Morning Preview: May 2, 2018

Scott GreenDaily Market Report

Early Look

Wednesday, May 2, 18

Stock futures are slightly higher ahead of today’s Federal Reserve rate decision (policy announcement at 2:00 PM EST). Markets will closely be watching for any signals that policy makers may consider diverging from the three-additional interest-rate increases that they indicated to make in 2018. Recent data and commentary from Fed members have raised the prospect of possibly four rate hikes in 2018 to get ahead of inflation. On the earnings front, Apple came in well above consensus views, as shares jumped over 3% following its earnings results last night, helping lift Nasdaq futures (though SNAP falls as Q1 revenue fell short of consensus). European stocks advanced with U.S. futures, shrugging off Asia declines as many investors returned from holidays to digest the latest earnings reports and shift their focus to the Federal Reserve’s imminent rate decision. The dollar dropped after rising nine of the last eleven sessions while gold climbed. Outside of another busy day of corporate earnings, markets watching the People’s Bank of China weakened its daily currency fixing more than expected ahead of U.S. trade officials visiting China for talks Thursday and Friday. In Asian markets, The Nikkei Index fell -35 points to settle at 22,472, the Shanghai Index slid 1 point to 3,081 and the Hang Seng Index dipped -84 points to end at 30,723. In Europe, the German DAX is up around 125 points at 12,735, while the FTSE 100 is up over 30 points at 7,550.

U.S. stocks closed mostly higher on Tuesday, as a sharp rally in technology stocks helped the S&P 500 and the Nasdaq shake off an early decline. However, the Dow fell for a third straight session as caution remained high ahead of the conclusion of a Federal Reserve policy meeting and fresh developments in global trade. Tech was by far the biggest outperformer of the day, with the sector ending up 1.5%. That was enough to offset broad weakness elsewhere, as six of the 11 primary S&P 500 sectors ended lower and other industries saw only modest gains on the day. Among the biggest decliners were consumer staples, which fell 0.9%, and energy, which lost 0.6%.

Market Closing Prices Yesterday

· The S&P 500 Index gained 6.75 points, or 0.25%, to 2,654.80

· The Dow Jones Industrial Average fell -64.10 points, or 0.27%, to 24,099.05

· The Nasdaq Composite spiked 64.44 points, or 0.91%, to 7,130.70

· The Russell 2000 Index advanced 8.44 points, or 0.55% to 1,550.33

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:15 AM EST ADP Employment Change for April…est. 198K

· 10:30 AM EST Weekly DOE Inventory Data

· 2:00 PM EST FOMC Rate Decision

Earnings Calendar:

· Earnings Before the Open: ABC, ADP, AME, BG, CLX, CVS, EL, ENR, EXC, GRMN, HFC, HRS, HUM, MA, NCLH, PBI, PNW, SSYS, TAP, W, YUM, ZTS


World News

· Investor Intelligence poll shows newsletter writers classified as bulls gives back all of last week’s gain, tumbling to 43.6% from 48.0%, while bearish sentiment rises to 20.8% which is the highest since November 2016 vs 19.6% last week and those expecting a correction rises to 35.6% from 32.4% prior

Sector News Breakdown


· Big 5 Sporting (BGFV) Q1 EPS loss (6c)/$234.2M vs. est. loss (14c)/$230.23M; Q1 same store sales decreased (-7.5%) vs. prior view “negative high-single digit range”; sees Q4EPS 4c-12c vs. est. 9c

· Jack Henry (JKHY) Q3 EPS 93c/$384.7M vs. est. 86c/$376.28M

· Mondelez (MDLZ) Q1 adjusted EPS 62c/$6.77B vs. est. 61c/$6.67B; Q1 organic net revenue grew 2.4%; reaffirms FY18 view of double-digit adjusted EPS growth

· Shutterfly (SFLY) Q1 EPS loss (83c)/$199.7M vs. est. loss (93c)/$192.06M; consumer net revenues totaled $152.1M, a 5% year-over-year decrease; Shutterfly Business Solutions net revenues totaled $47.7M, a 52% year-over-year increase; raises year EPS view

