Stocks in the News: PepsiCo, Google, Tiffany
Health care companies will be in the spotlight Monday after the House passed a sweeping reform bill late Sunday. Mostly, insurers such as UnitedHealth Group (UNH) and WellPoint (WLP) may be hurt by the bill as they must now show they spend a certain percentage of the premiums on medical care rather than administration expenses. Legg Mason's (LM) Bill Miller also said that because uncertainty has been removed, cheap health care stocks would outperform in the next few months. Shares of insurers were mixed.
But analysts are not certain as to the effect on pharmaceuticals such as Pfizer (PFE) and AstraZeneca (AZN), with some saying earnings will be hurt by as much as 2%, while others finding pharmas might benefit by as much as 1% in the first few years. Drugmakers had to make some concessions and will be hurt by some fees, but they may also benefit from the larger number of individuals being covered and able to buy drugs. Pharma shares were generally higher.
PepsiCo (PEP) said Monday it is maintaining its forecast for long-term earnings growth of 11% to 13% and low-double-digit profit growth for 2011 and 2012 on a constant currency basis. Pepsi wants to increase overseas revenue. PepsiCo plans to hold a two-day investor meeting at Yankee Stadium in New York starting Monday.
Tiffany & Co. (TIF) reported its fourth-quarter profits more than quadrupled to $140.4 million, or $1.10 per share, compared to last year. While last year's quarter included a restructuring charge, sales have improved this quarter with revenue rising 17% to $981.4 million. Tiffany did not manage to top expectations, but said it predicts 2010 earnings will beat Wall Street's expectations. Shares sank 4.7% in premarket trading.
Google (GOOG) may on Monday reveal plans to end some of its operations in China, according to media reports. If this happens, it will have to expand in South Korea and Japan, at least, analysts say.
Consol Energy (CNX) started an offering of $2.75 billion senior notes to fund part of its $3.48 billion acquisition of Dominion Resources. Consol also said it plans a public offering of about $1.75 billion shares of its common stock. Shares fell 1.8%.
Credit Suisse (CS) restricted employee travel to Germany, following a tax evasion investigation into customers and staff.
Lions Gate Entertainment (LGF) said late Friday its board will review Carl Icahn's new offer to acquire all its outstanding shares for $6 a share. Shares were 1.3% higher. Shares dropped over 3.2% in premarket trading.
Royal Dutch Shell (RDS.A) and PetroChina (PTR) agreed to buy Arrow Energy after increasing their offer to A$3.5 billion ($3.2 billion). Shell shares fell 1.4% ahead of the bell.
Williams-Sonoma (WSM) reported a higher-than-expected quarterly profit of $88.4 million, or 81 cents a share, on lower costs and strong holiday sales. Net sales also beat estimates, rising 8.1% to $1.09 billion. Shares rose over 2% before the bell.
Novell (NOVL) shares jumped 4.8% after the company on Saturday rejected an unsolicited bid by hedge fund Elliott Associates to buy the company for about $1.8 billion, saying the deal undervalued Novell and its growth prospects.
Palm (PALM) shares continued their free fall. After skidding over 29% Friday and with many voicing concern about the future of the company, PALM shares fell nearly 6% ahead of the bell.