Morning Preview: May 3, 2018

Scott GreenDaily Market Report

Early Look

Thursday, May 3, 2018

U.S. markets appear on track to start the day in positive territory following yesterday’s late day pullback after the FOMC policy meeting update. Another heavy round of corporate earnings reports and updates on weekly jobless claims and nonmanufacturing activity headline today’s activity ahead of the closely watched monthly jobs report tomorrow morning. Markets are also watching for developments from Beijing, where U.S. and Chinese officials are meeting for discussions on tariffs and other trade issues. Stocks slipped yesterday as the Fed, although keeping rates unchanged as expected, still relayed a hawkish tone noting that inflation is ticking higher, keeping the possibility alive for more aggressive hikes this year which brings higher borrowing costs and a stronger dollar. In Asian markets, The Nikkei Index was closed the Shanghai Index gained 19 points to settle at 3,100 and the Hang Seng Index dropped -410 points to settle at 30,313. In Europe, the German DAX is down around -30 points at 12,760, while the FTSE 100 is down a few points at 7,535. European stocks slipped following a surprise fall in eurozone inflation, which may lead the ECB to slow pulling back on its bond buying.

The Dow Jones Industrial Average finished near the lows late yesterday after the Federal Reserve signaled that the central bank was taking notice of an uptick in inflation but aren’t likely to increase its rate increases to more than three the market is expecting for 2018. It was the Dow’s 4th consecutive decline, while the Nasdaq Composite, which had been the outperformer among the main equity benchmarks due to better-than-expected results from Apple Inc. slipped late day as well.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -19.13 points, or 0.72%, to 2,635.67

· The Dow Jones Industrial Average fell -174.07 points, or 0.72%, to 23,924.98

· The Nasdaq Composite declined -29.81 points, or 0.42%, to 7,100.90

· The Russell 2000 Index advanced 4.70 points, or 0.30% to 1,555.04

Events Calendar for Today

· 7:30 AM EST Challenger Job Cuts YoY for April

· 8:30 AM EST Nonfarm Productivity for Q1-P…est. 0.9%

· 8:30 AM EST Unit Labor Costs Q1-P…est. 3.0%

· 8:30 AM EST Weekly Jobless Claims…est. 225K

· 8:30 AM EST Continuing Claims…est. 1.835M

· 8:30 AM EST Trade Balance for March…est. (-$50.0B)

· 9:45 AM EST Markit US Services PMI, Apr-F…est. 54.5

· 9:45 AM EST Markit US Composite PMI, Apr-F

· 9:45 AM EST Bloomberg Consumer Comfort Index

· 10:00 AM EST ISM Non-Manufacturing Index for April…est. 58.0

· 10:00 AM EST Durable Goods Orders, March-F

· 10:00 AM EST Factory Orders for March…est. 1.4%

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

Earnings Calendar:



World News

· The European Union’s statistics agency said that consumer prices were 1.2% higher than in April 2017, a fall from the 1.3% rate of inflation recorded in March. The unexpected drop is a setback for the ECB, which has a target of just below 2% for inflation

· UK service-sector activity came in lower than expected, as the services purchasing managers’ index from IHS Markit/CIPS came in at 52.8 in April, compared with 53.4 forecast. It was up from 51.7 in March, a 20-month low.

Sector News Breakdown


· Tesla (TSLA) shares fall -4%; Q1 EPS loss ($4.19)/$3.4B vs. est. loss ($3.58)/$3.22B; sees achieving full GAAP profitability in Q3 and Q4 primarily based on our ability to reach Model 3 production volume of 5,000 units per week and to grow Model 3 gross margin from slightly negative in Q1 2018 to close to breakeven in Q2 and then to highly positive in Q3 and Q4; 2018 capex projection reduced from above $3.4B to under $3B

· Caesars (CZR) Q1 EPS loss (5c)/$1.7B vs. est. 0c/$1.96B; same-store net revenues declined 2.0%; same-store adjusted EBITDAR decreased 3.4% to $518M, “driven primarily by unfavorable year-over-year hold and weather-related property closures.” Las Vegas RevPAR decreased $2 to $142; announces $500M share repurchase program