· Nikola Motor Co., a hydrogen truck startup, is suing Tesla Inc. (TSLA) for $2 billion, alleging billionaire Elon Musk’s company willfully infringed on its patents

· Yum China (YUMC) Q1 EPS 53c/$2.2B vs. est. 48c/$1.57B; Q1 comp store sales grew 3% YoY vs. est. 3.3%, with an increase of 5% at KFC partially offset by a 5% decrease at Pizza Hut, excluding F/X


· The American Petroleum Institute (API) reported that U.S. crude supplies rose by 3.4M barrels for the week ended April 27, a climb of 1.6M barrels in gasoline stockpiles, while inventories of distillates fell by -4.1M barrel

· Anadarko (APC) Q1 EPS 22c/$3.045B vs. est. 39c/$2.99B; Sees FY sales volume 240 to 250 MMBoe, up from prior view 238 to 248; sees FY capital expenditure $4.20B-$4.6B up from prior view $4.1B-$4.5B

· Concho Resources (CXO) Q1 adjusted EPS $1.00/$947M vs. est. 76c/$796.2M; Q1 production was 21M barrels of oil equivalent, or an average of 228 thousand Boe per day, an increase of approximately 26% from Q1 2017 and 8% from Q4 2017; raises FY18 production growth outlook to a range of 18% to 20%, as compared to the prior range of 16% to 20%

· Devon Energy (DVN) Q1 core EPS 20c/$3.81B vs. est. 19c/$3.88B; Q1 operating cash flow totaled $804M, an 11% increase from the fourth quarter of 2017; raises 2018 guidance for U.S. oil production to estimated growth rate of 16% compared to 2017, up from the previous 14%

· Edison (EIX) Q1 EPS 80c/$2.56B vs. est. 92c/$2.51B; provide 2018 guidance after final decision by California Public Utilities Commission on Southern California Edison 2018 GRC

· Hi-Crush Partners (HCLP) Q1 EPS 59c/$218.1M vs. est. 55c/$217.9M; Q1 adjusted EBITDA of $64.5M vs. $59.0M QoQ; Q1 2018 contribution margin per ton of $29.08 vs. $23.46 in 4Q 2017 and $8.15 in 1Q 2017

· Newfield Exploration (NFX) Q1 EPS 82c/$580M vs. est. 74c/$543.47M; Q1 net production was approximately 176,500 BOEPD, comprised of 42% oil, 20% natural gas liquids and 38% natural gas; sees FY18 total domestic production 175-185 mboepd

· Viper Energy (VNOM) Q1 EPS 38c vs. est. 34c; Q1 average realized prices were $61.43 per barrel of oil, $2.22 per Mcf of natural gas and $24.17 per barrel of natural gas liquids, resulting in a total equivalent price of $49.09/boe, up 17% year over year from $41.80/boe in Q1 2017 and up 12% from the Q4 2017 total equivalent price of $43.76/boe


· Blackhawk (HAWK) Q1 EPS 3c/$193.6M vs. est. $203.9M; adjusted EBITDA totaled $22.3M, an increase of 71% from $13.1M for the quarter ended March 25, 2017

· Capital Senior Living (CSU) Q1 EPS loss (24c)/$114.6M vs. est. loss (23c)/$118.46M; occupancy for consolidated and same communities was 86.1% in Q1

· Fiserv (FISV) Q1 EPS 76c/$1.44B vs. est. 73c/$1.44B; sees FY18 adjusted EPS in of $3.02-$3.15, vs. consensus $3.11; sees FY18 internal revenue growth at least 4.5%

· PermRock Royalty Trust (PRT) 6.25M share IPO priced at $17.00

· RenaissanceRe (RNR) Q1 EPS $3.40/$418M vs. est. $2.62/$541.79M; book value per common share increased 57c to $100.29; 1Q net premiums written $663.0M and Q1 net premiums earned $440.3M

· Unum Group (UNM) Q1 EPS $1.02/$2.899B vs. est. $1.25/$2.88B; backs FY18 after-tax adjusted ops income growth view 17%-23%

