Morning Preview: October 27, 2017

Scott GreenDaily Market Report

Early Look
Friday, October 27, 17
Stock futures are pointing to a higher open, with Nasdaq futures getting a pop early (up 0.5%) after INTC, MSFT, AMZN and GOOGL all posted better-than-expected earnings/guidance results overnight, though there were a few hiccups (EXPE, BIDU miss). Markets will also be watching out for a reading on gross domestic product (at 8:30 AM EST with est. 2.4% after 3.1% in Q2), which is expected to take a hit from powerful hurricanes that weighed on the quarter. Despite the early gains, the Nasdaq is down just over 1%, though Friday’s session could pare those losses, while the Dow industrials is looking at a 0.3% gain, and the S&P 500 is set to decline 0.6%. The dollar index is up around 3-month highs after the House of Representatives passed a budget resolution on Thursday, which was viewed as an encouraging sign for tax reform, while the euro slipped on yesterday’s ECB decision.
U.S. stocks rose on Thursday after the European Central Bank announced plans to extend the length of its quantitative-easing measures but reduce its monthly asset purchases (was expected), while better earnings and reports that the next Fed chair was narrowed to two candidates (Powell and Taylor as Yellen apparently removed from contention) had the dollar at 3-month highs and lifted bond yields. The S&P 500 and Dow Industrials bounced after posting their biggest drops in more than seven weeks Wednesday, though the Nasdaq Comp slipped on weakness in biotech. Health-care stocks got “smacked” after results/lowered outlook from CELG, then a hit to PBM’s and retail pharmacy (ABC, CAH, MCK, ESRX, WBA) on reports AMZN has started getting wholesale-pharmacy licenses.
In Asian markets, The Nikkei Index gained 268 points to settle at 22,008, the Shanghai Index gained 9 points to settle at 3,416 and the Hang Seng Index surged 236 points to end at 28,438. In Europe, the German DAX is up around 100 points at 13,222 (new record highs), while the FTSE 100 rises about 15 points back above 7,500. French stocks hit their highest level in more than nine years while Germany’s Dax index set a fresh record high on Friday as stocks reaped the benefits of dovish comments from European Central Bank president. The Russian Central Bank cuts key interest rate by 25 bps to 8.25%.
Market Closing Prices Yesterday
·      The S&P 500 Index gained 3.25 points, or 0.13%, to 2,560.40
The Dow Jones Industrial Average rose 71.40 points, or 0.31%, to 23,400.86
·      The Nasdaq Composite slipped -7.12 points, or 0.11%, to 6,556.77
·      The Russell 2000 Index advanced 3.98 points, or 0.27% to 1,497.46
Events Calendar for Today
·      8:30 AM EST       Gross Domestic Product (GDP) Annualized QoQ for Q3-A…est. 2.6%
·      8:30 AM EST       Personal Consumption for Q3-A…est. 2.1%
·      8:30 AM EST       GDP Price Index for Q3-A…est. 1.7%
·      8:30 AM EST       Core Prices QoQ for Q3-A…est. 1.3%
·      10:00 AM EST     University of Michigan Confidence Sentiment, Oct-F…est. 100.7
·      1:00 PM EST        Baker Hughes Weekly Rig Count
Sector News Breakdown
· (AMZN) shares gained 7%; Q3 EPS 52c/$43.7B vs. est. 3c/$42.14B; sees Q4 revenue $56.0B-$60.5B, vs. consensus $58.94B and sees Q4 operating income $300M-$1.65B vs. $1.3B last year (est. $1.55B); says Whole Foods contributed $1.3B in Q3 sales; Q3 AWS net sales $4.58 billion and Q3 Amazon Web Services net sales +42%
·      Mattel (MAT) shares fell -19%; Q3 EPS 9c/$1.56B vs. est. 59c/$1.82B; sales performance negatively impacted by Toys “R” Us filing for bankruptcy, tighter retailer inventory management and challenges with certain underperforming brand; suspends dividend starting in Q4
