Morning Preview: October 26, 2017

Scott GreenDaily Market Report

Early Look
Thursday, October 26, 17
  
Stock futures are flat/slightly higher ahead of a crucial day of earnings for the technology sector, with results from Dow components MSFT and INTC out after the close as well as Internet giants GOOGL and AMZN, as today marks one of the busiest earnings days of the quarter. U.S. stocks dropped the most in seven weeks on Wednesday following a mixed batch of corporate earnings, as the S&P 500 Index fell from near a record high, closing down about one 0.5%. It has been a strong quarter thus far, as almost 75% of the S&P companies to have reported have surpassed earnings expectations, according to FactSet data. Transports declined yesterday amid commentary/results from rails NSC and CNI as well as airlines, with another heavy dose of earnings today as UPS, UNP, LUV and AAL set to report. Traders are also waiting for the European Central Bank to announce its latest policy decision.
 
The European Central Bank (ECB) holds its monetary policy decision at 7:45 AM EST followed by Draghi press conference at 8:30 AM. According to reports, there generally seem to be a consensus that the ECB will reduce asset purchases to EU20 billion-EU30 billion from the EU60 billion currently and let the program run by another nine to 12 months. In Asian markets, The Nikkei Index gained 32 points to settle at 21,739, the Shanghai Index rose 10 points to close above 3,400 (its best level in 22-months) and the Hang Seng Index fell -100 points to close at 28,202. In Europe, the German DAX is up around 35 points at 12,990, while the FTSE 100 is higher by about 25 points at 7,475. Spain IBEX-35 index rises 0.6% after unconfirmed reports Catalan leader will dissolve parliament, call early election.
 
Market Closing Prices Yesterday
·      The S&P 500 Index dropped -11.98 points, or 0.47%, to 2,557.15
·      The Dow Jones Industrial Average fell -112.30 points, or 0.48%, to 23,329.46
·      The Nasdaq Composite slumped -34.54 points, or 0.52%, to 6,563.89
·      The Russell 2000 Index declined -6.94 points, or 0.46% to 1,493.48
 
Events Calendar for Today
·      8:30 AM EST       Weekly Jobless Claims…est. 235K
·      8:30 AM EST       Continuing Claims…est. 1.89M
·      8:30 AM EST       Advance Goods Trade Balance for September…est. (-$64.0B)
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 51.1
·      10:00 AM EST     Pending Home Sales MoM for September…est. 0.3%
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
·      11:00 AM EST     Kansas City Fed Manufacturing Activity for October…est. 17
 
Earnings Calendar
·      Earnings Before the Open: AAL, ABB, ABX, ALLE, ALV, APD, BCS, BEN, BMS, BMY, BSX, BWA, CCMP, CELG, CHTR, CMCSA, CME, COP, DB, DNKN, ENTG, EQT, EVR, EXLS, F, GNC, HLT, HSY, I, IDCC, IVZ, LAZ, LUV, MDP, MMC, MKC, NEM, NOK, OAK, ODFL, PENN, POT, PX, RS, RTN, SPGI, STM, TWTR, UNP, UPS, USG, VC, VNTV, WM, XEL, XRX
·      Earnings After the Close: ACTG, AIV, AJG, ATEN, AMZN, BIDU, BYD, CB, CDNS, CENX, CERN, CLS, CY, DECK, EFII, EGHT, ELLI, EXPE, FII, FLEX, FTNT, FTV, GILD, GIMO, GOOG, HIG, HUBG, INTC, KLAC, LOGM, LPLA, MAT, MB, MPWR, MSFT, MULE, NATI, NOV, PDFS, PFG, POWI, PRO, SAM, SGEN, SIVB, SYK, TRMB, VDSI, VRSN, WDC
   
