Morning Preview: April 27, 2018

Scott GreenDaily Market Report

Early Look

Friday, April 27, 18

Stock futures are mixed, with technology shares outperforming for a second session after Amazon, and Dow components Intel and Microsoft all posted quarterly results/guidance that topped expectations. The Nasdaq was the top performer on Thursday as well after Facebook, and several chip companies posted better results as well. This morning, energy stocks will be in focus with Dow components Exxon and Chevron expected to report their quarterly results. The dollar index rallies to fresh 3-month highs ahead of today’s GDP data (released at 8:30 AM EST, with estimate of 2%), as the Pound falls on soft growth data, and the euro extends its weekly loss, falling below the 1.21 level. But the lead story overnight was North Korean leader Kim Jong Un and South Korean President Moon Jae-in agreeing to finally end a seven-decade war this year and pursue the “complete denuclearization” of the Korean Peninsula. The two leaders embraced after signing the deal during a historic meeting on their shared border, the first time a North Korean leader has set foot on the southern side. For the week, the Dow was looking at a loss of 0.6%, the S&P 500 a drop of 0.1% and the Nasdaq a loss of 0.4%, as of Thursday’s close. Those would be the first fall in three weeks for all those gauges.

In Asian markets, The Nikkei Index gained 148 points to settle at 22,467, the Shanghai Index gained 7 points to settle at 3,082 and the Hang Seng Index advanced 272 points to end at 30,280. In Europe, the German DAX is up around 100 points at 12,600, while the FTSE 100 is higher by around 50 points at 7,475. European markets have posted gains this week amid a pullback in the euro. The pound moved sharply lower against all other currencies after data showed U.K. economic growth slowed more than expected in the first quarter, reducing chances for the BOE to raise rates in the future.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 27.54 points, or 1.04%, to 2,666.94

· The Dow Jones Industrial Average rose 238.51 points, or 0.99%, to 24,322.34

· The Nasdaq Composite spiked 114.94 points, or 1.64%, to 7,118.68

· The Russell 2000 Index advanced 7.43 points, or 0.48% to 1,557.89

Events Calendar for Today

· 8:30 AM EST Employment Cost Index for Q1…est. 0.7%

· 8:30 AM EST GDP Annualized for Q1-A…est. 2.0%

· 8:30 AM EST Personal Consumption for Q1-A…est. 1.1%

· 8:30 AM EST GDP Price Index for Q1-A…est. 2.2%

· 8:30 AM EST Core PCE QoQ, Q1-A…est. 2.6%

· 10:00 AM EST University of Michigan Sentiment, Apr-F…est. 98.0

· 1:00 PM EST Baker Hughes Weekly Rig Count

World News

· North Korean leader Kim Jong Un and South Korean President Moon Jae-in embraced after pledging to work for the “complete denuclearization of the Korean peninsula

· Forecasters surveyed by the European Central Bank slightly lowered their outlook for inflation over the coming years on Friday while raising their projections for economic growth. Respondents to the survey projected that the eurozone’s inflation rate would rise slightly to 1.6% in 2019 and 1.7% in 2020, from 1.3% currently. That was 0.1 percentage point lower for each year than they projected in the same survey three months ago.

· The U.K. economy grew at its slowest pace in more than five years in the first quarter of 2018, dampening the case for an interest rate increase. The Office for National Statistics said that GDP expanded 0.1% in Q1 when compared with the previous three months, a rate of 0.4%.

· German jobless claims declined by 7,000 in April, vs. the survey that predicted a drop of 15,000. Germany’s adjusted unemployment rate came in at 5.3%, remaining at the lowest level since the beginning of the data series in January 1992

Sector News Breakdown

Consumer

· Amazon.com (AMZN) shares rose 6%; Q1 EPS $3.27/$51.0B vs. est. $1.27/$49.87B; sees Q2 revenue $51B-$54B, vs. est. $52.2B or to grow between 34% and 42% YoY; Q1 operating income $1.93B vs. est. $1.01B; operating income is expected to be between $1.1B-$1.9B, compared with $628M last year; 1Q AWS net sales $5.44B vs. $3.66B last year and 1Q Amazon Web Services net sales +49%

· Expedia (EXPE) shares rose 10%; Q1 EPS loss (36c)/$2.5B vs. est. (44c)/$2.44B; Q1 gross bookings up 15% y/y to $27.2B; Q1 room night growth 15%; Q adjusted Ebitda $124M vs. est. $116.4M; announces 15M share buyback program

