Morning Preview: April 26th, 2017

eOptionDaily Market Report

U.S. futures are poised to open higher ahead of an expected day of busy earnings reports and the expectations of significant corporate tax cuts from the Trump administration. The Trump administration is due to reveal a “massive” tax package later on Wednesday that will deliver cuts bigger than “any tax cut ever,” the president has said. Overnight, reports out of the NYT and Bloomberg said Trump plans to propose a 10% repatriation tax, expected to call for a cut to rates for pass-through businesses to 15% from nearly 40%, and a 15% tax rate for corporations. More expected to be seen today.

Stocks surged on Tuesday, as the Nasdaq Composite index closed above 6,000 for the first time ever (a new record high), while the Russell 2000 Index, Dow Industrials and S&P 500 closed near their best all-time levels. The move came on the heels of a global equity rally Monday, as investors celebrate positive corporate earnings from several large cap companies (CAT, MCD, DD) and awaited a tax plan from the White House scheduled for Wednesday. Stocks advanced most since March 1 after the French election result sparked an appetite for riskier assets, as the S&P 500 posted its first back-to-back gains this month with a 1.7% gain in its biggest two-day advance since Nov. 8.

In Asian markets, The Nikkei Index gained 210 points to settle at 19,289, the Shanghai Index gained 6 points to close at 3,140 and the Hang Seng Index rose 122 points to close at 24,578. In Europe, the German DAX is down about -5 points at 12,460 and the FTSE 100 is down only a few points around 7,270

Market Closing Prices Yesterday

  • The S&P 500 Index jumped 12.58 points, or 0.65%, to 2,140.45
  • The Dow Jones Industrial Average rose 98.58 points, or 0.59%, to 18,836.10
  • The Nasdaq Composite spiked 44.58 points, or 0.05%, to 5,296.23
  • The Russell 2000 Index advanced 22.72 points, or 0.55% to 1,243.94

Events Calendar for Today

  • 7:00 AM ET          MBA Mortgage Applications Data
  • 10:30 AM ET       Weekly DOE Inventory Data

Earnings Calendar:

  • Earnings Before the Open: ALK, ANTM, APH, AVY, BA, BAX, BCE, BLMN, DPS, FLIR, GD, GRA, HES, HSY, Hynix, IR, JBT, NDAQ, NOC, NSC, NYCB, PEP, PG, ROK, SLAB, SONS, STT, STX, TEL, TMO, TWTR, UTX, VNTV, X, WM, WRK, WYN
  • Earnings After the Close: AMGN, AVB, BCR, CAVM, BWLD, EFX, EQIX, EXR, FBHS, FFIV, FISV, FTI, KIM, KN, MAA, MKSI, NOW, NTGR, ORLY, PYPL, SAM, TSCO, UNM, VAR, XL, XLNX

World News

  • President Donald Trump plans to propose a 10% repatriation tax, reports Bloomberg, citing a White House official familiar with the plans. The plan is also expected to call for a cut to rates for pass-through businesses to 15% from nearly 40%, and a 15% tax rate for corporations, the report says
  • The Trump administration has pulled support for a border adjustment tax on imports, reports the New York Times, citing sources
  • Investor Intelligence poll shows writers classified as bulls rise to 54.7% vs prior reading of 51.9%, which was a 3-week low, while bearish sentiment falls to 17.9% vs 18.3% last week and those expecting a correction slips to 27.4% from last week’s 3-week high 29.8%
  • S&P Dow Jones Indices will make the following changes to the S&P MidCap 400 and S&P SmallCap 600 indices effective prior to the open on Friday, April 28: PBF Energy (PBF) will replace Waddell & Reed Financial (WDR) in the S&P MidCap 400, and Waddell & Reed Financial will replace Stillwater Mining (SWC) in the S&P SmallCap 600. Sibanye Gold (SBGL) is acquiring Stillwater Mining in a deal expected to be completed soon pending final conditions. Apollo Commercial Real Estate Finance (ARI) will replace ZELTIQ Aesthetics (ZLTQ) in the S&P SmallCap 600. S&P 100 and 500 constituent Allergan (AGN) is acquiring ZELTIQ Aesthetics in a deal expected to be completed on April 27 pending final conditions

