Morning Preview: November 3, 2017

Regal HelpdeskDaily Market Report

Early Look
Friday, November 3, 17
Stock futures looking at another higher open, led by another round of better than expected earnings, with tech behemoth and Dow component Apple (AAPL) rising after hours following its results. U.S. stocks were steady on Thursday as investors reviewed details of a tax bill that contains sweeping changes for business and individual taxes as well as the nomination of Jerome Powell to head the Federal Reserve head (which was widely expected). Next up for markets, the nonfarm payrolls report at 8:30 AM EST (est. for 313K jobs added), which could further strengthen the case for a December interest rate rise by the Federal Reserve. The S&P 500 closed marginally higher on Thursday (just shy of its all-time closing high), the Dow posted its 55th record closing high of 2017 and the Nasdaq Composite Index ended slightly lower. As of Thursday’s, close, the Dow average and Nasdaq were set for weekly gains of 0.4% and 0.2%, respectively, while the S&P was eyeing a 0.1% loss for the week. Oil prices are higher, gold slightly lower and bonds steady on the final day of a very busy week for stocks.
In Asian markets, The Nikkei Index was closed, the Shanghai Index fell -11 points to 3,371 and the Hang Seng Index gained 84 points to settle at 28,603. In Europe, the German DAX rises by over 35 points at 13,475, while the FTSE 100 is higher by about 20 points at 7,575. In Currencies, Bitcoin jumps to fresh all-time high above $7,400 in what has been another record breaking week for the crypto-currency. Bitcoin rising despite another CEO with cautious comments after Credit Suisse CEO Thiam said “‘From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble.”
Market Closing Prices Yesterday
·      The S&P 500 Index inched higher 0.49 points, or 0.02%, to 2,579.85
·      The Dow Jones Industrial Average rose 81.25 points, or 0.35%, to 23,516.26
·      The Nasdaq Composite slipped -1.59 points, or 0.02%, to 6,714.94
·      The Russell 2000 Index advanced 3.77 points, or 0.25% to 1,496.55
Events Calendar for Today
·      8:30 AM EST       Change in Nonfarm Payrolls for October…est. 312K
·      8:30 AM EST       Change in Private Payrolls for October…est. 301K
·      8:30 AM EST       Change in Manufacturing Payrolls for October…est. 15K
·      8:30 AM EST       Unemployment Rate for Oct…est. 4.2%
·      8:30 AM EST       Average Hourly Earnings MoM for Oct…est. 0.2%
·      8:30 AM EST       Trade Balance for September…est. (-$43.2B)
·      9:45 AM EST       Markit US Services OMI, Oct-F…est. 55.9
·      9:45 AM EST       Markit US Composite PMI, Oct-F…prior 55.7
·      10:00 AM EST     ISM Non-Manufacturing Comp for October…est. 58.5
·      10:00 AM EST     Factory Orders for September…est. 1.2%
·      1:00 PM EST        Baker Hughes Weekly Rig Count
·      12:15 PM EST     Fed’s Kashkari speaks on Housing and Finance
Earnings Calendar:
·      Earnings Before the Open: AINV, AXL, BID, BLMN, CBG, CNK, MCO, MSG, PBPB, REV, RLGY, SSP, WPC
World News
·      IHS Markit Ltd. said UK purchasing managers index for the services industry–which accounts for some 80% of the U.K. economy–rose to 55.6 in October, up from 53.6 in September
Sector News Breakdown
