Morning Preview: February 8, 2018

Scott GreenDaily Market Report

Early Look
Thursday, February 8, 18
  
Stock futures are lower, but posting more modest losses than what investors have seen over the last week, as markets attempt to stabilize following one of the most volatile trading weeks in years. Major averages are pointing to losses for the week, which would be the second consecutive decline, amid rising bond yields (surging borrowing costs) amid signs of inflation, but while equities were due for a pullback after scoring big gains in January and throughout 2017. The three main gauges are down between 2.5% and 2.9% for the week as of Wednesday’s close, after tumbling Monday, rallying Tuesday and suffering modest losses Wednesday. Political uncertainty remains an issue as well as a partial shutdown of the federal government awaits if lawmakers can’t agree on spending measures by midnight (this after the Senate unveiled an agreement Wednesday).
 
U.S. stocks ended Wednesday’s session on the lows after swinging between gains and losses earlier in the day as higher yields renewed concern about riskier assets. Recent trading has seen huge swings in both directions, though the dominant move over the past week has been lower. The yield on the 10-year Treasury note jumped to 2.84% after trading as low as 2.75% earlier (fell to lows of 2.648% this week and a high 2.883%). Late day, it was reported Congressional leaders reached an agreement on a two-year budget pact that would increase fiscal spending by $300 billion on the back of a big increase in military spending…but that failed to lift stocks.
 
In Asian markets, The Nikkei Index gained 245 points to 21,890, the Shanghai Index lost -47 points to settle at 3,262 and the Hang Seng Index rose 128 points to settle at 30,451. In Europe, the German DAX is down around -150 points at 12,440, while the FTSE 100 is down over -50 points at 7,220.
 
Market Closing Prices Yesterday
·      The S&P 500 Index dropped -13.49 points, or 0.50%, to 2,681.65
·      The Dow Jones Industrial Average fell -19.42 points, or 0.08%, to 24,893.35
·      The Nasdaq Composite slumped -63.90 points, or 0.90%, to 7,051.98
·      The Russell 2000 Index inched higher 0.80 points, or 0.05% to 1,507.97
 
Events Calendar for Today
·      8:00 AM EST       Fed’s Harker speaks on Economy
·      8:30 AM EST       Weekly Jobless Claims…est. 232K
·      8:30 AM EST       Continuing Claims…est. 1.94M
·      9:00 AM EST       Fed’s Kashkari speaks in moderated Q&A
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 54.6
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
·      9:00 PM EST        Fed’s George speaks on the Economy
 
Earnings Calendar
·      Earnings Before the Open: ALXN, BCE, BR, BWA, CAH, CBG, COTY, CVS, EPC, GRUB, K, KKR, MANU, MAS, MD, NLSN, ODFL, PM, RGEN, SEE, SNA, TDC, TEVA, TSN, TWTR, UBNT, VIAB, VIRT, WLTW, WSO, WWE, YUM
·      Earnings After the Close: AIG, AIZ, ATVI, CBL, CDR, DXC, ELLI, EXPE, FEYE, FLT, FTV, HIG, HIVE, HOLX, IMPV, LGF, MHK, MOBL, MPWR, MTW, NCR, NUAN, NVDA, NWS’A, PCTY, PSDO, REG, RSG, UIS, VRSN, WEB, ZG
   
