ADP National Employment Report Misses Estimates

ADP National Employment Report Misses Estimates

Stocks are lower across the board after the May ADP employment report missed Wall Street estimates.  ADP reported the payrolls increased 133,000, missing estimates of 157,000 by a wide margin.  The prior reading of 119,000 was also lowered to 113,000.

The news comes after a slew of bad economic reports.  Earlier this week Consumer Confidence, Pending Home Sales and the GDP second reading all miss estimates by a wide margin. The news left Wall Street nervous about Friday’s government employment numbers and increased the thought that the U.S. economy is slowing down.

For the full ADP press release and report, click on the following links.

ADP Employment Report Press Release

ADP Employment Full Report

MORNING COFFEE

Ireland to Vote on Austerity. In Ireland today, citizens are expected to vote in favor of the EU fiscal compact.  Polls in Ireland are showing 60% in favor of the austerity measures even though unemployment remains at a very high 14.3%. Analysts believe that a no vote would instantly turn Ireland into another Greece.

Upgrades

Zanga (ZNGA): Robert W. Baird raised their rating from Neutral to Outperform and placed a target price of $13.00 on the company. Pre-market: 6.04 +0.17 (2.90%)

SAP AG (SAP): UBS raised their rating from Neutral to Buy and raised their target price from $63.75 to $70.00. Pre-market: 58.03 +1.27 (2.24%)

Downgrades

TiVo (TIVO): Lazard Capital lowered their rating from Buy to Neutral . Pre-market: 8.67 -0.29 (-3.24%)

Coverage Initiated

Expeditors International (EXPD): FBR Capita initiated their coverage with a Market Perform rating and target price of $40.00.

BMC Software (BMC): Mizuho initiated their coverage with a Neutral rating and target price of $44.00. Pre-market: 43.33 +0.33 (0.77%)

CA Tech (CA): Mizuho initiated their coverage with a Buy rating and target price of $30.00. Pre-market: 25.19 +0.16 (0.64%)

Red Hat (RHT): Mizuho initiated their coverage with a Buy rating and target price of $60.00. Pre-market: 51.53 0.00 (0.00%)

Pertoleo Brasileiro (PBR): Raymond James initiated coverage with a Buy rating and target price of $30.00. Pre-market: 19.15 +0.02 (0.10%)

Arch Coal (ACI): Global Hunter initiated coverage with a Neutral rating.

AutoZone (AZO): Stephens initiated coverage with an Overweight rating and target price of $440.00.

Owens Corning (OC): Wells Fargo initiated coverage with an Outperform rating and target range of $37.00-$39.00.

Earning Reports

Coldwater Creek (CWTR): Reported EPS of -$0.20 missing estimates by -$0.01.

Tilly’s (TLYS): Reported EPS of $0.18 beating estimates by+$0.04.

TiVo (TIVO): Reported EPS of -$0.17 missing estimates by -$0.01.

Ciena (CIEN): Reported EPS of $0.04 beating estimates by +$0.07.

Joy Global (JOY): Reported EPS of $2.04 beating estimates by +$0.08.

Movado Group (MOV): Reported EPS of $0.26 beating estimates by +$0.02.

Markets: 
Futures at 9:02: Dow +0.17%. S&P +0.24%. Nasdaq +0.07%. Crude -0.35% to $87.48. Gold +0.15% to $1565.80. 

Europe: London +0.50%. Paris -0.02%. Frankfurt +0.01%. 

Asia: Japan -1.05%. Hong Kong -0.32%. China -0.52%. India -0.57%. 

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MORNING COFFEE

Crisis in the EU Continues.  Yields on Spanish 10 year bonds shot up +20 bps to 6.64% and past pre-ECB LTRO levels.  The yield on the Spanish bonds surged after Egan Jones downgraded the country's debt to junk status and there were reports that the ECB would not come to the rescue of the Spanish bank Bankia. 

In Italy the 10 year bond also soared +23 bps driving the yield above 6% following a poor auction.  The Italian government auctioned off€5.73B of five and ten-year paper vs. a target of €6.25B with yields of 5.66% and 6.03% respectively.

The New York Times is reporting that Greece's €130 billion in bailout funds are mostly being used to pay the interest on the country's debt. This means that the bailout money coming from Troika is going right back to it.

