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Fly News Breaks for August 11, 2017
AXTA, WMT, HBAN, PRGO, KSS
Aug 11, 2017 | 10:36 EDT
Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1. Wal-Mart (WMT) upgraded to Overweight from Equal Weight at Stephens with analyst Ben Bienvenu saying that the company's multi-year investments have led to a better in-store experience, which he sees continuing to drive momentum. 2. Kohl's (KSS) upgraded to Neutral from Underperform at Credit Suisse. 3. Huntington Bancshares (HBAN) upgraded to Overweight from Neutral at Piper Jaffray with analyst Kevin Barker saying the "disappointing" expense guidance has lowered expectations while Huntington should grow earnings faster than any regional bank peer in fiscal 2018 and fiscal 2019. 4. Axalta Coating (AXTA) upgraded to Overweight from Neutral at JPMorgan with analyst Jeffrey Zekauskas saying the 16% pullback over the past three weeks has created an investment opportunity. 5. Perrigo (PRGO) upgraded to Neutral from Sell at Goldman Sachs with analyst Jami Rubin saying the quarterly results may mark the beginning of inflection towards stabilization in the Rx business. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
News For WMT;KSS;HBAN;AXTA;PRGO From the Last 2 Days
WMT
Aug 23, 2017 | 16:22 EDT
Stocks opened in negative territory and remained there throughout the session. The averages moved in a fairly narrow range, finishing the day with losses of about 0.3%. There was little from a macro standpoint to point to for the weakness, but last night's Trump speech, which included a threat to let the government be shut down if a deal to fund his Mexican wall plans cannot be reached, did little to prop up a market that is once again spending much of its time focused on Washington. ECONOMIC EVENTS: In the U.S., Markit's flash manufacturing PMI for August came in at 52.5, below the consensus call for a 53.5 reading, while the flash services PMI was better than expected at 56.9, beating the 55.0 consensus forecast. New home sales dropped 9.4% in July to a 571,000 home rate. In Europe, flash PMIs were also mixed, with manufacturing beating expectations with a 57.4 reading and the services reading falling short at 54.9. In Asia, Japan's flash manufacturing PMI came in at 52.8, up from 52.1 in July. COMPANY NEWS: Walmart (WMT) announced a new partnership with Google (GOOG) to offer "hundreds of thousands of items" for voice shopping via Google Assistant. KeyBanc said that the partnership deal will intensify the competition facing Amazon (AMZN), noting that voice ordering had previously been a competitive advantage of Amazon while adding that Wal-Mart's acquisitions and investments have improved its e-commerce offerings... Shares of Lowe's (LOW) slipped 3.5% after the home improvement retailer's Q2 sales and earnings fell short of expectations and the company lowered its full year profit outlook... Meanwhile, Salesforce (CRM) shares were fractionally higher after the company reported better than expected quarterly results and raised its adjusted earnings and revenue guidance for fiscal 2018. The company said on its quarterly earnings call that it had the "best quarter ever," noting that integration efforts from recent acquisitions are paying off. MAJOR MOVERS: Among the notable gainers was Paratek Pharmaceuticals (PRTK), which jumped 27% after Bloomberg reported that the company is exploring its strategic options, including a possible sale, after receiving takeover interest. Also higher was Fiat Chrysler (FCAU), which rose 7% following a report that the carmaker is considering spinoffs of its Maserati and Alfa Romeo brands, as well as its components operations. Among the noteworthy losers were Omnicom Group (OMC) and Interpublic Group (IPG), which dropped 7% and 6%, respectively, after peer advertising and public relations company WPP Group (WPPGY) lowered its 2017 revenue and net sales growth view. Meanwhile, WPP shares trading in New York fell 11.5%. Also lower following their earnings reports were La-Z-Boy (LZB), which fell 20%, and Cree (CREE), which slid 3.5%. INDEXES: The Dow declined 87.80, or 0.4%, to 21,812.09, the Nasdaq slid 19.07, or 0.3%, to 6,278.41, and the S&P 500 dropped 8.47, or 0.35%, to 2,444.04.