· Starbucks (SBUX) Q2 adjusted EPS 53c/$6B vs. est. 53c/$5.93B; Q2 global comparable store sales up 2% and Americas and U.S. comp store sales increased 2%; backs FY18 adjusted EPS view $2.48-$2.53 (est. $2.49); backs FY18 SSS growth view 3%-5% and backs FY18 revenue growth view in the high single digits; sees FY comp sales at low end of 3%-5%; new buyback

· Mattel (MAT) Q1 adjusted EPS loss (60c)/$708.4M vs. est. loss (39c)/$694.38M; 1Q adj. gross margin declined by 380bps, primarily driven by higher product costs as a result of higher materials costs, higher freight and distribution costs, higher obsolescence, partially offset by favorable mix

· BJ’s Restaurants (BJRI) Q1 EPS 70c/$278.5M vs. est. 53c/$274.1M; 1Q comparable sales +4.2%, vs. estimate +2.4%

· Boyd Gaming (BYD) Q1 EPS 39c/$606.1M vs. est. 35c/$608.68M; backs 2018 adjusted EBITDA view $600M-$620M; 1Q Las Vegas Local Adjusted EBITDA $71.0M and Q1 Las Vegas Downtown adjusted Ebitda $13.2M

· Callaway Golf (ELY) Q1 EPS 65c/$403M vs. est. 51c/$370.91M; raises FY18 EPS view to 77c-82c from 64c-70c (est. 70c) and raises FY18 revenue view to $1.17B-$1.185B, consensus $1.13B

· Columbia Sportswear (COLM) Q1 EPS 64c/$607.3M vs. est. 58c/$581.75M; raises FY18 EPS view to $3.27-$3.37 from $3.17-$3.27 (est. $3.23) and raises FY18 net sales growth view to 8%-10% from 5.5%-7.5% vs. est. $2.62B

· Extended Stay America (STAY) Q1 EPS 19c/$297.8M vs. est. 17c/$292.18M; sees FY18 adjusted EPS $1.04-$1.14 vs. consensus $1.12

· Mohawk Industries (MHK) Q1 EPS $3.01/$2.41B vs. est. $3.00/$2.40B; sees Q2 EPS $3.89-$3.98, vs. consensus $4.13; said will have a non-recurring reduction of operating income of $70-75M, comprised of $30-35M from higher start-up costs and $40M from patents that expired in 2017

· SkyWest (SKYW) Q1 EPS $1.03/$783M vs. est. 85c/$770.6M

Energy

· Cabot Oil (COG) Q1 EPS 28c vs. est. 27c; 1Q cash flow from operations $272.8M; reaffirmed its total 2018 daily production growth guidance of 10%-15% or 18%-23% on a divestiture-adjusted basis and its full-year capital budget of $950M

· National Oilwell (NOV) Q1 EPS loss (18c)/$1.8B vs. est. loss (5c)/$1.87B

· Southwestern Energy (SWN) Q1 EPS 28c/$920M vs. est. 25c/$870.27M

· First Solar (FSLR) Q1 EPS 78c/$567M vs. est. loss (10c)/$421.24M; to invest about $400M for new manufacturing plant in Ohio which will add 500 jobs; sees FY18 GAAP EPS $1.50-$1.90 vs. est. $1.68 and sees FY18 revenue $2.45B-$2.65B vs. est. $2.54B

· World Fuel Services (INT) Q1 EPS 52c/$9.18B vs. est. 52c/$9.12B; Q1 adjusted EBITDA of $80.9M, up 5% year-over-year

Financials

· BofI Holding (BOFI) Q3 EPS 80c vs. est. 79c; 3Q non-interest income $23.5M, 3Q net interest income $116.7M, Q3 non-interest expenses $45.4M, 3Q provision for loan losses $16.9M

· Discover (DFS) Q1 EPS $1.82 vs. est. $1.77; Q1 total loans grew $6.9B from the prior year to $82.7B; credit card loans grew $5.8B to $65.6B, on Discover card sales volume of $30.9B

· Ellie Mae (ELLI) Q1 EPS 34c/$117.9M vs. est. 9c/$108.52M; sees year EPS $1.68-$1.78 vs. est. $1.73; said number of closed loans on our platform increasing 7% year-over-year despite lower industry volumes

· Hartford Financial (HIG) Q1 core EPS $1.27/$4.69B vs. est. $1.07/$4.62B; reports book value per diluted share of $36.06, down 3% from Dec. 31, 2017, “primarily due to the impact of higher interest rates

· Principal Financial (PFG) Q1 EPS $1.40 vs. est. $1.35; reports assets under management of $673.8B for the quarter, up 9%