Upgrades

Jack In The Box (JACK): Oppenheimer raised their rating from Perform to Outperform and placed a target price of $32.00 on the company.

American International Group (AIG): Sandler O’Neil raised their rating from Hold to Buy and placed a target price of $35.00 on the company. Pre-market: 29.83 +0.05 (0.17%)

Research In Motion (RIMM): JMP Securities raised their rating from Underperform to Market Perform. Pre-market: 10.06 -1.17 (-10.42%)

LinkedIn (LNKD): Citigroup raised their rating from Neutral to Buy and placed a target price of $125.00 on the company. Pre-market: 10.06 -1.17 (-10.42%)

Downgrades

Nokia (NOK): MKM Partners lowered their rating from Neutral to Sell and placed a target price of $2.00 on the company. Pre-market: 2.82 -0.13 (-4.41%)

Pilgrim’s Pride (PPC): BB&T lowered their rating from Buy to Hold. Pre-market: 8.14 -0.42 (-4.91%)

Coverage Initiated

Allscripts Healthcare (MDRX): Wells Fargo initiated coverage with a Market Perform rating and target range of $11.00-$12.00.

Ciena (CIEN): Needham initiated coverage with a Buy rating and target price of $16.00. Pre-market: 12.20 -0.14 (-1.13%)

Marriott (MAR): MLV & Co initiated coverage with a Hold rating and target price of $41.00.

Coverage Reiterated/Price Target Changed

Apple (AAPL): ISI Group reiterated their Buy rating and raised their target price from $525.00 to $650.00. Pre-market: 569.00 -3.27 (-0.57%)

Earning Reports

Jos. A. Bank (JOSB): Reported EPS of $0.53 missing estimates by -$0.09.

The Fresh Market (TFM): Reported EPS of $0.40 beating estimates by +$0.05. Pre-market: 51.00 +2.14 (4.38%)

Yingli Green Energy (YGE): Reported EPS of -$0.24 missing estimates by -$0.03.

Markets: 
Futures at 8:31: Dow -0.83%. S&P -0.84%. Nasdaq -0.72%. Crude -1.64% to $89.26. Gold -0.15% to $1546.30. 

Europe: London -1.54%. Paris -1.58%. Frankfurt -1.11%.

Asia: Japan -0.28%. Hong Kong -1.92%. China -0.21%. India -0.77%. 

MORNING COFFEE

Greece and Spain Recapitalize Banks.  Greece has provided over €18B to its four largest banks in an attempt to recapitalize them and prevent a collapse of their banking system. The recapitalization came from the European Financial Stability Facility rescue fund and will go to prop up Alpha Bank, Eurobank, National Bank and Piraeus Bank.  Additionally, former Prime Minister Papademos warned that unless the Greek June 17^th election can produce a stable government, Greece’s finances could collapse.

In Spain Bankia will issue new debt to recapitalize, versus injecting bonds into the company. Prime Minister Rajoy yesterday said he had ruled out an external bank rescue even as Spain is "finding it very difficult to finance itself." 

Upgrades

Gulfport Energy (GPOR): RBC Capital Markets raised their rating from Sector Perform to Outperform.

Cracker Barrel (CBRL): Argus raised their rating from Hold to Buy and placed a target price of $72.00 on the company.

Salesforce.com (CRM):Oppenheimer raised their rating from Perform to Outperform and placed a target price of $180.00 on the company. Pre-market: 147.80 +0.80 (0.54%)

Jack In The Box (JACK): Wedbush raised their rating from Underperform to Neutral and raised their target price from $21.00 to $25.00.

L-3 Communications (LLL): Oppenheimer raised their rating from Underperform to Perform.

ConocoPhillips (COP): Citigroup raised their rating from Neutral to Buy and raised their target price from $64.80 to $67.00. Pre-market: 52.89 +0.78 (1.50%)

Foot Locker (FL): Deutsche Bank raised their rating from Hold to Buy and raised their target price from $32.00 to $48.00. Pre-market: 33.30 +0.88 (2.71%)

Downgrades

Viacom (VIAB): Caris & Company lowered their rating from Buy to Above Average and lowered their target price from $58.00 to $56.00.

