Morning Preview: January 26, 2018

Scott GreenDaily Market Report

Early Look
Friday, January 26, 18
  
Stocks looking at a strong open, on track to start at fresh record highs after ending Thursday little changed after swinging between gains and losses during the day as a rally in rate-sensitive utilities firms offset a dip in oil and gas companies. Technology shares dropped for a second day, as the Nasdaq Composite posted its first back-to-back losses this year, led by weakness in semiconductors on Apple iPhone X demand concerns hitting the supply chain (analysts have been lowering estimates this week on suppliers). After a brief afternoon rebound, the U.S. dollar is trending lower again as investors await a keynote speech from U.S. President Donald Trump who is attending the World Economic Forum in Davos, Switzerland. Outside of earnings and the Davos forum, markets will also turn its attention to economic data, as gross domestic product data (GDP) for Q4 is due at 8:30 AM EST with estimates for a 3% increase. Durable goods orders for December are due at the same time, along with advance trade in goods for December. For the week, the Dow is looking at a gain of 1.2%, while the S&P 500 and Nasdaq Composite are looking at a rise of around 1% each. In Asian markets, The Nikkei Index fell -37 points to settle at 23,631, the Shanghai Index gained 9 points to end at 3,558, but the Hang Seng Index surged nearly 500 points (1.53%) to settle at a new record of 33,154 on strength in bank stocks. In Europe, the German DAX is flat around 13,300, while the FTSE 100 is up around 40 points at 7,655
 
Events Calendar for Today
·      8:30 AM EST       Gross Domestic Product (GDP) for Q4-A…est. 3.0%
·      8:30 AM EST       Personal Consumption for Q4…est. 3.7%
·      8:30 AM EST       GDP Price Index for Q4-A…est. 2.3%
·      8:30 AM EST       Core PCE QoQ for Q4-A…est. 1.9%
·      8:30 AM EST       Durable Goods Orders, Dec-P…est. 0.8%
·      8:30 AM EST       Advanced Goods Trade Balance for Dec…est. (-$68.9B)
·      1:00 PM EST        Baker Hughes Weekly Rig Count
 
Earnings Calendar
·      Earnings Before the Open: APD, CL, COL, GNTX, HON, HRC, LEA              
 
Market Closing Prices Yesterday
·      The S&P 500 Index gained 1.71 points, or 0.06%, to 2,839.25
·      The Dow Jones Industrial Average rose 140.67 points, or 0.54%, to 26,392.79
·      The Nasdaq Composite dropped -3.89 points, or 0.05%, to 7,411.16
·      The Russell 2000 Index advanced 2.06 points, or 0.13% to 1,601.67
   
World News
·      Japan’s core inflation rose for a 12th straight month in December but failed to gain any additional upward momentum, a reading that may temper recent speculation about possible monetary policy tightening in Japan. The core consumer price index in December rose 0.9% from a year earlier
·      Confidence in French manufacturing rose one point to 113 in January, well above the long-term average of 100, statistics agency Insee said.
·      U.K. GDP rose 0.5% in Q4, beating forecasts of a 0.4% reading
 
Sector News Breakdown
Consumer
·      Starbucks (SBUX) Q1 EPS 65c/$6.07B vs. est. 57c/$6.18B; Q1 global and U.S. comparable store sales increased 2% vs. est. 3%, driven by a 2% increase in average ticket; Americas and U.S. comp store sales increased 2%, driven by a 2% increase in average ticket; raises FY18 adjusted EPS view to $2.48-$2.53 from $2.30-$2.33; backs FY18 revenue growth in the high single digits
·      Amazon (AMZN) invited Boxed.com founder and CEO to the company’s Seattle headquarters to discuss an acquisition of the start-up, which has also been eyed byKroger (KR), according to the New York Post
·      Whirlpool (WHR) cut to sector weight from overweight at KeyBanc Capital
 
Energy
·      SunPower (SPWR) is pausing its $20M U.S. factory expansion and the creation of hundreds of new positions until its solar panels are granted an exclusion from the 30% tariff implemented on imported solar modules by the Trump administration, Reuters reports, citing CEO Tom Werner
 
Financials
·      E-Trade (ETFC) agreed to acquire more than one million retail brokerage accounts with $18 billion in customer assets from Capital One for a purchase price of $170 million; Q4 EPS 64c/$637M vs. est. 61c/$629.14M; reports Daily Average Revenue Trades of 236,000 (DARTs); net new brokerage accounts of 46,000; net new brokerage assets of $3.2B
·      PlayAGS (PAGS) 10.25M share IPO priced at $16.00
·      Arthur J. Gallagher (AJG) Q4 adjusted EPS 82c/$1.599B vs. est. 75c/$1.49B
·      Associated Banc-Corp (ASB) Q4 EPS 41c vs. est. 38c; reports Q4 net interest margin down 5 basis points to 2.79%
·      Berkshire Hills Bancorp (BHLB) Q4 core EPS 58c vs. est. 57c; Q4 NII $83.37M; Q4 loan loss provision $6.14M vs. $4.1M a year ago; Q4 net charge-offs $3.31M vs. $3.26M a year ago
·      Dime Community (DCOM) Q4 EPS 34c (in-line); 4Q net interest margin 2.50% vs. est. 2.52%; Q4 net interest income $38.7M and Q4 provision for loan losses $1M
·      Federated Investors (FII) Q4 adjusted EPS 61c/$278.3M vs. est. 58c/$283.09M; 4Q equity assets $68.14 billion and 4Q fixed-income assets $64.22 billion
·      Fair Isaac (FICO) Q1 EPS $1.30/$235M vs. est. $1.09/$235.63M; raises FY18 adjusted EPS view to $6.09 from $5.32 and consensus $5.43; maintains FY18 revenue view $990M
·      First Hawaiian (FHB) Q4 EPS 42c vs. est. 41c; Q4 provision for credit losses $5.1M; Q4 net interest margin 2.99% and Q4 return on average assets 0.23%
·      Seacoast Banking (SBCF) Q4 EPS 37c (in-line); Q4 return on average tangible assets was 0.97%, return on average tangible shareholders’ equity was 10.7%, and the efficiency ratio was 64.0%, compared to 1.12%, 12.5% and 58.9%, respectively YoY
 
