Morning Preview: April 28th, 2017

eOptionDaily Market Report

Stock futures are quiet in the early going, trading in a narrow 5-point range overnight (high 2,388.50 and low 2,383.50) following mixed reactions to earnings results from top tech firms Amazon, Alphabet (both higher), Microsoft, and Intel (lower) overnight. While tech grabs headlines on the earnings overnight, a first reading on U.S. economic growth in Q1 could also drive trading action later in the day, with estimates being for a meager 1% rise in GDP following growth rates of 2.1% and 3.5% in the prior two quarters. Another focus for investors is a potential government shutdown this weekend. Government funding expires at 12:01 a.m. Eastern on Saturday, though Congress is expected to pass a one-week spending bill to keep the government going a while longer. In Asian markets, The Nikkei Index fell -55 points to settle at 19,196, the Shanghai Index inched higher 2 points to 3,154 and the Hang Seng Index dipped -83 points to close at 24,615. In Europe, the German DAX is up a few points at around 12,450, and the FTSE 100 is down over -0.2% at 7,218.

Alphabet (GOOGL) in on track for a gain of about 4% after earnings and AMZN about 3%, helping lift the Nasdaq Comp which posted a record closing high yesterday and is on track for a weekly gain of about 2.3%. The S&P 500 index and Dow average both nudged higher at the close on Thursday, setting them on track for a weekly gain of 1.7% and 2.1%, respectively. For the month, all three major indexes are set for their best monthly performance since February. The Nasdaq is poised to gain 2.3%, the Dow industrials, 1.5% and the S&P 500, 1.1%.

Note the Dow Industrial Average has rallied 14.45% since Trump’s Nov. 8 election victory over Hillary Clinton after a campaign promising friendly policies, including tax cuts, deregulation and a boost in infrastructure spending. The S&P 500 index has gained about 11.6% over that period, while the Nasdaq Composite Index has climbed 16.4%.

Market Closing Prices Yesterday

  • The S&P 500 Index gained 1.32 points, or 0.06%, to 2,388.77
  • The Dow Jones Industrial Average rose 6.24 points, or 0.03%, to 20,981.33
  • The Nasdaq Composite climbed 23.71 points, or 0.39%, to 6,048.94
  • The Russell 2000 Index declined -2.30 points, or 0.16% to 1,417.13

Events Calendar for Today

  • 8:30 AM ET          Gross Domestic Product (GDP) Annualized for Q1-A…est. 1.0%
  • 8:30 AM ET          Personal Consumption for Q1…est. 0.9%
  • 8:30 AM ET          GDP Price Deflator for Q1…est. 2.0%
  • 8:30 AM ET          Core PCE QoQ for Q1-A…est. 2.0%
  • 8:30 AM ET          Employment Cost Index for Q1…est. 0.6%
  • 9:45 AM ET          Chicago PMI Index for April…est. 56.2
  • 10:00 AM ET       University of Michigan Confidence, April-F…est. 98.0
  • 1:00 PM ET          Baker Hughes Weekly Rig Count
  • 2:30 PM ET          Fed’s Harker speaks in Washington

Earnings Calendar:

  • Earnings Before the Open: CL, COG, CVX, GM, GT, HST, LYB, PEG, PSX, SYF, VFC, VTR, WY, XOM

World News

  • K. GDP slows to 0.3% in Q1 vs. 0.4% estimate on weaker growth in services activity
  • Eurozone inflation rises to 1.9% in April vs. 1.5% in March and 1.8% estimate
  • Eurozone core inflation rises to 1.2% in April, highest since 2013
  • Russian central bank cuts key interest rate to 9.25% from 9.75%
Sector News Breakdown

