Morning Preview: May 1, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, May 1, 18

U.S. stock futures are pointing to a slightly lower open, paring recent losses ahead of a very busy morning of corporate earnings (including Dow components PFE and MRK this morning and AAPL after the close). Meanwhile, President Trump postpones steel tariff decision for Canada, EU, Mexico. The administration has reached agreements in principle with Argentina, Australia, and Brazil, details of which will be finalized in the next 30 days. The administration is also extending negotiations with Canada, Mexico, and the European Union for a final 30 days. The dollar continues it recent push higher into the two-day FOMC policy meeting (starts today with decision and commentary tomorrow afternoon), as the euro falls to lowest levels since mid-January, the last time it dropped below the 1.20 level. The FOMC is expected to leave interest rates on hold and signal no change to a tightening path of two more rate increases in 2018. In Asian markets, The Nikkei Index gained 40 points to settle at 22,508, the Shanghai Index remained closed and the Hang Seng Index was also closed. In Europe, the German DAX was closed for holiday, while the FTSE 100 was up over 20 points at 7,535.

U.S. stocks couldn’t hold on Monday, failing despite M&A related gains and a better-than-expected earnings report from Dow component McDonald’s, as all 11 main S&P sectors declined, but the benchmark ended April up 0.3%, snapping two months of declines. The Nasdaq Composite was -0.8% lower despite Apple’s 1.8% gain (ahead of earnings tonight). For the month, the Dow and S&P 500 closed with a monthly rise of 0.3%, while the Nasdaq rose less than 0.1% for the month.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -21.86 points, or 0.82%, to 2,648.05

· The Dow Jones Industrial Average fell -148.04 points, or 0.61%, to 24,163.15

· The Nasdaq Composite slipped -53.53 points, or 0.75%, to 7,066.27

· The Russell 2000 Index declined -14.35 points, or 0.92% to 1,541.88

Events Calendar for Today

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 9:45 AM EST Markit US Manufacturing PMI, Apr-F…est. 56.5

· 10:00 AM EST Construction Spending MoM for March…est. 0.5%

· 10:00 AM EST ISM Manufacturing for April…est. 58.4

· 4:30 PM EST API Weekly Inventory Data

· N/A Monthly auto sales data released for April

Earnings Calendar:



World News

· President Donald Trump gave top allies the European Union, Canada and Mexico an extension to the tariff exemption to allow more time negotiate a new pact to avoid the levies. The tariffs of 25% on steel and 10% aluminum already in effect against China, Russia, Japan and others — were slated to come into effect on May 1 but have now been pushed back to June 1.

· Business activity in the U.K.’s manufacturing sector dropped to a 17-month low in April as the manufacturing industry fell to 53.9 in April, down from 54.9 a month earlier. The figure marks the 21st straight month of expansion

Sector News Breakdown


· Nutrisystem (NTRI) shares rose 13%; Q1 EPS 9c/$210.9M vs. est. 6c/$207M; sees FY revenue $693M-$708M vs. est. $697.5M and sees year EPS $2.04-$2.14 vs. est. $2.03

· J & J Snack Foods (JJSF) Q2 EPS 95c/$266.5M vs. est. $1.00/$263.89M

· TrueBlue (TBI) Q1 EPS 31c/$554M vs. est. 22c/$572.96M; sees Q2 adjusted EPS 47c-53c on revs $585M-$600M vs. est. 53c/$629.1M

· Texas Roadhouse (TXRH) Q1 EPS 76c/$627.7M vs. est. 76c/$625.74M; Q1 comparable restaurant sales increased 4.9% at company restaurants vs. est. 4.1% and 3.9% at domestic franchise restaurants; backs view of positive FY18 comparable restaurant sales growth


· BP PLC (BP) reported its strongest quarterly profit since mid-2014, boosted by higher oil prices and rising production; said its replacement cost profit was $2.4 billion in the first quarter, compared with $1.4 billion in the same period a year earlier

· Advanced Energy (AEIS) Q1 EPS $1.34/$195.6M vs. est. $1.33/$187.92M; sees Q2 EPS $1.30-$1.40 on revenue $193M-$207M vs. est. $1.33/$190.3M

· Quaker Chemical (KWR) Q1 EPS $1.38/$212.1M vs. est. $1.25/$205.62M

· Transocean (RIG) Q1 EPS loss (48c)/$664M vs. est. loss (37c)/$638.71M; 1Q revenue efficiency 91.5% and 1Q rig utilization 52%

