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Amerisource Gains on Distribution Deal and DSW Falls on Weak Outlook

March 19, 2013 | About:
U.S. equity markets are getting a boost following bullish housing data as February housing starts increased by 0.8% or a 917,000 unit annual rate, which is the highest level since 2008. At the same time, permits for new home construction also rose The numbers continue to reaffirm a stabilization and growth in housing. The news also put domestic issues ahead of the upcoming vote in Cyprus, in which analyst in the region are expecting parliament not to pass the bank levy.

Companies Making Headlines

Shares of athletic gear maker Lululemon Athletica (LULU) are under pressure after the management gave lower than expected revenue projections. The company is expecting first quarter revenue of between $333 million to $343 million, well below analyst expectations of revenue of $354 million. The company is also pulling yoga wear products from the shelves because the company was not happy with the “level of sheerness” in women’s yoga pants. The company said the move to pull the yoga wear from its shelves will have a “significant impact” to its bottom line and will have a shortage of women’s yoga wear in the first quarter.

Gurus for the most part have avoided Lululemon as it has historically traded at a premium to the market and the retail industry. SAC Capital Advisors’ Steven Cohen was the lone bull, but his purchase only had a portfolio impact of .03%. Jim Simons of Renaissance Technologies and Pioneer Investments were bears of LULU as they both reduced their small positions in the last quarter.

Shares of shoe retailer DSW (DSW) are significantly lower after the company reported fourth quarter EPS of $0.69 versus analyst estimates of $0.72. Revenues also fell short of analyst estimates, but shares started tanking after management stated that it didn’t know how 2013 will evolve.

Gurus have been mixed on the shoe retailer. The two bulls on the shoe retailer include:

The two gurus who reduced their positions in the last quarter include:

Shares of Amerisource Bergen (ABC) are up more than 5% in early trading after the drug distributor signed a 10-year distribution agreement with with Walgreen (WAG) and Walgreen affiliate Alliance Boots. The agreement is meant to streamline distribution of pharmaceuticals to Walgreen’s stores and will have an immediate impact to Amerisource’s financials. The agreement will contribute an incremental $28 billion in revenue and an estimated 20 cents to Amerisource’s bottom line in 2014.

In the last quarter, Gurus sold out or reduced their position in the drug distributor. Gurus selling out or reducing their positions include:

Rating: 3.7/5 (6 votes)


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