Sector News Breakdown
Consumer
·      Buffalo Wild Wings (BWLD) shares rose 20%; Q3 EPS $1.36/$496.7M vs. est. 79c/$501.62M; Q3 company-owned restaurant sales increased 0.5% to $473M in Q3; raises FY17 adjusted EPS view to $4.85-$5.15, from prior $4.00-$4.50 (est. $4.41); sees FY17 SSS growth (1.5%)
·      Las Vegas Sands (LVS) Q3 EPS 77c/$3.2B vs. est. 68c/$3.15B; announced more than $1.1b in new capital projects over the next three years in the market
·      Southwest (LUV) Q3 EPS 88c/$5.27B vs. est. 87c/$5.31B; backs FY18 ASM growth view of less than 5.7%
·      Tractor Supply (TSCO) Q3 EPS 72c/$1.72B vs. est. 68c/$1.68B; Q3 comparable same store sales increase of 6.6%; raises FY17 EPS view to $3.25-$3.29 from $3.22-$3.27 (est. $3.25) and raises FY17 revenue view to $7.17B-$7.22B from $7.13B-$7.19B (est. $7.2B)
·      Allegiant Travel (ALGT) Q3 EPS $1.39/$348.8M vs., est. $1.31/$351.8M; raises full year CAPEX guidance to be $604M, versus prior guidance of $525M
·      Ethan Allen (ETH) Q1 EPS 28c/$181.3M vs. est. 28c/$181.3M;
·      Fortune Brands (FBHS) Q3 EPS 83c/$1.35B vs. est. 82c/$1.38B; sees 2017 EPS $3.05-$3.10 vs. prior $3.04-$3.12 (est. $3.09) based on a U.S. home products market growth assumption of 6%-7% and an assumption of 5%-6% growth for our total global market
·      Nutrisystem (NTRI) Q3 EPS 49c/$158.1M vs. est. 46c/$155.21M; announces new $50M share repurchase program; sees Q4 EPS 37c-42c on revs $126M-$131M vs. est. 40c/$127.21M;
·      SkyWest (SKYW) Q3 EPS $1.01/$831.9M vs. est. 97c/$817.41M
 
Energy
·      BP Midstream (BPMP) 42.5M share IPO priced at $18.00
·      Ensco (ESV) Q3 EPS loss (8c)/$460.2M vs. est. loss (14c)/$456.6M
·      Marathon Petroleum (MPC) Q3 revs #19.39B vs. est. $22.48B
·      Statoil’s (STO) recent recovery suffered a setback in Q3 despite higher oil prices, as problems at one of its sites in North America weighed on profits at the Norwegian oil major
·      QEP Resources (QEP) Q3 EPS loss (10c)/$390.1M vs. est. loss (20c)/$391.67M; sees ’18 Crude Oil production up Mid-teens vs. ’17 Midpoint view
·      Whiting Petroleum (WLL) Q3 EPS loss (14c) vs. est. (19c) loss; sees FY capital expenditure $950M; sees FY production 42.6 to 43.2 MMBoe after 3Q production 114.35 mboe/d
 
Financials
·      Aflac (AFL) Q3 EPS $1.70/$5.51B vs. est. $1.63/$5.41B; boosts dividend to 45c from 43c; sees FY operating EPS $6.75-$6.95 vs. est. $6.70
·      Arch Capital (ACGL) Q3 EPS loss (79c) vs. est. loss (61c); Q3 net premiums written $1.33B vs. $1.01B last year and book value per common share was $59.61 at September 30, 2017
·      BofI Holding (BOFI) Q1 EPS 50c (in-line) and reports Q1 loan loss provision $1M vs. $1.9M a year ago; tangible book value increased to $13.41 per share
·      CoreLogic (CLGX) Q3 EPS 72c/$483M vs. est. 72c/$489.03M; raises FY17 share repurchase target by 10%
·      CoStar Group (CSGP) Q3 EPS $1.04/$248M vs. est. $1.13/$244.5M; raises FY17 EPS view to $4.65-$4.73 from $4.42-$4.52 (est. $4.43) and sees FY17 revenue $962M-$965M (est. $966M)
·      European banks Barclays (BCS) and Deutsche Bank (DB) shares fall after hits to trading revenues; BCS reported a jump in profits, but suffered a sharp drop in revenues at its investment banking arm
·      Fifth Street Asset (FSAM) said its board has determined that it is in the best interest of FSAM and its stockholders to dissolve the co. and wind up its affairs; to delist from Nasdaq exchange
·      Kimco (KIM) Q3 FFO 39c/$290.9M vs. est. 37c/$296M; sees FY FFO $1.55-$1.56 vs. est. $1.53
·      Legg Mason (LM) Q2 EPS 78c/$768.3M vs. est. 69c/$740.0M; Q2 assets under management $754.4 billion with Q2 net outflows $1.2 billion
·      Mid-America (MAA) Q3 FFO $1.50/$384.6M vs. est. $1.47/$387.2M; sees 4Q FFO/share $1.40-$1.50 and year FFO share $5.84-$5.94
·      Moelis (MC) Q3 EPS 57c/$170M vs. est. 42c/$168.41M
·      Unum Group (UNM) Q3 EPS $1.09/$2.82B vs. est. $1.04/$2.82B; 3Q book value per share $42.11; sees year operating growth forecast at or slightly above 5%-8% range
 
