Despite the rough start to the session, stocks managed to bounce back into the black before the closing bell rang, largely lifted by shares of Google Inc. (NASDAQ:GOOGL) that went soaring following the company’s earnings beat. The S&P 500’s close of 2,126.64 on Friday represented a gain of 0.11%.
It wasn’t a bullish day for all stocks, however.Celanese Corporation (NYSE:CE), SolarWinds Inc. (NYSE:SWI) and Best Buy Co. Inc. (NYSE:BBY) all managed to skip out on the rally, mostly thanks to analysts.
Celanese Corporation (CE)
For proof the market has selective vision, look no further than Celanese Corporation. The company posted mostly good news on Friday, but the market sent CE down nearly 5% anyway on analyst concerns.
The good news: Last quarter, materials company Celanese earned $1.58 per share, improving on the $1.47 per share of CE the organization earned in the same quarter last year, and trouncing the bottom line of $1.42 per share the pros were expecting for the prior quarter. Better still, Celanese upped its full-year profit outlook to a range of between $5.70 and $6.00 per share. Analysts has been expecting an average of $5.75.
The bad news: Not all analysts are convinced the strong quarter can be reproduced going forward. Alembic Global Advisors’ Hassan Ahmed is one of those skeptics. He suggests last quarter was a fortuitous one because its pricing power didn’t diminish, but its input-costs were lower … a situation that can’t be sustained.
SolarWinds (SWI)
The software company may have topped earnings estimates for its second quarter, but between the revenue miss and the tepid guidance it offered for the current quarter, investors weren’t impressed, sending SWI shares down to the tune of 25%.
Earnings of 52 cents per share rolled in better than the profit of 46 cents per share of SWI analysts were anticipating, though sales of $119.1 million came up short of the projected top line of $122.9 million. Worse, the company now expects the third quarter’s bottom and top lines to roll in under current analyst estimates on a slowdown in licensing revenue it witnessed last quarter.
It was enough for Deutsche Bank analyst Karl Keirstead to downgrade SWI from a “buy” to a “hold,” as well as lower his price target on SWI from $60 to $45. Keirstead commented in the downgrade note “This is the second weak qtr [sic] in a row and we have too little visibility into the cause of the miss and the recovery path.”
Best Buy (BBY)
Best Buy was on the wrong end of a one-two punch combination today, leading to a 6% tumble from BBY shares.
The first shot was news that the electronics retailer’s sales for the current quarter might fall by single digits, after slumping in the first quarter as well. It’s not the evidence of a turnaround patient that BBY shareholders were hoping to see by this point in time.
The knockout punch was provided by Bank of America/Merrill via a double-downgrade of Best Buy based on the weak sales outlook. Specifically, Bank of America lowered its opinion on BBY all the way from a “buy” down to a “sell,” and simultaneously lowered its target price on the stock from $45 to $32.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