· Fitbit (FIT) Q1 adjusted EPS loss (17c)/$248M vs. est. loss (20c)/$247.56M; sold 2.2M wearable devices in Q1 with average selling price increased 16% YoY to $112 per device driven by the growing mix of smartwatch devices; sees Q2 adjusted EPS loss (27c)-(23c) on revs $275M-$295M, below est. loss (10c)/$314.19M

· Gildan Activewear (GIL) Q1 EPS 34c/$647.3M vs. est. 36c/$656.59M; reaffirms 2018 adjusted EPS outlook $1.80-$1.90

· Grand Canyon (LOPE) Q1 EPS $1.52/$275.7M vs. est. $1.39/$274.13M; Q1 end-of-period enrollment increased 9.6% to 91,378 at March 31, 2018, from 83,352 at March 31, 2017, as ground enrollment increased 9.6% to 17,386

· Host Hotels (HST) Q1 EPS 34c/$1.35B vs. est. 21c/$1.33B;

· Hyatt (H) Q1 adjusted EPS 33c/$1.11B vs. est. 31c/$1.15B; Comparable systemwide RevPAR increased 4.3%, including an increase of 1.6% at comparable owned and leased hotels; cuts FY18 adjusted EBITDA view to $765M-$785M from $805M-$825M raises RevPAR outlook

· Kraft Heinz (KHC) Q1 adjusted EPS 89c/$6.3B vs. est. 82c/$6.35B

· Masonite (DOOR) Q1 adjusted EPS 73c/$518M vs. est. 69c/$518.52M


· Continental Resources (CLR) Q1 EPS 68c/$1.14B vs. est. 63c/$1.07B; Q1 production totaled 25.9M barrels of oil equivalent (Boe), or 287,410 Boe per day, up 34% YoY; expects to remain in the range of 57% – 60% oil as a percent of overall production in 2018, in-line with prior guidance

· Mammoth Energy (TUSK) shares fell -9%; Q1 EPS $1.23 missed the $1.60 estimate

· Marathon Oil (MRO) Q1 EPS 18c/$1.73B vs. est. 14c/$1.36B; Q1 total production averaged 398,000 net Boed, excluding Libya; U.S. production averaged 284,000 net Boed and U.S. oil production averaged 164,000 bopd, both up 9% sequentially

· Matador(MTDR) Q1 EPS 36c vs. est. 33c; Q1 average daily oil equivalent production increased 4% sequentially to 45,300 BOE per day as compared to Q4 2017. Average daily oil production increased 7% sequentially to 26,500 barrels per day and average daily natural gas production decreased 1% sequentially to 112.9M cubic feet of natural gas per day

· Murphy Oil (MUR) Q1 adjusted EPS 23c/$585.61M vs. est. 27c/$579.77M

· Pioneer Natural (PXD) Q1 EPS $1.66/$2.15B vs. est. $1.48/$1.12B; produced 312 MBOEPD company-wide, an increase of 7 MBOEPD, or 2%, compared to Q4; sees Q2 production 312-322 MBOEPD

· Williams (WMB) Q1 EPS 19c vs. est. 22c; Q1 adjusted EBITDA of $1.135B, a $10M decrease YoY

· Williams Partners (WPZ) Q1 EPS 37c vs. est. 40c; Q1 adjusted EBITDA of $1.122B, up $5M YoY

· WPX Energy (WPX) Q1 EPS loss (6c)/$407M vs. est. loss (1c)/$375.5M; Q1 oil volumes of 65,800 bbl/d from its two remaining basins led by 33,800 bbl/d in the Delaware Basin. Delaware oil volumes were 8% higher than the most recent quarter and 149% higher than a year ago


· AIG shares fell -5%; Q1 adjusted EPS $1.04 vs. est. $1.27; 1Q adjusted ROE 7.7% vs 9.6% YoY; 1Q net investment income fell 9% y/y to $3.3B and book value per share $69.95 as of March 31 vs $72.49 at Dec. 31