Healthcare
·      Amgen (AMGN) Q3 EPS $3.27/$5.8B vs. est. $3.11/$5.76B; boosts FY EPS to $12.65-$12.83, excluding 15c-18c hurricane costs from prior $12.15-$12.65 (est. $12.57) and sees FY revenue of $22.7B-$23B vs. prior $22.5B-$23B (est. $22.87B); Enbrel revs $1.36B, Repatha $89M, Neulasta $1.12B and Aranesp $516M; incurred non-cash charges from decision to discontinue internal development of AMG 899, an oral CETP inhibitor
·      Anika Therapeutics (ANIK) announced the completion of enrollment in its second pivotal Phase III trial evaluating CINGAL, its novel HA-corticosteroid combination visco supplement for the treatment of symptoms associated with osteoarthritis of the knee
·      C.R. Bard (BCR) Q3 EPS $3.02/$989.8M vs. est. $2.95/$992.1M; raises FY17 adjusted EPS view to $11.85-$11.90 from $11.70-$11.90 (est. $11.84) and raises FY17 revenue growth view to 5.5%-6% vs. consensus $3.93B
·      PRA Health (PRAH) Q3 EPS 88c/$494.6M vs. est. 84c/$477.9M; sees FY adjusted EPS $3.28-$3.35 vs. estimate $3.20 and total service revs $1.91B-$1.93B vs. est. $1.89B
·      Sarepta (SRPT) Q3 EPS loss (78c)/$46.0M vs. est. (85c)/$40.77M; sees FY17 revenue $150M-$155M (above prior view $125M-$130M) vs. est. $139.45M
·      Universal Health (UHS) Q3 EPS $1.47/$2.54B vs. est. $1.68/$2.6B; 3Q acute care adjusted admissions +3.5% and 3Q behavioral health adjusted admissions +1.1%; sees FY adjusted EPS $7.25-$7.50 below estimate $7.69 and prior view $7.50-$8.00
·      Varian Medical (VAR) Q4 EPS $1.09/$739M vs. est. $1.19/$741.7M; sees FY18 adjusted EPS $4.20-$4.32 vs. est. $4.44 and sees FY18 revenue growth 2%-4%
·      Vertex (VRTX) Q3 EPS 53c/$578.2M vs. est. 31c/$520.13M; raises 2017 CF product revenue view to $2.10B-$2.15B from $1.87B-$2.10B; now expects total 2017 product revenues for ORKAMBI of $1.29B-$1.32B, up from previous guidance of $1.1B-$1.3B; boosts 2017 product revenues for KALYDECO of $810M-$830M, up from previous guidance of $770M-$800M
 
Industrials & Materials
·      Agnico Eagle (AEM) raises FY17 gold production outlook to top 1.68M oz from 1.62M oz; total cash costs per ounce are now expected to be $570 to $600 versus $580 to $610 previous forecast
·      Barrick Gold (ABX) Q3 EPS 16c/$1.99B vs. est. 17c/$2.04B; gold production in Q3 was 1.243 million ounces; narrows FY17 gold production view to 5.3M-5.5M oz from 5.3M-5.6M oz and sees FY17 cost of sales of $790-$810 per ounce
·      Goldcorp (GG) Q3 EPS 13c vs. est. 9c; reports Q3 gold production of 633,000 ounces at all-in sustaining costs of $827 per ounce, compared to 715,000 ounces at AISC of $812 year-ago
·      Echo Global (ECHO) shares up 7%; Q3 EPS 27c/$509.5M vs. est. 18c/$474.0M; revises FY17 revenue view to $1.86B-$1.90B from $1.76B-$1.82B
·      Forward Air (FWRD) Q3 EPS 58c/$280.2M vs. est. 58c/$278.07M; sees Q4 EPS 60c-64c, and revenue growth 12%-16% vs. est. 65c/$295.1M
·      Graco (GGG) Q3 EPS $1.15/$379.8M vs. est. $1.06/$356.1M; posted double-digit sales growth on an organic, constant currency basis; sees low single-digit organic, constant currency growth in Q4
·      KapStone (KS) Q3 EPS 39c/$868M vs. est. 43c/$839.94M
·      Landstar System (LSTR) Q3 EPS $1.01/$943M vs. est. 96c/$892.3M; sees Q4 EPS 98c-$1.03 on revs $975M-$1.025B vs. est. $1.01/$945.6M
·      Rush Enterprises (RUSHA) Q3 EPS 72c/$1.26B vs. est. 47c/$1.20B
·      Trinity Industries (TRN) Q3 EPS 43c/$973.6M vs. est. 31c/$957.43M; sees FY EPS $1.41-$1.51 vs. est. $1.25 and Q4 EPS 35c-45c vs. est. 30c
·      Service Corp. (SCI) Q3 EPS 33c/$731.3M vs. est. 27c/$735.63M
·      Waste Connections (WCN) Q3 EPS 60c/$1.206B vs. est. 57c/$1.19B; increases dividend 16.7% to 14c per share
 
