U.S. markets rose today as the dollar fell and European Cental Bank President Mario Draghi reassured the markets that the asset purchase program will continue and that the ECB wants Greece to remain in the eurozone.
In economic news, the ISM non-manufacturing index for May was 55.7, almost a 12-month low and below the Street’s expectations. May ADP private sector payrolls were 201,000, just slightly above expectations.
Also the U.S. Commerce Department reported that the April U.S. trade gap was down 19% to $40.9 billion, below the revised deficit of $50.6 billion for March and the largest decline in six years.
As has often been the case recently, these numbers are still in the sweet spot — neither too weak to signal a recession nor too strong for the Federal Reserve to have to tighten interest rates in the near future.
The Dow Jones Industrial Average and the Nasdaq Composite both rose 0.4% while the S&P 500 picked up 0.2%. Sectors were mostly positive, with industrial and cyclical consumer goods the strongest of the groups. Utilities got hit hard by rising bond yields.
Wendys Co (WEN)
WEN stock was up 3.3% today after announcing the board of directors has authorized a buyback of $1.4 billion of shares by the end of 2016, including $211 million from hedge fund Trian Group, WEN’s largest shareholder. This is about one-third of Wendy’s total market cap and will bring about a 20% increase in its earnings-per-share growth beginning in 2018.
In addition, Wendy’s reaffirmed its sales guidance, saying it now expects 2015 adjusted earnings of 31 cents to 33 cents a share, slightly lower than prior guidance, which is mostly due to the sale of their bakery operations.
WEN stock is up about 27% since the beginning of 2015.
Heron Therapeutics Inc (HRTX)
Shares of HRTX stock blistered 14.8% higher today after the disclosure of a large insider purchase totaling 150,000 shares by hedge fund manager Kevin Tang of Capital Management. According to Insider Monkey, the shares were purchased at prices ranging from $19.30 to $23.84, well below the closing price of $24.37 from Tuesday.
Earlier this week, Heron Therapeutics had announced very positive results from its recent Phase 3 MAGIC study, which evaluated efficacy and safety of Sustol, a drug designed to reduce nausea and vomiting from chemotherapy.
Ambarella Inc (AMBA)
AMBA stock was up 3.7% today after the manufacturer of chips for drones and other technology products reported first-quarter earnings of 71 cents a share on $71 million of revenue. In doing so, it beat the Street estimates of 59 cents a share on $67.4 million revenue.
AMBA stock also got a boost from an upgrade by Stifel Financial to “Hold” from “Underperform,” but without a price target. In addition, Keybanc Capital Markets reiterated its “Overweight” rating but raised its price target from $96 to $123.
Keybanc estimated that AMBA will ship system on a chip (SoCs) into some 400,000 drones in the next quarter alone.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
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