Morning Preview: April 26, 2018

Scott GreenDaily Market Report

Early Look

Thursday, April 26, 18

 

Stock futures are looking at a higher open, led by strong earnings in the tech space overnight, as shares of Facebook, AMD, and PayPal are moving higher on results. Tonight, markets await another round of big-tech earnings, with Dow components Microsoft and Intel expected to report as well as one of the FAANG stocks with Amazon due. The yield on the 10-year U.S. Treasury note pushed beyond the 3% handle Wednesday, notching a level not seen since late December of 2013, as traders increasingly bet the Federal Reserve will have to raise interest rates more aggressively than the two or three. However, this morning yields have settled at 3%, while the dollar pulls back slightly after its strong run, trading to its best levels in over 3-months. There are a few data points to watch today including weekly jobless claims, trade balance and durable goods, though the ECB meeting could provide a market catalyst. In Asian markets, The Nikkei Index rose 104 points to settle at 22,319, the Shanghai Index dropped -42 points to settle at 3,075 and the Hang Seng Index dropped 320 points or over 1% to just hang above the 30,000 level. In Europe, the German DAX is up about 20 points at 12,440, while the FTSE 100 is up a few points trading just under 7,400. Today’s European Central Bank meeting is among top macro stories today after the bank dropped the easing bias from its language in March.

Market Closing Prices Yesterday

· The S&P 500 Index gained 4.84 points, or 0.18%, to 2,639.40

· The Dow Jones Industrial Average rose 59.70 points, or 0.25%, to 24,083.83

· The Nasdaq Composite dropped -3.61 points, or 0.05%, to 7,003.74

· The Russell 2000 Index declined -2.81 points, or 0.18% to 1,550.47

 

Events Calendar for Today

· 8:30 AM EST Weekly Jobless Claims…est. 230K

· 8:30 AM EST Continuing Claims…est. 1.85M

· 8:30 AM EST Advance Trade Balance for March…est. (-$75.0B)

· 8:30 AM EST Durable Goods Orders, March-P…est. 1.6%

· 8:30 AM EST Wholesale Inventories MoM, March-P…est. 0.7%

· 9:45 AM EST Bloomberg Consumer Comfort Index…prior 58.1

· 10:30 AM EST Weekly EIA Natural Gas Inventory Data

· 11:00 AM EST Kansas City Fed Manufacturing Activity, for April…est. 17

 

Sector News Breakdown

Consumer

· PepsiCo (PEP) Q1 EPS 96c/$12.56B vs. est. 93c/$12.4B; 1Q organic rev growth 2.3%; reaffirms year core EPS forecast of $5.70, vs. est. $5.71; sees core effective tax rate in the low 20s

· Chipotle (CMG) shares rose 10%; Q1 EPS $2.13/$1.15B vs. est. $1.57/$1.15B; Q1 comparable restaurant sales increased 2.2% (vs. est. 1.3%) and operating margin increased to 19.5% from 17.7%; approves additional $100M for stock buybacks; sees 2018 comparable restaurant sales up low-single digit; sees 130 to 150 new restaurant openings

· Ford Motor (F) Q1 EPS 43c/$42B vs. est. 41c/$37.16B; reports Q1 pretax income $1.9B; reports Q1 North America revenue $24.8B, Q1 South America revenue $1.3B, Q1 Europe revenue $8.9B; said plans to reduce capex by $5b over 2019-2022; now expects 8% adjusted EBIT margin by 2020, two years earlier than previous target

· Las Vegas Sands (LVS) Q1 EPS $1.04/$3.58B vs. est. 85c/$3.38B; 1Q Sands China adjusted property EBITDA $789M vs. Bloomberg est. $769.9M; 1Q Sands China revenue $2.16B

· O’Reilly Auto (ORLY) Q1 EPS $3.61/$2.28B vs. est. $3.58/$2.28B; Q1 comparable sales +3.4% and Q1 gross profit margin 52.6%; Sees 2Q EPS $15.30-$15.40; sees 2Q comparable sales +2% to +4%

