Morning Preview: May 10th, 2017

eOptionDaily Market Report

Stock futures in the U.S. are lower, following a few disappointing earnings and guidance in the media & technology sectors overnight as well as President Donald Trump’s surprise firing of FBI Director James Comey. The initial reaction to Trump’s move late Tuesday has been to put a bid on safe haven plays, with gold, bonds and the Japanese yen strengthening. Trump dismissed the director of the Federal Bureau of Investigation over his handling of the investigation into Hillary Clinton’s emails. Oil prices are bouncing after yesterday’s decline following bullish API inventory data overnight (large drawdown). Markets prepare for another busy day of earnings (though the calendar lightens the remainder of the week), as markets focus on the FBI news and unpredictability of President Trump. In Asian markets, The Nikkei Index rose 57 points to settle at 19,900, the Shanghai Index declined -27 points to finish at 3,052 and the Hang Seng Index advanced 126 points to close at 25,015. In Europe, the German DAX is down only a few points at around 12,745 and the FTSE 100 is higher by about 0.2% at 7,355.
Late yesterday stocks sold off after a report from Sky News said North Korea will go ahead with its sixth nuclear test, citing North Korean ambassador Choe Il. “In regards to the sixth nuclear test, I do not know the scheduled time for it, as I am here in the U.K., not in my home country,” Choe said. U.S. stocks were mostly steady Tuesday as gains in consumer shares offset losses in utility and energy shares. The CBOE Volatility Index (VIX) lifted 0.19 today to close at 9.96. 2-year Treasury yield rises for fifth day in a row, with the 10-yr above 2.40%.
Market Closing Prices Yesterday
·      The S&P 500 Index slipped -2.46 points, or 0.10%, to 2,396.92
·      The Dow Jones Industrial Average fell -36.50 points, or 0.17%, to 20,957.78
·      The Nasdaq Composite gained 17.93 points, or 0.29%, to 6,120.59
·      The Russell 2000 Index advanced 0.22 points, or 0.02% to 1,391.86
Events Calendar for Today
·      7:00 AM ET          MBA Mortgage Applications Data
·      8:30 AM ET          Import Prices MoM for April…est. 0.1%
·      10:30 AM ET       Weekly DOE Inventory Data
·      12:00 PM ET        Fed’s Rosengren to speak on Economy at Vermont Business Group
·      2:00 PM ET          Monthly Budget Statement for April…est. $179.0B
Earnings Calendar:
·      Earnings Before the Open: AVID, BR, COTY, CRL, CROX, IPXL, MYL, SODA, TIME, TRCO, VSI, WIX
·      Earnings After the Close: ENV, FOXA, HOLX, LPSN, SNAP, SYMC, WFM
Other Key Events:
·      DA Davidson’s 19th Annual Financial Institutions Conference, 5/9-5/11, in Denver, CO
·      Jefferies Global Technology Conference, 5/9-5/10, in Miami, FL
·      Oppenheimer 12th Annual Industrial Growth Conference, 5/9-5/10 in NY
·      Wells Fargo Securities Industrials Conference, 5/9-5/10, in NY
·      Wells Fargo 8th Annual Gaming, Hospitality, and Leisure Conference, 5/9-5/10, in Las Vegas
World News
·      President Donald Trump fired FBI Director James Comey on Tuesday over his handling of the investigation into Hillary Clinton’s emails. “The president has accepted the recommendation of the attorney general and the deputy attorney general regarding the dismissal of the director of the Federal Bureau of Investigation
·      Earlier in the day, the FBI clarified comments Comey made to a Senate panel last week, in which he wrongly said “hundreds and thousands” of Clinton emails, many of them classified, were forwarded by top Clinton aide Huma Abedin to the personal computer of her husband, former Rep. Anthony Weiner. In fact, only a handful of emails were forwarded, and only two contained classified material
