Stock Market Today: Xerox and HP Merger; Apple’s Next Target?

Stock Market

It was another quiet session in the stock market today. The SPDR S&P 500 ETF (NYSEARCA:SPY) was about flat on the day, as investors continue to digest the big gains over the past few weeks. It’s hard to make the bearish case with stocks continuing to hold up.

A day after rumors swirled around a go-private deal for Walgreens (NASDAQ:WBA), reports surfaced that Xerox (NYSE:XRX) is mulling a takeout of HP (NYSE:HPQ). The latter jumped over 7% on the day, but closed at $19.58, well off the highs of $21.67.

That’s likely as investors realize HPQ has a market capitalization almost four times the size of Xerox, at roughly $30 billion compared to $8 billion. Reports suggest the takeout bid values HPQ at less than $23 per share and is below the stock’s 52-week high of $25.72. According to sources, Xerox believes it could realize $2 billion in synergies and still maintain an investment grade balance sheet after the cash and stock offer.

It’s unknown if XRX will formerly make an offer or whether it will be accepted. Remember, Carl Icahn has a 10% stake in Xerox, and will likely play a role in the deal’s outcome.

Could Sonos (NASDAQ:SONO) be Apple’s (NASDAQ:AAPL) next target? According to analyst Thomas Forte from D.A. Davidson, it will be. Forte believes that this will help advance Apple’s connected home segment, which he thinks needs improvements. Sonos shares closed higher by 6.5% trading at $14.34, while Apple was roughly flat on the day.

Movers in the Stock Market Today

Caterpillar’s (NYSE:CAT) hit from tariffs in 2019 should be lower than expected. CAT anticipated a $250 million to $350 million impact from tariffs, but the final tally should come in under $250 million. While there are opportunities to cut costs, it is currently not looking to make any changes to restructure at this time. CAT fell 0.6% despite the news.

Airbnb got some bad news from Jersey City. Voters haven’t been happy with increasing rents, and voted in favor of stricter short-term rental regulations. City residents won by a landslide. This comes as a pretty large upset for Airbnb, which spent at least $4.2 million to help sway voters in its favor. Unlike Uber (NYSE:UBER), Lyft (NASDAQ:LYFT) and other unicorn IPOs, Airbnb has avoided a 2019 IPO and plans to go public in 2020.

Speaking of Uber, shares hit a new 52-week low on Wednesday, after doing so on Tuesday as well. Yesterday’s catalyst came from earnings, but Wednesday’s action came after lockup expiration. The action allows insiders and certain large investors to sell their stock after a predetermined amount of time.

As readers know, the market consists of supply and demand. If demand isn’t strong enough to soak up the increase in supply, then the price goes lower. Let’s see if Wednesday’s low sticks, or if lower prices are yet to come.

Humana (NYSE:HUM) shares are on the move, rallying about 3.5% Wednesday after the company beat on earnings and revenue estimates, and raised its full-year earnings guidance.

SoftBank (OTCMKTS:SFTBY) recorded its first quarterly loss in 14 years. The result ties to the company’s investment in WeWork, and subsequent $9.5 billion bailout via equity and debt. SoftBank recorded an operating loss of $6.5 billion, as the company marked down WeWork’s equity value to $7.8 billion. That’s a major haircut from the $47 billion valuation it garnered not long ago.

Remember how bad WeWork was? Good thing it didn’t come public.

Heard on the Street

Foot Locker (NYSE:FL) shares were initiated at Raymond James with an “outperform” rating. The analysts assigned a price target of $70, implying upside of 52%.

Raymond James analysts didn’t stop there. They also initiated Lululemon Athletica (NASDAQ:LULU) as a “strong buy,” while slapping a price target of $275 on the stock. Their target implies upside of 37.5%.

BlackRock (NYSE:BLK) was updated to “buy.” Deutsche Bank assigned BlackRock with a price target of $543, implying that shares could rally 11%.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL.

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