Sector News Breakdown
Consumer
·      Tesla (TSLA) Q4 EPS loss ($3.04)/$3.29B vs. est. loss ($3.20)/$3.28B; Q4 deliveries of 29,967, including 1,542 Model 3 vehicles; Combined Model S and Model X deliveries in Q4 grew 10% globally compared to our prior record in Q3, and they grew 28% compared to Q4 2016; still targets weekly Model 3 production rates of 2,500 by end Q1; sees Model S and Model X deliveries of about 100,000 in 2018
·      Yum China (YUMC) Q4 EPS 19c/$2.23B vs. est. 18c/$2.15B; Q4 comparable sales +5% vs. estimate +3.6%, KFC comp sales +7% vs. estimate +4.7% and Pizza Hut comps +1% vs. est. +0.2%; says recorded estimated one-time tax charge of $0.42/share related to recent U.S. tax reform
·      iRobot (IRBT) shares fell -20%; guided 2018 EPS $2.10-$2.35 vs. GAAP estimate $2.80, while guides year revs $1.05B-$1.08B vs. est. $1.02B; sees 2018-2020 revenue growth about 20%
·      O’Reilly Auto (ORLY) Q4 EPS $3.52/$2.19B vs. est. $2.78/$2.19B; sees 1Q EPS $3.55-$3.65 vs. est. $3.63 and Q1 comp sales +2% to +4% after Q1 comps rose 1.3%; sees FY EPS $15.10-$15.20, vs. estimate $15.55 and revs $9.4B-$9.6B vs. est. $9.46B
·      Central Garden & Pet (CENT) Q1 adjusted EPS 19c/$442.0M vs. est. 15c/$436.62M; organic sales increased 1.1%, contributed almost equally from the Garden and Pet segments despite difficult comparisons with 1Q 2017, when sales grew 7.0% over the prior year; raises year EPS
·      Zumiez (ZUMZ) sees 4Q EPS to be toward high-end of range (had seen 88c-90c); comparable sales increased 6.3% for the five-week period ended February 3 vs. estimate up 1.9%
·      BorgWarner (BWA) Q4 EPS $1.07 vs. est. $1.01; sees year EPS $4.25-$4.35 below estimate $4.48; reaffirms Q1 and 2018 organic growth guidance
·      Costco (COST) Jan. comp. sales up 6% vs est. up 3.8% and Jan. U.S. comp. sales ex fuel up 3.6% vs est. up 2.1%
·      Coty (COTY) Q2 EPS 32c/$2.64B vs. est. 23c/$2.48B
 
Energy
·      Green Plains (GPRE) Q4 EPS loss (16c)/$921M vs. est. loss (21c)/$940.7M; Q4 Ebitda $36.1M vs. Bloomberg estimate $40.3M; says 4Q net loss excludes revaluation of deferred tax liabilities
·      CNX Resources (CNX) will sell its 95% interest in the Shirley-Pennsboro gathering system to CNXM for total cash consideration of $265M; both agreed to amend their existing gathering agreement
·      California Resources (CRC) said Ares Management’s Private Equity Group (ARES) invested $750M for certain common and preferred equity interests in the venture; the Ares-led investor group also bought about 2.34m California Resources shares at $21.33 per share
·      WGL Holdings (WGL) Q1 EPS $1.84/$652.4M vs. est. $1.26/$643.3M
 
Financials
·      Allstate (ALL) Q4 EPS $2.09 vs. est. $1.50; Q4 net premiums written $7.84B, net premiums earned $7.97B; 4Q net investment income $913M and catastrophe losses $599M; 4Q combined ratio reported 91%
·      Cincinnati Financial (CINF) Q4 EPS 93c/$1.4B vs. est. 86c/$1.41B; 4Q net premiums written $1.13 billion; 4Q book value per share $50.29
·      Fiserv (FISV) Q4 EPS $1.41/$1.52B vs. est. $1.38/$1.51B; Q4 adjusted operating margin +34%; 4Q payments revenue $865M and Q4 financial revenue $668 million; sees FY18 adjusted EPS $6.05-$6.30 vs. est. $5.88 and sees FY18 internal revenue growth at least 4.5%
·      Moelis (MC) Q4 adjusted EPS 52c/$169.2M vs. est. 42c/$160.41M; declares special dividend of $1.50 and boosts quarterly dividend
·      Prudential Financial (PRU) Q4 EPS $2.69 vs. est. $2.64; Assets under management $1.39 trillion; 4Q adjusted book value per share $88.28
·      Pzena Investment (PZN) preliminary assets under management (AUM) at Jan. 31, 2018 $40.5B vs. $31.1B at Jan. 31, 2017
·      Primerica (PRI) Q4 EPS $1.60/$442.9M vs. est. $1.43/$436M; 4Q net investment income $19.5M and boosts dividend to 25c from 20c
·      American Equity (AEL) Q4 adjusted EPS 82c vs. est. 68c
·      Victory Capital (VCTR) 11.7M share IPO priced at $13.00
 
