Morning Preview: May 4th, 2017

eOptionDaily Market Report

Stock futures are broadly higher, with Europe extending gains as well, as markets digested a Federal Reserve statement yesterday that signaled confidence in the American economy. French presidential candidate Emmanuel Macron appeared to remain on track to win in Sunday’s runoff election after a televised debate Wednesday night, which is helping boost European markets (the euro also rebounding). Commodity prices are in rout mode, as gold prices plunge further, extending losses from yesterday after the FOMC policy statement, as prices drop over 1% to around $1,235 an ounce. Oil prices are also down around a 1% after mixed inventory data yesterday. The stronger dollar is partially to blame as well as fears of slowing demand from China (see below comments about iron ore prices). Today’s move in futures come after major averages closed little changed/mixed on Wednesday.

In Asian markets, The Nikkei Index was closed, but the Shanghai Index slipped -7 points to close at 3,127 and the Hang Seng Index slipped -12 points to 24,683. In Europe, the German DAX is higher by nearly 100 points around 12,625, while the FTSE 100 is up over 20 points at 7,255. Europe’s benchmark stock index heads for an almost 21-month high on Thursday, boosted by a round of well-received earnings.

Chinese metals prices tumbled on Thursday amid increasing worries that demand for commodities like steel and iron in the world’s No. 2 economy is weakening. The price of iron-ore traded closed down 8%, the daily trading limit, at 485 yuan (US$70.32) a ton, extending losses after a four-day rally was reversed on Wednesday. In Shanghai, hot-rolled coil futures also dropped by the daily maximum of 7%, while steel-rebar futures plunged 6.2% at 2,931 yuan a ton, wiping out last week’s gains, according to Marketwatch.com.

Market Closing Prices Yesterday

  • The S&P 500 Index slipped -3.04 points, or 0.13%, to 2,388.13
  • The Dow Jones Industrial Average rose 8.01 points, or 0.04%, to 20,957.90
  • The Nasdaq Composite dropped -22.82 points, or 0.37%, to 6,072.55
  • The Russell 2000 Index declined -8.44 points, or 0.60% to 1,390.92

Events Calendar for Today

  • 7:30 AM ET          Challenger Job Cuts YoY for April…prior (-2.0%)
  • 8:30 AM ET          Weekly Jobless Claims…est. 248K
  • 8:30 AM ET          Continuing Claims…est. 1.99M
  • 8:30 AM ET          Nonfarm Productivity for Q1-P…est. (-0.1%)
  • 8:30 AM ET          Unit Labor Costs Q1-P…est. 2.7%
  • 8:30 AM ET          Trade Balance for March…est. (-$44.5B)
  • 9:45 AM ET          Bloomberg Consumer Comfort Index…prior 50.8
  • 10:00 AM ET       Factory Orders for March…est. 0.4%
  • 10:30 AM ET       Weekly EIA Natural Gas Inventory Data

Earnings Calendar:

  • Earnings Before the Open: ABC, APA, ARW, BDX, BLL, CEVA, CHD, CHK, D, DBD, ES, FLR, INCY, IT, K, LITE, OXY, REGN, SNI, ZTS, VIAB, WLTW
  • Earnings After the Close: ATVI, CBS, ED, LOGM, MET, MRO, MSI, PKI, SRCL, VECO

World News

  • Eurozone final April services PMI at 56.4 vs. 56.0 in March
  • Italy final April services PMI at 56.2, up from 52.9 in March
  • German final April services PMI at 55.4 vs. 55.6 in March
  • France final April services PMI at 56.7 vs. 57.5 in March
  • The number of new home loans approved in the U.K. fell in March to its lowest level in six months, sliding in March to 66,837 from 67,926 a month earlier. Mortgage lending, net of repayments, declined to GBP3.1 billion ($4.0 billion) from GBP3.4 billion.
Sector News Breakdown