· Southwest Airlines (LUV) Q1 EPS 75c/$4.94B vs. est. 74c/$5.00B; 1Q economic fuel costs $2.09 per gallon vs $2.93 y/y; says exercising options with Boeing for 40 737 MAX 8 planes, adding 10 firm orders a year 2019-2022; now sees 2018 capex $2.0B-$2.1B, saw $1.9B in January

· Allegiant Travel (ALGT) Q1 EPS $3.42/$425.4M vs. est. $3.01/$424.61M; sees Q2 TRASM impacted by early Easter

· Cheesecake Factory (CAKE) Q1 EPS 56c/$590.7M vs. est. 68c/$586.93M

· Interface (TILE) Q1 EPS 25c/$241M vs. est. 23c/$234.35M; still sees 2018 revenue growth 3%-5%, consensus and still sees 2018 gross profit margin 39%-39.5%

· Inter Parfums (IPAR) Q1 revenue $171.8M vs. est. $146.9M; raises FY18 EPS view to $1.59 from $1.44 (est. $1.49) and raises FY18 revenue to $665M from $620M vs. est. $642.05M

 

Energy

· Helmerich & Payne (HP) Q2 EPS loss (5c)/$577.5M vs. est. loss (5c)/$567.3M; sees FY capital expenditure $400M-$500M

· Royal Dutch Shell (RDS/A) Q1 adjusted EPS 64c vs. est. 63c

· Range Resources (RRC) Q1 EPS 46c/$765.5M vs. est. 44c/$685.1M; sees 2Q production 2,190 mmcfe/d; sees FY capital expenditure $941 million; sees FY production 2,200 mmcfe/d

· Martin Midstream Partners (MMLP) Q1 EPS 32c/$284.2M vs. est. 35c/$246.26M

 

Financials

· Visa (V) Q2 EPS $1.11/$5.1B vs. es.t $1.02/$4.81B; reports Q2 payments volume growth 11%, Q2 cross-border volume growth 11% and Q2 processed transactions growth 12%; cuts FY18 revenue growth view to low single digits from high single digits

· PayPal (PYPL) Q1 EPS 57c/$3.69B vs. est. 54c/$3.59B; Q1 operating margin 22.5% vs. 21.6% last year; raises FY18 EPS view to $2.31-$2.34 from $2.24-$2.30 (est. $2.28) and raises FY18 revenue view to $15.20B-$15.40B from $15.0B-$15.25B (est. $15.24B); Q1 payment transactions at 2.2B, up 25% from last year; Q1 total payment volume $132.3B, up 32% from last year

· Aflac (AFL) Q1 EPS $1.05/$5.5B vs. est. 97c/$5.47B; sees FY18 adjusted EPS $3.72-$3.88, below consensus $3.91

· Deutsche Bank AG (DB) said Q1 net income declined 79% and that it will shrink its U.S. investment bank, the latest sign of struggle at the German lender, which this month replaced its CEO and reshuffled several other top executives. The bank said it is pulling back in certain trading and lending activities that don’t make enough money to justify costs and risk

· CoreLogic (CLGX) Q1 EPS 52c/$445M vs. est. 42c/$435.7M; said also drove up Adjusted EBITDA margins almost 300 bps through productivity, cost management and favorable revenue mix

· Duke Realty (DRE) Q1 core FFO 30c (in-line); revised year guidance

· Equifax (EFX) reports Q1 adjusted EPS $1.43/$865.7M vs. est. $1.37/$854.6M

· Everest Re (RE) Q1 operating EPS $5.34 vs. est. $5.33; gross written premiums for the quarter were $1.9B an increase of 21% compared to last year; combined ratio was 93.3% vs. 86.0% last year; book value per share was $203.62 at March 31, 2018, versus $204.95 at end of 2017

