Morning Preview: May 2nd, 2017

eOptionDaily Market Report

Stock futures are slightly lower ahead of a very busy day of corporate quarterly earnings, with two Dow components scheduled to report shortly (Pfizer and Merck). There are high market expectations ahead of Apple’s quarterly results after the close, monthly auto sales data throughout the morning, the FOMC meeting results tomorrow (starts today) and jobs data this Friday. Auto sales data in March was disappointing, leading to a sharp pullback in auto, suppliers and retailers, though the group has rallied over the last week on better earnings in the sector. While the central bankers are expected to keep rates on hold at this meeting, analysts are looking for any comments on the recent slowdown in U.S. economic activity.

The Nasdaq Comp closed at yet another record on Monday, lifted by high-beta stock such as Apple which also touched a new high (ahead of earnings tonight), while the Dow industrials slipped on slightly weaker economic data and as investors prepare for the FOMC policy meeting. The Nasdaq Composite Index closed higher to a record 6,091.60, after touching an all-time intraday high of 6,100.73. The S&P 500 index posted a 4-point gain with only five of the 11 main sectors finishing higher (led by Tech while defensive Telecoms and Utilities paced the declines). Banks were mixed, recovering from earlier comments by President Donald Trump who said that he was looking at breaking up big banks.

In Asian markets, The Nikkei Index rose 135 points to settle at 19,445, the Shanghai Index slipped -10 points to close at 3,143, and the Hang Seng Index climbed 81 points to end at 24,696. In Europe, the German DAX is higher by around 20 points at 12,460, while the FTSE 100 is up around 30 points at 7,235. The euro moves a higher after Greece and its creditors reached an agreement to unlock the next trance of bailout money.

Market Closing Prices Yesterday

  • The S&P 500 Index gained 4.13 points, or 0.17%, to 2,388.33
  • The Dow Jones Industrial Average fell -27.05 points, or 0.13%, to 20,931.46
  • The Nasdaq Composite spiked 44.00 points, or 0.73%, to 6,091.60
  • The Russell 2000 Index advanced 6.93 points, or 0.50% to 1,407.36

Events Calendar for Today

  • 7:45 AM ET          ICSC Weekly Retail Sales
  • 8:55 AM ET          Johnson/Redbook Weekly Sales
  • 4:30 PM ET          API Weekly Inventory Data
  • N/A                        Monthly auto sales data released for April

Earnings Calendar:

  • Earnings Before the Open: ADM, AET, AME, CDK, CHTR, CMI, COH, COP, CVS, ECL, EMR, ETN, EXLS, FIS, GWR, HCA, HCP, HLT, IIVI, IPGP, LL, MA, MO, MOS, MRK, NRG, OZM, PBI, PCG, PFE, PNW, SABR, SHOP, VSSM, WEC, WDR, XYL
  • Earnings After the Close: AAPL, AIZ, AKAM, ALL, APC, BYD, CSOD, DVA, DVN, FEYE, FSLR, FTR, GILD, EVHC, GDDY, HBI, HUBS, IPHI, JKHY, NANO, MDLZ, MTCH, NFX, OCLR, OKE, PAYC, PRO, QLYS, TEX, TWLO, VIAV, WBMD, WU

World News

  • Eurozone final April manufacturing PMI comes in at 56.7, misses forecast of 56.8
  • German final April manufacturing PMI comes in at 58.2, same as flash reading
  • France final April manufacturing PMI comes in at 55.1, same as flash reading
  • K. manufacturing activity grew at the fastest clip in three years in April, as new orders and exports advanced, as the purchasing managers index for the British manufacturing sector rose to 57.3 in April, bouncing from March’s four-month low of 54.2 (est. was for 54.0)
  • Greece and its international creditors sealed a deal Tuesday over fresh austerity measures, keeping its EUR86-billion ($93.74 billion) bailout on track and clearing the way for debt-relief talks
Sector News Breakdown

Consumer

  • Hilton (HLT) Q1 EPS 38c/$2.16B vs. est. 28c/$2.06B; system-wide comparable RevPAR increased 3% on a currency neutral basis for the first quarter compared to the prior year, achieving high end of guidance; raises FY17 adjusted EPS view to $1.73-$1.81 from $1.65-$1.75 (est. $1.75); system-wide RevPAR is expected to increase between 1%-3% on a comparable and currency neutral basis compared to 2016
  • Texas Roadhouse (TXRH) Q1 EPS 48c/$567.69M vs. est. 58c/$560.94M; Q1 comparable restaurant sales increased 3.1% (vs. est. 1.9%) at company restaurants and 3.8% at domestic franchise restaurants
  • True Blue (TBI) Q1 EPS 21c/$568.2M vs. est. 12c/$560M; sees Q2 EPS 38c-43c vs. est. 43c
  • Nautilus (NLS) expands buyback program to $25M
  • Murphy USA (MUSA) Q1 EPS loss (8c)/$3.0B vs. est. loss (8c)/$2.95B; 1Q same store gallons -3%

