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TheStreet Open House

Facebook, InterMune: Market Movers

NEW YORK ( TheStreet) -- These stocks are making headlines during Monday's regular session.

Facebook (FB):

The sell side was weighing on Facebook's upcoming results on Monday. The social networking company is slated to report its second-quarter numbers after Thursday's closing bell. The average estimate of analysts polled by Thomson Reuters is for Facebook to report a profit of 12 cents a share in its first quarterly report as a public company on revenue of $$1.15 billion.

Oppenheimer is expecting the results to show some evidence of a slowdown as users shift to mobile usage from the desktop but it still anticipates an in-line performance.

"We expect US advertising will slow to 7% y/y growth from 27% in 1Q, with Int'l slowing to 32% growth from 48%, based on our analysis of desktop usage," said the firm, which has an outperform rating on the stock and a $41 price target. "The wild card is mobile, as we are not assuming the company is seeing ad revenues from new formats. However, we believe investor sentiment remains negative on the shares, with the stock reacting negatively to a recent comScore data release. For 2012, we estimate revenues in line with underwriters' and 1% below consensus."

Facebook shares were down less than 1% at $28.51.

InterMune (ITMN):

InterMune fell sharply after the biotech reported weak sales of its lung disease therapy Esbriet.

The Brisbane, Calif.-based company posted a loss from continuing operations of $50.9 million, or 78 cents a share, on revenue of $5.5 million, much wider than the average estimate of analysts polled by Thomson Reuters for a loss of 23 cents a share on revenue of $39.9 million.

The stock dropped 14.3% to $10.04 in afternoon action.

Homebuilders:

Goldman Sachs was out with a big positive call on the homebuilders early Monday, boosting its view of the sector to attractive from neutral as pricing starts to strengthen. As for individual stocks, the firm added MDC Holdings (MDC) to its conviction buy list; upgraded KB Homes (KBH) to buy from neutral; upgraded Ryland Group (RYL) to neutral; and downgraded NVR (NVR) to sell.

"We acknowledge the ytd price performance, but see this as the beginning of a longer positive trend in housing-related equities," Goldman said. "Rising US home prices are atop 'Housing's Long List of Positives' that we expect will propel a 20-30% CAGR compound annual growth rate in US housing starts over the next four years. Our 1mn forecast for 2013 housing starts is above the 875,000, we estimate the market is currently pricing in. We think investors should take advantage of the likely volatility in the space given US Homebuilders' strong correlation with the still depressed levels of new home sales."

Goldman estimates the market could see "50% growth in new home sales without additional jobs growth."

Peet's Coffee & Tea (PEET):

An already busy merger got another jolt Monday as Peet's Coffee & Tea agreed to be acquired by Joh. A. Benckiser for roughly $1 billion. The deal values Peet's shares at $73.50 each, a premium of 29% to Friday's close at $57.16.

The transaction is expected to close within three months. The 52-week high for Peet's shares is $77.60 on March 28.

The news was giving a boost to Coffee Holding Co. (JVA), whose shares were rising more than 7% early Monday. Peet's shares were up 29% at $73.74.

Aeropostale (ARO):

The New York-based specialty retailer was upgrade to overweight from neutral at Piper Jaffray. The firm also lifted its earnings estimates citing a favorable analysis of back-to-school pricing trends.

"We believe the consistency in the pricing delta between AE American Eagle /Hollister and Aero over the first two weeks of BTS back-to-school , trending in the mid-50% range, will support market share recapture and margin recovery at a faster pace than previously modeled," Piper said. "Beyond BTS, we are intrigued by the growth prospects for P.S. by Aeropostale, acknowledging a favorable youth demographic tailwind and potential business model leverage."

The firm also boosted its price target on Aeropostale to $24 from $20. Aeropostale shares were up less than 1%.

The Wet Seal (WTSLA):

Wet Seal said Monday its board has fired Susan McGalla as chief executive officer, effective immediately. The Foothill Ranch, Calif.-based young women's apparel retailer didn't provide a specific reason for McGalla's termination but said it's starting a search for a new CEO.

In the meantime, the company is to be led by a three-person Office of the Chairman, including Hal Kahn, its non-executive chairman.

Wet Seal also gave a downbeat financial outlook, saying its July same-store sales are down 13-14% through the third week of the month and that it expects a fiscal second-quarter loss of 6 to 7 cents a share, wider than its previous view for a loss of 3 to 6 cents a share. The current average estimate of analysts polled by Thomson Reuters is for a loss of 5 cents a share in the three months ending this month.

The stock dropped 14% in midday trades.

McDonald's (MCD):

The Dow component reported second-quarter earnings of $1.35 billion, or $1.32 a share, on revenue of $6.92 billion. In the same period a year earlier, the company posted a profit of $2.19 billion, or $1.35 a share, on revenue of $6.91 billion.

The average estimate of analysts polled by Thomson Reuters was for earnings of $1.37 a share on revenue of $6.94 billion in the latest quarter.

McDonald's, which attributed the year-over-year decline in operating income and earnings per share to foreign currency translation, said global comparable sales rose 3.7% for the quarter.

""McDonald's global comparable sales remained solid for the quarter while overall results reflected the slowing global economy, persistent economic headwinds and the investments we've made to enhance restaurant operations and provide customers the everyday value they have come to expect from McDonald's," said Don Thompson, the company's CEO, in a press release.

The company said it expects global comparable sales for July to be positive "less than the second quarter." The stock fell 3.2%.

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