Consumer

  • Amazon (AMZN) Q1 EPS $1.48/$35.7B vs. est. $1.08/$35.31B; sees Q2 operating income $425M-$1.075B (vs. est. $1.49B) and Q2 revenue $35.25B-$37.75B vs. est. $36.84B; 1Q AWS net sales $3.66B vs. est. $3.63B and AWS net sales +43%; Q1 operating income $1.01B vs. est. $936.2M
  • Starbucks (SBUX) Q2 EPS 45c/$5.29B vs. est. 45c/$5.41B; Q2 global comp sales increased 3% Americas comp store sales increased 3%. U.S. comp store sales increased 3% vs. est. 3.5% with 4% increase in average ticket; China/Asia Pacific comp. sales +3%, vs. est. +4.7%; cuts FY17 adjusted EPS view to $2.08-$2.12 from $2.12-$2.14
  • Columbia Sportswear (COLM) Q1 EPS 51c/$543.8M vs. est. 41c/$533.37M; Q1 inventory decreased 3% to $398.8M; cuts FY17 operating income to up 3% to $256M-$265M from prior view $260M-$270M
  • Mohawk (MHK) Q1 EPS $2.72/$2.22B vs. est. $2.72/$2.27B; sees Q2 EPS $3.53-$3.62 vs. est. $3.74; said Q2 sales growth should accelerate sequentially on a local basis, and our operating income should improve despite inflation, expiring patents and a weaker British Pound
  • Emerald Expositions Events (EEX)5M share IPO priced at $17.00
  • SkyWest (SKYW) Q1 EPS 65c/$765M vs. est. 52c/$745.86M
  • GoPro (GPRO) Q1 EPS loss (44c)/$218.6M vs. est. loss (44c)/$207.9M; says remain on track toward our goal of returning to full-year non-GAAP profitability in 2017; sees Q2 revenue of $270M +/- $10M vs. consensus $240.4M
  • BJ’s Restaurants (BJRI) Q1 EPS 42c/$257.8M vs. est. 35c/$255.62M
  • Leggett & Platt (LEG) Q1 EPS 62c/$960.3M vs. est. 59c/$959.0M; reaffirms forecast

Energy

  • FirstEnergy (FE) Q1 EPS 80c vs. est. 75c; sees Q2 EPS 55c-65c vs. est. 55c; reaffirms 2017 EPS outlook $2.70-$3.00
  • Southwestern Energy (SWN) Q1 EPS 18c (in-line); Q1 revenue $846M, consensus $769.67M; reports Q1 total net production of 204 Bcfe
  • Cloud Peak (CLD) Q1 EPS loss (30c)/$195.73M vs. est. loss (4c)/$233.57M; Cuts FY17 adjusted EBITDA view $80M-$110M from $80M-$120M; backs FY17 coal shipments for the three mines 55M-60M tons

Financials

  • Barclays Bank PLC (BCS) and Royal Bank of Scotland Group PLC (RBS) dropped over 4% and rose 2.5% respectively in premarket trading, after the British lenders’ earnings reports
  • Principal Financial (PFG) Q1 EPS $1.27 vs. est. $1.18; Q1 assets under management $619.7B; Q1 book value per share $36.85 and raises dividend to 46c from 45c
  • Hartford Financial (HIG) Q1 core EPS $1.00/$4.66B vs. est. $1.00/$4.71B; book value per diluted share of $45.25 rose 2% from Dec. 31, 2016; Assets under management $103.2B and 1Q net investment income $728M
  • Aflac (AFL) Q1 operating EPS $1.67/$5.31B vs. est. $1.62/$5.33B
  • Reinsurance Group (RGA) Q1 EPS $2.22/$3.01B vs. est. $2.16/$2.86B; reports book value per share of $115.24 and book value per share
  • LPL Financial (LPLA) Q1 EPS 52c/$1.04B vs. est. 37c/$1.01B; Q1 Ebitda $152.0M
  • Cowen (COWN) Q1 EPS 19c/$115M vs. est. 13c/$135.52M
  • Artisan Partners (APAM) Q1 EPS 52c/$184.1M vs. est. 49c/$180.9M
  • Greenhill (GHL) Q1 EPS loss (2c)/$56.9M vs. est. 26c/$68.4M
  • Apartment Investment (AIV) Q2 FFO 58c (in-line); sees 2Q proforma FFO 56c-60c vs. est. 60c
  • Digital Realty (DLR) Q1 FFO $1.52/$550,6M vs. est. $1.47/$551.2M; sees FY core FFO/share $5.95-$6.10 vs. est. $6.00
  • CubeSmart (CUBE) Q1 FFO 36c vs. est. 36c; sees 2Q FFO 38c-39c vs. est. 39c; Q1 same property NOI change +6%; reaffirms year FFO forecast
  • Taubman Centers (TCO) Q1 AFFO 92cc and FFO 85c; cuts year EPS to $1.16-$1.41 from prior view $1.20-$1.45 and year FFO to $3.60-$3.75 from $3.67-$3.82