·      Starbucks (SBUX) Q4 EPS 55c/$5.7B vs. est. 55c/$5.8B; Q4 global comparable store sales increased 2%, driven by a 2% increase in average ticket and a 1% increase in transactions; up 3% excluding the impact from Hurricanes Harvey and Irma; also announced entry into a definitive agreement for Unilever (UN) to acquire the assets of the Tazo brand including its signature recipes, intellectual property and inventory for $384M; commits to returning $15B to shareholders over next 3 years
·      Chuy’s (CHUY) announces authorization of $30M share repurchase program; Q3 EPS 19c/$92.2M vs. est. 22c/$93.2M; Q3 comparable restaurant sales decreased 2.1%; lowered year EPS to 96c-$1.00 from prior $1.04-$1.08; lowers comp sales to (1.5%) to 0.0% from (1.5%) to 0.5%
·      Herbalife (HLF) Q3 EPS 82c/$1.1B vs. est. 88c/$1.1B; sees Q4 adjusted EPS 84c-$1.08 on rev growth 2.3%-7.3% vs. est. $1.16/$1.12B; narrows FY17 adjusted EPS view to $4.42-$4.62 from $4.30-$4.70 and narrows FY17 revenue growth view to (1.9%)-(0.6%) from (3%)-2%,
·      Floor & Decor (FND) Q3 EPS 17c/$343.9M vs. est.14c/$338M; sees Q4 EPS 14c-16c and sales $316M-$372M vs. est. 13c/$347.3M
·      Clean Energy Fuels (CLNE) Q3 EPS loss (61c)/$81.8M vs. est. loss (11c)/$85.4M
·      Consolidated Edison (ED) reports Q3 EPS $1.47 vs. est. $1.51; narrows FY17 EPS view to $4.05-$4.15 from $4.00-$4.15 (est. $4.08)
·      EOG Resources (EOG) Q3 EPS 19c vs. est. 11c; 3Q production 327.9 mb/d; 3Q adjusted Ebitda $1.16 billion; expects to grow 2017 U.S. oil production 20%; expects to complete about 505 net wells in 2017 
·      Rice Energy (RICE) Q3 EPS 5c/$365.28M vs. est. 9c/$373.53M; Q3 net production averaged 1,440 MMcfe/d, a 6% increase from Q2
·      Rice Midstream (RMP) Q3 EPS 48c/$81.7M vs. est. 35c/$64.56M; said gathering throughput averaged 1,483 per day, a 9% increase from Q2
·      AIG (AIG) Q3 operating loss ($1.22) vs. est. (78c) loss; 3Q pretax catastrophe losses were $3.0B, primarily from Hurricanes Harvey, Irma and Maria; 3Q book value per share $80.62 vs $81.62 QoQ; Q3 commercial insurance combined ratio 195.4 vs 105.8 y/y
·      Assurant (AIZ) Q3 EPS loss ($1.40)/$1.586B vs. est. loss ($1.72)/$1.59B; backs FY17 EPS ex-items view of up double digits; 3Q net premiums earned $1.07 billion
·      Athene (ATH) shares fell late day after Evercore/ISI, commenting on Section 4303 of Tax Reform Bill, said that if this new provision limits the use of internal quota share reinsurance, it could have a meaningful impact on the tax rate of Athene Holdings
·      Cardtronics (CATM) Q3 EPS 96c/$402M vs. est. 86c/$375.4M; sees 2017 EPS $2.83-$3.00 on revs $1.47B-$1.5B vs. est. $2.80/$1.46B
·      CBL & Associates (CBL) Q3 FFO 50c vs. est. 54c; cuts year FFO outlook to $2.08-$2.12 vs. est. $2.20
·      MoneyGram (MGI) Q3 EPS 24c/$397.8M vs. est. 26c/$418.8M; 3Q adjusted Ebitda $67.9M
·      Western Union (WU) Q3 EPS 51c/$1.4B vs. est. 45c/$1.39B; raises 2017 adjusted EPS outlook to $1.75-$1.85 from $1.70-$1.80 (est. $1.77) and sees 2017 low single digit increase in both GAAP and constant currency revenue vs. flat to low single digit increase for GAAP revenue previously
·      Valley National (VLY) announces the retirement of Gerald Lipkin as CEO, effective December 31, 2017
·      Valeant Pharmaceuticals International Inc. (VRX) shares higher after the FDA approved the company’s Vyzulta drug. The drug, a treatment for open angle glaucoma, has been developed by Valeant’s wholly-owned subsidiary Bausch + Lomb and France’s Nicox