Healthcare
·      Regeneron (REGN) Q4 EPS $5.23/$1.58B vs. est. $4.58/$1.51B
·      Lannett (LCI) cuts year sales view to $680M-$700M from prior view $710M-$720M
·      Alexion (ALXN) Q4 EPS $1.48/$909.7M vs. est. $1.28/$880.65M
·      Evolus (EOLS) 5M share IPO priced at $12.00
·      MediciNova (MNOV) 4.42M share Spot Secondary priced at $9.05
·      Amicus Therapeutics (FOLD) announced additional positive results from a global Phase 1/2 clinical study to investigate ATB200/AT2221 in patients with Pompe disease; continues to engage in a series of collaborative discussions with regulators in the U.S. and EU, and expects to provide an update in the first half of 2018
·      Invacare (IVC) Q4 EPS loss (42c)/$250.4M vs. est. loss (44c)/$243.3M; Q4 cash and cash equivalents $176.5 million
·      OraSure (OSUR) Q4 EPS 12c/$52M vs. est. 11c/$47.8M; sees Q1 EPS loss (6c) on revs $40<-$41M vs. est. 8c/$40.8M
·      pSivida (PSDV) announced that results from the Company’s second Phase 3 trial for Durasert three-year treatment for posterior segment uveitis confirmed a significant reduction in uveitis recurrence rate at 12 months. “The continued positive efficacy and safety data for Durasert, now confirmed in two separate Phase 3 studies at both six and 12 months, is encouraging for patients that are suffering from posterior segment uveitis”
·      Sage Therapeutics (SAGE) announces $575M common stock offering
·      athenahealth (ATHN) appoints Jeff Immelt as chairman of board
 
Industrials & Materials
·      Echo Global (ECHO) Q4 EPS 33c/$547.7M vs. est. 19c/$485.2M; sees FY18 revenue of $2.1B-$2.3B vs. consensus $2.11B
·      Forward Air (FWRD) Q4 adjusted EPS $1.18/$306.1M vs. est. 62c/$300.95M
·      KapStone (KS) Q4 EPS 51c/$859M vs. est. 39c/$837.2M; Q4 Ebitda $135.9M
·      Rayonier (RYN) Q4 pro forma EPS 20c/$186.3M vs. est. 9c/$168.06M; sees 2018 net income $78M-$87M, adjusted EBITDA $280M-$305M
·      Terex (TEX) announces new $325M share repurchase program
·      XPO Logistics (XPO) Q4 EPS 45c/$4.19B vs. est. 43c/$3.89B; reaffirms 2018 Ebitda forecast; raises 2017-2018 cumulative free cash flow target to about $1B, from about $900M
 
