Today’s news: BP plc (BP) and Boise Cascade (BCC) third quarter earnings beats; news on Alexion Pharmaceuticals (ALXN) and Mattel (MAT).
Alexion Pharmaceuticals (ALXN) – Many pharmaceutical and biotech stocks are down in recent days, due to company-specific bad news at a few companies. However, Alexion has not had bad news, and in fact earnings estimates having been inching upwards. A quick glance at the price chart shows you two things: the stock moves quickly, and there seems to be good price support at 115. I normally wait for a stock to stop falling and then rest for a while, before encouraging people to buy. However, I don’t think ALXN is going to rest. So take advantage of near-term low prices if you want to catch the rebound. Buy.
BP plc (BP – yield 5.8%) reported third quarter results this morning. Net income of $1.87 billion far surpassed the consensus estimate of $1.58 billion. (I don’t currently have a breakdown of U.S. earnings per share.) Energy production came in higher than expected, and is expected to increase again in the fourth quarter, while production costs fell. The refining and marketing business far surpassed profit expectations due to both stronger refining margins and petrochemical profits. A lower quarterly tax rate of 40% contributed to the earnings beat.
The company’s breakeven fell to $49 per barrel, with a previously-stated goal of $35-$40 by the year 2021. The debt ratio came in slightly lower at 28.8%, and is expected to fall further in the fourth quarter as a result of additional asset sales.
BP intends to begin a modest share repurchase program to offset the number of increased shares associated with shareholders’ reinvested dividends.
BP is a European integrated oil company and a very undervalued aggressive growth stock. I expect BP to continue rising toward 43, where it last traded in 2014. Hold.
Boise Cascade (BCC) reported third quarter diluted EPS of $0.81 this morning, above all analysts’ estimates, when the market was expecting $0.69. Revenue was $1.23 billion vs. the consensus estimate of $1.16.
Boise Cascade is one of the largest producers of engineered wood products (EWP) and plywood in North America and a leading U.S. wholesale distributor of building products. Both the wood products and building materials distribution businesses fared well during the quarter due to strong commodity pricing, increasing demand from post-hurricane rebuilding and the rising trend in single-family home starts.
Prior to today’s earnings release, analysts had expected Boise to grow EPS by 64.8% and 26.6% in 2017 and 2018. The 2017 EPS consensus estimate was $1.73, and could now be revised as high as $1.85 in light of today’s earnings beat.
BCC is an undervalued, aggressive growth small-cap stock, recently trading between 34 and 36. The stock shot up to 39 this morning, then came back down to 36+. I believe we’ll see the stock begin rising toward 43 now, where it last reached an all-time high in February 2015. Buy.
Mattel (MAT) rose 11% yesterday on takeover speculation, then receded today. To be clear, the news was centered on the company’s attractive qualities as a takeover target, but not on any actual or rumored M&A activity. I agree that the company makes a compelling takeover target. Hold.