·      Smith & Nephew PLC (SNN) said that it expects its full-year performance to come in at the lower end of its guidance range after recording 3% revenue growth for Q3; the lower guidance follows a weak outlook from competitor Zimmer (ZBH) earlier this week
·      Allscripts (MDRX) Q3 EPS 16c/$449.4M vs. est. 16c/$429.71M; reaffirms 2017 EPS outlook 61c-63c vs. est. 61c and sees 2017 revenue at high end of $1.79B-$1.82B (est. $1.79B)
·      Apricus Biosciences (APRI) files $100M mixed securities shelf
·      Insulet (PODD) Q3 EPS loss (4c)/$121.8M vs. est. loss (10c)/$114.41M; raises 2017 revenue outlook to $456M-$459M from $440M-$450M vs. est. $447.09M
·      Mettler-Toledo (MTD) Q3 EPS $4.36/$698.8M vs. est. $4.33/$685.57M; sees Q4 adjusted EPS $5.90 on revenue growth 5.5% vs. est. $5.87/$760.67M; sees FY18 adjusted EPS $19.65-$19.85, vs. est. $19.72 and sees FY18 revenue growth 6%
·      Molina Healthcare (MOH) Q3 EPS with charge ($1.70)/$5.03B vs. est. $4.96B
·      PerkinElmer (PKI) Q3 EPS 73c/$554.3M vs. est. 72c/$552.44M; sees year EPS $2.87-$2.89 vs. prior view $2.84-$2.92
·      PTC Therapeutics (PTCT) Q3 EPS loss (82c)/$41.9M vs. est. loss (60c)/$40.5M; filed formal dispute resolution request with the FDA’s complete response letter for its experimental therapy, ataluren; sees 2017 revs $160M-$185M, up from the $120M-$140M prior (est. $175M); sees 2017 sales of Translarna between $120M-$140M
·      Amgen (AMGN) and Novartis (NVS) announced an expanded collaboration with the Banner Alzheimer’s Institute to initiate a new trial – the Alzheimer’s Prevention Initiative Generation Study
Industrials & Materials
·      Chemours (CC) Q3 EPS $1.12/$1.6B vs. est. $1.04/$1.59B; backs FY17 adjusted EBITDA view $1.3B-$1.4B
·      Fluor (FLR) Q3 EPS 67c/$4.9B vs. est. 60c/$4.7B; narrows year EPS to $1.50-$1.60 from prior view $1.40-$1.70 and estimate $1.54
·      Heavy duty trucks: Buckingham said that net orders for Class 8 trucks rose 160% to 36,200 units in October, citing ACT Research data, topping prior estimates from Wells Fargo between 27K-30K as ACT noted that Class 8 orders highlight “improving freight conditions and freight rates in 2017 that will lead to a rebound in carrier profitability in 2018 (CMI, NAV, PCAR leveraged to data)
·      Kratos Defense (KTOS) raises FY17 revenue view to $735M-$745M from $720M-$740M (est. $737M) and backs FY17 Adjusted EBITDA guidance of $52M to $54M; sees Q4 revenue $185M-$195M vs. consensus $197.3M
·      Republic Services (RSG) Q3 EPS 67c/$2.56B vs. est. 63c/$2.54B; sees 2018 adjusted EPS $2.53-$2.58 vs. est. $2.62 and sees 2018 adjusted free cash flow $925M-$950M
·      YRC Worldwide (YRCW) Q3 EPS 9c/$1.25B vs. est. 28c/$1.25B; Q3 operating ratio of 96.8 was consistent with Q3’16 and operating ratio was 97.4 compared to 97.3 YoY
Technology, Media & Telecom
·      Apple (AAPL) shares rise 3%; Q4 EPS $2.07/$52.6B vs. est. $1.87/$50.79; sees Q1 revenue $84B-$87B vs. est. $84.5B and sees Q1 gross margin 38%-38.5%; 4Q iPhone units sold 46.7M vs. est. 46.1M and 4Q iPhone ASP $618 vs. est. $633; 4Q services revenue up 34% y/y to $8.5B vs. est. $7.8B; 4Q gross margin 37.9% vs. est. 38.0%