NetApp (NTAP): Argus lowered their rating from Buy to Hold. Pre-market: 28.93 +0.32 (1.12%)

Tenet Healthcare (THC): CRT Capital lowered their rating from Buy to Fair Value. Pre-market: 4.75 0.00 (0.00%)

Coverage Initiated

Facebook (FB): CLSA initiated coverage with a Buy rating and target price of $40.00. Pre-market: 31.50 -0.41 (-1.28%)

Tilly’s (TLYS): William Blair initiated coverage with an Outperform rating.

Tilly’s (TLYS): Piper Jaffray initiated coverage with an Overweight rating and target price of $20.00.

Adidas (ADDYY): JPMorgan initiated coverage with a Neutral rating.

Markets: 
Futures at 8:34: Dow +0.66%. S&P +0.60%. Nasdaq +0.67%. Crude +0.30% to $91.13. Gold +0.09% to $1574.40. 

Europe: London +0.33%. Paris +0.73%. Frankfurt +0.88%. 

Asia: Japan +0.74%. Hong Kong +1.35%. China +1.20%. India +0.13%. 

Weekly Market Report

MORNING COFFEE

Iran gets even closer to bomb.

Iran Makes World Look Like Fools. Once again Iran has made the world look like fools. After two days of discussions, the only thing agreed upon was to have yet another meeting.   Iran has been very good at playing this game off agreeing to meetings when the heat is turned up on their nuclear enrichment.   Over and over they have either agreed to more meetings or agreed to allow inspectors into the country, only to kick them out and call for more meetings.  By doing this they have delayed any disruption to their enrichment program that is believed to be for nuclear weapons. 

Now it may be past the point of no return and the world may be surprised by the announcement or testing of a nuclear weapon by Iran.  Israel has warned that they would strike militarily in the spring if nothing was done to stop the nuclear program. That was delayed by the announced of this past meeting.  World leaders need to wake up to the fact that Iran does not care about sanctions and the effect it has on its people.  The leaders in Iran want the bomb to control the Middle East, world oil supplies and possibly destroy Israel.  They will not stop until they have the bomb.  Iran 1 World 0.

Upgrades

Cracker Barrel (CBRL): Argus raised their rating from Hold to Buy and placed a target price of $72.00 on the company.

Salesforce.com (CRM): Oppenheimer raised their rating from Perform to Outperform and placed a target price of $180.00 on the company. Pre-market: 148.24 +2.03 (1.39%)

Illinois Tool Works (ITW): JPMorgan raised their rating from Neutral to Overweight and raised their target price from $56.00 to $66.00. Pre-market: 56.50 +0.75 (1.35%)

Eastman Chemical (EMN): JPMorgan raised their rating from Neutral to Overweight and raised their target price from $57.00 to $58.00.

Downgrades

H.J. Heinz (HNZ): JPMorgan lowered their rating from Overweight to Neutral and lowered their target price from $59.00 to $56.00. Pre-market: 52.87 -0.68 (-1.27%)

NetApp (NTAP): Argus lowered their rating from Buy to Hold. Pre-market: 28.57 -0.25 (-0.87%)

Viacom (VIAB): Caris lowered their rating from Buy to Above average and maintained their target price of $56.00 on the company. Pre-market: 48.40 0.00 (0.00%)

Coverage Initiated

Facebook (FB): Capstone Investments initiated coverage with a Hold rating and a target price of $32.00. Pre-market: 32.63 -0.40 (-1.21%)

W.W. Grainger (GWW): Wunderlich initiated coverage with a Hold rating and a target price of $216.00.

Fastenal (FAST): Wunderlich initiated coverage with a Buy rating and a target price of $51.00.

Genuine Parts (GPC): Wunderlich initiated coverage with a Hold rating and a target price of $64.00.

Cooper Tire & Rubber (CTB): BB&T initiated coverage with a Hold rating and a target price of $64.00.