Healthcare
·      Intuitive Surgical (ISRG) Q4 EPS $2.54/$892M vs. est. $2.27/$850.6M; 4Q worldwide procedure growth +17%; 4Q surgical system placements 216
·      AstraZeneca PLC (AZN) said that its PT010 therapy for chronic obstructive pulmonary disease showed positive results compared with existing treatments in a trial; said the phase 3 trial for the PT010 triple-combination therapy showed “significant improvement” in eight out of nine lung function primary endpoint
·      Five Prime Therapeutics (FPRX) announced that a development milestone for Cabiralizumab has been achieved, triggering a $25M payment from Bristol-Myers Squibb Company (BMY) under the license and collaboration agreement
·      PerkinElmer (PKI) Q4 EPS 97c/$642M vs. est. 94c/$618.64M; sees FY18 adjusted EPS $3.50, vs. consensus $3.47
·      Quality Systems (QSII) Q3 adjusted EPS 15c/$131.7M vs. est. 15c/$130.63M; backs FY18 EPS view 64c-68c and revenue view $522M-$530M vs. est. 66c/$527.52M
·      Adverum Biotechnologies (ADVM) announced an extension of its collaboration agreement with Editas Medicine (EDIT)
·      Strongbridge Biopharma (SBBP) 5M share Secondary priced at $6.75
·      Solid Biosciences (SLDB) 7.8M share IPO priced at $16.00
·      ResTORbio (TORC) 5.67M share IPO priced at $15.00
 
Industrials & Materials
·      Honeywell (HON) Q4 EPS $1.85/$10.84B vs. est. $1.84/$10.78B; raises 2018 guidance to reflect lower tax rate which they see as 22%-23%
·      Air Products (APD) Q1 EPS $1.79/$2.2B vs. est. $1.65/$2.09B; sees FY18 adj. EPS $7.15-$7.35 vs. est. $7.06, adjusted EPS guidance including an estimated 20c-25c benefit from the U.S. Tax Cuts and Jobs Act
·      Celanese (CE) Q4 EPS $1.98/$1.59B vs. est. $1.87/$1.49B
·      Huntsman (HUN) raises 4Q due to strong MDI ops demand and margins; Q4 prelim for performance products Ebitda down vs prior year pro forma Ebitda of $61M
·      Marten Transport (MRTN) Q4 EPS 16c/$182.8M vs. est. 16c/$178.0M
·      Matthews (MATW) Q1 EPS 64c/$369.5M vs. est. 61c/$392.35M; sees 2018 EPS up at least 10%
·      Rockwell Collins (COL) Q1 EPS $1.59/$2.01B vs. est. $1.55/$1.99B;
 
Technology, Media & Telecom
·      Intel (INTC) Q4 EPS $1.08/$17.1B vs. est. 87c/$16.34B; raises dividend 10% to $1.20 annually; sees Q1 EPS 70c plus or minus 5c and revs $15.0B plus or minus $500M vs. est. 72c/$15.03B; sees FY18 EPS $3.55 plus or minus 5% and revs plus or minus $1B vs. est. $3.27/$63.79B; reports $5.4B charge on tax reform in 4Q
·      KLA-Tencor (KLAC) Q2 adjusted EPS $1.97/$976M vs. est. $1.73/$968.81M; 2Q product rev. $761.6 million and 2Q service revs $214.2 million
·      Flex (FLEX) Q3 EPS 31c/$6.75B vs. est. 30c/$6.5B; sees Q4 adjusted EPS 28c-32c on revs $6.1B-$6.5B vs. est. 29c/$6.19
·      Maxim Integrated (MXIM) Q2 adjusted EPS 65c/$623M vs. est. 65c/$620.49M; raises quarterly dividend 17% to 42c; sees Q3 adjusted EPS 66c-72c and revs $620M-$660M vs. est. 63c/$602.25M; sees Q3 gross margin 64% to 66%
·      Microsemi (MSCC) Q1 EPS $1.01/$468.7M vs. est. $1.01/$460.18M; sees Q2 non-GAAP EPS 93c-$1.07 on revs $477M-$502M vs. est. $1.02/$464.07M
·      Western Digital (WDC) Q2 adjusted EPS $3.95/$5.34B vs. est. $3.82/$5.31B; said continued strong financial performance in the December quarter, with 9% YoY revenue growth, driven by each of our major end-market categories and solid execution by our team; sees income tax expense of $1.66B for repatriation tax
·      Rapid7 (RPD) 5.18M share Secondary priced at $22.00
·      VMWare (VMW) shares could be active after The Wall Street Journal reported that Dell Inc. could be exploring a deal to buy the cloud computing company. Dell may also be considering an IPO, the article said. https://goo.gl/Pkg9Aj
·      8×8, Inc. (EGHT) Q3 EPS 2c/$75.6M vs. est. 1c/$73.9M; said mid-market and enterprise bookings grew 40% year-over-year; sees FY18 revenue $293M-$294M vs. est. $292.99M
·      MicroStrategy (MSTR) Q4 adjusted EPS $1.55/$138.1M vs. est. $1.37/$132.94M
·      Equinix (EQIX) says Steve Smith has resigned as CEO and from the Board, after exercising poor judgment with respect to an employee matter. Company says action was not related to the company’s operational performance or financial condition
 

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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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