Healthcare

  • Cerner (CERN) Q1 EPS 59c/$1.26B vs. est. 57c/$1.23B; sees 2Q EPS 60c-62c on revs $1.27B-$1.34B vs. est. 62c/$1.30B; sees 2Q bookings $1.30B-$1.50B after Q1 bookings $1.25B
  • Vertex (VRTX) Q1 EPS 41c/$482.3M vs. est. 30c/$458.9M; sees FY Kalydeco revs $710M-$730M, up from prior $690M-$710M vs. est. $712.7M and still sees FY Orkambi revs $1.1B-$1.3B
  • Athenahealth (ATHN) Q1 EPS 32c/$285.4M, below est. 47c/$297.56M; cuts year revs to $1.21B-$1.25B vs. est. $1.29B; cuts year operating income to $120M-$140M from $170M-$190M and annual bookings to $350M-$400M from $400M-$450M
  • HealthSouth (HLS) Q1 EPS 70c/$974.8M vs. est. 65c/$944.1M; sees FY EPS $2.61-$2.73 on revs $3.85B-$3.95B vs. est. $2.67/$3.85B
  • Align Technology (ALGN) Q1 EPS 85c/$310.3M vs. est. 67c/$297.3M; sees Q2 EPS 71c-74c on revs $340M-$345M vs. est. 71c/$324.44M
  • ResMed (RMD) Q3 EPS 71c/$514.2M vs. est. 71c/$523.3M; 3Q gross margin 58.3% vs est. 58.4%; 3Q operating expenses rose 24% y/y to $192.3M from $155.6M
  • Seattle Genetics (SGEN) Q1 EPS loss (42c)/$109.1M vs. est. loss (42c)/$103.23M; said continue to successfully execute on our ADCETRIS commercial objectives, and are positioned to achieve several important clinical development milestones during 2017
  • Sarepta (SRPT) Q1 EPS loss (60c)/$16.3M vs. est. loss (36c)/$13.86M; Q1 Exondys 51 revs $16.3M vs. est. $14.2M; sees year revs over $95M

Industrials & Materials

  • Eastman Chemical (EMN) Q1 EPS $1.83/$2.3B vs. est. $1.75/$2.26B
  • LyondellBasell (LYB) Q1 EPS $2.00/$8.43B vs. est. $7.59B; Q1 Ebitda $1.6B
  • Fortive (FTV) Q1 EPS 60c/$1.54B vs. est. 57c/$1.53B; sees Q2 EPS 65c-69c vs. est. 68c; raises FY17 adjusted EPS view to $2.68-$2.78 from $2.60-$2.70
  • National Instruments (NATI) Q1 EPS 21c/$300M vs. est. 13c/$300.28M; Q1 gross margin up 55 bps to 75.3%. “In Q1 2017, NI received $5M in orders from its largest customer compared with $6M in orders from this customer in Q1 2016; sees Q2 revs $305M-$335M vs. $325.93M est.
  • Republic Services (RSG) Q1 EPS 55c/$2.39B vs. est. 53c/$2.36B; said solid pricing and volume growth continue to demonstrate the benefits from our Company strategy of profitable growth through differentiation

