.5% each to Rs 115, Rs 913, respectively. ITC, and Ranbaxy slipped 2.5% each to Rs 166 and Rs 390, respectively. Bajaj Auto slumped for the fifth straight day as selling pressure continued. It lost 0.8% to Rs 2,177, after staying firm throughout the day.

Index heavy Reliance Industries declined around 1% to Rs 1,758 on 6.18 lakh shares. It hit a record high of Rs 1,785 in opening trade. There are reports that Reliance Industries is in talks with rig manufacturers for the purchase of a deepwater rig to drill for oil at a depth of around 12,000 feet.