· Intuit (INTU) released the second and final update for its fiscal year 2018 consumer tax offerings. Season-to-date through April 21, total TurboTax Online units increased 6% and total TurboTax units rose 4 percent versus the comparable prior-year period

· Legg Mason (LM) Q4 EPS 86c/$785.1M vs. est. 71c/$761.27M; reports end of period $754.1M from $767.2M; increases dividend 21% to 34c per share

· UDR, Inc. (UDR) Q1 FFO 47c (in-line with ests); YoY same-store revenue, expense and net operating income growth was 3.0%, 3.6% and 2.7%, respectively

 

Healthcare

· Align Technology (ALGN) shares rose 5%; announced that the company has received approval from the China Food and Drug Administration (CFDA) to market the iTero Element intraoral scanner in China; Q1 EPS $1.17/$436.9M vs. est. 98c/$408.25M and better Q2 guidance

· BioMarin (BMRN) Q1 GAAP EPS loss (26c)/$373M vs. est. loss (18c)/$348.57M

· Bristol-Myers Squibb (BMY) announced that the European Commission has approved an every four-week Opdivo monotherapy dosing schedule of 480 mg infused over 60 minutes as an option for patients with advanced melanoma and previously treated renal cell carcinoma

· FARO Technologies (FARO) Q1 EPS 3c/$92.8M vs. est. 8c/$92.92M

· PRA Health (PRAH) Q1 EPS 85c/$701.8M vs. est. 84c/$694.84M; backs FY18 EPS view

· Universal Health (UHS) Q1 EPS $2.45/$2.69B vs. est. $2.59/$2.75B

· uniQure (QURE) presents preclinical data on AMT-130 for Huntington’s disease at AAN

· Varian Medical (VAR) Q2 EPS $1.15/$730M vs. est. $1.04/$688.55M; raises FY18 adjusted EPS view to $4.43-$4.53 from $4.24-$4.36 (est. $4.34) and raises FY18 revenue growth range to 6%-9%, vs. prior view revenue growth of 4%-7%.

· Sangamo (SGMO) 12.31M share Secondary priced at $16.25

· Zimmer Biomet (ZBH) Q1 EPS $1.91/$2.02B vs. est. $1.89/$1.98; sees FY18 EPS $7.60-$7.80 vs. est. $7.80 and sees FY18 revenue up 1.5%-$3.5% and FY18 free cash flow $1.1B-$1.3B

 

Industrials & Materials

· Ball Corp. (BLL) announces 25M share repurchase program

· Echo Global (ECHO) Q1 EPS 40c/$577.1M vs. est. 30c/$535.41M; sees FY18 revenue $2.25B-$2.4B vs. est. $2.25B

· Forward Air (FWRD) Q1 EPS 60c/$302.6M vs. est. 57c/$290.24M; sees Q2 EPS 73c-77c vs. est. 77c and sees Q2 revenue growth 16%-20%

· Graco (GGG) Q1 EPS 48c/$406.3M vs. est. 41c/$369.32M; raises FY18 organic sales growth view to mid-to-high single digits

· Landstar System (LSTR) Q1 EPS $1.37/$1.048B vs. est. $1.35/$1.03B; sees Q2 EPS $1.48-$1.54 on revenue $1.115B-$1.165B vs. est. $1.43/$1.11B

· Ternium (TX) Q1 EPS $1.87 vs. est. $1.28; said expects Q2 operating income to increase QoQ, mainly due to higher operating margin, since increasing realized prices in Mexico will be only partially offset by higher cost per ton

· Trinity Industries (TRN) Q1 EPS 30c/$831.3M vs. est. 26c/$895.1M; raises FY18 adj. EPS view to $1.20-$1.40 from $1.15-$1.35 (est. $1.32)

· Triumph Group (TGI) announced that it has reached an agreement with Boeing (BA) to extend its current long-term agreement to supply composite detail and assembly parts for the Boeing 787 Dreamliner

· Vale Inc. (VALE) Q1 operating revenue $8.6B vs. est. $8.72B

 