·      BJ’s Restaurants (BJRI) Q3 EPS 11c/$247.0M vs. est. 24c/$248.81M; Q3 comp sales (-1.7%)
·      Boyd Gaming (BYD) Q3 EPS 22c/$587.7M vs. est. 26c/$591.82M; 3Q adjusted Ebitda $140.3M
·      Columbia Sportswear (COLM) Q3 EPS $1.25/$747.4M vs. est. $1.15/$736.58M; lowers FY17 EPS view to $2.60-$2.70 from $2.74-$2.84 (est. $2.79) and backs 2017 net sales growth view of approximately 3% including less than 1% positive effect from changes in forex
·      Decker’s Brands (DECK) said it will not actively pursue a sale of the entire company at this time after completing a strategic review announced in April; lifts stock repurchase program to $400M; Q3 EPS $1.54/$482.5M vs. est. $1.02/$438.5M; raises year EPS to $4.15-$4.30 from prior $3.95-$4.15 (est. $4.06) and boosts year sales view to 1%-2% from -2% to 0%
·      Expedia (EXPE) shares fell -13%; Q3 EPS $2.51/$2.97B vs. est. $2.62/$2.98B; said room night growth in 3Q was 16%, slowing from 31% growth YoY; Q2 bookings up 11% YoY to $22.2B
·      Leggett & Platt (LEG) Q3 EPS 60c/$1.01B (in-line with estimates)
·      Mohawk (MHK) Q3 EPS $3.75/$2.4B vs. est. $3.74/$2.46B; sees Q4 EPS $3.25-$3.34 vs. est. $3.31
·      PICO Holdings (PICO) announces $5.00 per share special dividend
·      PriceSmart (PSMT) Q4 EPS 64c/$733.5M vs. est. 73c/$734.42M
·      Wynn Resorts (WYNN) Q3 EPS $1.52/$1.61B vs. est. $1.45/$1.56B; Q3 Wynn Macau operations revenue $1.15B; Q3 Las Vegas operations revenue $459.6M; Q3 Wynn Palace revenue $555.3M
·      Dow components and oil giants Chevron (CVX) and Exxon (XOM) reporting later this morning
·      First Solar (FSLR) Q3 EPS $1.95/$1.1B vs. est. 84c/$866.8M; reports 4.5GW quarterly net bookings; raises FY17 non-GAAP EPS view to $2.40-$2.60 from $2.00-$2.50 (est. $2.21) and backs FY17 net sales view of $3.0B-$3.1B vs. est. $3.11B; sees FY gross margin 18% from prior 17%-18%;
·      Cabot Oil (CBT) Q3 EPS 7c vs. est. 8c; sees 4Q production +9% to +11%
·      Cloud Peak (CLD) Q3 EPS 3c/$248.88M vs. est. loss (1c)/$255M; cuts FY17 Capex view to $15M-$20M from $20M-$25M; sees FY adjusted Ebitda $95M-$105M
·      FirstEnergy (FE) Q3 EPS 97c vs. est. 86c; boosted its year EPS to $3.00-$3.10, from prior $2.70-$3.00, vs. estimate $2.83
·      National Oilwell (NOV) Q3 EPS loss (7c)/$1.84B vs. est. loss (8c)/$1.86B
·      Southwestern Energy (SWN) Q3 EPS 6cv.s est. 7c; 3Q production 232 Bcfe
·      Energy Transfer Equity (ETE) increases quarterly distribution 1c to 29.5c
·      World Fuel Services (INT) Q3 EPS 60c/$8.54B vs. est. 60c/$8.05B
·      Chubb (CB) Q3 EPS loss (13c) vs. est. loss (23c); Q3 net premiums written $7.90B, catastrophe losses $1.53B, Q3 property & casualty combined ratio 110.8%
·      Cincinnati Financial (CINF) Q3 EPS 58c/$1.41B vs. est. 52c/$1.42B; 3Q net premiums written $1.21 billion; 3Q book value per share $45.86
·      Cowen Group (COWN) Q3 EPS 26c/$182.6M vs. est. 15c/$182.34M
·      Ellie Mae (ELLI) Q3 EPS 53c/$107M vs. est. 40c/$105.46M; reports 8,100 Encompass seats booked; sees Q4 adjusted EPS 19c-29c on revs $107M-$109M vs. est. 32c/$101.51M
·      Principal Financial (PFG) Q3 EPS $1.28 vs. est. $1.30; assets under management $655.5B and Q3 book value per share $41.58
·      LPL Financial (LPLA) Q3 EPS 66c/$1.06B vs. est. 58c/$1.08B
·      Royal Bank of Scotland (RBS) posted a net profit of £392m in Q3, showing its potential to pay dividends for the first time since the financial crisis, once legacy issues are resolved, with stronger-than-expected capital in the quarter
·      Reinsurance Group (RGA) Q3 EPS $3.44 vs. est. $2.63; 3Q adjusted book value per share $100.54
·      UBS Group AG (UBS) said Q3 net profit rose significantly, beating expectations; said net profit grew 14% compared with a year earlier, to 946 million Swiss francs ($952.7 million).