Consumer

  • Tesla (TSLA) Q1 EPS loss ($1.33)/$2.7B vs. est. loss (81c)/$2.6B; says Model 3 on track for initial production in July; Q1 Automotive gross margin improved to 27.4% (GAAP) and 27.8% (non-GAAP); $4.0 billion of cash on hand heading into Q2; Q1 GAAP and Non-GAAP loss from operations improved from Q4; 1H Outlook Remains Unchanged for 47,000-50,000 Deliveries
  • Kraft Heinz (KHC) Q1 EPS 84c/$6.36B vs. est. 85c/$6.46B
  • Macy’s (M) and Tailored Brands (TLRD) said they will wind down operations under the tuxedo rental license agreement Macy’s had established with Men’s Wearhouse in June 2015; sees 2017 EPS $1.37-$1.67 or adj. EPS $1.60-$1.90, compares to prior forecast $1.45-$1.75
  • Fitbit (FIT) Q1 EPS loss (15c)/$298.9M vs. est. loss (19c)/$280.76M; says sold 3 million devices; backs FY17 adjusted EPS loss view (44c)-(22c) on revs $1.5B-$1.7B vs. est. loss (35c)/$1.58B
  • Cheesecake Factory (CAKE) Q1 EPS 72c/$563.4M vs. est. 73c/$570.08M; Q1 comp sales at The Cheesecake Factory restaurants increased 0.3% vs. est. 0.6%
  • Gildan Activewear (GIL) Q1 EPS 36c/$665.4M vs. est. 35c/$662.73M; 1Q merchandise inventories $948.2M and gross margin 28.4%
  • La Quinta (LQ) Q1 EPS 4c/$234.3M vs. est. 6c/$231.3M; Q1 comparable hotel RevPAR +2.8%
  • Nu Skin (NUS) Q1 EPS 51c/$499.1M vs. est. 50c/$491.54M; sees Q2 EPS 65c-70c on revs $530M-$550M vs. est. 88c/$594.82M
  • Habit Restaurants (HABT) Q1 EPS 9c/$78.6M vs. est. 8c/$78.58M; company-operated comparable restaurant sales increased 0.9% YoY; sees FY17 company-operated comparable restaurant sales growth of approximately 2.0%
  • Central Garden & Pet (CENT) Q2 EPS 67c/$569.9M vs. est. 64c/$574.8M; reports organic revenue up 1.7%; revises FY17 adjusted EPS to $1.37 ‘or higher’ (from $1.34)
  • Craft Brew (BREW) Q1 EPS loss (9c)/$44.3M vs. est. loss (12c)/$40.01M; backs FY17 Cap-Ex $16M-$20M
  • Zumiez (ZUMZ) sees 1Q net loss per share toward low end of its forecast of loss of 17c-21c, vs. est. 18c, due to higher than expected tax rate; April comp sales up 7.8% vs. est. up 4.5%

Energy

  • Continental Resources (CLR) Q1 EPS 2c/$685.43M vs. est. 3c/$643.85M; Q1 net production totaled 19.2 million Boe, or 213,755 Boe per day, up approximately 4,000 Boe per day 4Q16
  • Concho (CXO) Q1 EPS 49c vs. est. 29c; Q1 production 181,372 boe/d; sees 2Q production 182 to 186 mboe/d; boosts year production growth target to 21%-25%
  • Pioneer Natural (PXD) Q1 EPS 25c vs. est. 15c; Q1 production 249 mboe/d; Q1 oil and gas revs $809M; sees 2Q production 254 to 259 mboe/d
  • Transocean (RIG) Q1 EPS 1c/$785M vs. est. loss (9c)/$719.38M; EBITDA margin was 52%, compared with 59% in the fourth quarter of 2016
  • WPX Energy (WPX) Q1 EPS loss (15c)/$216M vs. est. (17c); Q1 oil volumes of 46,100 barrels per day has since been eclipsed by higher rates; Q1 Ebitda $115M
  • Williams Cos (WMB) Q1 EPS 14c vs. est. 21c; Q1 Ebitda $1.15B; sees cutting debt by about $500M for year 2017
  • Williams Partners (WPZ) Q1EPS 68c/$1.12B vs. est. 38c/$1.11B; Q1 adjusted Ebitda $1.12B
  • Itron (ITRI) Q1 EPS 57c/$478M vs. est. 48c/$469.25M; says bookings up 8% to $424M
  • Mammoth Energy (TUSK) Q1 EPS (13c)/$74.4M vs. est. loss (13c)/$71.25M
  • Tallgrass Energy Partners (TEP) Q1 EPS 55c/$144.4M vs. est. 60c/$157.49M
  • Antero Midstream (AMGP)25M share IPO priced at $23.50