· Validus (VR) Q1 EPS 53c/$655M vs. est. 84c/$675.25M; book value per common share at March 31, 2018 was $44.14

· Verisk Analytics (VRSK) Q1 EPS 94c/$581M vs. est. 95c/$565.92M; Q1 net income grew 22.2%; organic constant currency EBITDA growth was 7.4%

· Western Union (WU) Q1 adjusted EPS 45c/$1.39B vs. est. 42c/$1.36B; Consumer-to-Consumer revenues, which represented 79% of total Company revenue in the quarter, increased 7%; sees FY18 adjusted EPS $1.80-$1.90 vs. est. $1.86


· AmerisourceBergen (ABC) Q2 EPS $1.94/$41B vs. est. $1.82/$40.55B; sees FY EPS at the bottom end of $6.45-$6.65 view

· Community Health (CYH) shares rose 9%; Q1 adjusted EPS 13c/$3.689B vs. est. loss (20c)/$3.65B; sees FY18 adjusted EPS loss ($1.50)-($1.10) on revs $13.6B-$13.9B vs. est. ($1.28)/$13.74B

· Gilead (GILD) Q1 EPS $1.48/$5.09B vs. est. $1.67/$5.4B; Q1 total product sales $5B compared to $6.4B for the same period in 2017. Antiviral product sales, which include sales of HIV, chronic hepatitis B and chronic hepatitis C products, were $4.4B compared to $5.8B for the same period; reaffirms 2018 sales outlook $20B-$21B vs. est. $21.29B

· Acadia (ACHC) Q1 EPS 58c/$742.2M vs. est. 48c/$728.85M; raises FY18 adj. EPS view to $2.58-$2.62 from $2.42-$2.48 (est. $2.45); backs FY18 revenue view $3.04B-$3.08B

· Galapagos NV (GLPG) and MorphoSys AG announced that the first patient has been screened in IGUANA, a Phase 2 study with MOR106, an investigational antibody directed against IL-17C, in atopic dermatitis patients

· Karyopharm (KPTI) files to sell $125M of common stock

· NuVasive (NUVA) Q1 EPS 39c/$260.5M vs. est. 45c/$259.43M; backs FY18 adjusted EPS view $2.44-$2.47 and revenue view $1.095B-$1.105B vs. est. $2.46/$1.1B

· uniQure (QURE) files to sell 4M shares of common stock

· Siga Technologies (SIGA) reports favorable outcome of FDA Antimicrobial Drugs Advisory Committee meeting on oral Tpoxx, a small molecule antiviral treatment for smallpox

Industrials & Materials

· C.H. Robinson (CHRW) Q1 EPS $1.01/$3.9B vs. est. $1.01/$3.86B

· Compass Minerals (CMP) Q1 EPS 37c/$437.9M vs. est. 35c/$420.02M; reaffirms 2018 EPS outlook $2.75-$3.25 vs. est. $2.95

· Ferro (FOE) Q1 EPS 36c/$405.5M vs. est. 34c/$380.58M

· John Bean Technologies (JBT) Q1 EPS 34c/$409.2M vs. est. 36c/$373.7M

· Matson (MATX) Q1 EPS 33c/$511.4M vs. est. 23c/$460.96M; sees FY18 Ocean transportation operating income higher than $128.8M; sees FY18 logistics operating income $20.6M

· Terex (TEX) Q1 EPS 55c/$1.26B vs. est. 37c/$1.12B; raises 2018 EPS outlook to $2.70-$3.00 from $2.35-$2.65

Technology, Media & Telecom

· Apple (AAPL) shares rose 3%; Q2 EPS $2.73/$61.1B vs. est. $2.69/$60.98B; reports new $100B share buyback, boosts dividend by 16%; sees Q3 revenue $51.5B-$53.5B vs. est. $52.04B; sees gross margin between 38%-38.5% and operating expenses between $7.7B-$7.8B; 2Q iPhone units sold 52.2M vs. Bloomberg estimate 52.3M and 2Q iPhone ASP $728 vs estimate $740; 2Q services revenue up 31% y/y to $9.19B vs. est. $8.26B; 2Q gross margin 38.3% vs estimate 38.5%