·      Around 15% of eurozone workers are unemployed or underemployed, according to the European Central Bank
Sector News Breakdown
·      Amplify Snack Brands (BETR) Q1 EPS 6c/$87.2M vs. est. 6c/$87.58M; announces international leadership transition; sees FY adjusted EPS 42c-50c vs. est. 44c
·      Blue Buffalo Pet Products (BUFF) Q1 EPS 23c/$302M vs. est. 22c/$299.84M; sees FY adjusted EPS 91c-94c on sales $1.24B-$1.27B vs. est. 92c/$1.25B
·      Coty (COTY) Q3 EPS 15c/$2.032B vs. est. 13c/$1.94B
·      Wolverine World Wide (WWW) Q1 EPS 37c/$591.3M vs. est. 31c/$557.79M; sees FY17 EPS $1.58-$1.68 on revs $2.27B-$2.37B vs. est. $1.51/$2.32B
·      Fossil (FOSL) shares fell over 20% last night; Q1 EPS loss ($1.00)/$581.8M vs. est. loss (20c)/$589M; cuts year EPS view to 80c-$1.50from prior $1.00-$1.70 vs. est. $1.13; and lowers year sales growth to -1.5% to +6%, from prior -6.5% to 0%
·      KAR Auction (KAR) Q1 EPS 62c/$866.6M vs. est. 60c/$848.7M
·      Noodles & Co (NDLS) Q1 EPS loss (8c)/$116.7M vs. est. loss (7c)/$115.3M; Q1 comparable sales -2%, vs. est. -1.3%; sees FY revenue $458.0M-$468.0M vs. est. $467.2M
·      Hostess Brands (TWNK) Q1 EPS/$184.5M; Q1 gross margin 43%; reaffirms year outlook
·      TrueCar (TRUE) Q1 EPS loss (1c)/$75.8M vs. est. loss (2c)/$73.3M; sees 2Q revenue $79M-$81M vs. est. $77.7M; sees FY revenue $322M-$327M vs. est. $320.5M
·      American Public Education (APEI) Q1 EPS 28c/$75.7M vs. est. 28c/$75.24M; sees Q2 EPS 19c-24c vs. consensus 22c and revs down decrease between approximately 10%-7% year-over-year
·      The American Petroleum Institute (API) said weekly crude inventories fell -5.79M barrels in the latest week, while gasoline stockpiles rose +3.17M barrels and distillates fell -1.17M
·      A disagreement between Libya’s state-run National Oil Co. and German producer Wintershall AG has led to the shutdown of some of Libya’s oil production, according to Mustafa Sanallah, chairman of NOC
·      Ring Energy (REI) Q1 EPS 6c/$12.24M vs. est. 3c/$11.8M; for the three months ended March 31, 2017, oil sales volume increased to 240,260 barrels, compared to 191,377 barrels for the same period in 2016, an 26% increase
·      SunPower (SPWR) Q1 EPS loss (36c)/$429.5M vs. est. loss (49c)/$366.44M; reaffirms FY17 revenue view $2.1B-$2.6B vs. est. $2.29B; sees FY17 non-GAAP operational expenses of less than $350M capital expenditures
·      SolarEdge (SEDG) Q1 EPS 36c/$115.1M vs. est. 32c/$114M; sees 2Q revenue $120M-$130M vs.  est. $121.2M; sees 2Q gross margin 32% to 34%
·      TPI Composites (TPIC) files to sell 4.5M shares of common stock for holders
·      Vivint Solar (VSLR) Q1 EPS loss (50c)/$30.4M vs. est. loss (42c)/$47.09M
·      Artisan Partners (APAM) April AUM $106.6B vs. $103.8B MoM; says separate accounts totaled $52.9B of AUM
·      Invesco (IVZ) Assets Under Management (AUM) $841.4B at the end of April; rose 0.8% MoM on favorable market returns, foreign exchange, and inflows into PowerShares QQQs
·      PHH Corp. (PHH) Q1 core loss per share ($1.24)/$114M vs. est. loss (68c)/$135M; Q1 mortgage loans held for sale $471M, cash and cash equivalents $936M; authorizes $100M share buyback
·      Two Sigma agreed to buy Interactive Brokers (IBKR) options market-making business, acquiring a pioneer of electronic trading to forge into derivatives trading
·      Summit Hotel Properties (INN) files to sell 9M shares
·      Ellington Residential (EARN) files to sell 3M shares of common stock
·      Five Point Holdings (FPH) 21M share IPO priced at $14.00, below the range
·      INC Research Holdings Inc. (INCR) said it would buy privately held inVentiv Health Inc. in a deal valued at about $4.6 billion.