Financials

  • American International Group (AIG) adds $2.5B to share repurchase authorization; 1Q operating EPS $1.36 vs. est. $1.05; normalized ROE 8.1% vs 4.8% q/q and 8.3% y/y; book value per share $78.59 vs $76.66 q/q
  • MetLife (MET) Q1 EPS $1.41 vs. est. $1.28; operating earnings by segment: U.S. +24% y/y; Asia -3%; Latin America -5%; EMEA +19%; MetLife Holdings +44%; Brighthouse Financial -25%; book value per share $60.91 vs. $67.10 YoY
  • Lincoln National (LNC) Q1 EPS $1.92/$3.58B vs. est. $1.61/$3.51B; 1Q book value per share $66.58, return on equity 11.8%; 1Q Annuities unit net $281M
  • Prudential Financial (PRU) Q1 EPS $2.79 vs. est. $2.64; said book value per Common share was $107.09 at March 31, 2017, compared to $104.91 at December 31, 2016;
  • Square (SQ) Q1 EPS loss (4c)/$462M vs. est. loss (8c)/$450.67M; sees Q2 adjusted EPS 3c-5c on revs $532M-$538M vs. consensus $531.37M; raises 2017 revenue outlook to $2.12B-$2.16B from $2.09B-$2.15B and raises adjusted EPS outlook to 16c-20c from 15c-19c
  • CBL & Associates (CBL) Q1 AFFO 52c vs. est. 53c; sees FY AFFO $2.18-$2.24 vs. est. $2.29
  • Life Storage (LSI) Q1 AFFO $1.26 vs. $1.22 last year; says increased same store revenue by 3.2% and net operating income by 3.2%.

Healthcare

  • AmerisourceBergen (ABC) Q2 EPS $1.77/$37.1B vs. est. $1.68/$38.09B; sees FY adjusted EPS $5.77-$5.92 vs. est. $5.82 and sees FY change in revenue +5.5% to +6.5%
  • Regeneron (REGN) Q1 EPS 2.92/$1.32B vs. est. $3.07/$1.3B
  • House Republicans plan to vote Thursday on their revised healthcare bill, reports Bloomberg, citing statements from House Majority Leader Kevin McCarthy to reporters (note hospitals THC, CYH, LPNT, UHS and Medicaid names MOH, CNC, WCG have moved on news in past)
  • UroGen Pharma (URGN)7M share IPO priced at $13.00
  • Aratana Therapeutics (PETX) sells 5.25M shares at $5.25 in a registered direct offering
  • Milacron (MCRN) 12M share Secondary priced at $17.20
  • Clovis (CLVS) Q1 EPS loss ($1.33)/$7.05M vs. est. loss ($1.48)/$4.89M; says this is an exciting time at Clovis, with a robust U.S. launch of Rubraca underway, ARIEL3 topline results expected by the end of June, and our efforts underway to prepare for a potential E.U. launch early next year
  • Bruker (BRKR) Q1 EPS 19c/$384.9M vs. est. 19c/$372.7M
  • EVERTEC (EVTC) Q1 EPS 45c/$101.3M vs. est. 39c/$98.31M; now sees FY17 adjusted EPS of $1.54-$1.67 on revs $394M-$404M vs. est. $1.59/$396.5M
  • Masimo (MASI) Q1 EPS 82c/$183.3M vs. est. 60c/$184.14M; sees 2017 EPS $2.65 on revs $759M, vs. consensus $2.33/$753.1M

