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Q2 GDP & ADP Payroll Top Estimates; Ackman’s New Play; Facebook Flirts with IPO Price

Dan Berman
Hot Stock Minute
Q2 GDP & ADP Payroll Top Estimates; Ackman’s New Play; Facebook Flirts with IPO Price

The morning kicks off with a double dose of positive breaking news. Both GDP and the ADP payroll numbers beat estimates. As for GDP, the first estimate for the second quarter came in at 1.7%. Estimates had been between .9% and 1.1%. This number was calculated a bit differently than in the past. That's because the Commerce Department is now including the cost of research and development, the cost of producing artistic goods, and the transfer fees related to home sales.

Now on to the ADP payroll report for July, it shows 200,000 nonfarm privtae sector jobs added for the month nationwide. Expectations had been for about 180,000 new jobs. As always, this report comes two days ahead of the more crucial government jobs report. We'll have expanded coverage of that on Friday.

Meanwhile, earnings season continues with a flurry of companies reporting results this morning. Comcast (CMCSA) posted profits of 65-cents a share when expectations were for 63-cents. Revenue also beat the consensus at $16.3-billion. We got a mixed report from health insurer Humana (HUM). Earnings beat by 15-cents at $2.63 a share, but revenue came in short at $9.7-billion. Garmin (GRMN) is up 6% after reporting both profits and revenues that easily beat estimates. Burger King (BKW) beat on the bottom line by 2-cents, but revenues missed estimates by almost 15%.

Bill Ackman is taking the lid off his largest-ever activism play. Ackman confirms he has taken a 9.8% stake in Air Products and Chemicals (APD). The company supplies hydrogen and semiconductor materials to places like hospitals. Ackman began a guessing game earlier this month which pointed many to Air Products, and the company installed a poison pill strategy to make the stock look less atractive discourage a hostile takeover ast week. But remember this is also what sent shares of FedEx (FDX) higher earlier this month. The Wall Street Journal reports Ackman doesn't intend to press for a break-up, but instead will push for operational improvements. Shares of Air Products have been up 13% this past month. They're up 23% so far in 2013.


CBS (CBS) which reports after the closing bell. We've all been hearing about the company's battles with Time Warner Cable (TWC) over subscription fees to carry CBS programming. This is part of a larger move by the company to lower its dependency on advertising dollars. Along these lines, the company has recently strengthened ties with Netflix (NFLX). Analysts are looking for earnings of 72-cents a share up from 65-cents last year on revenue of $3.51-billion. The stock is up 33% year-to-date and set a new 52-week high about two weeks ago.

Whole Foods Market (WFM) also reports after today's close. Analysts are looking for significant growth over last year with revenues that surpass $3-billion and earnings of 37-cents a share, up a nickel from a year ago. Whole Foods has reported double-digit revenue increases for the past four quarters. 65% of analysts rate it as a buy. The stock is currently up 21% year-to-date. It hit an all-time high back on July 17th.

Cubist Pharmaceuticals (CBST) has been up almost 6% in early trading. The company is buying two smaller drug makers. One of them, Trius (TSRX), has been up as much as 17%. Meanwhile the other, Optimer (OPTR), has been down 8%. Cubist is considered one of the few big players in the U-S when it comes to antibiotics. The acquisitions give it more current offerings and a larger pipeline. Prior to the movement we're seeing on this deal, Cubist was up 32% year-to-date. The stock is also at its highest level since 2001, when it topped $60 a share.

Networking hardware company Riverbed Technology (RVBD) has been down as much as 19% in early trading. Riverbed reported earnings after yesterday's closing bell. Not as bad as you might think. A match on earnings of 22-cents a share, with a slight miss on revenue which came in at $255-million. The problem: guidance for the current quarter was below estimates. Riverbed was down 17% year-to-date even before this morning's drop.