Ticker Shock: Texas Instruments, Sun Fall Short; Pfizer, Schering Suggest You Buy Drugs
Tuesday's top stories and stocks with potential to move.
The Hang Seng was down a bit, but the Nikkei rose a little more than 3%. And Europe was a mixed bag. Not too shabby, I guess. As for the US, things are slightly in the red after the open.
Texas Instruments (TXN)
After the close on Monday, Texas Instruments reported a third-quarter profit of $0.43 per share, just a penny shy of the $0.44 per share that the Street had been looking for. In this environment, and for a company of that caliber, that's not too much of a turn-off. However, its outlook for the fourth quarter most certainly was: Though analysts had been forecasting revenue of $3.33 billion and $0.43 earnings per share (not including a tax gain), TI said it expected revenue from $2.83 to $3.07 billion, with earnings per share of $0.30 to $0.36 - including the $0.05 tax gain.
So here's the deal: I think Texas Instruments has solid longer-term potential. But because the near-term outlook seems so uncertain -- and management lowered the bar so far below what the Street was looking for -- I can't help but think the shares are going to get pummeled. The stock is already trading near it's 52-week low, and it's going to get hit by some tax-loss selling. So I plan to steer clear.
And if the shares were such a bargain, why haven't insiders been clamoring for the stock?
With the exception of some activity in April, top execs have been pretty silent on this front. (Of course, I'm guessing that windows for activity could be few and far between, so perhaps there's an excuse. Hold the email, TI bulls.)
Earlier on this crisp autumn morning, Pfizer, the company that brought you Xanax --which I could use right about now -- reported a third-quarter profit of $0.62 per share, an impressive $0.02 north of what analysts had been expecting.
On the downside, its revenue number came in at about $11.97 billion, which was just shy of the $12 billion and change some had been expecting. Moreover, it said it's looking to earn $2.36 to $2.41 per share on an adjusted basis for the full year. And that's slimmed down a bit from the $2.35 to $2.45 per share guidance it offered in conjunction with its second-quarter earnings.
With all that in mind, I like Pfizer, and I think the stock could pop today. Its bottom-line beat was indeed a nice surprise, and, all told, it still has a decent full-year outlook - particularly for a stock that can currently be had for under $18.
I'd point out that Schering-Plough (SGP) plowed past third-quarter estimates, so maybe drug companies as a whole will get a little bounce today.
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