Although we don’t believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes — just in case they’re material to our investing thesis.
Markets are ending the week in a good way today, as stocks have moved higher to end a strong past five days on Wall Street. The Dow Jones Industrial Average has picked up gains of more than 60 points as of 2:15 p.m. EDT, with most of the stocks on the blue-chip index moving higher. Intel Corporation (NASDAQ:INTC) has had a big hand in the Dow’s outperformance, leading the index into the green. Let’s catch up on what you need to know.
Intel’s upgrade
Intel Corporation (NASDAQ:INTC) shares are up around 3% after Jefferies upgraded the chipmaker from “hold” to “buy.” An analyst at the company cited Intel’s production of less power-consuming chips, which will help the company expand its reach into mobile and other high-growth areas. Intel has had little success breaking into those new markets so far, with the exception of the server area, where it has established a strong hold.
Still, at least revenue from the company’s server products is growing. Intel Corporation (NASDAQ:INTC) has struggled financially lately, but the company’s data center division — its second-largest by revenue — posted 3.7% sales growth over the first half of 2013. Until Intel can bolster its product portfolio by becoming a real force in the mobile industry, data center sales will need to pick up the slack of slumping PC chip sales, which lost 7% in revenue in that same time frame.
That slump has hit the company’s net margin hard: In the second quarter of this year net margin fell to 15.6% from 20.9% a year ago. The stock has still managed to grow a respectable 13% year to date, but Intel Corporation (NASDAQ:INTC) will have to keep looking for new routes for growth if it wants to please shareholders and justify Jefferies’ upgrade.
Johnson & Johnson (NYSE:JNJ) is not keeping up with its Dow peers today. Shares of the diversified health-care giant are down 0.% to rank among the Dow’s biggest laggards. The company announced today that it will recall one lot of its schizophrenia therapy Risperdal Consta, although J&J was quick to mention that any possible patient risk was low.
Recalls are never a great sign for any health care firm, and Johnson & Johnson (NYSE:JNJ) has had its share of them over the past few years. Nonetheless, for investors, this company has performed admirably and looks on pace to continue its run into the future.
The company’s star immunology blockbuster, Remicade, continues to grow in sales despite already raking in more than $3.2 billion in revenue over the first half of the year. That was a 7.5% gain from the year before, and Remicade has formed a solid cash foundation for J&J to rely on while newer, faster-growing drugs, such as cancer treatment Zytiga, move up the ranks. Zytiga was approved only a few years ago, but the drug is already on pace to hit blockbuster status with more than $1 billion in sales by the end of the year — and Zytiga’s revenue jumped by more than 70% year over year in 2013’s first half.