Sector News Breakdown

Consumer

  • PepsiCo (PEP) Q1 core EPS 94c/$12.05B vs. est. 91c/$11.98B; continues to target 2017 core EPS $5.09 vs. est. $5.14 and reiterates year organic rev. growth view of “at least” 3%
  • Wynn Resorts (WYNN) Q1 EPS $1.24/$1.48B vs. est. 96c/$1.38B; Q1 Macau revenues down 3.5% to $587M, Macau Q1 adjusted property EBITDA down 5.3% to $181.1M; reports Macau table games turnover in VIP operations down 1.4% to $13.28B and Macau VIP table games win as a percentage of turnover 3.3% vs. 2.81% last year.
  • Chipotle (CMG) Q1 EPS $1.60/$1.07B vs. est. $1.29/$1.05B; 1Q comp. sales +17.8% vs. est. 15.5%, labor costs as percentage of rev. 26.9%, restaurant level operating margin 17.7%; backs FY17 SSS view of up in high-single digits and backs FY17 restaurant openings view of 195-210
  • Decker’s Brands (DECK) to review broad range of strategic alternatives, which may include a sale or other transaction; also continues to explore additional margin-enhancing opportunities, plans to give more details on upcoming year-end earnings call May 25
  • Allegiant Travel (ALGT) Q1 EPS $2.50/$375.8M vs. est. $2.67/$374.95M; sees Q2 TRASM increasing 1.5%-3.5% vs. Q2 last year
  • iRobot (IRBT) Q1 EPS 58c/$168.5M vs. est. 72c/$154.55M; sees FY revs $780M-$790M and EPS $1.45-$1.70 vs. est. $778M/$1.54
  • Churchill Downs (CHDN) announces new $250M stock repurchase program

Energy

  • The American Petroleum Institute (API) reported a rise of 897,000 barrels in U.S. crude supplies for the week ended April 21, a climb of about 4.4 million barrels in gasoline supplies, while inventories of distillates slipped 36,000 barrels
  • Superior Energy (SPN) Q1 EPS loss (59c)/$400.9M vs. est. loss (61c)/$387.5M
  • EQT Midstream Partners (EQM) raises quarterly distribution to 89c per unit

Financials

  • Capital One (COF) Q1 EPS $1.75/$6.5B vs. est. $1.92/$6.64B; 1Q net interest margin 6.88%; Q1 provision for credit losses $2.0B, Q1 non-interest income $1.06B; Q1 net interest income $5.47B
  • Discover Financial (DFS) Q1 EPS $1.43 vs. est. $1.43; total loans ended the quarter at $75.8B, up 8% compared to the prior year. Credit card loans ended the quarter at $59.8B, up 7% from the prior year. Personal loans increased $1.1B from the prior year
  • Equity Residential (EQR) Q1 FFO 74c in-line on rental income $603.9M vs. est. $609M; sees 2Q normalized FFO 75c-79c vs. est. 77c
  • BofI Holding (BOFI) Q3 EPS 64c vs. est. 63c; reports Q3 adjusted earnings up 13.5%; Q3 NIM 4.24%; 3Q non-interest income $23.2M and 3Q net interest income $88.6M
  • Santander Consumer (SC) Q1 EPS 40c vs. est. 37c; reports Q1 CET1 capital ratio 13.8%
  • SiteOne Landscape (SITE) 10M share Secondary priced at $47.50
  • Medical Properties Trust (MPW) files to sell 37.5M shares of common stock
  • Vantiv (VNTV) announced its agreement to acquire Paymetric, a portfolio company of Francisco Partners
  • Cascade Bancorp (CACB) Q1 EPS 9c (in-line); net interest margin improved to 3.63% from 3.55%

Healthcare

  • Anthem (ANTM) Q1 EPS $4.68/$22.3B vs. est. $21.27B; sees FY operating revs $88B-$89B from prior $86.5B-$87.5B and est. $87B; sees FY medical membership 40.2M-40.4M
  • Thermo Fisher (TMO) Q1 EPS $2.08/$4.77B vs. est. $2.02/$4.68B; raises FY17 adjusted EPS view to $9.12-$9.28 from $9.06-$9.24 (est. $9.17) and raises FY17 revenue view to $19.51B-$19.71B from $19.38B-$19.62B (est. $19.53B)
  • Stryker (SYK) Q1 EPS $1.48/$2.96B vs. est. $1.43/$2.9B; sees FY17 EPS $6.35-$6.45 vs. est. $6.41; expects 2017 organic sales growth to be in the range of 5.5%-6.5% and adjusted net earnings per diluted share to be in the range of $6.35-$6.45(est. $6.41)
  • Akebia Therapeutics Inc. (AKBA) shares jumped over 20% said it expanded its collaboration with Otsuka Pharmaceutical Co., part of Otsuka Holdings Co. on an anemia treatment.
  • Edwards Lifesciences (EW) Q1 EPS 94c/$884M vs. est. 82c/$777.83M; raises FY17 adjusted EPS to $3.43-$3.55 from $3.30-$3.45 (est. $3.41); is narrowing its full year sales guidance to $3.2B-$3.4B, from $3B-$3.4B (est. $3.26B)
  • Universal Health (UHS) Q1 EPS $2.10/$2.61B vs. est. $2.07/$2.65B; 1Q acute care adj. admissions +5.1% and 1Q behavioral health admissions +2.4%
  • Perrigo (PRGO) sees Q1 prelim sales $1.2B vs. est. $1.19B; says some previously issued financial statements for some fiscal years and quarterly periods should be restated; restatements related to Tysabri royalty stream recognition and the acquisition of Omega Pharma
  • PRA Health (PRAH) Q1 EPS 62c/$427.1M vs. est. 60c/$419.5M; sees FY17 EPS $3.08-$3.18 on revenue $1.795B-$1.835B vs. est. $3.14/$1.81B
  • Illumina (ILMN) Q1 EPS 64c/$598M vs. est. 64c/$590.75M; sees FY17 EPS $3.60-$3.70 vs. est. $3.64; sees FY17 revenue growth of 10%-12% vs. est. $2.65B
  • NuVasive (NUVA) Q1 EPS 38c/$250M (in-line with estimates); sees FY17 EPS $2.00/$1.065B vs. est. $2.02/$1.07B
  • Flexion (FLXN) files $125M in convertible senior notes due 2024

