10:41 ET Existing Home Sales Unexpectedly Fall, but Data Points to a Stronger June
Existing home sales unexpectedly declined to 5.66 million in May from 5.79 million in April. The Briefing.com consensus expected sales to rise to 6.10 million last month.
The market seems to believe that the payback period following the expiration of the homebuyer tax credits may have began a little bit earlier than anticipated as equity markets dropped following the release. However, that may be too quick of a judgment. There two are ways to look at May's decline.
First, first-time homebuyers made up 46% of all purchases in May. The consensus expected that a large percentage of these buyers were in the market for distressed properties. Banks have been overwhelmed with applications for foreclosed and short-sale properties, and whereas before the housing crash sales would only take about four weeks, it now routinely takes six to eight weeks or longer for homes to close. The delays may have pushed some of the sales that were expected in May back to June.
In this case, the weak May report will be followed by a stronger June report.
Second, it is also possible that potential buyers were aware of the delays regarding distressed properties and signed contracts for non-distressed properties so that they would make sure they closed before the June deadline. In this case, closing should not take longer than four weeks and the quick drop-off in May would signal a weaker June report.
However, the National Association of Realtors announced that 180,000 buyers (2.16 million annualized) have signed contracts for distressed properties in April that may be delayed beyond the June deadline. With such a large quantity of potential purchases, we believe it is more likely that the drop in May was due to delays and not from the beginning of an early payback period.
HNSN Reports Positive In-Vivo Study
Hansen Medical (HNSN 2.31 +0.06) reports pre-clinical in-vivo study highlights potential for reduction in vessel trauma and improvements in efficiency with Hansen Medical's new vascular robot.
The company announced the successful completion of a pre-clinical in-vivo study evaluating its new vascular robot, which demonstrated improvements in catheter navigation, reductions in vessel trauma during catheter manipulation, and improvements in access time for some vessels, as compared to manual catheter manipulation during endovascular procedures.
Results also showed that the company's vascular robot has the potential to standardize catheter navigation.
CCL Guides Q3 EPS Below Consensus
Carnival (CCL 34.25 -0.49) reported second quarter earnings of $0.32 per share, $0.03 better than the Thomson Reuters consensus of $0.29.
Revenues rose 8.4% year-over-year to $3.19 billion, below the $3.27 billion consensus.
For its third quarter, the company issued earnings of $1.43 to $1.47 per share, below the $1.52 Thomson Reuters consensus, with constant dollar net rev yields +5-6% (flat to +1% on current dollar basis).
For its fiscal year 2010, the company sees earnings of $2.25 to $2.35 per share, worse than the $2.38 Thomson Reuters consensus; with net rev yields +2-3% in constant dollar, ~flat in current dollar basis.
JEF Q2 Results Top Expectations
Jefferies (JEF 24.41 +1.54) reported second quarter earnings of $0.41 per share this morning, which was $0.04 better than the Thomson Reuters consensus of $0.37.
Net revenues rose 13.4% year-over-year to $669.5 million, well above the $575.1 million consensus.
Investment banking revs +112% year-over-year to $256 million. Equities, Fixed Income and Investment Banking each contributed significantly by bringing quality ideas and execution to our global client base."
WAG Q3 EPS Expectations Fall Short
Walgreens (WAG 28.65 -1.49) reported third quarter earnings this morning of $0.53 per share, ex-a $0.04 charge as a result of the repeal of the tax benefit for the Medicare Part D subsidy for retiree benefits and a $0.02 charge from the Duane Reade acquisition; including $0.01 in restructuring, $0.04 worse than the Thomson Reuters consensus of $0.57.
Revenues rose 6.1% year-over-year to $17.2 billion versus the $17.14 billion consensus.
Total sales in comparable stores increased 0.7% in the quarter, while comparable store front-end sales increased 0.1% (comps ex-Duane Reade). Front-end sales were impacted by continued weak demand for discretionary goods and by lower demand for flu-related products compared with the year-ago quarter. Gross profit margins increased 10 bps to 27.6 percent vs. the year-ago quarter of 27.5%.
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