· Whiting Petroleum (WLL) Q1 adjusted EPS 92c/$515.08M vs. est. 28c/$470.29M; 1Q production 127.05 mboe/d; Sees FY capital expenditure $750.0 million and sees FY production 11 to 11.5 MMBoe; backs FY18 production view 46.5-47.2 MMBOE


· Alexandria Real Estate (ARE) Q1 FFO $1.62/$320.1M vs. est. $1.59/$241.34M; reports same property net operating income growth: 4.0% and 14.6% for Q1 of FY18, compared to Q1 of FY17

· Brixmor (BRX) Q1 FFO 51c/$317.17M vs. est. 51c/$304.67M; backs previous FY18 NAREIT FFO, same property NOI growth outlook

· CURO Group Holdings (CURO) announced that it will begin offering consumers within the United States an innovative and flexible line of credit product

· First Industrial Realty (FR) 4.8M share Spot Secondary priced at $30.65

· Heartland Financial (HTLF) Q1 EPS 76c/$118.0M vs. est. 85c/$115.85M

· Regency Centers (REG) Q1 FFO 96c/$52.7M vs. est. 94c; reports same property NOI as adjusted, excluding termination fees, increased 4.0%; narrows FY18 NAREIT FFO view to $3.74-$3.79 from $3.73-$3.82 and lowers FY18 net income view to $1.33-$1.38 from $1.47-$1.56

· Stifel Financial (SF) Q1 adjusted EPS $1.15/$750.4M vs. est. $1.08/$734.82M; Q1 net interest margin 2.89%

· Vornado (VNO) Q1 adjusted FFO 91c/$536.4M vs. est. 88c/$531.94M; reports Q1 same-store NOI up 3.7%


· Karyopharm Therapeutics (KPTI) shares rose 24%; reported positive top-line results from the Phase 2b STORM study evaluating the Company’s lead, oral Selective Inhibitor of Nuclear Export compound selinexor in heavily pretreated patients with refractory multiple myeloma

· Aetna (AET) Q1 EPS $3.19/$15.22B vs. est. $2.97/$15.37B; Medical membership 22.1 million; 1Q adjusted pretax margin +10.1%; 1Q total healthcare member 80.4%

· Pfizer (PFE) Q1 EPS 77c vs. est. 75c and reaffirms year outlook

· Merck & Co (MRK) Q1 EPS $1.05/$10.0B vs. est. $1.00/$10.11B; raises year EPS view to $4.16-$4.28 from prior view $4.08-$4.23

· Accuray (ARAY) narrows FY18 revenue view to $395M-$400M from $390M-$400M vs. est. $398.4M; reaffirming gross orders growth of approximately 5% year over year

· Bright Horizons (BFAM) Q1 EPS 72c/$464M vs. est. 71c/$461.2M; backs FY18 adjusted EPS view $3.12-$3.16 (est. $3.15) and backs FY18 revenue growth view 8%-10% (est. $1.9B)

· Edwards (EW) said it received CE Mark for Edwards Cardioband Tricuspid Valve Reconstruction System for the treatment of tricuspid regurgitation, making it the first commercially available transcatheter therapy for the treatment of tricuspid heart valve disease

· Gilead Sciences (GILD) and Verily Life Sciences, an Alphabet company (GOOG), announced a scientific collaboration using Verily’s Immunoscape platform to identify and better understand the immunological basis of three common and serious inflammatory diseases: rheumatoid arthritis, inflammatory bowel disease and lupus-related diseases

· Inogen (INGN) Q1 EPS 48c/$79.1M vs. est. 29c/$63.86M; raises FY18 revenue view to $310M-$320M from $298M-$308M vs. est. $304.3M

· Neurocrine (NBIX) Q1 EPS loss (47c)/$71.08M vs. est. loss (31c)/$63.79M; reports total assets of $806.4M as of March 31; raises FY18 operating expenses view to $395M-$420M

· Orthofix (OFIX) Q1 EPS 39c/$108.7M vs. est. 37c/$107.08M; cuts FY18 adj. EPS view to $1.58-$1.68 from $1.76-$1.84 but raises FY18 net sales view to $458M-$464M from $450M-$455M

· PerkinElmer (PKI) Q1 EPS 63c/$644M vs. est. 61c/$619.61M; raises FY18 adjusted EPS view to $3.60 from $3.50 vs. est. $3.53

