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American Eagle Outfitters flying high after revenues and earnings top expectations - PRE-MARKET

The share price of the clothing seller was soaring in pre-market trade like a giant bird of prey, the name of which I can't recall at the moment. Also featured: Lowe's Companies; Intra-Cellular Therapies; Paratek Therapies; Achaogen; and WPP

American Eagle Outfitters
Sales and earnings were better than expected

American Eagle Outfitters Inc (NYSE:AEO) soared like its namesake after topping Wall Street's forecasts with its revenue and earnings.

The shares were up 11.3% at US$12.48 in pre-market trading on the back of adjusted earnings per share of 19 cents that beat the Street's number by three cents.

The clothing retailer's revenue in the second quarter rose to US$844.6mln from US$822.6mln the year before, beating the consensus forecast of US$824mln.

Like-for-like (LFL) sales were up 2% year-on-year, surprising analysts, who had penciled in a 0.4% decline.

The retailer said it expected LFL sales in the third quarter should be at least flat year-on-year, and may even be up by a low single digit percentage.

The reaction to the update from sector peer Lowe's Companies Inc (NYSE:LOW) was less effusive, as the home improvements chain posted lower-than-expected earnings for the three months to 4 August, and slashed its guidance on full-year operating margins.

The shares slipped 3.8% to US$72.05 as analysts raced to revise full-year forecasts. The company said it now expects operating margin to rise 80 to 100 basis points (0.8 to one percentage point) in the current financial year, down from previous guidance of a 120-basis-point increase.

LFL sales were a bright spot, rising 4.5% from a year earlier, beating the consensus forecast of a 4.3% rise.

On Nasdaq, the biggest gainer in pre-market trading was Intra-Cellular Therapies Inc (NASDAQ:ITCI) after it announced a positive regulatory update on its schizophrenia program.

The US Food and Drug Administration (FDA) had been concerned that its candidate, lumateperone, had shown worrying signs of toxicity when used in tests on animals.

The FDA said the company had presented adequate data to support its position that the metabolic pathway in the animal species is distinctive from humans, which indicates that the toxicity observed in the animal species is not relevant to humans; the company is therefore pressing on with its long-term safety study of lumateperone, which it hopes will lead to a new drug application for the treatment of schizophrenia by mid-2018.

The shares were up more than a third on the news.

Sector peer Paratek Pharmaceuticals inc (NASDAQ:PRTK) was another hot stock, rising 24% to US$23.70 as it revealed it would participate in five upcoming investor conferences.

Another biopharmaceutical company, Achaogen Inc (NASDAQ:AKA) received a lift from the BidaskClub – an algorithm-based share tipping service – moving to a less bearish stance.

Achaogen is now merely a “sell”, rather than a “strong sell” according to the robots at BidaskClub.

Going the other way were the American Depositary Receipts of global marketing and advertising leviathan WPP PLC (NASDAQ:WPPGY, LON:WPP), which tumbled after a profit warning.

READ £200mln wiped from WPP’s value as revenues stumble on declining client spend

The UK company's shares lost around a tenth of their value. The FTSE 100-listed group is generally seen as a bellwether for the world’s financial health, given that companies tend to spend more on advertising when times are good but cut back when things get more difficult.

Quick facts: American Eagle Outfitters Inc.

Price: 14.46 USD

NYSE:AEO
Market: NYSE
Market Cap: $2.41 billion
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