· Snap (SNAP) shares fell -15%; Q1 adjusted EPS loss (17c)/$230.67M vs. est. loss (17c)/$243.55M; Q1 DAU 191M, up 15%; average revenue per user was $1.21 in Q1 2018, up 34% YoY and down 21% sequentially. Cost of revenue per user was $1.03 in Q1 2018, up 5% YoY and 1% sequentially

· Arris (ARRS) Q1 EPS 73c/$1.58B vs. est. 53c/$1.62B; sees Q2 adjusted EPS 72c-77c on revenue $1.760B-$1.810B vs. est. 72c/$1.78B

· Brooks Automation (BRKS) Q2 EPS 40c/$207M vs. est. 36c/$199.31M; sees Q3 adjusted EPS 40c-46c on revs $215M-$225M vs. est. 38c/$200.32M

· Frontier Communications (FTR) Q1 adjusted EPS loss (58c)/$2.2B vs. est. loss (91c)/$2.19B; reports customer churn of 1.94%, average revenue per customer of $86.21; reaffirms 2018 adjusted EBITDA outlook of $3.6B; reaffirms 2018 capital expenditures outlook of $1.0B-$1.15B

· Glu Mobile (GLUU) Q1 EPS loss (5c)/$81.4M vs. est. 2c/$73.76M; 1Q bookings $86.3M; Q1 gross margin +62.3%, estimate +65.1%; raises 2018 full-year bookings guidance by $35M

· Juniper (JNPR) Q1 EPS 28c/$1.08B vs. est. 26c/$1.05B; sees Q2 adjusted EPS about 44c, plus or minus 3c on revs about $1.175B, plus or minus $30M vs. est. 43c/$1.16B

· Macom (MTSI) Q2 EPS 13c/$150.4M vs. est. 12c/$145.52M; sees Q3 EPS 9c-15c on revs $142M-$150M vs. est. 12c/$149.6M

· NCR Corp. (NCR) Q1 EPS 56c/$1.52B vs. est. 45c/$1.47B; backs FY18 EPS view of $3.30-$3.45, vs. est. $3.35; reaffirming FY18 revenue growth view of 0%-3%; says evaluating, beginning to implement margin improvement programs; sees Q2 EPS 60c-65c vs. est. 75c

· Qualys (QLYS) Q1 EPS 36c/$64.9M vs. est. 33c/$63.89M; raises FY18 non-GAAP EPS view to $1.43-$1.48 from $1.39-$1.44 and raises FY18 revenue view to $276.8M-$278.5M from $275.5M-$278.5M

· Quotient Technology (QUOT) Q1 EPS loss (12c)/$86.8M vs. est. 5c/$86.9M; authorizes $100M stock buyback program; sees Q2 revenue $87M-$90M vs. est. $90.3M and sees Q2 adjusted EBITDA to be in the range of $12M-$14M

· T-Mobile (TMUS) Q1 EPS 78c/$10.5B vs. est. 70c/$10.38B; raises FY18 adj. EBITDA view to $11.4B-$11.8B from $11.3B-$11.7B and raises FY18 branded postpaid net customer additions target to 2.6M-3.3M; Q1 total net additions 1.4M, Q1 total branded postpaid net additions 1M and Q1 branded postpaid phone net additions 617,000; authorizes increase in stock buyback program to $9B

· Ultimate Software (ULTI) Q1 EPS $1.30/$276.8M vs. est. $1.13/$270.75M; sees Q2 revenue $267M-$269M vs. est. $267.15M; sees Q2 recurring revenues roughly $237M-$239M; backs FY18 revenue growth view of over 20%

· Xerox Corp.’s (XRX) top executive and six board members agreed to step down in a victory for Carl Icahn’s battle against the company’s planned $6.1 billion takeover by Fujifilm Holdings Corp.

· Zendesk (ZEN) Q1 EPS 2c/$129.8M vs. est. loss (3c)/$126.41M; FY18 revenue view to $565M-$572M from $555M-$565M (est. $562.55M)


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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