Market Movers at Noon Tuesday: Catalent (CTLT), VF Corp (VFC), Arista (ANET), Leidos (LDOS)

Investing

Published: October 31, 2023 12:55 pm

Tuesday morning economic news did not include big changes in either the consumer confidence index, down about 1.5 points month over month but still above 100, or the employment cost index, up by 1.1%, more than a consensus estimate for an increase of 1%.

Here’s a look at the morning’s big movers.

Catalent

New Jersey-based contract drug maker Catalent Inc. (NYSE: CTLT) traded down more than 17% Tuesday morning. Since early March the shares have dropped more than 55%.

The decline fell off the edge of the table in mid-April when the company said it may have to restate fiscal year 2022 results. Catalent blamed “certain accounting adjustments” related to its Indiana plant, an excuse that is almost always a red flag to investors.

By mid-May, the stock was down 57% from its March level. After recovering somewhat, the stock is inching closer to that May low of $31.45. The company announced in mid-September that it had received a non-compliance letter from the New York Stock Exchange for failing to file its fiscal year 2023 (ended in June) in a timely manner.

Tuesday morning, the company issued a press release announcing the release of first-quarter 2024 results on November 15. Catalent did not mention the delinquent reports at all, and that may have made investors nervous. Shares recently traded at $33.48, down 16.2%, in a 52-week range of $31.45 to $74.49.

VF Corp

Apparel maker V.F. Corp. (NYSE: VFC) reported fiscal second-quarter earnings results last night that missed the consensus estimate. Revenue came in with a sequential gain of just 0.2%, a 2.6% year-over-year decline for the quarter.

Not all that bad, but it got worse. The maker of clothing brands including North Face, Timberland, and Vans also withdrew fiscal 2024 guidance and lowered its free cash flow estimate from $900 million to $600 million.

That’s when things went from bad to worse. V.F. cut its quarterly dividend by 70%, from $0.30 to $0.09. Prior to the cut, the dividend yield on the stock was around 7%, awfully rich for a stock the price of which has dropped by more than 50% since its peak last November.

Company CFO Matt Puckett blamed insufficient progress at Vans or in the United States. The first step in the company’s program is to replace Vans’ brand president, Kevin Bailey. V.F. CEO Bracken Darrell “will take a more active role in leading the brand and delivering its turnaround strategies. Darrell was appointed to the position in mid-June.

Shares traded down about 12% Tuesday morning, at $15,13, in a 52-week range of $15.03 to $34.90. The low was posted earlier this morning.

Arista

Networking equipment provider Arista Networks Inc. (NYSE: ANET) reported third-quarter results after markets closed Monday. The company beat earnings per share expectations by nearly 16% and revenue expectations by 2%. Year-over-year revenue was up more than 28%.

We discussed Arista’s quarterly report and outlook in our premarket movers story earlier this morning.

Shares recently traded up more than 12% at $197.50, not far from the 52-week high posted in early September. The 52-week low is $107.57.

Leidos

Defense contractor Leidos Holdings Inc. (NYSE: LDOS) beat the consensus adjusted EPS estimate by $0.36 (21.6%) and the revenue estimate by 3.8%. Revenue rose 8.7% in the company’s third quarter.

The company also issued upside EPS guidance in a range of $6.80 to $7.10, above the consensus estimate of $6.68 and earlier company guidance of $6.40 to $6.80. Leidos also boosted fiiscal year revenue guidance from $14.9 to $15.2 billion to a new range of $15.1 to $15.3 billion. The consensus estimate has been $15.12 billion.

Leidos wrote down restructuring charges of $699 million related to its Security Enterprise Solutions unit. The charges were not included in adjusted EPS.

Operating cash flow for the quarter totaled $795 million and free cash flow rose to $745 million. The company expects operating cash flow of at least $850 million for the fiscal year ending in December. For the first two quarters of this year, operating cash flow was negative.

The stock traded up more than 7.5% shortly before noon Tuesday, at around $98.75 in a 52-week range of $76.58 to $110.91.

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