Category: Stock Market News

Shares of Ambarella Inc. fell 1% in morning trade Monday, in the wake of GoPro Inc.’s revenue warning and announcement that it was exiting the drone business. The maker of chips for cameras in drones said in its latest quarterly filing with the Securities and Exchange Commission that GoPro accounted for 19% of its fiscal 2017 revenue. GoPro’s stock plunged 21%, the biggest one-day selloff since the action-camera maker went public in June 2014, after the company said it will exit the drone business because the “hostile regulatory environment” in the U.S. and Europe make the aerial market “untenable.” GoPro also said it was cutting its workforce by more than 20% and provided a fourth-quarter revenue outlook that was well below expectations. Ambarella’s stock has run up 27% over the past three months, while GoPro shares have plunged 40% and the S&P 500 has gained 7.6%. Earlier Monday, Amabarella introduced a new camera chip, for use in the home monitoring, automotive, drone and wearable camera markets.

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The largest exchange-traded fund to track the health-care sector fell on Monday, dropping as the biggest declining industry of the day by far. The Health Care Select Sector SPDR ETF was down 0.8%, its biggest one-day percentage drop since Dec. 14. The fund is coming off a four-day rally, and it hit a record on Friday. Biotechnology companies were the biggest drags on the sector on Monday. Celgene Corp. fell 3.2% after it agreed to buy blood-disease biotechnology company Impact Biomedicines for as much as $7 billion. Separately, Biogen Inc. shares fell 3.9% while those for Regeneron Pharmaceuticals was down 3.1%. The iShares Nasdaq Biotechnology ETF fell 0.8% on Monday. Thus far this year, the health-care fund is up 2.3%, compared with the 2.6% rise of the S&P 500 . The S&P was unchanged in Monday trading.

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Shares of Caterpillar Inc. rallied 1.4% in morning trade Monday toward a record high, enough to pace the Dow Jones Industrial Average’s gainers, after the mining and construction equipment maker was upgraded at J.P. Morgan. The stock’s price gain of $2.25 added about 15.5 points to the price of the Dow, which was down 38 points. J.P. Morgan analyst Ann Duignan raised her rating to overweight from neutral and boosted her stock price target to $200 from $144, which ties her for the highest target among the 25 analysts surveyed by FactSet. Although the stock already soared 70% in 2017, the second-best calendar-year performance in the stock’s history, according to FactSet, Duignan said she believes there is still “significant upside” to the stock. She said among the “notable catalysts” for the stock, the recent tax reform legislation should extend the cycle for Caterpillar’s North America construction business and a lower tax rate supports higher through-cycle FCF. In addition, Duignan believes Caterpillar’s resource business in si the second year of a 10-year upcycle.

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Shares of Humana Inc. dropped 2.5% in morning trade Monday, to pull back from the previous session’s record close, after the health care company provided 2018 membership growth estimates. Following results of the annual enrollment period, the company raised its net membership growth estimate for individual Medicare Advantage products to 180,000 to 200,000 members from an initial estimate of 150,000 to 180,000 member, as a result of higher-than-expected retention of existing members. For prescription drug plans, however, membership is estimated to decline by 280,000 to 320,000 members. The decline is primarily a result of the loss of auto assign members in Florida and South Carolina, due to pricing over the Centers for Medicare & Medicaid Services (CMS) low income benchmark, continued membership declines in its Enhanced Plan and “significantly” lower-than-anticipated growth in the co-branded plan with Wal-Mart Stores Inc. given low-priced competitor offerings. Separately, the company affirmed its adjusted 2017 earnings-per-share guidance of about $11.60, which compares with the FactSet consensus of $11.63, and said it expects the tax reform legislation to reduce fourth-quarter net earnings by about $160 million. The stock has gained 4.4% over the past three months, while the SPDR Health Care Select Sector ETF has tacked on 2.3% and the S&P 500 has gained 7.6%.

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Arconic Inc.’s stock fell 0.4% in morning trade Monday, to pull back from an 11-month high, after the aluminum company disclosed that it was freezing its defined-benefit pension plan for 7,900 employees. The company, which was spun off from Alcoa in late 2016, said benefit accruals for future service and compensation will cease as of April 1. Service earned after March 31 will count towards eligibility for early retirement. The company expects to record a liability decrease of $140 million in the first quarter, as a result of the cut in future benefits. The stock had closed Friday at the highest level since Feb. 22, 2017. It has rallied 8.8% over the past three months, while the S&P 500 has gained 7.5%.