· Reinsurance Group (RGA) Q1 EPS $1.61/$3.17B vs. est. $2.53/$3.1B; book value per share at March 31 was $139.64 including AOCI, and $117.49 excluding AOCI

· Square Inc. (SQ) said that it would be acquiring website-creation company Weebly for a total of $365M in cash and stock; deal includes Square restricted stock units that will vest over four years after the deal closes

· Corporate Office Properties (OFC) Q1 FFO 49c/$155.5M vs. est. 49c/$126.56M; at March 31, 2018, the Company’s core portfolio of 157 office and data center shell properties was 91.1% occupied and 91.9% leased

· Taubman Centers (TCO) Q1 FFO $1.04/$161.5M vs. est. $1.02/$159.28M; Q1 Comparable center net operating income, including Lease Cancellation Income, up 9.2%. NOI excluding Lease Cancellation Income, up 4.7%

· Goosehead Insurance (GSHD) 8.53M share IPO priced at $10.00

Healthcare

· Stryker (SYK) Q1 EPS $1.68/$3.2B vs. est. $1.60/$3.2B; sees FY18 EPS $7.18-$7.25 vs. consensus $7.13; sees FY18 organic net sales growth, excluding the impact related to adoption of the new revenue recognition standard, to be 6.5%-7.0%

· athenahealth (ATHN) Q1 EPS 96c/$329.4M vs. est. 72c/$318.47M; sees FY18 revenue $1.31B-$1.38B vs. est. $1.35B; Starting in fiscal year 2019, will no longer present GAAP and Non-GAAP financial results under the previous revenue recognition standard

· Abaxis (ABAX) Q4 EPS 42c/$67.9M vs. est. 31c/$65.96M

· Exact Sciences (EXAS) Q1 EPS loss (33c)/$90.3M vs. est. loss (37c)/$86.93M; still sees 2018 revenue of $420M-$430M vs. est. of $431.7M; maintains outlook for 900,000 to 920,000 completed Cologuard tests during 2018, vs 571,000 reported in 2017

· eHealth (EHTH) Q1 EPS loss (7c)/$43.1M vs. est. loss (41c)/$38.43M; lowers FY18 EPS view to 69c-95c from 92c-$1.08 (est. 97c) and backs FY18 revenue view at $217.5M-$227.5M

· ResMed (RMD) Q3 EPS 92c/$591.6M vs. est. 84c/$574.6M; 3Q gross margin 58.2% vs 58.3% y/y

· Seattle Genetics (SGEN) withdraws FY18 ADCETRIS sales guidance citing new approval; for Q2 expects sales of ADCETRIS will be in the range of $105M-$110M

· Vertex (VRTX) starting two Phase 3 studies of VX-445, tezacaftor and ivacaftor as an investigational triple combination regimen for people with cystic fibrosis (CF).

Industrials & Materials

· Fortive (FTV) Q1 EPS 78c/$1.7B vs. est. 75c/$1.71B; raises FY18 adjusted EPS view to $3.40-$3.50 from $3.35-$3.45 (est. $3.44)

· U.S. Steel (X) Q1 EPS 32c/$3.15B vs. est. 29c/$3.15B; Q1 adjusted Ebitda $255M vs. est. $251.7M; sees Q2 Ebitda $400M vs. est. $452M; but sees year Ebitda about $1.7B-$1/8B from prior view $1.75B

· Eastman Chemical (EMN) Q1 EPS $2.23/$2.61B vs. est. $2.09/$2.47B; sees FY EPS growth 10% to 14%

· Hub Group (HUBG) Q1 EPS 48c/$1.1B vs. est. 39c/$1.03B; sees FY18 EPS $2.34-$2.44 vs. est. $2.35 and sees FY18 capital expenditures $190M-$210M

· OSI Systems (OSIS) Q3 EPS 86c/$267M vs. est. 84c/$263.18M; raises FY18 adjusted EPS view to $3.50-$3.69 from $3.45-$3.67 (est. $3.54) and raises FY18 revenue view to $1.065B-$1.095B from $1.055B-$1.09B (est. $1.06B)

· Rockwell Collins (COL) Q2 EPS $1.81/$2.18B vs. est. $1.77/$2.16B

Technology, Media & Telecom

· Intel (INTC) shares rose 7%; Q1 adjusted EPS 87c/$16.1B vs. est. 72c/$15.05B; said PC business continued to execute well and our datacentric businesses grew 25%; sees Q2 adjusted EPS 85c, +/- 5c on revs $16.3B, plus or minus $500M vs. est. 81c/$15.55B; raises FY18 EPS view to $3.85, +/- 5%, from $3.55 on revs $67.5B plus/minus $1B vs. est. $3.56/$65.05B

