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TheStreet Open House

Midday Wrap: Three Stocks Dragging the Market

NEW YORK (TheStreet) -- Shares of IBM (IBM), eBay (EBAY) and Goldman Sachs (GS) lag the market after disappointing Wall Street with weaker-than-expected third-quarter financials.

IBM lost 6.3% to $175 as of 1:15 p.m. EST, after the tech giant recorded a 4% decrease in third-quarter revenue to $23.7 billion. Net income, however, was up 6% to $4.4 billion, and diluted earnings were $3.68 a share.

Thursday's losses mark the largest drop in share price since April 19 this year after the release of the IT company's first-quarter results. In the year to date, shares have fallen 8.3%.

"It is carrion for other, more aggressive companies," wrote Jim Cramer in his recent Real Money analysis. "While there were currency issues that were endlessly discussed by management, I am calling this one a disaster."

eBay shares were suffering from a hangover after management outlined weak outlook a day earlier. Shares dropped 3.9% to $51.46 by 1:15 p.m. EST. In the year to date, the online auction house has gained 0.85%.

"We expect to be at the low end of the full-year 2013 guidance range on both the top and bottom line," said CFO Bob Swan in a conference call.

For the fourth quarter, management anticipates earnings of 79 to 81 cents a share, compared to analysts' estimate of 83 cents, and revenue of $4.5 billion to $4.6 billion, lower than expectations of $4.64 billion.

Swan said the cautious outlook over the festive season is partly due to shaken confidence during the U.S. government shutdown softening the economy and consumers' willingness to spend.

"All the anxiety we see when we pick up the newspaper everyday makes us fairly cautious about how we look at the holiday season and its impact on our outlook for the fourth quarter," said Swan. "I hope I am too conservative, but right now all the signs point to a bit of caution."

TheStreet Ratings team rates eBay as a Buy with a ratings score of A-. The team has this to say about its recommendation:

"We rate eBay Inc (EBAY) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had subpar growth in net income."

Goldman Sachs was also pushing the markets lower on Thursday after reporting a 20% year-on-year decrease in revenue to $6.72 billion. The fifth-largest U.S. bank recorded earnings per share of $2.88 a share, higher than $2.85 a share for the year-ago quarter.

Shares for the big bank dropped 2.7% to $157.91 as of 1:15 p.m. EST, trailing the S&P 500, which is up 0.35% to 1,727.52, the highest it has been since September 18. 

Written by Keris Alison Lahiff.

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