Image source: Navistar International.
The stock market inched closer to new all-time record highs on Tuesday, but major market benchmarks pulled back from their best levels of the day and finished mixed. Many investors pointed to the latest sign of a rebound in the energy markets as crude oil prices climbed back above the $50 per barrel level and spurred strength in stocks tied to oil and natural gas. Yet weakness in biotechnology held back the Nasdaq, pulling that market down despite modest gains for the S&P 500 and the Dow.
Some stocks managed to climb quite strongly, and Navistar International (NAV +0.00%), LDR Holding (NASDAQ: LDRH), and Zillow Group (Z 2.39%) were among the best performers on the day.
Navistar soared almost 20% after the truck manufacturer posted its first quarterly profit in almost four years. The tough conditions that have plagued the industry haven't let up much, and Navistar's revenue fell 18% because of falling engine volumes in the Brazilian market and overall global weakness. Surprisingly, investors overlooked Navistar's decision to reduce its guidance for the full year, setting new expectations for sales of $8.2 billion to $8.6 billion, and for EBITDA of $550 million to $600 million. Still, earning a profit makes it easier for Navistar to figure out how to handle its debt, and cost-cutting measures have already paid off with nine-figure savings that could help make debt restructuring easier as outstanding bonds and other securities come due.
LDR Holding jumped 64% as the red-hot mergers and acquisitions market snared another company. The specialist in medical devices aimed at spine disorder treatment received a buyout bid from Zimmer Biomet, with LDR shareholders to receive $37 per share in cash and putting a roughly $1 billion price tag on the company as a whole. Zimmer Biomet sees the purchase as helping it accelerate the growth of its spine-based business segment. LDR CEO Christophe Lavigne said, "We are delighted with this combination, which will further our commitment to improving spine care by providing greater access to our innovative product offerings for patients around the world." The fact that the stock closed almost exactly at $37 suggests that LDR shareholders might be hoping for a rival bid, but Zimmer believes the deal should close during the third quarter of 2016, pending necessary approvals.
Finally, Zillow Group rose 6%. Investors reacted favorably to news that the real-estate information provider is settling a lawsuit from competitor Move, which operates rival site Realtor.com. The settlement involves Zillow paying $130 million to end a dispute that could have led to damages awards of up to $1.8 billion. The allegations Move had made included the idea that Zillow obtained trade secrets by hiring former Move executives, and those trade secrets played a role in helping Zillow buy out industry peer Trulia two years ago. The settlement doesn't require Zillow to admit wrongdoing, and it will help Zillow focus on its future rather than having to deal with the threat of a large damages award.
