U.S. stocks were mixed midday Wednesday, as investors digested mixed earnings news and awaited the Federal Reserve's statement on rates, expected at 2 p.m. Eastern time.
Stocks on the Move
Shares of Apple (AAPL) rose 6.6% Wednesday after the iPhone maker beat expectations despite reporting that profit fell 27% in its fiscal third quarter. Morningstar's director of technology, media, and telecom equity research Brian Colello said he remains confident in our narrow economic moat rating and our long-term thesis that most of Apple’s iPhone customers today will continue to stick with the ecosystem (and buy future iPhones) going forward. "We will maintain our $133 fair value estimate for Apple and continue to view the stock as one of our best long-term investment ideas within the tech sector," Colello said.
Twitter (TWTR) shares dropped 12.2% after the social media company reported that its revenue rose 20% to $602 million in the second quarter, a bit below consensus. It also reported disappointing third-quarter guidance. "We continue to believe that Twitter’s product enhancements, along with more premium and live-streaming content, can drive user growth and attract ad dollars in the long run," said Ali Mogharabi. "We will maintain our narrow moat rating and fair value estimate of $20 per share. Although the stock is trading in the low $16 range after-hours, we continue to recommend a slightly wider margin of safety before investing in the name."
Shares of Coca-Cola (KO) slid 3.4% after the soft-drink maker said that "challenging macroeconomic conditions, structural changes and foreign-exchange headwinds" dragged on the top line during the second quarter. Morningstar sector director Adam Fleck says he plans to maintain our $44 fair value estimate for the wide-moat Coca-Cola following challenging second-quarter results. "We still believe that Coke can grow its revenue about 5% annually over the long term, driven by renewed emerging market growth rates (as rising incomes lead to increasing per capita nonalcoholic beverage consumption) and continued rational pricing between the company and its competitors in developed economies," Fleck said.
Comcast (CMCSA) shares rose 1.1% after the media company and cable operator reported better-than-expected results in the second quarter and limited the loss of cable customers. Comcast's strong network position, central to our wide moat rating, and struggles at rivals AT&T and Verizon drove the strong results in the cable business during the quarter, said Morningstar strategist Michael Hodel. "While investments to drive growth continue to pressure margins and cash flow, we don’t expect to change our fair value estimate, which we recently raised to $60. We believe Comcast is roughly fairly valued," Hodel said.
Shares of Boeing (BA) were up 1.2% after the aircraft maker beat consensus expectations, despite reporting a loss during the second quarter and cutting its full-year earnings outlook.
Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.