· Square (SQ) Q1 EPS 6c/$307M vs. est. 6c/$292.86M; reports Q1 GPV $17.8B, up 31% YoY; sees Q2 adjusted EPS 9c-11c on revs $355M-$360M vs. est. 12c/$334.02M; raises FY18 adj. EPS view to 44c-48c from 43c-47c and ups FY18 revenue view to $1.4B-$1.43B from $1.3B-$1.33B

· CyrusOne (CONE) Q1 FFO 85c/$196.6M vs. est. 75c/$186.35M; backs FY18 normalized FFO view $3.18-$3.28

· Kennedy Wilson (KW) Q1 EPS loss (2c)/$190.7M vs. est. loss (14c)/$184.01M; reports Q1 same property revenue up 3.2% and NOI grew 5%

· Lincoln Financial (LNC) Q1 EPS $1.97/$3.61B vs. est. $1.94/$3.72B;

· Manning & Napier (MN) Q1 EPS 7c/$42.2M vs. est. 8c/$43.12M; AUM at March 31, 2018 were $23.4B, vs. $25.1B at December 31, 2017

· MetLife (MET) Q1 EPS $1.36/$14.81B vs. est. $1.17/$15.51B; Q1 book value of $52.49 per share down 14% from $61.14 per share at March 31, 2017

· Prudential (PRU) Q1 adjusted EPS $3.08 vs. est. $2.99; Assets under management $1.39 trillion and Q1 adjusted book value per share $93.55

· XL Group (XL) Q1 operating EPS 82c vs. est. 96c; 1Q net premiums written $3.15B, 1Q net investment income $218.5M, 1Q property & casualty combined ratio 95.3%, 1Q book value per share $36.53 and Reinsurance gross premiums written +6.6%


· Cerner (CERN) shares fell -6%; Q1 EPS 58c/$1.29B vs. est. 58c/$1.33B; Q1 bookings were $1.398B, an increase of 12% compared to last year; sees Q2 EPS 59c-61c on revs $1.31B-$1.36B below est. 66c/$1.38B; lowers 2018 adjusted EPS outlook to $2.45-$2.55 from $2.57-$2.73

· Dexcom (DXCM) Q1 EPS loss (32c)/$184.4M vs. est. loss (33c)/$172.08M; backs FY18 revenue view $830M-$850M vs. est. $842.79M and sees FY18 gross profit margins 65%-68%

· Express Scripts (ESRX) Q1 EPS $1.77/$24.77B vs. est. $1.76/$24.77B; cuts FY18 adjusted EPS view to $9.00-$9.14 from $9.27-$9.47 due to suspension of share repurchase program and backs revs

· Hologic (HOLX) shares fell -9% Q2 EPS 53c/$789.3M vs. est. 53c/$781.84M; backs FY18 EPS view $2.22-$2.27 vs. est. $2.26 while cuts FY18 adjusted revenue view to $3.18B-$3.21B from $3.2B-$3.28B vs. est. $3.25B

· LHC Group (LHCG) Q1 EPS 63c/$291.1M vs. est. 61c/$295.16M

· Masimo (MASI) Q1 EPS 75c/$213M vs. est. 69c/$205.75M; Q1 product revenues $204.4M; boosts FY adjusted EPS view to $2.88 from $2.80 (est. $2.81) and boosts FY product revenue guidance to $818M from $808M

· Medpace (MEDP) files to sell 3M shares of common stock for holders

· Qiagen (QGEN) Q3 EPS 26c/$343.6M vs. est. 24c/$339.1M

· Teladoc (TDOC) files to sell $225M of convertible senior notes due 2025

· Inspire Medical Systems (INSP) 6.75M share IPO priced at $16.00

· Unity Biotechnology (UBX) 5M share IPO priced at $17.00

· uniQure (QURE) 4.5M share Secondary priced at $28.50

Industrials & Materials

· Avis Budget (CAR) Q1 adjusted EPS loss (74c)/$1.97B vs. est. loss ($1.03)/$1.93B; backs FY18 adjusted EPS view of $2.90-$3.75 (est. $3.36) and backs FY18 revenues view of $9.2B-$9.45B, vs. consensus $9.21B

