Morning Preview: February 13, 2018

Scott GreenDaily Market Report

Early Look
Tuesday, February 13, 18
  
Stock futures are pointing to a lower open, sliding after two strong days of gains (helped by President Trumps infrastructure plan revealed yesterday), falling ahead of key inflation data tomorrow. The dollar is broadly lower, falling over 15 against the safe-haven yen, and down roughly 0.4% vs. the euro, pulling back from gains last week where the greenback posted its best weekly return since December 2016 as markets await important inflation data tomorrow (CPI). President Trump comments on reciprocal tax yesterday also potentially having an influence on USD. A two-day gain for Wall Street has seen the Dow industrials climb 1.7% and the S&P 500 1.4%. However, the Dow, for example, is still 7.6% off its Jan. 26 high of 26,616.71.
 
U.S. stocks rose for a second straight session Monday as investors jumped back into the market, hunting for bargains amid signs of stability after one of the worst weeks for equity benchmarks in two years. Investors also digested the newly released plan by the Trump administration to revamp the nation’s infrastructure against the backdrop of mounting worries about accelerating inflation. Last week, despite a rally late in Friday’s session, all three indexes suffered weekly losses of at least 5%, the biggest since early 2016. The S&P 500 and the Dow entered correction territory on Thursday, down 10% from highs.
 
In Asian markets, The Nikkei Index fell -137 points to settle at 21,244, the Shanghai Index rose 30 points to settle at 3,184 and the Hang Seng Index rose 379 points to close at 29,839. In Europe, the German DAX is down around -50 points at 12,230, while the FTSE 100 is flat around the 7,175 level.
 
Market Closing Prices Yesterday
·      The S&P 500 Index surged 36.45 points, or 1.39%, to 2,656.00
·      The Dow Jones Industrial Average rose 410.37 points, or 1.70%, to 24,601.27
·      The Nasdaq Composite spiked 107.47 points, or 1.56%, to 6,981.96
·      The Russell 2000 Index advanced 13.15 points, or 0.89% to 1,490.98
 
Events Calendar for Today
·      6:00 AM EST       NFIB Small Business Optimism for January
·      7:45 AM EST       ICSC Weekly Retail Sales
·      8:00 AM EST       Fed’s Mester to discuss Monetary Policy and Economic Outlook
·      8:55 AM EST       Johnson/Redbook Weekly Sales
·      4:30 PM EST        API Weekly Inventory Data
 
Earnings Calendar:
·      Earnings Before the Open: APRN, DBD, GNRC, ONDK, PEP, TRU, UAA
·      Earnings After the Close: CALX, CARB, CSOD, HUBS, IMI, MET, MXL, OXY, TWLO, VOYA, WU
 
Other Key Events:
·      19th Annual Credit Suisse Financial Services Forum, 2/12-2/14 in Miami, FL
·      23rd Annual Credit Suisse Energy Summit, 2/12-2/15, in CO
·      Stifel 2018 Transportation and Logistics Conference, 2/12-2/14, in Miami, FL
·      Goldman Sachs Technology and Internet Conference, 2/13-2/15, in San Francisco
   
World News
·      The index of small-business optimism from the National Federation of Independent Businesses (NFIB) climbed two points to a reading of 106.9 in January. The headline number was stronger than the 105.5 reading forecast by economists
 
Sector News Breakdown
Consumer
·      Pepsi Co (PEP) Q4 adjusted EPS $1.31/$19.53B vs. est. $1.30/$19.39B; announces new $15B share repurchase program; sees FY18 core EPS $5.70, vs. est. $5.78; boosts dividend; sees 2018 FY organic revenue growth to be at least in line with the 2017 growth rate
·      Generac (GNRC) Q4 adjusted EPS $1.37/$488.0M vs. est. $1.19/$475.15M; sees FY18 net sales up 3%-5% vs last year
·      GNC Holdings (GNC) shares up 22%; announced it has reached an agreement regarding a strategic partnership and China joint venture agreement with Harbin Pharmaceutical Group Holding, a pharmaceutical company in China. Under the terms of the agreement Hayao will invest approximately $300M in GNC
·      A special board committee of Wynn Resorts Ltd (WYNN) said on Tuesday the board will be expanded and that an outside counsel has been retained to help probe accusations of sexual misconduct against former CEO Steve Wynn
 
Energy
·      Arch Coal (ARCH) Q4 EPS $3.64/$560.2M vs. est. $2.33/$578.09M; boosts dividend
·      TallGrass Energy Partners (TEP) Q4 EPS 67c/$174.8M vs. est. 83c/$186M
 
Financials
·      Arch Capital (ACGL) Q4 adjusted EPS $1.34 vs. est. $1.11; reports Q4 book value per common share of $60.91 at December 31, 2017, a 2.2% increase in Q4’17 and a 10.4% increase for the year
·      Brighthouse Financial (BHF) Q4 revs $1.88B below est. $2.02B; Q4 net investment income $769M; ended Q4 with book value of $121.19 on a per share basis, and book value, excluding accumulated other comprehensive income of $109.71 on a per share basis
·      Dun & Bradstreet (DNB) Q4 adjusted EPS $3.22/$528.3M vs. est. $3.04/$537.82M; boosts quarterly dividend to 52.25c from 50.25c; announces management changes
·      Invesco Ltd. (IVZ) preliminary month-end assets under management (AUM) of $972.6 billion, an increase of 3.7% month over month. The increase was driven by favorable market returns, foreign exchange, higher money market AUM, net long-term inflows, and inflows into non-management fee earning AUM.
·      Waddell & Reed Financial (WDR) reported preliminary assets under management of $84.3 billion for the month ended January 31, 2018, compared to $81.1 billion on December 31, 2017
·      Manning & Napier (MN) reports preliminary AUM $24.9B as of January 31, compared with $25.1B at December 31, 2017.
·      Sunstone forecast (SHO) Q4 AFFO 28c/$290.2M vs. est. 26c/$284.5M; sees FY AFFO/share $1.05-$1.15 vs. estimate $1.20 and guides Q1 AFFO/share 18c-20c, below estimate 23c
·      Asset managers & exchanges: AMG, IVZ, JHG all upgraded to buy from hold at Deutsche Bank as views the recent pullback in shares as a buying opportunity saying asset manager valuations are now significantly depressed relative to better fundamentals
 