KSS
Aug 23, 2017 | 11:34 EDT
Shares of Abercrombie & Fitch (ANF) moved higher after peer American Eagle Outfitters (AEO) reported better than expected quarterly amid a trend of disappointing results in the retail sector. Abercrombie & Fitch is scheduled to report Q2 earnings before market open on August 24. AMERICAN EAGLE EARNINGS: Before the market open on Wednesday, American Eagle reported adjusted earnings per share of 19c on revenue of $845M, handily beating analysts' estimates of 16c and $824.04M, respectively. Consolidated comparable sales were up 2%, following a 3% increase last year.The company forecast Q3 EPS of 36c-38c, at the low end of analysts' 38c consensus, on flat to up low single digit SSS. CEO Jay Schottenstein noted on the earnings call that AE's store fleet is "largely profitable" and, despite a slower start to Q2, the company saw demand strengthen in June and July. ABERCROMBIE: In May, Abercrombie & Fitch said it expected comp sales to remain challenging in Q2, with trends improving in the second half of the year. The company also expected a continued adverse impact from foreign currency on sales and operating income and predicted a gross margin rate down slightly vs. last year, with continued pressure in Q2. During the quarter, Abercrombie announced plans to launch its namesake brand and abercrombie kids on Tmall. In July, Abercrombie said it had decided to end talks with parties interested in a potential deal to buy the company. The decision came after Abercrombie said in May that it was in preliminary discussions with several parties, with American Eagle and Cerberus Capital rumored to be working on a joint offer. "The A&F board of directors determined that the best path to enhance value for stockholders is the rigorous execution of our business plan," Abercrombie Executive Chairman Arthur Martinez said at the time. Prior to that, Abercrombie investor SLS Management said the retailer was not being "aggressive enough" in its turnaround efforts and called on the company to buy back a "large" amount of its shares. PEERS: Many mall-based retailers like Abercrombie & Fitch, have been hurt by the slowdown of mall traffic reflecting a shift to fast-fashion retailers like Zara, Forever 21 and H&M as well as an increase in online shopping on sites such as Amazon (AMZN). Urban Outfitters (URBN) recently reported a quarterly earnings beat, though its comp sales declined. "While we are disappointed in our second quarter performance, we have a number of initiatives underway including: speed to customer, international growth, wholesale expansion and digital investments," CEO Richard Hayne said. Macy's (M), Kohl's (KSS) both reported declining quarterly comp sales, though Kohl's EPS and revenue narrowly beat estimates. J.C. Penney (JCP) reported a larger than expected loss for the latest quarter, with its comp sales dropping 1.3%. Gap's (GPS) quarterly results, including comp sales, beat analysts' expectations, helped by Old Navy, a consistent bright spot for the retailer, as well as fewer promotions. Nordstrom (JWN) said in June that members of its founding family formed a group to explore the possibility of pursuing a "going private" transaction, but WWD recently said that the retailer is not in negotiations with "anybody" regarding a potential sale. PRICE ACTION: Shares of Abercrombie & Fitch are up 4.8% to $9.59 in morning trading. "Before the Move" is The Fly's recurring series of exclusive stories that identify potentially market moving events, along with analyst predictions, ahead of the news.
WMT
Aug 23, 2017 | 09:36 EDT
KeyBanc says that the partnership deal announced today between Wal-Mart (WMT) and Alphabet (GOOG,GOOGL) will intensify the competition facing Amazon (AMZN). The firm says that the deal will give consumers the capacity to obtain Wal-Mart products through voice ordering. Voice ordering had previously been a competitive advantage of Amazon, according to the firm ,which adds that Wal-Mart's acquisitions and investments have improved its e-commerce offerings.