Energy

  • BP PLC (BP) reported a sharp increase in Q1 profit, benefiting from a roughly 60% increase in prices since the first quarter of 2016 and higher production volumes.
  • Noble Energy (NBL) Q1 EPS loss (5c)/$1.036B vs. est. loss (14c)/$958.96M; says it initiated production on 3 Wolfcamp A wells in 1Q, each are materially outperforming its type curve; maintains 2017 guidance for sales volumes and capital
  • Noble Midstream (NBLX) raises FY17 Capital Budget guidance to $185M-$200M from $155M-$175M and raises FY17 EBITDA view to $110M-$122M from $108M-$120M. Noble Midstream has two additional central gathering facilities in its 2017 capital budget to support the planned development on the recently dedicated acreage from the Clayton Williams Energy acquisition.
  • Cabot Corp. (CBT) Q2 EPS 87c/$678M vs. est. 85c/$637.5M
  • Edison International (EIX) Q1 EPS $1.11/$2.46B vs. est. 90c/$2.68B; sees FY core EPS $4.04-$4.24 vs. est. $4.15
  • NRG Energy (NRG) Q1 adjusted Ebitda $412M below est. $462.1M and Q1 revs $2.76B vs. est. $2.91B
  • Hi-Crush Partners (HCLP) Q1 EPS loss (7c)/$83.4M vs. est. $83.9M; sees Q2 volumes boost by 50%-60% vs. Q1; boosts year cap-ex $115M-$125M from prior $30M-$35M
  • BWX Technologies (BWXT) Q1 EPS 45c/$428.2M vs. est. 46c/$391.71M
  • Advanced Energy (AEIS) Q1 EPS $1.04/$149.4M vs. est. 96c/$147.91M; sees Q2 EPS $1.00-$1.10, on revs $150M-$160M vs. est. 96c/$147.31M

Financials

  • FleetCor (FLT) in definitive agreement to acquire B2B international payments provider Cambridge Global Payments for $675M using a combination of cash/borrowings under existing credit facilities; reports Q1 adjusted EPS $1.96/$520.4M vs. est. $1.87/$512.76M; reports Q1 revs, or revs, net less merchant commissions, rose 29% to $496.0M; raises year EPS and revenue outlook
  • Dun & Bradstreet (DNB) Q1 EPS 95c/$381.5M vs. est. 90c/$380M; reaffirms FY17 adjusted EPS growth outlook (4%)-(9%) and reaffirms FY17 adjusted total revenue growth outlook of 3%-5%, before the effect of foreign exchange
  • First Bancorp (FBNC) to acquire ASB Bancorp (ASBB) for $43.12 per share in deal valued at about $175M; combined company will have $5.2B in pro forma assets, $3.9B in loans, $4.3B in deposits and >100 branches
  • AGNC Investment (AGNC) files to sell 24.5M shares of common stock
  • Stifel Financial (SF) Q1 EPS 77c/$677.5M vs. est. 74c/$682.2M
  • Vornado (VNO) Q1 AFFO/share $1.13/$620.8M vs. est. $1.27/$643.0M
  • Alexandria Real Estate (ARE) Q1 FFO $1.48/$270.9M vs. est. $1.45/$265.3M; sees FY AFFO/share $5.97-$6.07 vs. est. $6.01 (narrows year view)
  • Brixmor Property (BRX) Q1 FFO 53c/$325.8M vs. est. 52c/$319.0M; 1Q same property NOI change +3.2% and reaffirms forecast

Healthcare

  • Aetna (AET) Q1 EPS $2.71/$15.48B vs. est. $2.37/$15.44B; reports medical membership down about 664,000 at March 31; raises FY17 adjusted EPS view to $8.80-$9.00 from prior view of $8.55 (est. $8.88)
  • Tenet Healthcare (THC) Q1 EPS loss (27c)/$4.81B vs. es.t loss (51c)/$4.84B; same-hospital patient revenue declined 1.0% and reflects a 1.6% increase in revenue per adjusted admission offset by a 2.5% decline in adjusted admissions; sees FY EPS $1.05-$1.30 on revs $19.7B-$20.1B vs. est. $1.13/$19.8B; raises FY17 adjusted EBITDA view
  • Community Health (CYH) Q1 EPS 8c/$4.49B vs. est. 7c/$4.36B; sees 2017 EPS 25c-90c on revs $15.8B-$16.2B vs. est. 53c/$15.98B; sees same-store hospital annual adjusted admissions growth 0.0%-1.5%; sees FY adjusted Ebitda $2.00B-$2.18B
  • Luminex (LMNX) shares jumped over 20% as Q1 EPS 28c/$77.8M topped est. 7c/$74.19M; sees Q2 revenue $74M-$76M vs. est. $74.99M; raises FY17 revenue view to $300M-$310M from $295M-$305M (est. $301.27M)
  • Global Blood Therapeutics (GBT) Q1 EPS loss (60c) vs. es.t loss (70c); said cash, cash equivalents, and marketable securities totaled $310.3M at March 31, compared with $197.3M at December 31, 2016
  • Sunesis Pharmaceuticals Inc. (SNSS) shares dropped overnight after it pulled a European marketing application for a leukemia treatment.
  • Lion Biotechnologies (LBIO) Q1 EPS loss (28c); held $147.2M in cash and cash equivalents and short-term investments, compared to $166.5M as of December 31, 2016
  • ZIOPHARM (ZIOP) Q1 EPS loss (15c)/$1.6M vs. est. loss (12c)/$1.71M; ended the quarter with cash and cash equivalents of approximately $66.4M
  • Exelixis (EXEL) Q1 EPS 5c/$80.89M and product revenue $68.9M vs. est. loss (1c)/$65.23M; sees Phase III cabozantinib combination trial in RCC start later this year; on track to file cabozantinib sNDA in untreated RCC in Q3
  • Aeglea BioTherapeutics (AGLE) files $150M mixed securities shelf