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The Dow Jones Industrial Average on Monday was threatening to end lower for the first time in 2018, as shares of components Boeing Co., Walt Disney Co., and UnitedHealth Group Inc., weighed on the benchmark. The Dow most recently was down about 30 points, with Boeing’s shares contributing about 13 points to that early decline. Shares of UnitedHealth were exacting about the same point drag on the blue-chip gauge, as was a decline in Disney . A $1 move in any one of the Dow’s 30 components can equate to a 6.83-point swing in the price-weighted average. More broadly, the S&P 500 index was down 0.1% at 2,740, while the Nasdaq Composite Index was trading little changed at 7,134. The three main equity indexes on Friday closed out a stellar, albeit holiday-shortened early start to 2018, carving a trio of all-time highs and registering four-straight days of gains to start the year.

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Crocs Inc. shares are up nearly 5% in early Monday trading after the shoe company raised its fourth-quarter sales guidance to between $195 million and $198 million from between $180 million and $190 million. The FactSet consensus is $188 million. Crocs raised its fourth-quarter margin expectation by 200 basis points to about 45% from about 43%. And the company expects its sales, general and administrative (SG&A) expenses to be flat with last year’s $118.5 million total. For the full year 2017, Crocs continues to expect sales to be down in the low-single digits compared with $1.036 billion in 2016. The FactSet consensus is for $1.012 billion. Crocs shares are up nearly 83% for the past year, outpacing the S&P 500 index which is up 20.4% for the period.

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Shares of Five Below Inc. sank 6.3% in morning trade Monday, after the discount retailer provided a downbeat profit outlook despite a record holiday sales performance. The company said it expects fiscal fourth-quarter earnings per share of $1.09 to $1.16, which is below the FactSet consensus of $1.17. The company also expects revenue of $491 million to $503 million, compared with the FactSet consensus of $501.1 million, and same-store sales growth 4% to 6%, compared with expectations of a 5.6% increase. The company said the outlook comes on the heels of a 27% increase in net sales for the holiday period to $442.6 million, and a 6.7% jump in same-store sales, which was the best holiday-sales performance since the company went public in 2012. Five Below said its outlook doesn’t include any impact from recently enacted tax legislation. The stock, which closed at a record high on Jan. 4, has soared 18% over the past three months, while the SPDR S&P Retail ETF has climbed 11% and the S&P 500 has gained 7.5%.

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U.S. stock indexes traded near break-even levels, taking a pause from their record-setting run after the Dow added 220 points last week. The S&P 500 was down a point, or less than 0.1%, to 2,742. The Dow Jones Industrial Average shed 8 points to 25,287. The Nasdaq Composite Index was flat at 7,136. If stocks end lower for the day, it would represent the first down day in 2018 in what has been the stock market’s strongest out-of-the-gate performance since 1964. Traders will deal with a raft of speeches from central bankers at the Federal Reserve, following comments last week from some that suggested a stronger outlook for growth in 2018.

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GoPro Inc. said it was cutting its workforce by more than 20%, said it was exiting the drone market and provided a fourth-quarter revenue outlook that was well below expectations, citing “price protection” measures for several products. The action camera maker said it expects revenue of $340 million, well below the FactSet consensus of $472 million. The company said it would reduce its global workforce to fewer than 1,000 employees, from the current count of 1,254. Chief Executive Nicholas Woodman will cut his 2018 cash composition to $1. The restructuring will result in a charge of $23 million to $33 million, which will be mostly recognized in the first quarter. Woodman said that despite “significant marketing support,” consumers were reluctant to buy HERO5 Black cameras at the same price as last year, but sales increased sharply after the Dec. 10 price cut. The company said it cut prices over the weekend on HERO6 Black cameras by 20% to $399. The company said a “hostile” regulatory environment in the U.S. and Europe is expected to reduce the addressable market for its Karma Drone in the coming years, which will prompt the company to exit the aerial market. The stock was halted for news until 9:50 a.m. ET. It has plunged 24% over the past three months, while the S&P 500 has gained 7.6%.

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