Jim Cramer Blog

Inflation fears sparked by a rise in consumer prices and Federal Reserve comments detailed in the minutes of the last FOMC meeting combined to push stocks to a mixed finish today. Blue Chips as measured by the Dow Jones Industrial Average and the S&P 500 Index traded lower, while the Nasdaq composite managed to eke out a small gain. Crude oil prices reversed course. After declining yesterday on warmer temperatures in key heating oil markets, oil jumped sharply to close above $60 a barrel. Crude has been trading in a fairly narrow band for the past couple of weeks. The 10-year Treasury note also dipped on the inflation news.
The consumer price index rose 0.2% in January, the Labor Department reported. That was down from the 0.4% increase in December, but still more than the 0.1% increase economists expected. Core CPI rose 0.3% in January after a 0.1% gain in December. The increase in the core reading, which excludes food and energy, also rose more sharply than economists had forecasted. Also weighing on stocks was the release of the meeting minutes from last January's rate-setting meeting. The Fed governors debated whether it was time to change their bias away from fighting inflation to a more neutral stance, but decided there was enough of an inflation threat to continue its long-standing policy.
In earnings news, the nation's largest prescription benefits manager was one of the day's top performers after posting profits that surged past Wall Street's expectations. Medco Health Solutions (NYSE: MHS - News) added 10% after reporting a 29% increase in its Q4 profit. The company raised its guidance for the current quarter and said it would increase its share buyback program after posting record profits of $229 million, or 77 cents per share.
Nasdaq stocks managed a small gain in large measure due to a strong performance by Apple (Nasdaq: AAPL - News). The stock advanced 4% after receiving a boost from Prudential Securities, which raised its earnings target for the current quarter. Microsoft (Nasdaq: MSFT - News) managed a modest gain today as well on positive comments about Windows Vista from Chairman Bill Gates yesterday. Gates' comments seemed to contrast with recent reduced guidance from CEO Steve Ballmer. Subscribers can read further analysis on these two tech leaders in today's issue.
The news wasn't as good for other sector bellwethers. Hewlett-Packard (NYSE: HPQ - News) slid despite reporting a 26% increase in its fiscal Q1 profit after the bell last night. Analysts suggested the printer and computer maker had probably achieved most of the savings it could realize from cost-cutting. Intel (Nasdaq: INTC - News) and Yahoo (Nasdaq: YHOO - News) also moved lower today.
In the energy sector, Valero Energy (NYSE: VLO - News) added 3% after Friedman Billings Ramsey raised its earnings estimate for the independent oil refiner and suggested the company will increase its stock buyback plan this year. FBR maintained its "outperform" rating on Valero and raised its target from $79 to $82. Other independent refiners also moved higher, including Tesoro (NYSE: TSO - News), up 3%; Holly (NYSE: HOC - News), which added 4%; and Frontier Oil (NYSE: FTO - News), which closed 3% higher. Frontier announced last night that it bought an ethanol company, Ethanol Management, for $31.1 million. Frontier had been a customer. The deal will enable the firm to ensure ethanol supplies for blending, and to expand ethanol production. Ethanol leaders like Aventine Renewable Energy Holdings (NYSE: AVR - News) and VeraSun Energy (NYSE: VSE - News) ended higher on the day.
Published By Bullmarket.com Staff