Earning Reports

rue21 (RUE): Reported EPS of $0.46 beating estimates by +$0.03. Pre-market: 27.60 +0.60 (2.22%)

VeriFone (PAY): Reported EPS of $0.64 beating estimates by +$0.03. Pre-market: 40.50 -4.50 (-10.00%)

Talbots (TLB): Reported EPS of $0.02 beating estimates by +$0.04. Pre-market: 1.75 -0.81 (-31.64%)

Markets: 
Futures at 7:34: Dow -0.08%. S&P -0.22%. Nasdaq -0.15%. Crude -0.10% to $90.57. Gold +0.16% to $1560.00. 

Europe: London -0.68%. Paris -0.72%. Frankfurt -0.51%. 

Asia: Japan +0.20%. Hong Kong +0.25%. China -0.74%. India -0.03%. 

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MORNING COFFEE

Hewlett-Packard to Cut 27,000 Jobs. After the market close yesterday, Hewlett-Packard (HPQ) reported EPS for FQ2 that beat Wall Street estimates by nearly 8%.  Analysts were looking for the company to report EPS of $0.91 versus the $0.98 reported, revenue fell -3% to $30.69 billion. The company also announced that it would be cutting 27,000 jobs as part of a restructuring plan. Estimates are that the restructuring would save approximately $3-$3.5 billion a year by the end of FY14. H-P also provided FY 2012 guidance above consensus. Pre-market: 22.87 +1.79 (8.49%)

Greece’s Exit from EU Edging Closer. It appears that the EU summit in Brussels to discuss stimulating the eurozone economy, the Greek bailout and the division between the EU nations has produced no new plans.  Leaders would like Greece to stay in the EU, but reports say that they are making plans for the country to leave.  Economists believe that if Greece leaves the eurozone other countries such as Spain and Portugal would consider leaving also.  Such contagion would leave Europe in economic chaos that would spill over the U.S. economy.

 Upgrades

National Oilwell (NOV): Societe Generale raised their rating from Hold to Buy and placed a target price of $85.00 on the company. Pre-market: 68.54 +0.59 (0.87%)

Watson Pharmaceuticals (WPI): Well Fargo raised their rating from Market Perform to Outperform and raised their target range from $78.00-$79.00 to $84.00-$90.00.

Aeropostale (ARO): Well Fargo raised their rating from Underperform to Market Perform and placed a target range of $20.00-$21.00 on the company.

Eaton Vance (EV): Citigroup raised their rating from Sell to Neutral and raised their target price from $23.50 to $24.00.

Duke Energy (DUK): UBS raised their rating from Neutral to Buy and raised their target price from $22.00 to $24.00.

Downgrades

RailAmerica (RA): JPMorgan Chase lowered their rating from Overweight to Neutral and placed a target price of $26.00 on the company.

Human Genome Science (HGSI): BMO Capital lowered their rating from Outperform to Market Perform and lowered their target price from $17.00 to $13.00.

Coverage Initiated

Cree (CREE): Stephens initiated coverage with an Equal Weight rating and target price of $35.00. Pre-market: 26.79 +0.34 (1.29%)

Earning Reports

Hewlett-Packard (HPQ): Reported EPS of $0.98 beating estimates by +$0.07. Pre-market: 22.87 +1.79 (8.49%)

PVH (PVH): Reported EPS of $1.30 beating estimates by +$0.04. Pre-market: 81.00 +3.63 (4.69%)

Synopsys (SNPS): Reported EPS of $0.53 missing estimates by -$0.02.

Costco (COST): Reported EPS of $0.88 beating estimates by +$0.01. Pre-market: 84.93 +1.62 (1.94%)

HJ Heinz (HNZ): Reported EPS of $0.81 beating estimates by +$0.02. Pre-market: 52.85 -1.01 (-1.88%)

Tiffany & Co (TIF): Reported EPS of $0.64 missing estimates by -$0.06. Pre-market: 56.65 -5.15 (-8.33%)

Toronto-Dominion Bank (TD): Reported EPS of $1.82 beating estimates by +$0.04.

Markets: 
Futures at 8:44: Dow +0.33%. S&P +0.44%. Nasdaq +0.34%. Crude +0.67% to $90.50. Gold +1.05% to $1564.70. 

Europe: London +1.53%. Paris +1.30%. Frankfurt +0.76%. 

Asia: Japan +0.08%. Hong Kong -0.64%. China -0.53%. India +1.72%.