The markets rose decisively in a low volume summer market. Unlike what we expect on a typical Monday, an early rise did not get faded. I noticed a fair amount of stocks which had fairly large gains or losses. For example, Priceline Group (PCLN) rose 4.34% and Royal Caribbean which reported results a week ago jumped 3.21%, both on no news. Priceline Group will report earnings next week. On the other hand, Michael Kors (KORS) declined 5.89% after once again reporting better than expected results. That company likes to play the UPOD game (under promise over deliver)
Tobacco Plant Treatment for Ebola
As a result of the slow financial news day, Ebola dominated the headlines. An American doctor infected with the disease returned to the US after taking an experimental drug designed to cure the disease. It appeared that the drug was working. This morning Bloomberg news reports that “A tiny San Diego-based company provided an experimental Ebola treatment for two Americans infected with the deadly virus in Liberia. The biotechnology drug, produced with tobacco plants, appears to be working.” The story goes on to say that a subsidiary of Reynolds American (RAI) working with a small biotech company, Mapp Biopharmaceuticals helped to produce the drug. Who would have guessed that tobacco plants would treat diseases? If this drug is the real thing, Mapp Biopharmaceutical and Reynolds American could be in for a windfall.
Walt Disney Earnings Later Today
The earnings calendar is rather active today. Coach (COH) and CVS Caremark (CVS) will dominate the morning results. Walt Disney (DIS) will take center stage when that media giant reports results after the close. Disney is expected to earn $1.17 versus $1.03 a year ago as revenues are expected to rise 5% year-over-year to $12.16 billion. That company’s stock rose a little over 2% yesterday in anticipation of those earnings. We own shares of Walt Disney and expect excellent results from theme parks and its ESPN unit. My concern is the weak summer box office and the lack of exciting releases in the second half of the year from Disney’s studios.
The market is likely to take back some of yesterday’s gains with investor’s focus on individual stocks rather than the broad market.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long PCLN, RCL, KORS & DIS — although positions can change at any time.
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