The bulls got off to a good start this morning as they tried to extend their gains for a second-straight session but the bears have evened things up as we turn the corner.
MSC Industrial Direct (MSM, $73.66, down $3.34) is taking a 4% hit after announcing earnings this morning that disappointed Wall Street. Synnex (SNX, $35.48, up $0.07), Washington Federal (WAFD, $17.03, up $0.07) and Xyratex (XRTX, $7.89, up $0.10) report after the close.
Of course, the big news on Friday will be Wells Fargo (WFC, $34.94, up $0.18) and what they say. There have been a few downgrades in recent weeks on the stock and most of the analysts are not too “excited” about the possible numbers they might post.
There are 32 suit-and-ties covering the stock and the average estimates are calling for the company to earn $0.89 a share on revenue of $21.3 billion. The average Price Target for Wells Fargo is $39 with the high being $44. The low is $35.
The company will be the first of the big Financials to report with the floodgates opening next week. We looked at the longer-term chart for Wells Fargo and did some digging in their books and shares could be on the verge of a breakout. We believe the Housing recovery was super bullish for their mortgage business and the valuations overall look cheap if this business keeps growing.
Wells has 30% of the mortgage business market and could add another 10% in the coming year if housing stays strong which we believe it will. Earnings are always tricky to predict because of what a company may or may not say about guidance or other headline risk but we are looking for Wells to surprise analysts and breakout to new highs.
As we head to press, the Dow is up 46 points to 13,436 while the S&P 500 is higher by a six-pack to 1,467. The Nasdaq is up a point to 3,106.
We have a lot more to talk about with our current trades and we have a NEW TRADE for you as well so let’s go see where we are at. Subscribers, check the Members Area for the updates and we will be back Friday morning with our next report.