Industrials & Materials

  • Eaton (ETN) Q1 EPS 96c/$4.8B vs. est. 88c/$4.7B; raises FY17 operating EPS view to $4.45-$4.75 from $4.30-$4.60 (est. $4.46)
  • Flowserve (FLS) Q1 EPS 25c/$864M vs. est. 19c/$813.8M; total bookings were $958M, up 5.3% on a constant currency basis; backs FY17 adjusted EPS view $1.55-$1.85 vs. consensus $1.75; says target range based on an expected 6%-11% decline in revenues year-over-year
  • Chemours (CC) Q1 EPS 75c/$1.44B vs. est. 50c/$1.32B; sees year adjusted Ebitda $1.15B-$1.25 vs. prior view of over $1B
  • Quaker Chemical (KWR) Q1 EPS $1.18/$194.9M vs. est. $1.06/$186.3M; sees increasing adjusted earnings, adj. Ebitda for year
  • Innophos Holdings (IPHS) Q1 EPS 59c/$166M vs. est. 52c/$167.54M; Sales comps in Q2 are expected to improve sequentially, but still be down approximately 5% year-over-year, due primarily to portfolio pruning of lower margin, less differentiated applications
  • Monsanto Co. (MON) said it’s no longer pursuing a deal to acquire a crop-planting equipment business from Deere & Co. following delays resulting from Justice Department concerns.

Media & Telecom

  • Angie’s List Inc. (ANGI) jumped late yesterday after the WSJ reported that IAC Corp. (IAC) is planning to buy the company; said IAC would combine Angie’s List with its HomeAdvisor site and form a new publicly traded company. IAC would pay $8.50 a share, or more than $500M https://goo.gl/xCQrxO
  • SBA Communications (SBAC) Q1 AFFO $1.69/$423.4 vs. est. $1.67/$418.52M; Q1 adjusted EBITDA for the quarter was $292.2M, a 6.4% increase YoY; adjusted EBITDA Margin was 69.7% in the first quarter of 2017 compared to 70.3% in the first quarter of 2016; sees FY revenue $1.69B-$1.73B (saw $1.67B-$1.71B) vs. est. $1.70B
  • NIC Inc. (EGOV) Q1 EPS 21c/$83.2M vs. est. 18c/$82M

Technology:

  • Advanced Micro (AMD) Q1 EPS loss (4c)/$984M (in-line with consensus); 1Q adjusted gross margin 34% vs. est. 33.02% and sees Q2 revs up about 17% sequentially, plus/minus 3%; sees FY17 revenue up low double digit percentage (est. $4.74B)
  • Integrated Device (IDTI) Q4 EPS 35c/$175.7M vs. est. 34c/$175.0M; sees Q1 EPS 30c-34c on revs $195M plus/minus $5M vs. est. 35c/$184.87M
  • Cognex (CGNX) Q1 EPS 51c/$134.94M vs. est. 29c/$124.69M; sees Q2 revenue $165M-$170M, vs. consensus $172.42M; expects to report growth YoY in Q2 despite a lower contribution from consumer electronics, where larger orders are expected to turn to revenue later in the year
  • Harmonic (HLIT) shares fall over 15%; Q1 EPS loss (14c)/$82.9M vs. est. loss (5c)/$92.62M; sees Q2 non-GAAP EPS loss (4c)/$95M-$103M vs. est. 1c/$104.8M; sees FY17 EPS 2c-16c on revs $400M-$420M vs. est. 21c/$438.98M
  • Blackbaud (BLKB) Q1 EPS 46c/$183.6M vs. est. 47c/$182.95M; backs FY17 adjusted EPS view $2.06-$2.18 vs. est. $2.13 and backs FY17 adjusted revenue $775M-$795M (est. $787.06M); backs FY17 Non-GAAP operating margin of 20.0%-20.5%
  • Cisco Systems Inc. (CSCO) reached an agreement to purchase software-defined-networking startup Viptela Inc. for $610 million in cash and assumed stock awards
  • Cray (CRAY) awarded contract to install Cray CS400 cluster supercomputer

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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