·      Aclaris Therapeutics (ACRS) said the FDA has accepted its New Drug Application A-101 40% topical solution, an investigational drug, for the potential treatment of seborrheic keratosis
·      Depomed (DEPO) Q1 EPS 7c/$95M vs. est. 14c/$103.6M; sees FY adjusted Ebitda $120M-$130M, vs. est. $151.3M and year revs $410M-$430M
·      Dermira (DERM) announces $250M convertible senior notes offering due 2022
·      Foundation Medicine (FMI) Q1 EPS loss ($1.31)/$26.3M vs. est. loss ($1.01)/$29.07M; reports 13,933 clinical tests, up 55%; backs FY17 revenue $135M-$145M vs. consensus $139.85M
·      Jazz Pharmaceuticals (JAZZ) Q1 EPS $2.31/$376M vs. est. $2.34/$377.02M; sees FY adjusted EPS $10.70-$11.30 on revs $1.63B-$1.70B vs. est. $11.12/$1.67B
·      Opko Health (OPK) Q1 EPS loss (6c)/$296.1M vs. est. loss (4c)/$313.6M
·      Regenxbio (RGNX) sees interim updates in Phase 1 trial of RGX-314 for treatment of wet AMD and Phase 1/2 trial of RGX-501 for treatment of homozygous familial hypercholesterolemia by year-end 2017
Industrials & Materials
·      ChemChina has won around 82% support from Syngenta (SYT) shareholders for its $43 billion takeover of the Swiss pesticides and seeds group, China’s biggest foreign acquisition to date, the two companies said – Reuters
·      Franco-Nevada (FNV) Q1 EPS 25c/$172.2M vs. est. 22c/$159.22M; 1Q gold production 131,578 equivalent oz; Q1 adjusted Ebitda $128.5M
·      Authorities in Argentina’s San Juan province will decide on redesign plan for Barrick’s (ABX) Veladero gold mine as soon as possible, says Governor Sergio Unac
·      General Dynamics (GD) downgraded to Market Perform at Bernstein
·      Wesco Aircraft (WAIR) Q2 EPS 21c/$364.6M vs. est. 24c/$371.3M; suspends guidance
Media & Telecom
·      Disney (DIS) Q2 EPS $1.50/$13.3B vs. est. $1.41/$13.45B; 2Q Cable Networks operating profit $1.79B, Cable Networks revs $4.06B (light), media networks revs $5.95B, parks and resorts revs $4.30B, studio entertainment revs $2.03B
·      News Corp (NWSA) narrowed its losses in the quarter ended in March, driven by digital subscriber growth at The Wall Street Journal, cost cuts and the strong performance of the in-store marketing and coupon business
·      West Corp (WSTC) to be acquired by Apollo Global (APO) for $23.50 per share in cash, in a deal valued at about $2 billion
·      Rocket Fuel (FUEL) Q1 EPS loss (26c)/$95.2M vs. est. loss (31c)/$102.1M; sees Q2 adjusted revenue $42M-$48M; sees Q2 adjusted EBITDA ($4M)-$2M
·      Zayo Group (ZAYO) Q3 EPS 11c/$550.2M vs. est. 9c/$555.22M
·      Nvidia (NVDA) shares jumped over 10%; Q1 EPS 85c/$1.94B vs. est. 81c/$1.91B; sees returning $1.25B to holders in ’18 via dividend/buybacks; sees 2Q revs $1.95B +/- 2% vs. est. $1.90B