Technology, Media & Telecom

  • Alphabet (GOOGL) Q1 EPS $7.73/$24.75B vs. est. $7.40/$24.22B; Q1 Aggregate paid clicks up 44%, paid clicks on Google properties up 53% and paid clicks on Google Network Members’ properties up 10%; Q1 aggregate cost-per-click down (19%), with cost-per-click on Google properties down (21%) and cost-per-click on Google Network Members’ properties down (17%)
  • Intel (INTC) Q1 EPS 66c/$14.8B vs. est. 65c/$14.81B; raises FY17 adjusted EPS view to $2.85 from $2.80 vs. est. $2.80; sees FY17 revenue roughly $60B, consensus $59.93B; approves $10B hike to share buyback program
  • Microsoft Corp. (MSFT) Q3 EPS 73c/$23.6B vs. est. 70c/$23.62B; 3Q capital expenditures $1.70B; Q3 total unearned revs $35.7B; Q3 Intelligent Cloud rev. $6.76B, More Personal Computing revs $8.84B and Productivity and Business Processes revs $7.96B
  • Skyworks (SWKS) Q2 EPS $1.45/$851.7M vs. est. $1.40/$840.4M; sees Q3 EPS $1.52 on revs $890M vs. est. $1.50/$868.4M
  • Expedia (EXPE) Q1 EPS 5c/$2.18B vs. est. 7c/$2.14B; said expects ~$15M-$20M in restructuring and related charges in 2017 vs prior view of ~$10M-$15M; Q1 gross bookings $23.6B up 14% YoY and Q1 room nights stayed +18%
  • Cloudera (CLDR) 15M share IPO priced at $15.00, above the range
  • Western Digital (WDC) Q3 EPS $2.39/$4.6B vs. est. $2.14/$4.57B; sees Q4 EPS $2.55-$2.65 on revs $4.8B vs. est. $2.13/$4.6B; said estimates for NAND industry bit growth rates for CY17 are at the low end of our long-term industry outlook of 35%-45%
  • KLA-Tencor (KLAC) Q3 EPS $1.62/$913.8M vs. est. $1.55/$895.6M; Q3 product revs $721.0M and service revs $192.8M; sees Q4 revs $885M-$945M vs. est. $896.3M
  • Cypress Semiconductor (CY) Q1 EPS 13c/$531.9M vs. est. 11c/$511.3M; 1Q adj. gross margin 39.3% vs. est. 39.04% and sees 2Q revs $530M-$560M vs. est. $533.8M
  • Amkor Technology (AMKR) Q1 EPS loss (4c)/$913.6M vs. est. loss (2c)/$902.06M; sees Q2 EPS 36c-52c on revs $955M-$1.035B vs. est. 11c/$978.79M
  • Baidu (BIDU) Q1 EPS $1.00/$2.45B vs. est. 89c/$2.44B; sees Q2 revs $2.974B-$3.048B vs. est. $3.03B
  • Brooks Automation (BRKS) Q2 EPS 28c/$169.3M vs. est. 25c/$167.16M; sees 3Q EPS 29c-33c, on revs $175M-$180M vs. est. 26c/$167.2M
  • Cohu (COHU) Q1 EPS 35c/$81.1M vs. est. 24c/$78.31M; sees Q2 revenue roughly $86M, below consensus $89.2M
  • Flex (FLEX) Q4 EPS 29c/$5.86B vs. est. 29c/$5.69B; sees Q1 EPS 24c-28c on revs $5.7B-$6.1B vs. est. 30c/$5.8B
  • Fortinet (FTNT) Q1 EPS 17c/$340.6M vs. est. 15c/$334.66M; Q1 Billings of $403.3M, up 22% YoY; raises FY17 EPS view to 89c-91c from 87c-89c (est. 89c) and sees FY17 revenue $1.485B-$1.495B (est. $1.48B)
  • Microsemi (MSCC) Q2 EPS 91c/$442.9M vs. est. 91c/$439.8M; sees Q3 EPS 94c-$1.04 on sales $448M-$468M vs. est. 99c/$455.2M
  • MicroStrategy (MSTR) Q1 EPS $1.28/$120.6M vs. est. $1.73/$122.0M
  • Power Integrations (POWI) Q1 EPS 63c/$104.7M vs. est. 61c/$102.31M; sees Q2 revenue $107M, plus or minus $3M vs. est. $106M; GAAP gross margin is expected to be between 48.8%- 49.3%
  • Synaptics (SYNA) Q3 EPS $1.27/$444.2M vs. est. $1.20/$430.14M; sees Q4 revenue $410M-$450M vs. est. $430.77M; expect the revenue mix from mobile and PC products to be approximately 87% and 13%, respectively
  • Trimble (TRMB) Q1 EPS 33c/$613.9M vs. est. 30c/$605.32M; sees Q2 EPS 33c-38c on revs $625M-$655M vs. est. 34c/$636.56M
  • VeriSign (VRSN) Q1 EPS 96c/$289M vs. est. 94c/$284.71M; Q1 deferred revenues on March 31, 2017, totaled $1.01 billion; processed 9.5 million new domain name registrations for .com and .net, as compared to 10.0 million YoY; raises FY17 revenue view to $1.145B-$1.16B from $1.138B-$1.158B


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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