·      CVS Health (CVS) has offered more than $200 per share for Aetna (AET) in buyout bid, the WSJ reported late day, lifting managed care stocks late day (ANTM, CI, UNH
·      Merck (MRK) Q3 EPS $1.11/$10.3B vs. est. $1.04/$10.54B; raises year EPS view to $3.91-$3.97 from prior $3.76-$3.88
·      Gilead Sciences (GILD) Q3 EPS $2.27/$6.51B vs. est. $2.13/$6.39B; Q3 product sales $6.4B; backs FY17 net product sales view $24.5B-$25.5B (est. $25.99B); 3Q Harvoni revenue $973M, Q3 Sovaldi revenue $219M and Truvada revenue $811M
·      Align Technology (ALGN) Q3 EPS $1.01/$383.3M vs. est. 82c/$359.82M; sees Q4 EPS 92c-95c on revs $391M-$398M vs. est. 90c/$368.08M; sees Q4 Invisalign case shipments in the range of 245,000-250,000, up approximately 29%-32% YoY
·      BioMarin (BMRN) Q3 EPS loss (7c)/$334.1M vs. es.t loss (12c)/$349.59M; narrows its revenue forecast for the full year to $1.29B-$1.32B from $1.29B-$1.34B and sees FY loss $110M-$130M from prior $115M-$155M
·      Bioverativ (BIVV) Q3 EPS 80c/$291.6M vs. est. 69c/$285.49M
·      Cerner (CERN) Q3 EPS 61c/$1.276B vs. est. 62c/$1.29B; sees Q4 EPS 60c-62c on revs $1.3B-$1.35B vs. est. 68c/$1.36B; sees FY18 EPS $2.52-$2.68 on revs $5.5B-$5.7B vs. est. $2.78/$5.64B; Q3 bookings $1.11B and sees Q4 bookings $1.75B-$2.0B
·      Chemed (CHE) Q3 EPS $2.15/$417M vs. est. $2.01/$413.83M; raises FY17 adjusted EPS view to $8.35-$8.40 from $8.10-$8.20; Revenue growth for VITAS in 2017, prior to Medicare Cap, is estimated to be in the range of 2% to 3%
·      HealthSouth (HLS) Q3 EPS 66c/$995.6M vs. est. 65c/$982.96M; narrows FY17 adjusted EPS view to $2.67-$2.73 from $2.64-$2.73 (est. $2.71) and narrows FY17 revenue view to $3.9B-$3.95B from $3.875B-$3.95B (est. $3.93B)
·      ResMed (RMD) Q1 EPS 66c/$523.7M vs. est. 66c/$505.61M; 1Q gross margin was 58.4%, up from 57.8% y/y due to manufacturing and procurement efficiencies, last year’s Astral field safety notification expenses
·      Seattle Genetics (SGEN) Q3 EPS 34c/$135.3M vs. est. loss (42c)/$112.8M; raises view for revenues from collaboration and license agreements to $90M-$100M from $75M-$90M and view of royalty revenues to $60M-$65M from $50M-$55M
·      Stryker (SYK) Q3 EPS $1.52/$3.0B vs. est. $1.50/$2.97B; sees Q4 EPS $1.92-$1.97 vs. est. $1.93; sees FY17 EPS $6.45-$6.50 vs. est. $6.44; sees FY organic revenue +6.5% to +7.0%
·      Tocagen (TOCA) to immediately advance Toca 511 and Toca FC for patients with high grade glioma to a pivotal trial known as the “Toca 5” study; decision based on TOCA’s communications with the FDA under Breakthrough Therapy Designation
Industrials & Materials
·      Century Aluminum (CENX) Q3 EPS 15c/$400.6M vs. est. 23c/$392.16M
·      Fortive (FTV) Q3 EPS 77c/$1.7B vs. est. 73c/$1.66B; sees Q4 EPS 74c-78c vs. est. 77c; sees FY EPS view $2.82-$2.86 vs. est. $2.80
·      Greenbrier (GBX) Q4 EPS 75c/$611.4M vs. est. 75c/$648M; sees FY revenue $2.4B-$2.6B vs. est. $2.24B; sees FY deliveries 20,000 to 22,000
·      LyondellBasell (LYB) Q3 EPS $2.67 on revs $8.52B vs. est. $8.14B; Q3 Ebitda $1.82B