WMT
Aug 23, 2017 | 06:07 EDT
Sridhar Ramaswamy, SVP, Ads & Commerce at Google (GOOG), says in a blog post: "We're entering an exciting partnership with Walmart (WMT) to bring you hundreds of thousands of products at Walmart's Every Day Low Prices-everything from laundry detergent to Legos-that you can buy through voice with your Assistant on Google Home or on the Google Express website or app. We're thrilled to partner with one of the most popular stores in America to help make your shopping faster and easier. Walmart will be launching on Google Express in late-September and if you want to be notified when they join, let us know. Starting today, we're offering free delivery on Google Express as long as your order is above each store's minimum. There's no membership required so no matter how you shop-through voice with your Google Assistant or on the website or mobile app-you'll get free delivery within one to three days. We're just getting started, and there will be lots more exciting experiences to come, so stay tuned." Reference Link
WMT
Aug 22, 2017 | 09:56 EDT
Jefferies analyst Andy Barish and a team of his peers believe weak spending from Hispanic consumers flagged by several companies this earnings season is mainly due to uncertainty around immigration policy. Given the challenging environment for new legislation, the analyst argued that the weakness may be a short-term phenomenon, with many companies potentially set to benefit from an improvement in spending from this demographic. HISPANICS CONSUMING LESS: During this last earnings season, several companies flagged weak spending from Hispanic consumers, a team of Jefferies' analysts, including Barish, Daniel Binder, Bret Jordan, Randal Konik, Stephanie Wissink and others said in a research note this morning. However, the analysts do not believe the weakness is a result of a deteriorating macro backdrop, but rather is likely due to uncertainty around the White House immigration policy. With Hispanics individuals making up about 18% of the U.S. population, a slowdown in spending can have a big impact, they pointed out, adding that companies with big Texas and California exposure tend to be at the top of the list. Barish and the team also noted that they assume the weakness is a short-term phenomenon given the challenging environment for new legislation. Companies that have been hurt may be due for a rebound, they argued. COMPANIES IMPACTED: While several companies have flagged weakness from Hispanic consumers, others have not cited weakness but have probably been impacted by a slowdown anyway, Jefferies' team contended. Noting that O'Reilly Automotive (ORLY) has 25% of stores in Texas and California, the analysts said they believe the slowdown seen thus far is more driven by weather and cyclical factors. Meanwhile, Wal-Mart (WMT) did not specifically cite weakness in Hispanic spending on its latest earnings call, but about 20% of store locations are in states where over 1/3 of the population is Hispanic and an improvement in spend could help comps, they argued. Additionally, the analysts pointed out that about 24% of e.l.f. Beauty's (ELF) consumers are Hispanic, which may have hurt sales in the first half of the year, but may provide an opportunity given the longer-term opportunity to grow sales through expanded distribution. In a similar position are Ulta Beauty (ULTA) and Jack in the Box (JACK), they said, adding that Foot Locker (FL) did cite weakness in markets with high Hispanic populations and though there are other negatives pressuring the company, an improvement in Hispanic spend would likely offer some relief. Alongside Foot Locker and O'Reilly Automotive, Murphy USA (MUSA), Target (TGT), Valvoline (VVV) and Wingstop (WING) also specifically flagged weakness in Hispanic spend this earnings period, according to Jefferies. "Trump Effect" is The Fly's recurring series of exclusive stories that highlight stocks that are being impacted, or are predicted to be impacted, by the comments, actions and policies of President Trump and his administration.
KSS
Aug 22, 2017 | 08:16 EDT
Kohl's announced details of the company's strategic plans to invest in its store base and enhance the capabilities of its e-commerce fulfillment network. During Q3 Kohl's will open four small format stores and its fifth e-commerce fulfillment center. The company continues to make progress on its initiatives to optimize and rightsize select Kohl's stores across the country. Kohl's will begin shipping from its fifth e-commerce fulfillment center in Plainfield, Ind., this month. The 937,000-square-foot facility will be dedicated to processing, filling and shipping Kohls.com orders. The facility is equipped with state-of-the-art technology to maximize productivity and throughput. In October 2017, Kohl's will open four small format, 35,000-square-foot stores, adding to the eight small format Kohl's stores opened in 2016. The four new stores will be located in the following cities: North Smithfield, R.I., Blue Ash, Ohio, East Windsor, N.J. and Montebello, Calif. In support of efforts to enhance store profitability and improve customer experience, approximately 300 Kohl's stores have been optimized with new interior layouts - becoming operationally smaller through balancing inventory and adjusting fixtures. By the end of 2017, nearly half of Kohl's stores will be operationally smaller.
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