· Tenet (THC) shares rose 4%; Q1 EPS 57c/$4.7B; raises FY18 adj. EPS view to $1.36-$1.70 from 73c-$1.07 (est. 92c) and backs FY18 revenue view $17.9B-$18.3B vs. consensus $18.09B

· WellCare (WCG) Q1 EPS 2.47/$4.65B vs. est. $2.02/$4.69B; raises FY18 adj. EPS view to $10.00-$10.30 from $9.55-$9.85 (est. $9.82) and backs FY18 revenue guidance of $18.3B-$18.8B

Industrials & Materials

· Boeing Co. (BA) said it would buy plane-parts specialist KLX Inc. (KLXI) for $3.2B, boosting the aerospace giant’s push for a bigger slice of the lucrative aircraft-servicing business. BA said it would pay $63 a share for KLX and take on about $1B in net debt.

· Allison Transmission (ALSN) Q1 EPS $1.08/$663M vs. est. 79c/$574.71M; raises FY18 revenue growth view to 10%-14% from 3%-7%

· Eaton Corp. (ETN) Q1 EPS $1.10/$5.25B vs. est. $5.11B; sees FY EPS $5.10-$5.30 vs. est. $5.18

· Huntsman (HUN) Q1 EPS 96c/$2.3B vs. est. 80c/$2.17B; says on track to achieve FY18 cash flow target of $450M-$650M

· MasTec (MTZ) Q1 adjusted EPS 35c/$1.4B vs. est. 21c/$1.24B; sees FY18 non-GAAP EPS $3.65 on revenue $6.9B vs. est. $3.49/$6.77B

· General Electric (GE) snaps 13-month losing streak, longest in decades, rising 4.4% for the month of April, its first positive month since a 0.4% gain in February 2017

· Simpson Manufacturing (SSD) Q1 EPS 54c/$244.8M vs. est. 48c/$237.58M; sees market price for steel increasing in Q2

· 3M (MMM) announced FDA 510k clearance for its 3M Attest Super Rapid Biological Indicator System for Steam, which now provides BI test results in just 24 minutes. The new 24-minute system is attainable through a software upgrade to existing 3M Attest Auto-reader 490 and 490H units

· Australia’s corporate regulator Tuesday said it has expanded its legal action against Rio Tinto Ltd. (RIO) and two former executives, over mining assets in Mozambique.

Technology, Media & Telecom

· Akamai (AKAM) Q1 EPS 79c/$669M vs. est. 70c/$654.28M

· Apptio (APTI) Q1 adjusted EPS 0c/$54.1M vs. est. loss (6c)/$51.65M; sees Q2 revenue $55M-$56M vs. consensus $53.55M

· Blackbaud (BLKB) Q1 EPS 66c/$204.2M vs. est. 60c/$204.36M

· Cognex (CGNX) shares fell -15%; sees 2Q revenue $200M-$210M below est. $216.2M citing tough comparisons in 2018, particularly in 2H, due to anticipated lower demand from consumer electronics; sees revenue over the next nine months relatively flat in total with the FY17 comps

· Consolidated Communications (CNSL) announced the launch of SD-WAN, software-based network technology that provides a simplified management and automation of WAN connections

· Electronics for Imaging (EFII) Q1 EPS 38c/$239.9M vs. est. 38c/$236.06M

· Harmonic (HLIT) Q1 non-GAAP EPS loss (1c)/$90.1M vs. est. loss (6c)/$88.36M; reports record backlog and deferred revenue of $224.4M, up 21.8% year over year

· Integrated Device (IDTI) Q4 EPS 46c/$224.6M vs. est. 44c/$222.21M

· Instructure (INST) Q1 non-GAAP EPS loss (21c)/$47.99M vs. est. loss (23c)/$47.11M; sees Q2 non-GAAP EPS loss (27c)-(25c) on revs $49.1M-$49.7M vs. es.t loss (26c)/$50.16M

· Monolithic Power (MPWR) Q1 adjusted EPS 79c/$129.2Mvs. est. 77c/$125.19M; Q1 non-GAAP gross margin was 55.9%; sees Q2 revenue $135M-$141M vs. est. $136.79M; sees Q2 GAAP gross margin between 54.9% and 55.9%

· SBA Communication (SBAC) Q1 AFFO $1.85/$458.3M vs. est. $1.83/$453.2M; sees FY AFFO/share $7.25-$7.66 vs. est. $7.64

· Varonis (VRNS) Q1 EPS loss (22c)/$53.5M vs. est. loss (31c)/$49.73M


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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