· CF Industries (CF) Q1 EPS 27c/$957M vs. est. 26c/$1.04B; sees demand in North America for nitrogen fertilizer for 1H 2018 to be similar to 1H of 2017, projecting 88-90m acres of corn, 46m acres of wheat and 13m acres of cotton to be planted in the United States

· FMC Corporation (FMC) Q1 EPS $1.84/$1.2B vs. est. $1.60/$1.18B; sees FY18 adjusted EPS $5.90-$6.20 vs. consensus $5.65; separate listing of FMC Lithium stock remains on track for October 2018; sees Q2 EPS $1.65-$1.75 vs. est. $1.42

· Gardner Denver (GDI) 22.1M share Secondary priced at $31.00

· Republic Services (RSG) Q1 EPS 74c/$2.43B vs. est. 68c/$2.41B

· Tetra Tech (TTEK) Q2 EPS 54c/$533M vs. est. 51c/$509.18M; backlog at the end of the quarter was $2.5B; raises FY18 ongoing EPS view to $2.50-$2.62 (est. $2.50) and sees FY18 net revenue $2.15B-$2.25B vs. est. $2.13B

· Waste Connections (WCN) Q1 EPS 56c/$1.14B vs. est. 55c/$1.14B

· XPO Logistics (XPO) Q1 adjusted EPS 61c/$4.19B vs. est. 51c/$3.92B; said 11% organic revenue growth reflected a healthy diversification of customer verticals and service lines; remain on track to deliver at least $1.6B of adjusted EBITDA and approximately $625M of free cash flow

Technology, Media & Telecom

· CACI (CACI) Q3 EPS $2.33/$1.12B vs. est. $1.88/$1.12B; backs FY18 EPS view of $11.26-$11.50, vs. est. $11.36 and backs FY18 revenue view of $4.4B-$4.5B vs. est. $4.47B

· Cirrus Logic (CRUS) shares fell -7%; Q4 EPS 51c/$303.2M vs. est. 58c/$318.3M; said while revs were below views due to lower than anticipated smartphone unit volumes, they made meaningful progress this past year on numerous strategic initiatives; sees Q1 revenue $210M-$250M vs. est. $305.95M

· FireEye (FEYE) Q1 EPS loss (4c)/$199M vs. est. loss (4c)/$194.68M; sees Q2 adjusted EPS (3c)-0c on revs $199M-$203M vs. est. loss (1c)/$201.01M; backs FY18 adjusted EPS view 0c-4c, vs. consensus (1c) and raises FY18 revenue view to $820M-$830M from $815M-$825M; guides Q2 billings to $180M-$195M and year $815M-$835M

· Five9 (FIVN) files to sell $200M of convertible senior notes due 2023

· Qorvo (QRVO) Q4 EPS $1.07/$665.4M vs. est. $1.05/$655.85M; sees Q1 EPS 75c at the midpoint of guidance on revs $645M-$665M below est. $1.08/$678.43M which reflects near-term impacts of product mix and costs associated with lower utilization at their SAW filter fabs

· Spotify (SPOT) shares fell -6%; Q1 EPS EUR (1.01) and Q1 revenue EUR1.14B, up 26% YoY; gross margin was 24.9% in Q1, above the high end of the guidance range of 23-24%; finished the quarter with 170M Monthly Active Users and 75M Premium Subscribers, up 30% and 45%, respectively, Y/Y

· Sprint (S) Q4 EPS 2c/$8.08B vs. est. loss (7c)/$8.0B; Q4 postpaid phone net additions of 55,000, which it said marked the eleventh consecutive quarter of net additions; Q4 prepaid net additions of 170,000. Reports Q4 net income of $69M, operating income of $236M

· Tableau (DATA) Q1 adjusted EPS loss (19c)/$246.2M vs. est. loss (18c)/$217.99M; Q1 total annual recurring revenue increased 46% to $641.9M, up from $439.0M YoY; subscription annual recurring revenue increased 230% to $237.5M

· 3D Systems (DDD) Q1 EPS loss (3c)/$165.9M vs. est. 1c/$159.59M


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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