Movers: Freddie Mac, Fannie Mae, Lehman, Wachovia, Rohm & Haas
Freddie Mac (FRE) and Fannie Mae (FNM) shares are seen weaker after remarks from former St. Louis Fed's Poole saying that the housing agencies were "technically insolvent." Wires report that Treasury Secretary Paulson said this about Fannie Mae and Freddie Mac: "Their regulator has made clear that they are adequately capitalized." According to the Wall Street Journal, The Bush administration has held talks about what to do in the event FRE, FNM falter. Officials don't expect the entities to fail, and no rescue plan is imminent. But the discussions have become more serious recently given the mortgage companies' financial woes, the newspaper says. S&P maintains sell on shares of FRE, cuts target to $6. Maintains hold on shares of FNM, cuts target to $15.
Lehman Brothers (LEH) fell 9% amid unfounded speculation that PIMCO would be reducing business with company traders. However, PIMCO spokesman Mark Porterfield responded to S&P MarketScope's phone call questioning the speculation with an email that states, "PIMCO continues to trade with Lehman." Also, the stock may be impacted by comments from Treasury Secretary Hank Paulson, who said that while Freddie Mac and Fannie Mae are adequately capitalized, the government must allow some banks to fail.
Wachovia (WB) says it appointed Robert K. Steel, who most recently served as Under Secretary for Domestic Finance for the U.S. Dept. of Treasury, as WB's new CEO, president and member of the board of directors, effective immediately. WB also says it expects to report an after-tax loss available to common stockholders of $2.6-$2.8 billion, or $1.23-$1.33 per share, for second quarter, excluding goodwill impairment charges. S&P maintains sell.
Rohm & Haas (ROH) agrees to be acquired by Dow Chemical (DOW). Terms: $78 cash per ROH share. DOW expects deal to be meaningfully accretive to EPS in the second year following completion, with pre-tax annual cost synergies expected to be at least $800 million per year.
General Electric (GE) said Thursday that it is considering a spinoff of its lighting and appliance divisions, confirming what many analysts have been speculating about in recent weeks.
Wal-Mart Stores (WMT) posts 5.8% June same-store sales (without fuel), 6.4% higher with fuel, 12% higher total sales. Sees 2%-4% higher July U.S. same-store sales (without fuel). Because of improved sales results during second quarter, it raises EPS forecast to $0.82-$0.84.
Boeing (BA) announces that second quarter will include a charge of about $0.22 on previously acknowledged delays on its Airborne Early Warning & Control (AEW&C) program. BA continues to expect $5.50-$5.85 2008 EPS, as company-wide performance and productivity are expected to offset the AEW&C charge by yearend.
Cato Corp. (CTR) shares jumped after the fashion specialty retailer posted a 4% rise in June same-store sales and a 7% increase in total sales. Cato raised its second-quarter earnings forecast to 42 to 44 cents a share from its prior estimate of 28 to 33 cents a share.
American Eagle Outfitters (AEO) posts 11% lower June same-store sales, 5% lower total sales. AEO maintains its Q2 EPS guidance of $0.28-$0.30.
BJ's Wholesale Club (BJ) posts 17% higher June comp-club sales, incl. contribution from sales of gasoline worth 8.2%, 19% higher total sales.
California Pizza Kitchen (CPKI) posts 1.
4% higher June same-store sales, 11% higher total revenue. Based on the better-than-expected revenue, positive comps, continued focus on operating efficiencies, co. raises $0.16-$0.17 second quarter EPS guidance to $0.25-$0.26. Sets $50 million stock buyback.
Marriott International (MAR) posts $0.41, vs. $0.43 a year ago, second quarter reported EPS from continuing operations despite 2.0% revenue rise. Sees third quarter total fee revenue of $300-$310 million, EPS of $0.30-$0.35, 2008 total fee revenue of $1.45-$1.475 billion, EPS of $1.77-$1.88. Expects worldwide systemwide comparable REVPAR to be flat to up 2% in 2008 reflecting a continued challenging demand environment in North America.
Men's Wearhouse (MW) cuts $0.75-$0.79 second quarter non-GAAP EPS guidance to $0.70-$0.74. Now sees GAAP EPS of $0.61-$0.65. Cites higher-than-expected severance costs related to the closing of the Canadian-based manufacturing facility operated by the Company's subsidiary, Golden Brand, lower-than-expected tuxedo rental unit volume from the Company's MW Tux stores.
Sunpower (SPWR) was selected by Florida Power & Light to build the largest solar photovoltaic power plant in the U.S., and a second power plant at the Kennedy Space Center. Installation will include a 25-megawatt power plant in DeSoto County, Fla., and a 10-megawatt project at the Kennedy Space Center.
Penford (PENX) posts $0.24, vs. $0.54, third quarter EPS as manufacturing variances arising from processing imported raw material in Australia, increased energy consumption, maintenance costs, start-up expenses to commence ethanol production offset 7.7% sales rise.
Zumiez (ZUMZ) posts 3.4% lower June same-store sales, 10.2% higher total sales. William Blair downgrades to market perform.
Shaw Group (SGR) posts better-than-expected $0.70 (excluding $0.06 related to Westinghouse segment), vs. $0.66, third quarter EPS on 14% revenue rise. Cites solid project execution by its Fossil & Nuclear, Energy & Chemicals and Fabrication & Manufacturing segments. Continues to sees fiscal year 2008 EPS, excluding Westinghouse, of about $2.30.
Limited Brands (LTD) posts 9% lower June same-store sales, 15% lower total sales.