Precision Castparts feels heat from energy downturn
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Precision Castparts has become the latest company to announce a negative impact on its sales and earnings due to weak demand from oil and gas distributors.
The company which manufactures metal components for aerospace and industrial gas turbines reported preliminary sales in the range of $2.42-$2.47bn in the third quarter ended in December, below Wall Street forecasts for sales of $2.54bn.
Earnings in the range of $3.05-$3.10 a share, fell short of forecasts for $3.42 a share.
The Portland, Oregon-based company also said that destocking at one of its commercial aerospace customers at the end of the year “had a greater impact on the third quarter than had been anticipated”.
“Precision Castparts share price was already feeling market pressure thanks to its oil and gas exposure,” of about $200m of sales, “and so cuts here are not a huge surprise,” Robert Stallard, an analyst at RBC Capital Markets, said. “What we see of more importance is the continued destocking and inventory issues from aerospace customers.”
Analysts at Canaccord Genuity downgraded the stock to “hold” from “buy” and lowered their price target to $242, from $276 following the pre-announcement.
Shares of Precision Castparts fell more than 9 per cent to $199.63 and are down 30 per cent in the past year.
Wet Seal shares fell nearly 55 per cent to below 4 cents, after the retailer filed for Chapter 11 bankruptcy protection amid what has been a challenging environment for teen apparel retailers. The Foothill Ranch, California-based company had previously warned that it might seek bankruptcy protection and earlier this month announced that it was closing 338 retail stores.
Schlumberger shares gained more than 6 per cent to $81.33, after the company beat adjusted fourth-quarter earnings estimates and announced that it would cut 9,000 jobs as a result of declining energy prices.
Profits slid 82 per cent to $302m, or 23 cents a share. Adjusting for certain items, Schlumberger said it earned $1.50 a share, ahead of estimates. Sales climbed 6 per cent to $12.64bn.
Shares of FXCM, one of the biggest currency brokers, were halted on Friday after the company said the Swiss National Bank’s decision to abandon its ceiling against the euro caused “unprecedented volatility”, which saw clients experience significant losses that left if with a negative equity balance of $225m. The company said it may be in breach of capital requirements. FXCM’s shares were down nearly 90 per cent before trading was stopped.
Interactive Brokers slipped 0.8 per cent to $28.04, after the Greenwich, Connecticut-based broker said several of its customers “suffered losses in excess of their deposit with us”. The company said its “debits” would amount to about $120m.
US stocks rallied on Friday led by energy stocks and as US consumer confidence hit a 10-year high.
The S&P 500 gained 1.3 per cent 2,019.42, the Dow Jones Industrial Average climbed 1.1 per cent to 17,511.57. The Nasdaq Composite gained 1.4 per cent to 4,634.38.
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