The iron ore price rally
Iron ore prices have remained firm in 2016. Year-to-date (or YTD), as of September 5, 2016, the benchmark iron ore prices have increased by 39%. This is despite the majority of market participants believing the contrary.
The stimulus provided by the Chinese government helped the demand side, while supply got somewhat deferred. Most analysts are still bearish (SPXS) on the medium- to long-term outlook for iron ore prices.
Performances of iron ore miners
With stronger iron ore prices YTD, iron ore miners have recuperated from some of their losses. Cliffs Natural Resources (CLF) has outperformed, with a YTD rise of 243% as of September 2, 2016.
In this series, we’ll look at Wall Street analysts’ recommendations and ratings for these iron ore miners. It’s important to note that analysts’ estimates usually lag behind price movements, and we see upgrades when stocks have already risen. As for downgrades, they’re apparent when a company has already seen lower prices.
That being said, changes in analysts’ estimates are key drivers of short-term price movements. You should keep track of changes in analysts’ estimates because they offer insight into what the market expects from a given company.
We’ll start by looking at analysts’ ratings for BHP Billiton.
According to data compiled by Bloomberg, analysts expect BHP to deliver revenues of $32 billion for 2016, which is a decline of 38% year-over-year.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
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Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Kimberly-Clark (KMB) stock has risen 20.5% this year, boosted by the company’s better-than-expected sales and earnings during its last reported quarter. However, its stock could stop climbing. Here's why.