·      OSI Systems (OSIS) Q1 EPS 79c/$257.1M vs. est. 71c/$248.4M; sees FY sales $1.05B-$1.09B, estimate $1.06B; sees FY adjusted EPS $3.40-$3.65 vs. est. $3.47
·      Rockwell Collins (COL) Q4 EPS $1.80/$2.19B vs. est. $1.79/$2.23B
·      Volkswagen AG (VLKAY) posted steep drop in Q3 net profit, hit by costs related to its diesel emissions scandal; said net profit fell to 1.06B euros ($1.25B), down from EUR2.28B YoY
Technology, Media & Telecom
·      Alphabet (GOOGL) shares up 2%; Q3 EPS $9.57/$22.3B ex-TAC vs. est. $8.34/$21.95B; Q3 aggregate paid clicks up 47% vs. last year and reports Q3 aggregate cost-per-click down -18% vs. last year; Q3 operating income $8.47B vs. Bloomberg est. $9.12B
·      Intel Corp. (INTC) shares gained 3% overnight; Q3 EPS $1.01/$16.1B vs. est. 80c/$15.73B; Q3 capex $2.98B vs. Bloomberg est.$3.38B (watch equipment stocks on weaker capex); Q3 Data Center Group Revenue $4.9B; sees Q4 EPS 86c (plus/minus 5c) and revs $16.3B (plus/minus) $500M vs. est. 83c/$16.1B
·      Microsoft (MSFT) shares gained 4%; Q1 EPS 84c/$24.54B vs. est. 72c/$23.56B; 1Q capital expenditure $2.13B, below Bloomberg est. $2.34B; Q1 Intelligent Cloud revenue $6.92B, Q1 More Personal Computing revenue $9.38B; says margins trending better than 2018 forecast
·      Aspen Technology (ASPN) Q1 EPS 53c/$122.8M vs. est. 48c/$121.73M
·      A10 Networks (ATEN) Q3 EPS 3c/$61.4M vs. est. loss (1c)/$59.46M
·      Baidu (BIDU) Q3 EPS $3.89/$3.53B vs. est. $2.04/$3.55B; sees Q4 revs $3.34B-$3.52B vs. est. $3.75B
·      Cadence Design (CDNS) Q3 EPS 35c/$485.5M vs. est. 34c/$481.24M; sees Q4 EPS 38c-40c on revs $490M-$500M vs. est. 39c/$497.2M
·      Cypress Semiconductor (CY) Q3 EPS 27c/$604.57M vs. est. 23c/$602.46M; sees Q4 EPS 23c-27c on revs $575M-$610M vs. est. 24c/$592.6M; Q3 gross margin 43%
·      Flex (FLEX) Q2 EPS 27c/$6.3B vs. est. 26c/$6.09B; sees Q3 adjusted EPS 28c-32c on revs $6.3B-$6.7B vs. est. 31c/$6.35B
·      Fortinet (FTNT) Q3 EPS 28c/$374.2M vs. est. 23c/$370.67M; sees Q4 EPS 28c-30c on revs $404.0M-$412.0M vs. est. 28c/$416.96M
·      Gigamon (GIMO) enters agreement to be acquired by Elliot for $38.50 per share in cash in a deal valued at $1.6B
·      KLA-Tencor (KLAC) Q1 EPS $1.80/$969.6M vs. est. $1.65/$947.5M; Q1 product revs $760.8M and Q1 service revs $208.8M
·      MicroStrategy (MSTR) Q3 EPS $1.56/$125.2M vs. est. $1.22/$126M
·      MuleSoft (MULE) Q3 EPS loss (13c)/$77.6M vs. est. loss (12c)/$71.49M; lowers FY17 non-GAAP EPS view to (43c)-(41c) from (38c)-(40c), and raises FY17 revenue view to $290M-$292M from $279M-$281M
·      National Instruments (NATI) Q3 EPS 32c/$321M vs. est. 30c/$319.79M; sees Q4 adjusted EPS 34c-48c on revs $331M-$361M vs. est. 36c/$352.6M
·      Power Integrations (POWI) Q3 EPS 78c/$111.3M vs. est. 73c/$111.89M; sees Q4 revenue $107M-$113M vs. est. $111.85M
·      Western Digital (WDC) Q1 EPS $3.56/$5.18B vs. est. $3.31/$5.13B
·      VeriSign (VRSN) Q3 EPS $1.00/$292M vs. est. 97c/$291.71M; 3Q new domain name registrations processed 8.9 million
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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