Industrials & Materials

  • Avis Budget (CAR) Q1 EPS loss (94c)/$1.8B vs. est. loss (51c)/$1.88B; sees FY17 adjusted EPS of $2.85-$3.50 on revs $8.8B-$8.95B vs. est. $3.26/$8.84B
  • Compass Minerals (CMP) Q1 EPS 63c/$387.8M vs. est. 51c/$387M; sees FY EPS $3.00-$3.50 (down from prior view $3.20-$3.70) vs. est. $2.89; sees FY capital expenditure $125M-$140M
  • Curtiss-Wright(CW) Q1 EPS 73c/$523.6M vs. est. 60c/$514.88M; Reports backlog of $2.1B, up 7% from December 31, 2016; raises 2017 EPS outlook by 10c to $4.40-$4.50 (est. 4.37); affirms 2017 sales outlook $2.17B-$2.21B vs. consensus $2.19B
  • Rayonier (RYN) Q1 EPS 5c/$186.5M vs. est. 10c; said on track to achieve FY17 adjusted EBITDA guidance; said recently closed on previously-announced acquisitions totaling 95,100 acres in coastal Florida, Georgia and South Carolina

Media & Telecom

  • ARRIS (ARRS) Q1 EPS 40c/$1.48B vs. est. 38c/$1.46B; sees 2Q adjusted EPS 2c-7c on revs $1.64B-$1.69B vs. est. 63c/$1.65B
  • CenturyLink (CTL) Q1 EPS 52c/$4.21B vs. est. 54c/$4.27B; sees ’17 results near lower end of adj. range; guides Q2 revs below current views
  • General Cable (BGC) Q1 EPS 27c/$918.2M vs. est. 16c/$896M; sees Q2 15c-30c on revs $925M-$975 vs. est. 23c/$939M
  • IAC (IAC) Q1 EPS 29c/$760.8M vs. est. 35c/$717.36M; 1Q Match Group revs $298.8M, up 15% YoY and 1Q HomeAdvisor revs $150.7M, up 35% YoY
  • Level 3 (LVLT) Q1 EPS 34c/$2.048B vs. est. 32c/$2.04B; sees FY free cash flow $1.10B-$1.16B and reaffirms forecast for adj. Ebitda, FCF for year
  • OUTFRONT Media(OUT) Q1 EPS 2c/$330.6M vs. est. loss (5c)/$330.68M
  • TiVo (TIVO) Q1 EPS loss (29c)/$206M vs. est. loss (27c)/188.8M; reaffirms forecast

Technology:

  • Facebook (FB) Q1 EPS $1.04, and GAAP Est. 87c; 1Q revenue $8.03B vs. est. $7.83B; Q1 daily active users 1.28B vs. est. 1.26B, Q1 monthly active users 1.94B vs. est. 1.91B, Q1 mobile ad revs as percentage of ad rev. 85%; says no longer reporting non-GAAP EPS
  • Cirrus Logic (CRUS) Q4 EPS 85c/$327.9M vs. est. 70c/$320.87M; sees Q1 revenue $300M-$340M, vs. consensus $320.17M; sees Q1 gross margin 48%-50%; sees Q1 gross margin 48%-50%
  • Qorvo (QRVO) Q4 EPS 85c/$643M vs. est. 81c/$631.94M; Q4 gross margin was 36.0%; sees Q1 EPS 70c-90c on revs $610M-$650M below est. $1.03/$700.36M
  • 3D Systems (DDD) Q1 EPS 6c/$156.4M vs. est. 10c/$156.28M; affirms 2017 EPS outlook 51c-55c, and revenue outlook $643M-$684M vs. est. 53c/$659.9M
  • Five9 (FIVN) Q1 EPS loss (0c)/$47.0M vs. est. loss (4c)/$44.71M; sees Q2 EPS loss (4c)-(2c) on revs $45.3M-$46.3M vs. est. loss (3c)/$44.8M
  • Glu Mobile (GLUU) Q1 EPS loss (17c)/$56.8M vs. est. loss (7c)/$53.1M; 1Q bookings $69.0M, Q1 gross margin 56%; sees 2Q bookings $71.0M-$73M and year $280.0M-$290.0M
  • Q2 Holdings (QTWO) Q1 EPS loss (17c)/$44.53M vs. est. loss (6c)/$44.37M
  • Tableau (DATA) Q1 EPS loss (3c)/$199.9M vs. est. loss (11c)/$200.83M; Q1 license revs $97.2M vs. $96.4M YoY
  • TTM Technologies (TTMI) Q1 EPS 37c/$625.2M vs. est. 29c/$616.25M

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 conten

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