Technology, Media & Telecom

· Facebook (FB) shares rose 7%; Q1 EPS $1.69/$11.97B vs. est. $1.35/$11.41B; increased share buyback authorization by additional $9B; Q1 daily active users 13% to 1.45B (in-line), monthly active users up 13% to 2.2B; mobile advertising revenue represented approximately 91% of advertising revenue for Q1, up from approximately 85% of advertising revenue YoY

· AMD (AMD) shares rose 9%; Q1 EPS 11c/$1.65B vs. est. 9c/$1.57B; sees Q2 revenue approximately $1.725B, +/- $50M vs. est. $1.57B and sees Q2 non-GAAP gross margin of approximately 37%.

· AT&T (T) Q1 adjusted EPS 85c/$38B vs. est. 87c/$39.31B; Q1 wireless net adds 3.2M; backs FY18 EPS view of around $3.50 vs. est. $3.46;

· Citrix (CTXS) Q1 EPS $1.29/$697M vs. est. $1.05/$674.96M; Deferred revenue totaled $1.69B as of March 31, compared to $1.66B as of March 31, 2017; sees Q2 EPS $1.18-$1.22 on revs $710M-$720M vs. est. $1.07/$704.93M

· eBay (EBAY) Q1 EPS 53c/$2.58B vs. est. 53c/$2.59B; Q1 gross merchandise volume, or GMV, of $23.6B, up 13% on an as-reported basis and 7% on an FX-neutral basis; grew active buyers by 4% across its platforms, for a total of 171M global active buyers; StubHub drove revenue of $232M, up 9% on both an as-reported basis; sees Q2 EPS 50c-52c on revs $2.64B-$2.68B vs. 52c/$2.69B

· F5 Networks (FFIV) Q2 EPS $2.31/$533.3M vs. est. $2.27/$529.97M; sees Q3 EPS $2.36-$2.39 on revs $535M-$545M vs. est. $2.37/$537.95M

· Qualcomm (QCOM) Q2 EPS 80c/$5.3B vs. est. 70c/$5.19B; sees Q3 EPS 65c-75c on revs $4.8B-$5.6B vs. est. 76c/$5.32B; sees 3Q MSM chip shipments 185 million to 205 million

· ServiceNow (NOW) Q1 EPS 56c/$589.2M vs. est. 37c/$570.34M; said Q1 subscription revenues grew 40% YoY, driven by 21 transactions greater than $1 million in net new annual contract value; sees FY18 subscription revs $2.336B-$2.351B and subscription billings of $2.755B-$2.77B

· ASGN Incorporated (ASGN) Q1 EPS 83c/$685.2M vs. est. 75c/$677.64M; sees Q2 adjusted EPS $1.01-$1.08 on revs $860M-$870M vs. est. $1.10/$862.32M

· Benchmark Electronics (BHE) Q1 EPS 41c/$608M vs. est. 36c/$593.7M; sees Q2 adjusted EPS 26c-34c on revs $590M-$630M vs. est. 43c/$634.78M

· Plexus (PLXS) Q2 EPS 74c/$699M vs. est. 74c/$690.8M; sees Q3 EPS 76c-86c on revenue $700M-$740M vs. est. 86c/$709.65M

· Ultra Clean (UCTT) Q1 EPS 69c/$314.8M vs. est. 60c/$281.97M; sees Q2 EPS 52c-62c on revs $280M-$300M vs. est. 60c/$282.02M

· Xilinx (XLNX) shares rose 5%; raises quarterly dividend to 36c from 35c; Q4 EPS 64c/$673M vs. est. 66c/$650.28M; sees Q1 revenue approximately $660M-$690M vs. est. $659.81M; said gross margin is expected to be 69% to 71%; operating expenses expected to be approximately $260M

· Casa Systems (CASA) 7.35M share Secondary priced at $25.00

· nLight (LASR) 6M share IPO priced at $16.00

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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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