Demonstrating how quickly things can change on Wall Street, Ameriprise Financial ($53; AMP) looks less appealing today than it did just a couple weeks ago. The shares have fallen 8% since July 8, dragged down by worrisome economic developments and bad news about rivals in advance of Ameripriseâ€™s expected July 27 earnings release. The 2011 consensus profit estimate has fallen $0.06 per share over the last week, and the stockâ€™s Quadrix Earnings Estimates score has fallen to 7, contributing to a decline in the Overall score to 79.
Ameripriseâ€™s recent regulatory compliance issues suggest that a negative profit surprise is possible, and BlackRock ($184; BLK) looks like a better choice in the asset-management group. Ameriprise is being dropped from the Buy List and Long-Term Buy List and dropped from coverage. BlackRock is a Buy and a Long-Term Buy.
TV stocks put on a good show
Shares of our recommended pay-TV companies — Comcast ($24; CMCSa), DirecTV ($53; DTV), and DISH Network ($31; DISH) — and have soared this year, with DISH hitting a three-year high and DirecTV an all-time high this month. All three grew free cash flow at least 17% last year and show a propensity for returning much of that cash to investors. Comcast has raised its quarterly dividend by at least 18% in each of the past two years, while both DISH and DirecTV are aggressively repurchasing shares. DirecTV plans to buy back one-third of its outstanding shares by 2013.
The rise in pay-TV stocks has come despite the threat of Internet-streaming services, such as those offered by Amazon.com ($218; AMZN), Google ($603; GOOG), and Apple ($377; AAPL). While some consumer surveys suggest that 10% of U.S. households could cancel their cable or satellite TV over the next year in favor of online options, itâ€™s too early to panic. Few of the streaming services, adopted by just 2% of U.S. households, feature a live-TV component. Of course, if Apple comes through with a rumored high-definition TV that lets customers purchase individual shows or channels, the threat becomes more serious.Â Apple and DirecTV are rated Focus List Buy and Long-Term Buy. DISH Network is a Buy and a Long-Term Buy. Comcast is a Long-Term Buy. Amazon.com is rated C (below average). Google is rated B (average).
Altera ($44; ALTR) said June-quarter per-share profits climbed 12% to $0.65 per share, a penny above Wall Streetâ€™s projection, on 17% revenue growth. Altera issued September-quarter revenue guidance exceeding the consensus at the time of the announcement. The company also hiked its quarterly dividend 33% to $0.08 per share, payable Sept. 1. The shares fell on the news, probably because gross profit margins lagged the consensus and the company projected September-quarter gross margins a bit lower than Wall Street expectations. Altera is a Focus List Buy and a Long-Term Buy.
CSX ($25; CSX) reported 28% growth in earnings per share to $0.46, $0.02 above the consensus. Revenue grew 13% on growth in all three business segments. CSX also raised its target for capital investments by 10% to $2.2 billion. CSX is a Focus List Buy and Long-Term Buy.
In the June quarter, Intel ($23; INTC) earned $0.59 per share excluding special items, up 16% and $0.08 above the consensus. Revenue advanced 22% to $13.03 billion, also ahead of the consensus. For the September quarter, Intel expects revenue of $13.5 billion to $14.5 billion, topping the consensus of $13.48 billion. Intel is a Buy and a Long-Term Buy.
BlackRock ($184; BLK) grew June-quarter profits 27% to $3.00 per share excluding special items, topping the consensus by a dime. Revenue climbed 16% to $2.35 billion, and assets under management rose at the same rate, reaching $3.66 trillion. Net inflows for long-term products totaled $18.4 billion despite investorsâ€™ worries about geopolitical and economic conditions. BlackRock is a Buy and a Long-Term Buy.
In the June quarter, J.P. Morgan Chase ($40; JPM) grew per-share earnings 17% to $1.27, topping the consensus by $0.06. Revenue rose 7% on growth from all units except card services. J.P. Morgan also said it plans to sell up to 15% of its mortgage assets every year until it unwinds the $154 billion portfolio. J.P. Morgan Chase is a Buy and a Long-Term Buy.
Strykerâ€™s ($59; SYK) per-share profits rose 13% to $0.90 per share excluding acquisition-related charges, matching the June-quarter consensus. Revenue jumped 16% to $2.05 billion on growth across all three business units. Stryker is a Long-Term Buy.
Abbott Laboratories ($53; ABT) earned $1.12 per share excluding special items in the June quarter, up 11%, and a penny above the consensus. Sales advanced 9%. The company raised its full-year guidance for per-share profits to $4.58 to $4.68, versus the $4.60 consensus. Abbott is a Long-Term Buy.
St. Jude Medicalâ€™s ($36; STJ) June-quarter earnings per share climbed 8% to $0.85 excluding special charges, exceeding Wall Streetâ€™s target by $0.01. Powered by 23% growth in international markets, revenue increased 10%. However, St. Jude lowered its full-year profit guidance, citing weakness in the U.S. cardiac-rhythm-management business (implantable defibrillators and pacemakers) and regulatory delays for a key new product. St. Jude Medical is a Long-Term Buy.
Mergers and deals
NASDAQ OMX Group ($23; NDAQ) will reportedly visit the London Stock Exchangeâ€™s board and major shareholders to explore a friendly merger. A separate report said the LSE would consider such a deal, though an analyst who had recently met with NASDAQ officials said the company seemed more focused on share repurchases and its current bid for the clearinghouse LCH.Clearnet than on a larger takeover. NASDAQ is a Buy and a Long-Term Buy.
A hedge fund holding a 1.5% stake in Walter Energy ($121; WLT) urged the coal miner to put itself up for sale. The fund argued that based on the value assigned to an Australian miner in a merger earlier this month, Walterâ€™s stock could be worth $240 per share. Walter is a Focus List Buy.
ConocoPhillips ($75; COP) announced that it will spin off its refining unit into a separate publicly traded company. ConocoPhillips is rated A (above average).
Two top executives at News Corp. ($16; NWSa) resigned and British lawmakers grilled CEO Rupert Murdoch over a phone-hacking scandal. The U.S. has launched its own probe into the allegations. While the scandal should have little effect on News Corp.â€™s operating results, bad news could continue to weigh on the stock. News Corp. is rated B (average).
Newmont Mining ($58; NEM) plans to take a charge of $120 million to $160 million in the June quarter after losing an appeal in a royalties dispute. Set to report its quarterly results July 29, Newmont is a Buy and a Long-Term Buy.
Ameriprise Financial ($53; AMP) is being dropped from the Buy List and Long-Term Buy List. Our recommended bond-fund position rises to 12.9% for the Buy List and 11.8% for the Long-Term Buy List.