Toll Brothers Cuts Guidance

Elena
08 Nov, 2005
New York City

Asian-Pacific markets closed mixed with the Nikkei declining 0.2% on lower oil and banking shares sell-off. European stocks advanced at mid-day on automakers and Sanofi-Aventis. Luxury home builder Toll Brothers released record fourth-quarter revenue, but lowered sales and profit guidance for 2006. French drug maker Sanofi-Aventis reported 29% profit growth on 12% higher sales, reaffirmed its 2005 earnings outlook.

U.S. MARKET AVERAGES

U.S. stock futures predict a lower market start on Tuesday on lowered 2006 sales and profit outlook from leading home builder Toll Brothers and expectations that investors will lock in recent gains.

The disappointing guidance from the company became one of the biggest stories of the morning after the luxury home builder announced record fourth-quarter revenue, but warned that due to fewer-than-expected selling communities it will deliver from 9,500 to 10,000 homes versus previously expected 10,200 to 10,600.

S&P 500 futures were up 0.7 point but below their fair value. Dow Jones industrial average futures were up 5 points, while Nasdaq 100 futures were up 1 point.

Lehman Brothers lowered its rating on LSI Logic Corp. ((LSI)), a maker of microchips used in products like DVD recorders, to ‘equal-weight’ from ‘overweight’.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mixed with the Nikkei falling 0.2% on declining oil prices which sent oil companies lower and on banking shares sell-off. Awaited economic data later in the week also weighed on sentiment. Among the regional gainers, Hong Kong’s Hang Seng rose 0.3%, South Korea’s Kospi gained 0.7%, and Australia’s All Ordinaries climbed 0.9%.

European markets advanced at mid-day on the back of strong automakers, boosted by weaker oil and rising mining stocks, supported by a rally in Japanese steel shares. Market was also given a lift by solid corporate earnings with Sanofi-Aventis one of the leading gainers. The German DAX 30 added 0.1%, the French CAC 40 gained 0.5%, and London’s FTSE 100 rose 0.3%. The euro was at a two-year low vs. the dollar, at $1.1725.

OIL, METALS, CURRENCIES

Crude oil prices hovered near $59 a barrel on unusually warm weather for the season, reducing consumers’ need for heating fuel. Light sweet crude December delivery fell 23 cents to $59.29 a barrel in electronic trading on the Nymex. London Brent lost 43 cents to $57.61.

Gold traded in a mixed fashion in Europe. In London the precious metal was fixed at $457.15 per troy ounce, up from $456.50. In Zurich gold fell to $457.45 from $457.65. In Hong Kong gold fell $0.10 to close at $457.35. Silver opened at $7.51, up from $7.46.

The U.S. dollar further strengthened against its major counterparts. The euro was quoted at $1.1736, down from $1.1793. The dollar bought 117.77 yen, up from 117.62. The British pound traded at $1.7353, down from $1.7434.

EARNINGS NEWS

Watson Wyatt & Co. ((WW)), consulting firm, announced Q1 profit from continuing operations rose 1% to 36 cents a share compared with the year-ago quarter. Revenue soared 52%. The company raised its fiscal-year earnings outlook to the range of $1.74 to $1.76 a share up from an earlier guidance of $1.67 to $1.69 a share.

Western Gas Resources Inc. ((WGR)), natural gas systems & facilities operator, announced Q3 net income of 88 cents a share, almost double the 47 cents a share in the same period last year on revenue growth and stronger volume and prices, beating analyst estimate of 74 cents a share.

Church & Dwight ((CHD)), household products company, reported Q3 net income of 51 cents a share up from 42 cents a share in the year-ago period on 5% sales growth, beating analysts’ expectations of 45 cents a share. The company expects damage caused by the summer''s hurricanes to cut 6 to 7 cents off Q4 earnings although it still expects 2005 earnings of $1.75 a share.

Visteon Corp. ((VC)), auto parts maker, reported Q3 loss narrowed to $1.58 a share, from $11.48 a share despite 0.4% revenue decline, missing analyst estimate of $1.34 a share. The company's attributed its narrower loss the lack of $1.3 billion in charges over deferred tax asset valuations and asset impairments, and the company highlighted a growing proportion of revenue coming from outside of Ford Motor Co.

Magna International Inc. ((MGA)), automotive systems supplier, announced Q3 net income advanced to $1.44 a share, up from $1.37 a share in the same period last year on 12% revenue growth. North American vehicle production rose 2% and European vehicle production went down 6%, it said. The company sees lower earnings per share in 2005 excluding items on sales between $22.3 billion and $22.9 billion.

Sanofi-Aventis ((SNY)), French drugmaker, posted a 28.7% increase in adjusted net profit at 1.92 billion euros, with sales up 11.6% to 7.2 billion euros. Generic competition hurt Allegra sales by 0.4% in Q3 at constant rates, but top drugs Lovenox and Plavix had sales growth of 13.8% and 22.8%, accordingly. Sanofi-Aventis reaffirmed its forecast of at least 20% earnings per share growth for 2005.

51job Inc. ((JOBS)), Chinese HR company, reported that Q3 net income dropped 29% to 7 cents per U.S. listed share, on a foreign currency translation loss, with revenue rising 21% to RMB161 million ($19.9 million). The company’s adjusted earnings of 12 cents per U.S. share as well as its revenue topped analyst estimate.