Real estate and consumer stocks lifted the major benchmarks on Tuesday, with the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) closing at record highs. Earnings reports generally supported a positive view of the U.S. consumer, but the energy sector saw weakness.
Today's stock market
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Best Buy fuels hope for the holiday season
Best Buy reported unexpectedly strong sales and profit for the third quarter and gave an upbeat forecast of the holiday shopping season, sending shares up 9.9%. Revenue increased 1.8% to $9.76 billion, just above the top end of the guidance the electronics retailer had given three months ago. Non-GAAP earnings per share grew 22% to $1.13 after the company had said to expect $1.00 to $1.05.
Domestic comparable sales increased 2%, an improvement over last quarter's 1.9% growth, and domestic online comparable sales were up 15%. Gross margin was flat year over year at 24.2% but expanded from last quarter's 23.9%. The profit growth came from effective expense management and higher-than-expected sales without resorting to promotions, as well as 5% fewer shares outstanding due to buybacks. Tariffs didn't have a material impact on results.
After beating its Q3 guidance by about $0.10, Best Buy raised its full-year forecast by more than $0.18 at the midpoint, saying that it had improved expectations for Q4, when holiday shoppers will get free next-day delivery on thousands of items.
Arrowhead continues to shoot higher
After surging ahead 16% on Monday, shares of biotech Arrowhead Pharmaceuticals tacked on another 18.8% today in the wake of its full-year results. Recognition of revenue from payments received earlier from partner Janssen Pharmaceuticals, a unit of Johnson & Johnson, resulted in a paper gain of $0.69 per share compared with a per-share loss of $0.65 last year. But Arrowhead's financial results were not what was focusing investor attention on the hot stock this week.
The Janssen collaboration is for JNJ-3989, a drug for hepatitis B, but what has investors excited are the prospects for Arrowhead's metabolic drugs, ARO-APOC3 and ARO-ANG3. These treatments use the emerging technology of RNA interference (RNAi), the same approach taken by The Medicines Company, which was snapped up by Novartis this weekend for $9.7 billion. Positive results from an early clinical trial of the drugs were presented last week.
On yesterday's conference call, Arrowhead was asked whether it's considering partnering for APOC3 and ANG3, given Novartis' (and possibly other drugmakers') interest in RNAi drugs. The company responded that it could probably find a partner, but with the Janssen deal meeting its capital needs, it will be able to go it alone in aggressively moving to later-stage trials.