Media & Telecom
·      21st Century Fox (FOXA) Q2 EPS 42c/$8.04B vs. est. 38c/$7.94B; 2Q Cable Network Programming revenue $4.41B, 2Q TV revenue $1.81B and 2Q Filmed Entertainment revenue $2.25B
·      CSRA Inc. (CSRA) Q3 adjusted EPS 56c/$1.31B vs. est. 47c/$1.27B; raises FY18 adjusted EPS view to $2.00-$2.05 from $1.88-$2.00 (est. $1.98) and raises FY18 revenue view to $5.15B-$5.2B from $5B-$5.2B (est. $5.15B); sees FY18 adjusted EBITDA $805M-$825M
·      IAC Corp. (IAC) Q4 EPS adjusted $1.40/$950.6M vs. est. 95c/$888.09M; sees FY18 adjusted EBITDA $845M-$940M and sees FY18 operating income $455M-$580M; sees Q1 Match Group revenue $380M-$390M and FY18 revenue $1.5B-$1.6B
·      Knowles (KN) Q4 EPS 40c/$215.5M vs. est. 33c/$216.07M; said they delivered Q4 revenue of $216M, with gross margin and EPS that were positively impacted by the settlement of a royalty dispute; sees Q1 EPS 10c-14c on revs $170M-$190M vs. est. 18c/$185.67M
·      Nielsen (NLSN) Q4 EPS 52c/$1.76B vs. est. 80c/$1.76B; reaffirms year guidance; backs FY18 revenue growth view of about 3%
·      Zayo (ZAYO) Q2 EPS 5c/$653.5M vs. est. 12c/$648.56M; Q2 adjusted Ebitda $329.9M
 
Technology, Media & Telecom
·      Take-Two Interactive Software (TTWO) Q3 EPS $1.12/$5653.9M vs. est. 98c/$663M; sees fiscal 2018 EPS $3.19-$3.26 up from $2.81-$3.00 (est. $3.07) and sees FY18 revs $1.99B-$2.04B vs. prior view $1.93B-$2.03B (est. $2.03B); 3Q net revenue from digitally delivered content $258.4M
·      Angi Home (ANGI) Q4 EPS loss (6c)/$223.2M vs. est. loss (4c)/$219.15M; 4Q adjusted Ebitda $16.2M vs. est. $35.2M and sees 2018 adj. Ebitda $270M vs. est. $266.1M
·      Benchmark Electronics (BHE) Q4 EPS 49c/$680M vs. est. 37c/$600.85M; sees Q1 non-GAAP EPS 34c-38c on revs $585M-$605M vs. est. 37c/$576.2M
·      CSG Systems (CSGS) Q4 EPS 62c/$205.2M vs. est. 65c/$199.5M; sees FY adjusted EPS $2.76-$2.89 vs. est. $2.71 and year revs $795M-$815M vs. est. $808.0M
·      Inphi (IPHI) shares fell -7%; Q4 EPS 37c/$85.68M vs. est. 35c/$86.1M; sees Q1 EPS loss (6c)-(4c) on revs $58M-$621M vs. est. 17c/$75.93M
·      Infinera (INFN) Q4 EPS loss (12c)/$195.8M vs. est. loss (13c)/$190.3M; 4Q adjusted gross margin 37.5%, vs. estimate 38.2%
·      FormFactor (FORM) Q4 EPS 24c/$131.9M vs. est. 27c/$130.5M; CFO Michael Ludwig to retire
·      TrueBlue (TBI) Q4 EPS 51c/$670M vs. est. 48c/$667.99M; sees 1Q adjusted EPS 18c-24c on revs $557M-$572M vs. est. 25c/$576.7M
·      TTM Technologies (TTMI) Q4 EPS 57c/$739.3M vs. est. 52c/$726.95M; sees Q1 EPS 22c-28c on revenue $610M-$660M vs. est. 36c/$644.3M
·      Yelp Inc. (YELP) Q4 adjusted EPS 19c/$218.2M vs. est. 5c/$214.96M; Q4 adjusted EBITDA was $41.6Mvs. $45.3M YoY; sees Q1 net revenue $218M-$221M vs. est. $218.91M; sees Q1 adjusted EBITDA $29M-$32M; sees initial FY18 revenue $935M-$965M vs. consensus $950.34M
·      Zynga (ZNGA) Q4 EPS 1c/$233.28M vs. est. 3c/$213.18M; sees Q1 revenue $200M vs. est. $219.3M; sees Q1 adjusted EBITDA $20M; 4Q Ebitda $37.0M, 4Q average MAUs 86m, up 37% y/y and 4Q average DAUs 22m, up 18% y/y
 

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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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