Morning Coffee Pre-Market Wall Street News

President Obama Unveils Budget. President Obama unveiled his budget proposal which calls for more spending, more taxes and cuts to entitlement programs. President Obama’s budget which is over two months late, calls for $3.77 trillion in spending for the fiscal year that begins in October, which is a 6% increase over this year’s projected spending levels.

The higher spending comes from canceling the across-the-board spending cuts, known as the sequester, that began just a few weeks ago. In addition to canceling the sequester, his budget would spend more on education and infrastructure.

The President’s plan also calls for cuts which have angered his liberal base, retirees, union members and Republicans. His plan calls for cuts to Social Security, Medicare and other government programs in addition to more cuts to the military.

In the area of taxes the President’s budget plan calls for the elimination of tax breaks for higher income families. For businesses, he proposes lowering corporate tax rates while eliminating deductions.  Analysts believe that the net effect on the tax that businesses pay would be the same or possibly more.  The U.S. currently has the highest corporate tax rate in the world.

Economists estimate that the overall effect of the budget would be a $744 billion budget deficit and put the 2014 deficit at roughly 4.4% of gross domestic. The Congressional Budget Office had estimated that the deficit would be 3.7% of the GDP if the sequester cuts remained in place.

http://www.whitehouse.gov/omb/budget

Upgrades

American Eagle (AEO): Piper Jaffray raised their rating from Neutral to Overweight and raised their target price from $23.00 to $24.00.

IBM (IBM): UBS raised their rating from Neutral to Buy and raised their target price from $210.00 to $235.00. Pre-market: 211.62 +2.40 (1.15%)

Downgrades

Aeropostale (ARO): Goldman Sachs lowered their rating from Neutral to Sell and lowered their target price from $11.00 to $10.00.

Expeditors International (EXPD): Goldman Sachs lowered their rating from Conviction Buy to Buy and lowered their target price from $50.00 to $47.00.

France Telecom (FTE): Goldman Sachs lowered their rating from Sell to Conviction Sell. Pre-market: 10.06 -0.07 (-0.69%)

NetApp (NTAP): UBS lowered their rating from Buy to Neutral and lowered their target price from $40.50 to $37.00.

Tenet Healthcare (THC): Deutsche Bank lowered their rating from Buy to Hold and maintained their target price of $46.00. Pre-market: 42.00 -1.52 (-3.49%)

Coverage Initiated

H&R Block (HRB): Wedbush initiated coverage with an Outperform rating and target price of $33.00. After Hours: 28.44 +0.14 (0.49%)

Netflix (NFLX): Evercore initiated coverage with an Underweight rating and target price of $115.00. Pre-market: 169.00 -0.36 (-0.21%)

Panasonic (PC): JPMorgan initiated coverage with an Overweight rating.

Sony (SNE): JPMorgan initiated coverage with an Neutral rating.

Coverage Reiterated/Price Target Changed 

Walt Disney (DIS): B. Riley & Co. reiterated their Buy rating and raised their target price from $63.00 to $65.00. After Hours: 59.14 0.00 (0.00%)

Earning Reports

CarMax (KMX): Reported EPS of $0.46 in-line with estimates. Pre-market: 41.83 +0.15 (0.36%)

Constellation Brands (STZ): Reported EPS of $0.47 beating estimates by +$0.02. Pre-market: 48.60 -0.03 (-0.06%)       

    

Family Dollar (FDO): Reported EPS of $1.21 missing estimates by -$0.01. Pre-market: 57.00 -2.80 (-4.68%)

Fastenal (FAST): Reported EPS of $0.37 in-line with estimates. Pre-market: 49.50 -1.38 (-2.71%)

PriceSmart (PSMT): Reported EPS of $0.82 beating estimates by +$0.06. After Hours: 83.00 +2.79 (3.48%)

Markets: 
Futures at 7:00: Dow +0.29%. S&P +0.28%. Nasdaq +0.37%. Crude +0.90% to $94.20. Gold -0.37% to $1580.90.

Europe: London +0.80%. Paris +1.11%. Frankfurt +1.07%. 

Asia: Japan +0.73% to 13288. Hong Kong +0.75% to 22035. China +0.02% at 2226. India +1.03% to 18414.