·      Priceline (PCLN) shares fell 3%; reports Q1 EPS $9.88/$2.42B vs. est. $8.89/$2.45B; gross travel bookings were $20.7B, an increase of 24% over a year ago; sees 2Q EPS $13.30-$14.00 vs. est. $14.99; sees 2Q gross travel bookings +12% to +17%; sees 2Q Ebitda $860M-$905M
·      Electronic Arts (EA) announces up to $1.2B share buyback program; Q4 EPS 85c/$1.09B vs. est. 75c/$1.075B; Q4 GAAP digital net revs $934M vs. $715M YoY; sees FY18 EPS ~$4.10 vs. est. $4.16 and year revs $5.10B vs. est. $5.21B
·      Acacia Communications (ACIA) shares fell over 15% last night as sees Q2 EPS 22c-35c on revs $85.0M-$95.0M below est. 74c/$130.8M; after Q1 EPS 77c/$114.7M vs. est. 66c/$112.4M; watch shares of optical companies shares LITE, OCLR, FNSR, INFN
·      Microchip (MCHP) Q4 EPS $1.16/$902.7M vs. est. $1.06/$891.3M; sees Q1 EPS $1.17-$1.27 on revs $920.7M-$965.9M vs. est. $1.12/$912.6M; sees 1Q gross margin 59.5%-60%, vs. est. 58.57% after Q4 gross margins of 59.2%, est. 58.21%
·      TripAdvisor (TRIP) Q1 EPS 24c/$372M vs. est. 26c/$377.06M; plans to start brand advertising campaign in 2Q; said pulling back from a major strategic effort to get travelers to book hotels directly on its website; reports Q1 average monthly unique visitors reached nearly 390M up 14% YoY, Average monthly unique hotel shoppers reached nearly 150M, up 9% YoY
·      Yelp (YELP) Q1 EPS 19c/$197.3M vs. est. 16c/$198.6M; cumulative reviews grew 26% year over year to approximately 127M; paying advertising accounts grew 17% YoY to approximately 139,000; sees Q2 revenue $202M-$206M vs. est. $215.42M; cuts FY17 revenue view to $850M-$865M from $880M-$900M; cuts FY17 EBITDA view to $130M-$145M from $150M-$165M
·      Amdocs (DOX) Q2 EPS 94c/$966M vs. est. 93c/$960.29M; sees FY17 non-GAAP EPS growth 4.5%-8.5% year-over-year; sees FY17 revenue growth 3.5%-5.5% year-over-year
·      Exar (EXAR) Q4 EPS 9c/$27.8M vs. est. 8c/$27.78M
·      Lattice Semi (LSCC) Q1 EPS 6c/$104.6M vs. est. 7c; Q1 gross margin 58.4%, vs. est. 56.3%
·      Maxwell (MXWL) Q1 EPS loss (23c)/$26.7M vs. est. loss (25c)/$25.78M; sees Q2 revenue $34M-$37M vs. consensus $29.29M; Q2 gross margin expected to be 23%, plus or minus 200 bps
·      Nuance (NUAN) Q2 EPS 43c/$511.1M vs. est. 38c/$498.5M; Q2 net new bookings $410.4M; sees Q3 EPS 27c-30c on revs $495M-$509M vs. est. 39c/$507.27M
·      Rapid7 (RPD) Q1 EPS loss (14c)/$45.2M vs. est. loss (24c)/$43.7M; sees Q2 EPS loss (20c)-(18c) on revs $45.4M-$46.8M vs. est. loss (21c)/$46.32M
·      ScanSource (SCSC) Q3 EPS 65c/$813.5M vs. est. 67c/$833.1M; said Worldwide Barcode, Networking and Security segment delivered 4% sales growth; sees Q4 EPS 64c-71c on revs $860M-$920M vs. est. 75c/$909.22M


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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