·      Activision Blizzard (ATVI) Q3 EPS 60c/$1.9B vs. est. 49c/$1.74B; sees 2017 EPS $2.16 from prior view $2.00 and revs $6.85B vs. est. $2.13/$6.78B; had 384m MAUs in 3Q; King had 293m MAUs in 3Q
·      Altice (ATUS) expects FY adjusted Ebitda growth at the low end of its guidance range for high-single digit growth, and consistent with year-to-date Ebitda growth of about 6% on constant currency basis; 3Q revenue falls 1.8% to EU5.76b
·      CBS Corp. (CBS) Q3 EPS $1.11/$3.2B vs. est. $1.08/$3.27B; Q3 Entertainment revenue down 7% to $1.82B; Q3 Publishing revenue up 1% to $228M; Q3 Cable Networks revenue up 40% to $840M; Q3 Local Media revenues of $397M, down 3%
·      Cirrus Logic (CRUS) Q2 EPS $1.36/$425.5M vs. est. $1.21/$410.4M; sees Q3 revs $510M-$550M vs. est. $523M
·      Acacia Communications (ACIA) Q3 EPS 46c/$105M vs. est. 35c/$104.4M; sees 4Q adjusted EPS 19c-36c on revs $83.0M-$93.0M vs. est. 47c/$113.1M (optical space declined yesterday after OCLR lowered guidance)
·      Axcelis (ACLS) Q3 EPS 38c/$104.5M vs. est. 28c/$95.1M; sees Q4 EPS 37c-41c on revs $107M-$112M vs. est. 31c/$95.24M
·      Arista Networks (ANET) shares gain 8%; Q3 EPS $1.62/$437.6M vs. est. $1.19/$418.5M; sees Q4 revenue $450M-$464M vs. est. $447.14M and sees Q4 adjusted gross margin 63%-65%
·      Live Nation (LYV) Q3 EPS 53c/$3.56B vs. est. 56c/$3.36B
·      Motorola Solutions (MSI) Q3 EPS $1.53/$1.6B vs. est. $1.40/$1.58B; sees Q4 adjusted EPS $2.00-$2.05 and revs growth roughly 3% vs. est. $2.05/$1.9B; raises FY17 EPS view to $5.35-$5.40 from $5.20-$5.30
·      OpenText (OTEX) Q1 EPS 54c/$641M vs. est. 54c/$631.52M
·      Pandora (P) Q3 EPS loss (6c)/$378.6M vs. est. loss (8c); advertising revenue was $275.7M up 1 YoY; ad RPM hits an all-time high of $70.27 in Q3 2017 from $58.10 in Q3 2016, growing 21% YoY; paid total subscribers were 5.19M, growing 29% YoY; Q3 active listeners 73.7M
·      Paylocity (PCTY) Q1 EPS 15c/$81.5M vs. est. 11c/$80.9M; raises FY18 EPS view to 84c-85c from 78c-80c (est. 81c) and sees FY18 revenue $368.5M-$370.5M vs. est. $369.9M
·      Rogers Corporation (ROG) Q3 EPS $1.37/$206.8M vs. est. $1.29/$198.16M; sees Q4 adjusted EPS $1.35-$1.45 on revs $200M-$210M vs. est. $1.28/$199.72M
· (STMP) Q3 EPS $2.68/$115.1M vs. est. $1.90/$110.4M; sees FY revenue $435M-$460M vs. est. $453.8M and year EPS $9.00-$10.00 vs. est. $8.02
·      Synopsys (SNPS) in pact to buy Black Duck Software for ~$565M
·      Tableau (DATA) shares fell -12%; Q3 EPS 8c/$214.9M vs. est. 9c/$219.44M; sees Q4 adjusted EPS (1c)-5c on revs $235M-$245M below est. 8c/$250.18M; cuts FY17 revenue view to $863M-$873M from $890M and below consensus $882.26M
·      Aquantia (AQ) 6.818M share IPO priced at $9.00
·      TiVo (TIVO) Q3 revs $197.9M vs. est.$190.8M; reaffirms 2017 revenue outlook $810M-$830M
·      Universal Display (OLED) Q3 EPS 28c/$61.7M vs. est. 12c/$47.1M; raises FY17 revenue view to $310M-$320M from $285M-$300M (est. $298.32M)
·      Uniti Group (UNIT) Q3 EPS loss (2c)/$245.2M vs. est. 2c/$244.04M; sees FY17 revenue $913M-$918M vs. consensus $916.08M; now sees 2017 AFFO of $2.51 at the midpoint vs its prior forecast of $2.53; the company cited delays in dark fiber construction and service order activations in the Southeast due to hurricanes
·      Cohu (COHU) Q3 EPS 43c/$93.7M vs. est. 39c/$91.43M


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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