Healthcare
·      Walgreens Boots Alliance Inc (WBA) has made a takeover approach to drug distributor AmerisourceBergen Corp, (ABC) shares up 19%; the Wall Street Journal reported on Monday. Walgreens is valued at $67.82 billion and AmerisourceBergen has a market capitalization of $19.65 billion https://goo.gl/5DatHr
·      HealthStream (HSTM) declares $1 per share special dividend
·      Molina (MOH) Q4 EPS unexpected loss ($4.52)/$4.95B vs. est. 13c/$4.99B; sees 2018 EPS $3.23-$3.73 vs. est. $3.89 and year revs $18.8B vs. est. $20.2B
·      Luminex (LMNX) Q4 EPS 20c/$78.2M vs. est. 9c/$77M; sees Q1 revenue $79M-$81M vs. est. $80.79M and year revenue $310M-$316M vs. est. $310.06M 
·      Kadmon (KDMN) reports positive topline results from study of KD025 saying it was well tolerated and showed clinical benefit in Phase 2 clinical trial; showed smaller decline in measure of lung function at week 24 compared with patients receiving best supportive care
·      Reata Pharmaceuticals, Inc. (RETA) says long-term follow up portion of LARIAT study showed pulmonary arterial hypertension (PAH) patients treated with bardoxolone methyl (bardoxolone) experienced kidney function improvements durable for two years, not associated with adverse outcomes.
·      Pacific Biosciences (PACB) announces offering of common stock
 
Industrials & Materials
·      FMC Corporation (FMC) Q4 EPS $1.10/$980M vs. est. $1.05/$996.03M; sees FY18 adjusted EPS $5.20-$5.60 vs. est. $5.35; continues to expect it will conduct a separate listing of FMC Lithium in the second half of 2018 to create two separate public companies
·      3M (MMM) upgraded to Buy from Hold at Deutsche Bank
·      Rail sector upgraded to neutral at Goldman Sachs as prefers Canadian rails, upgrading shares of Canadian Pacific (CP) to buy from neutral
 
Technology, Media & Telecom
·      Amkor Technology (AMKR) Q4 EPS 25c/$1.15B vs. est. 19c/$1.09B; sees Q1 EPS loss (2c) to 11c, on revs $980M-$1.06B vs. est. 11c/$1.02B; sees Q1 gross margin 14%-16%
·      Genpact (G) Q4 EPS 43c/$734M vs. est. 41c/$722.96M; sees FY18 adjusted EPS $1.70-$1.74, on revs $2.93B-$3B vs. est. $1.77/$2.91B; global client revenue growth to be in the range of 9% to 11%; raises annual dividend 25% to 30c from 24c per share
·      Qualys (QLYS) Q4 adjusted EPS 32c/$62.9M vs. est. 28c/$62M; announces $100M two-year share repurchase program; sees Q1 adjusted EPS 32c-34c on revs $63.4M-$64.1M vs. est. 28c/$62.87M; sees FY18 adjusted EPS $1.39-$1.44 on revs $275.5M-$278.5M vs. est. $1.19/$267.67M, which assumes an effective non-GAAP income tax rate of 23%
·      ServiceSource (SREV) Q4 EPS 6c/$66M vs. est. 3c/$62.5M; sees FY18 adjusted EPS loss(11c) on revs $243M-$246M vs. est. 5c/$243.1M; signs multi-year extensions with two of its five long-standing clients
·      Veeco (VECO) Q4 EPS 19c/$143.4M vs. est. 9c/$143.85M; sees Q1 EPS (4c)-14c on revs $140M-$165M vs. est. 2c/$157.67M
·      Vipshop (VIPS) Q4 adjusted EPS 22c/$3.7B vs. est. 20c/$3.68B; sees Q1 revenue growth 20%-25% YoY vs. est. $3.07B
·      Varonis (VRNS) Q4 EPS 36c/$73.2M vs. est. 29c/$66.28M; sees Q1 EPS loss (32c)-(31c) on revs $49.2M-$50M vs. est. loss (22c)/$49.04M
·      RingCentral (RNG) Q4 adjusted EPS 7c/$140.5M vs. est. 6c/$137M; sees Q1 adjusted EPS 11c-13c on revs $144.5M-$146.5M vs. est. 5c/$141.74M; sees FY18 adjusted EPS 56c-60c on revs $629M-$639M vs. est. 28c/$616.89M
·      Instructure Inc. (INST) Q4 EPS loss (27c)/$43.84M vs. est. loss (28c)/$41.43M; sees Q1 adjusted EPS loss (24c)-(22c) on revs $46.8M-$47.4M, vs. est. loss (25c)/$44.12M; sees FY18 adjusted EPS loss ($1.03)-(97c) on revs $203.5M-$209.5M vs. es.t loss (86c)/$200.7M
·      Mimecast (MIME) Q3 EPS 3c/$67.3M vs. est. 2c/$64.88M; sees Q4 revenue $71.1M-$71.8M, vs. consensus $68.11M; sees Q4 EBITDA $5.4M-$6.4M
 

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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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