Labels: AAPL, AVR, FTO, HOC, HPQ, INTC, MHS, MSFT, TSO, VLO, YHOO

Administaff (NYSE:ASF - News) said its fourth-quarter net income increased 22% to $13.4 million, or 47 cents a share, from $10.9 million, or 39 cents a share, a year earlier. The provider of human resources services said Monday revenue rose 15% to $352.6 million from $305.6 million. The company's average number of worksite employees paid per month advanced 11% and revenue per worksite employee per month rose 4.1%. Analysts surveyed by Thomson Financial, on average, expected the Houston company to earn 44 cents a share on revenue of $357.6 million for the final quarter of 2006. Administaff's board authorized the repurchase of up to 1 million more shares, bringing the total authorization to 9.5 million shares.
Arch Chemicals (NYSE:ARJ - News) reported a fourth-quarter loss of $28.3 million, or $1.18 per share, up from a year-ago profit of $3.6 million, or 15 cents a share. The latest results include a number of items, most notably an impairment charge of $23.5 million related to the write-down of goodwill associated with the company's industrial coatings business. Sales rose in the latest three months to $315.9 million from $278.3 million in the same period a year earlier. The average estimate of analysts polled by Thomson Financial was for loss of 9 cents a share in the December period. Looking ahead, the Norwalk, Conn.-based Arch said it expects earnings from continuing operations of $1.90 to $2 per share for fiscal 2007 with sales growth of 3% to 5%. For the first quarter, the company anticipates earnings from continuing operations of 10 to 15 cents a share. Wall Street's current consensus estimates are for earnings of $1.95 a share for 2007 and 30 cents a share for the March period.
Boston Scientific (NYSE:BSX - News) was downgraded by Bear Stearns to peer perform from outperform, as uncertainties about the drug-eluting stents market and competitive headwinds make sales growth and cost reductions difficult. Analyst Rick Wise said the fundamentals for the company's peers look better, and therefore he upgraded St. Jude Medical to outperform from peer perform, citing the company's strong product pipeline, its recent sales force investment and cost reduction opportunities.
Boyd Gaming Corp. (NYSE:BYD - News) was downgraded to market perform from outperform at Wachovia Securities.
Bristol-Myers Squibb (NYSE:BMY - News) and Sanofi-Aventis (NYSE:SNY - News) have reportedly scuttled merger talks, according to U.K. newspaper The Times (of London).
Calamos Asset Management Inc. (NasdaqGS:CLMS - News) said total assets under management as of Jan. 31 fell to $44.5 billion from $44.7 billion the previous month. The company said its mutual-fund assets fell to $33.1 billion from $33.3 billion, while separate-accounts held steady at $11.4 billion.
China BAK Battery Inc. (NasdaqGM:CBAK - News) reported fiscal first-quarter net earnings of $3.58 million, or 7 cents a share, up from $3.19 million, or 7 cents a share, in the year-ago period. Revenue in the three months ended Dec. 31 rose to $43.1 million from $26.1 million.
Chindex International (NasdaqCM:CHDX - News) shares fell after the provider of healthcare products and medical services in China reported a fiscal third-quarter net profit of $679,000, or 9 cents a share. In the same quarter last year, the company posted a net loss of $463,000, or 7 cents a share. Revenue rose to $30.3 million from $22.6 million.
Forward Air Corp. (NasdaqGS:FWRD - News) was downgraded to hold from buy at A.G. Edwards.
Eddie Bauer Holdings Inc. (NasdaqGM:EBHI - News) said its President and Chief Executive Fabian Mansson has resigned. The apparel retailer said Howard Gross, a member of the board, has been named interim CEO.
Embarq (NYSE:EQ - News) was downgraded to sell from neutral at Goldman Sachs.
Holly Corp. (NYSE:HOC - News) said fourth-quarter earnings rose to $47.7 million, or 84 cents a share, from $39.9 million, or 65 cents a share, a year earlier. Excluding discontinued operations, earnings would have increased to 86 cents a share from 63 cents a share. Analysts surveyed by Thomson Financial had been expecting earnings of 83 cents a share, on average. Revenue grew 15% to $938.1 million from last year's $812.4 million, with refined product volumes increasing 10%.
MedCath Corp. (NasdaqGM:MDTH - News) was downgraded to market perform from outperform at Wachovia Securities. "While we expect MedCath to grow faster than the rest of the hospital industry, we believe the market is already discounting that superior growth," Analyst William Bonello said in a research note. "Also, the threat of Medicare cuts to hospitals could keep a lid on multiples as the year progresses."
Micrus Endovascular (NasdaqGM:MEND - News) shares dropped after the San Jose, Calif.-based medical device maker reported a fiscal third-quarter net loss of $1 million, or 7 cents a share, compared with a net loss of $1.65 million, or 12 cents a share, in the year-ago period. Revenue rose to $15.5 million from $8.09 million.
Mercury General (NYSE:MCY - News) said fourth-quarter earnings rose 8.5% to $50.1 million, or 91 cents a share, from $46.2 million, or 84 cents, a year earlier. Analysts polled by Thomson Financial expected, on average, fourth-quarter earnings of $1.17 a share. The Los Angeles-based life insurance company said net realized investment gains increased to $1.34 million, or 2 cents a share, from $457,000, or a cent a share, in the year-ago period. Net premiums written rose to $740.7 million from $728 million, while net premiums earned rose to $753.9 million from $732.9 million.
Nam Tai Electronics Inc. (NYSE:NTE - News) posted a fourth-quarter loss of $2.3 million, or 5 cents a share, down from a year-ago profit of $12.7 million, or 29 cents a share. On a non-GAAP (generally accepted accounting principles) basis, excluding items, the company earned $12.3 million, or 28 cents a share, in the latest quarter. Sales fell 7.1% in the latest three months to $229.6 million from $247.2 million in the same period a year earlier. The average estimate of analysts polled by Thomson Financial was for a profit of 28 cents a share in the December period. The stock closed Friday at $14.26, down 14 cents.
The Nasdaq Stock Market (NasdaqGS:NDAQ - News) said it failed to secure sufficient support for its planned takeover of the London Stock Exchange.
Nuance Communications (NasdaqGS:NUAN - News) was downgraded to hold from buy at Needham & Co., which cited valuation concerns.
Rainmaker Systems (NasdaqGM:RMKR - News) said it plans to release its fourth-quarter results after the closing bell.
Shares of Sonic Automotive (NYSE:SAH - News) slumped after Bear Stearns downgraded the automotive retailer to peer perform from outperform, due primarily to valuation. Analyst Michael Geoghegan said that with the stock price closing in on his $33 price target, and with the valuation discount relative to its peers narrowing, he urged investors to "take profits."
Published By Michael Baron of MarketWatch

Labels: ARJ, ASF, BMY, BSX, BYD, CBAK, CHDX, CLMS, EBHI, EQ, FWRD, HOC, MCY, MDTH, MEND, NDAQ, NTE, NUAN, RMKR, SNY