· Microsoft (MSFT) Q3 EPS 95c/$26.8B vs. est. 85c/$25.77B; 3Q Intelligent Cloud revenue $7.90B, More Personal Computing revenue $9.92B, Productivity and Business Processes revenue $9.01B; reported Q3 capex $2.93B vs. est. $2.54B

· T-Mobile US Inc. (TMUS) and Sprint Corp. (S) are making progress in their merger negotiations, aiming to complete the deal talks as early as next week, according to Reuters, citing people familiar with the deal discussions. https://on.mktw.net/2JwqF2I

· Baidu (BIDU) Q1 ADS $2.60/$3.33B vs. est. $1.67/$3.20B; sees 2Q revenue $3.97B-$4.17V vs. est. $3.85B; Q1 active online marketing customers +5%, 1Q rev per online marketing customer +19%; Q1 adjusted Ebitda $979M vs. est. $731.1M

· Cypress (CY) Q1 EPS 27c/$582.2M vs. est. 24c/$580.43M; sees Q2 adjusted EPS 27c-31c on $605M-$630M vs. est. 29c/$618.91M

· Flex (FLEX) shares fell 14%; Q4 EPS 28c/$6.41B vs. est. 30c/$6.28B; sees 1Q adjusted EPS 22c-26c on revs $6.3B-$6.7B vs. est. 31c/$6.30B

· KLA-Tencor (KLAC) Q3 EPS $2.02/$1.02B vs. est. $1.99/$1B; 3Q product revenue $797.8 million and Q3 service rev. $223.5 million

· Maxim Integrated (MXIM) Q3 EPS 73c/$649M vs. est. 70c/$640.47M; sees Q3 EPS ex-items 67c-73c on revs $610M-$650M vs. est. 70c/$643.04M; Q3 GMs 67.2% and sees Q4 GM 64%-66%

· Western Digital (WDC) Q3 EPS $3.63/$5.0B vs. est. $3.29/$4.93B; sees Q4 EPS $3.40-$3.50 on revs $5B-$5.1B vs. est. $3.28/$5.06B

· CalAmp (CAMP) Q4 EPS 30c/$94.4M vs. est. 29c/$93.63M; sees Q1 adjusted EPS 26c-32c on revs $91M-$95M vs. est. 31c/$94.65M

· Knowles (KN) Q1 EPS 11c/$178.5M vs. est. 12c/$178.93M; sees Q2 adjusted EPS 12c-16c, on revenue $170M-$190M vs. est. 15c/$180.73M

· Lattice Semiconductor (LSCC) Q1 EPS 5c/$98.6M vs. est. 4c/$97.75M; sees Q2 revenue $98M-$102M vs. est. $99.23M and sees Q2 gross margin roughly 56%, plus or minus 2%

· Omnicell (OMCL) Q1 EPS 29c/$183M vs. est. 25c/$177.37M; sees Q2 adjusted EPS 36c-42c on revs $185M-$190M vs. est. 46c/$193.97M

· Power Integrations (POWI) Q1 EPS 67c/$103.1M vs. est. 59c/$102.79M; sees Q2 revenue $106M-$112M vs. est. $109.3M; Q2 GAAP gross margin to be approximately 51%

· Proofpoint (PFPT) Q1 EPS 30c/$162.5M vs. est. 15c/$152.3M; sees Q2 EPS 15c-17c on revenue $168M-$170M vs. est. 16c/$165.45M; Sees FY18 EPS $1.00-$1.09 on revs $702M-$706M, vs. est. 90c/$694.04M

· VeriSign (VRSN) Q1 EPS $1.07/$299.3M vs. est. $1.06/$287.7M; ended Q1 with 148.3M .com and .net domain name registrations in the domain name base, a 3.2% increase from the end of the first quarter of 2017, and a net increase of 1.91M during the Q1’18

· The National Football League has reached an agreement to renew its exclusive partnership with Amazon Prime Video (AMZN) to deliver a live OTT digital stream of Thursday Night Football

· Docusign (DOCU) 21.7M share IPO priced at $29.00

· Smartsheet (SMAR) 11.63M share IPO priced at $15.00

· Fujifilm Holdings Corp (4901.T) and Xerox Corp (XRX) have reopened talks about their $6.1B merger agreement, a Fujifilm spokeswoman said – Reuters https://reut.rs/2HXqCQj

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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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