Technology, Media & Telecom
·      PTC Corp. (PTC) Q4 EPS 34c/$306.4M vs. est. 36c/$306.58M. Q4 license and subscription bookings were $144M and subscription mix was 72%; total deferred revenue, billed and unbilled, was $1.1B an increase of 40% from the same period last year; sees FY18 EPS $1.27-$1.37 on revs $1.225B-$1.24B vs. est. $1.46/$1.22B; sees Q4 revenue $517M-$522M vs. est. $528M
·      ServiceNow (NOW) Q3 EPS 38c/$491.4M vs. est. 32c/$491.65M; Q3 non-GAAP billings of $546.1M, representing 35% YoY growth, or $543.0M, representing 34% YoY; sees Q4 revs $531M-$536M vs. est. $528.2M
·      Teradyne (TER) shares up 5%; Q3 EPS 54c/$503M vs. est. 43c/$472.75M; sees Q4 EPS 31c-37c on revs $420M-$450M vs. est. 20c/$365.4M
·      AXT, Inc. (AXTI) Q3 EPS 11c/$28.2M vs. est. 9c/$27.05M
·      CA Technologies (CA) Q2 EPS 62c/$1.03B vs. est. 62c/$1.05B; reaffirms year EPS and revs
·      Citrix (CTXS) Q3 EPS $1.22/$691M vs. est. $1.04/$691.53M; raises FY17 adjusted EPS view to $4.79-$4.81 from $4.60-$4.65 and raises FY17 revenue view to $2.82B-$2.83B from $2.81B-$2.83B (est. $2.82B)
·      F5 Networks (FFIV) Q4 EPS $2.44/$538M vs. est. $2.21/$534.71M; authorizes additional $1B for stock buyback; sees 1Q EPS $2.02-$2.05 on revs $515M-$525M vs. est. $2.09/$529.6M
·      Knowles (KN) Q3 EPS 28c/$221.7M vs. est. 25c/$220.62M; sees Q4 EPS 33c-39c on revs $225M-$260M vs. est. 42c/$262.48M
·      Mellanox (MLNX) Q3 EPS 71c/$225.7M vs. est. 64c/$226.81M; sees Q4 revenue $230M-$240M, vs. consensus $240.43M; sees 4Q adjusted gross margin 69% to 70%
·      Netgear (NTGR) Q3 EPS 81c/$355.5M vs. est. 68c/$349.6M; sees Q4 revenue of $375M-$390M, vs. consensus $386.6M; Q4 GAAP operating margin is expected to be in the range of 4.8% to 5.8% and non-GAAP operating margin is expected to be in the range of 7.0% to 8.0%
·      Nokia (NOK) tumbled 16% ahead of the bell after the Finnish telecommunications company said its loss widened in the third quarter.
·      Plexus (PLXS) Q4 EPS 84c/$669.9M vs. est. 82c/$680.3M; sees Q1 GAAP EPS 75c-85c on revs $665M-$705M vs. est. 83c/$681M
·      Tyler Technologies (TYL) Q3 EPS $1.05/$214.1M vs. est. $1.02/$217.24M; AQ3 total backlog was $1.1B, up 12.2% from September 30, 2016
·      Ultra Clean (UCTT) Q3 EPS 62c/$242.6M vs. est. 64c/$239.91M; sees Q4 adjusted EPS 57c-63c, on revs $240M-$250M vs. est. 55c/$228.79M
·      Xilinx (XLNX) Q2 EPS 65c/$620M vs. est. 63c/$620.95M; sees Q3 revenue approximately $615M-$645M vs. est. $626.06M and Q3 gross margin is expected to be 69% to 71%; operating expenses are expected to increase to approximately $260M
 
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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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