Wall Street roared back to life today following several difficult days, as all three major indices turned in big performances ahead of tomorrow’s conclusion of the Federal Open Market Committee meeting.
Crude oil was strong, lending much-needed support to the market. OPEC Secretary General Abdullah al-Badri predicted that low crude oil prices would not continue, and likely would rise within a few months to a year’s time, helping to lift crude oil prices nearly 3%.
The Dow Jones Industrial Average and Nasdaq were up 0.9%, while the S&P 500 beat that by gaining 1.1%. Every market sector was higher, with energy and financials leading the pack.
Leading the markets higher, among other stocks, were Lumber Liquidators Holdings Inc (NYSE:LL), Coach Inc (NYSE:COH) and Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Here are the details.
Lumber Liquidators Holdings Inc (LL)
A former uber-bear on Lumber Liquidators stock reversed his thinking today, sending LL stock soaring by nearly 25%.
Whitney Tilson, hedge fund manager of Kase Capital Management, has been a long time critic of Lumber Liquidators, and even called the company worthless. He admitted he was heavily shorting the stock.
However, now Tilson says he has received information that tells him the senior management of LL was not aware their flooring contained toxic formaldehyde, so that the company was “sloppy and naive, but not evil.” More importantly, Tilson said he has now covered his short position on LL stock.
Lumber Liquidators recently paid the U.S. Justice Department a $10 million fine for false import declarations, and will plead guilty to violating the Lacy Act, which prohibits the importing of illegally logged wood.
Coach Inc (COH)
COH stock was a winner today after Cowen Group upgraded the handbag and luxury accessories manufacturer from “market perform” to “outperform” and simultaneously raised its price target from $35 to $38 per share.
Cowen cited improved marketing, promotions and gift offerings as potential catalysts that could drive Coach into same-store sales growth by fiscal Q4. (The current comps estimate for the current fiscal quarter is for a decline of 4.2%.)
Other positive factors Cowen likes are the new line of merchandise by new creative director Stuart Vevers and the store remodels that have recently occurred.
Just yesterday, COH was upgraded from “neutral” to “overweight” by Piper Jaffray, with a price target increase from $33 to $37.
Valeant Pharmaceuticals Intl Inc (VRX)
VRX stock zoomed more than 16% higher today after announcing a new deal with Walgreens Boots Alliance Inc (NASDAQ:WBA) to distribute it’s prescription drugs through the Walgreens pharmacies.
Wall Street views this as increasing Valeant’s credibility amid recent criticism and a congressional inquiry for price increases and other questionable practices with specialty pharmacy Philidor Rx Services.
Valeant will now be able to sell its skin and eye products at more than 8,000 Walgreens outlets through 2035. In exchange, VRX will discount several products. Per CNBC, they’ll be sold “on consignment and Walgreens will be paid a distribution and dispensing fee.”
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