Industrials & Materials

  • United Technologies (UTX) Q1 EPS $1.48/$13.8B vs. est. $1.39; still sees year EPS $6.30-$6.60 vs. est. $6.55
  • Northrop Grumman (NOC) Q1 EPS $3.63/$6.3B vs. est. $2.92/$6.14B
  • S. Steel (X) Q1 EPS loss (83c)/$2.73B vs. est. $2.95B; cuts year EPS to $1.50, down from prior view of about $3.08 (est. $3.05) and sees year Ebitda $1.1B vs. est. $1.39B
  • Trinity Industries (TRN) Q1 EPS 30c/$877.3M vs. est. 30c/$912.56M; reports quarterly deliveries and orders totaling 3,770 and 970 railcars, respectively, in the Rail Group, compared to 7,145 and 1,620 railcars, respectively, in 2016; sees 2017 EPS $1.00-$1.25 vs. prior $1.00-$1.35 (est. $1.23)
  • H. Robinson (CHRW) Q1 EPS 86c/$3.42B vs. est. 81c/$3.34B
  • Century Aluminum (CENX) Q1 EPS loss (5c)/$365.8M vs. est. loss (16c)/$364.3M; Q1 Ebitda of $22.2M, up $10.3M sequentially on higher LME prices, partially offset by higher raw material costs
  • Arconic (ARNC) Q1 EPS 33c/$3.19B vs. est. 24c/$3.0B; reaffirms year forecast

Media & Telecom

  • AT&T (T) Q1 EPS 74c/$39.4B vs. est. 74c/$40.57B; Q1 wireless net adds of 2.7M, including 2.1M in the U.S., driven by prepaid and connected devices, and 633,000 in Mexico. Reports “best-ever” first quarter postpaid phone churn of 0.90% and wireless postpaid churn of 1.12%, including “pressure from tablets; Q1 Wireless operating margin of 30.1%.
  • Crown Castle (CCI) files to sell 4.75M shares of common stock

Technology

  • Texas Instruments (TXN) Q1 EPS 97c/$3.4B vs. est. 83c/$3.31B; sees Q2 revs $3.4B-$3.7B vs. est. $3.5B
  • Juniper (JNPR) Q1 EPS 46c/$1.22B vs. est. 42c/$1.2B; sees Q2 EPS 54c plus/minus 3c on revs $1.28B plus/minus $30M vs. est. 53c/$1.28B
  • TSYS (TSS) Q1 EPS 82c/$832.9M vs. est. 77c/$833.53M; raises 2017 adjusted EPS outlook to $3.16-$3.26 vs. est. $3.13 and raises 2017 revenue outlook to $3.295B-$3.395B vs. est. $3.34B
  • Ultimate Software (ULTI) Q1 EPS 75c/$228.5M vs. est. 73c/$228.85M; sees Q2 revenue roughly $228M vs. consensus $231.85M; sees Q2 recurring revenues roughly $196M
  • Cree (CREE) reports Q3 EPS 1c/$341.5M vs. est. 4c/$356.14M; sees Q2 EPS 2c-7c on revs $340M-$360M vs. est. 13c/$381.4M; says its forming a joint venture with San’an Optoelectronics to produce, deliver LED products in an exclusive arrangement to serve North and South America, Europe, Japan and serve China and the rest of the world on a non-exclusive basis
  • Exactech (EXAC) Q1 EPS 32c/$69.5M vs. est. 31c/$67.05M; raises FY17 adjusted EPS view to $1.26-$1.32 from $1.24-$1.32 and raises FY17 revenue view to $266M-$272M from $264M-$272M
  • RingCentral (RNG) Q1 EPS 3c/$111.8M vs. est. 2c/$110.45M; software subscriptions revenue grew 30% year-over-year to $103.7M
  • CoreLogic (CLGX) Q1 EPS 37c/$440M vs. est. 39c/$442.98M
  • Shutterfly (SFLY) Q1 EPS loss (98c)/$192M vs. est. loss (99c)/$187.35M; sees 2017 EPS 45c-80c on revs $1.135B-$1.165B vs. est. 59c/$1.15B

Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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