Morning Preview: May 4, 2018

Terrie AmengualDaily Market Report

Early Look
Friday, May 4, 2018

Stock futures are slipping on this final day of the volatile trading week, as markets turn their attention from earnings to the monthly nonfarm payroll report, which is expected at 8:30 AM EST (est. for 193K jobs). The other focus remains trade talks between the U.S. and China as day two of discussions took place. The U.S. handed China a lengthy list of demands on trade, ranging from immediately cutting a trade imbalance by $100 billion a year to halting all Chinese government support for advanced technologies, according to a document sent to Beijing before talks this week. Markets to this point are taking it all in stride, but could get volatile with any push back from China later today. It has been another busy week of corporate earnings, leading the Dow industrials lower for the week by 1.6% as of Thursday’s close, while the S&P 500 was looking at a 1.5% fall and the Nasdaq at a 0.4% decline.

U.S. stocks slipped on Thursday, but finished well off their session lows, as the Dow Industrial Average erased a near 400-point intraday decline drop to end higher, while the tech heavy Nasdaq bounced more than 100 points of its lows, but still ended the day slightly lower. The S&P 500 index and Dow both dropped below their key technical support 200-day moving averages intraday but managed to recover in choppy action ahead of today monthly employment report. Weakness was underpinned by quarterly results that failed to impress investors along with uncertainty over the Federal Reserve’s policy plan, and worries over a U.S.-China trade war, as US officials traveled to Beijing to talk trade and tariffs.

In Asian markets, The Nikkei Index remained closed the Shanghai Index dipped -9 points to settle at 3,091 and the Hang Seng Index dropped -386 points to settle at 29,926. In Europe, the German DAX is up over 50 points around 12,750, while the FTSE 100 is up over 30 points at 7,539.

Market Closing Prices Yesterday

· The S&P 500 Index slipped -5.94 points, or 0.23%, to 2,629

· The Dow Jones Industrial Average rose 5.17 points, or 0.02%, to 23,930

· The Nasdaq Composite dipped -12.75 points, or 0.18%, to 7,088

· The Russell 2000 Index declined -8.36 points, or 0.54% to 1,546

Events Calendar for Today

· 8:30 AM EST Change in Nonfarm Payrolls for April…est. 193K

· 8:30 AM EST Change on Private Payrolls for April…est. 190K

· 8:30 AM EST Change in Manufacturing Payrolls for April…est. 20K

· 8L30 AM EST Unemployment Rate for April…est. 4.0%

· 8:30 AM EST Average Hourly Earnings for April…est. 0.2%

· 8:30 AM EST Average Weekly Hours for April…est. 34.5 hours

· 1:00 PM EST Baker Hughes Weekly Rig Count

Sector News Breakdown

Consumer
· B&G Foods (BGS) Q1 EPS 55c/$431.7M vs. est. 53c/$432.08M; backs FY18 adjusted EPS view $2.05-$2.25 and revenue view $1.72B-$1.755B vs. est. $2.07/$1.72B

· Del Taco (TACO) Q1 EPS 8c/$112.6M vs. est. 11c/$112.8M; Q1 system-wide comparable restaurant sales growth of 3.7%; sees FY18 EPS 59c-63c on revs $506M-$516M vs. est. 62c/$510.2M; sees FY18 system-wide same store sales growth of approximately 2% to 4%

· El Pollo Loco (LOCO) Q1 EPS 17c/$105.8M vs. est. 17c/$103.3M; Q1 system-wide comparable restaurant sales decreased 1.1%, including a 2.0% decrease for company-operated restaurants, and a 0.4% decrease for franchised restaurants; sees FY18 system-wide comp sales growth of approximately flat and opening of 6-8 new company-owned restaurants and 6-8 new franchised

· Herbalife (HLF) Q1 EPS $1.40/$1.2B vs. est. $1.10/$1.11B; raises FY18 adj. EPS view to $5.05-$5.45 from $4.60-$5.00 (est. $5.31)

· John B. Sanfilippo & Son (JBSS) Q3 EPS 75c/$203.2M vs. est. 70c/$183.69M

· Shack (SHAK) Q1 EPS 15c/$99.1M vs. est. 8c/$96.34M; Q1 Same-Shack sales up 1.7%; raises FY18 revenue view to $446M-$450M from $444M-$448M (est. $448.99M) and raises FY18 Same-Shack sales view to up 0%-1% from flat

· Sotheby’s (BID) Q1 EPS 9c/$195.8M vs. est. loss (22c)/$140.35M

· Weight Watchers (WTW) Q1 EPS 56c/$408.2M vs. est. 6c/$388.5M; said ended Q1 with 4.6M subscribers – the highest level in the history of Weight Watchers and an increase of 1M YoY; raises FY18 EPS view to $3.00-$3.20 from $2.40-$2.70 (est. $2.57)

· Wingstop (WING) Q1 EPS 25c/$37.4M vs. est. 20c/$36.13M; Q1 domestic comp sales rose 9.5%; system-wide restaurant count increased 12.2% to 1,157 global locations and system-wide sales increased 20.4%

Energy
· EOG Resources (EOG) Q1 adjusted EPS $1.19/$3.68B vs. est. $1.00/$3.45; backs FY18 Exploration and Development target $5.4B-$5.8B; reiterates full-year 2018 oil production growth target of 16-20%; targets $3B debt reduction and higher dividend growth rate

· Parsley Energy (PE) Q1 EPS 31c/$392.74M vs. est. 24c/$342.01M; Q1 net oil production increased 15% quarter-over-quarter and 57% year-over-year to 59.3 Mboepd; total net production averaged 93.4 MBoe per day; Q1 CapEx $424M

· TransCanada (TRP) intends to begin preliminary work on its Keystone XL pipeline project in the state of Montana in the fall of 2018 before full construction in 2019, Reuters reports

Financials
· HSBC Holdings (HSBC) said it would buy back another $2 billion in shares but shares slid as it posted a $3.09 billion net profit for the January-March period, slightly down from $3.13 billion a year earlier and in line with analyst expectations. It said operating costs rose 13%, or 8% after one-off provisions, outpacing a 3% adjusted revenue rise

· Athene Holding (ATH) Q1 EPS $1.21/$1.01B vs. est. $1.24/$900.74M; reports book value per share increased 13% YoY to $44.09; adjusted book value per share increased 18% to $40.66

· Camden Property (CPT) Q1 AFFO $1.04/$230.7M vs. est. $1.13/$233.80M; Q1 same-store NOIC up 4% from last year and Q1 occupancy 95.4% vs. 95.7% last year

· Cedar Realty Trust (CDR) Q1 FFO 13c/$37.57M vs. est. 13c/$37.06M; same-property NOI was flat compared to the same period in 2017

· Credit Acceptance (CACC) Q1 adjusted EPS $6.11/$295.6M vs. est. $6.19/$290.9M

· FleetCor (FLT) Q1 EPS $2.50/$585.5M vs. est. $2.37/$602.47M; sees Q2 adjusted EPS roughly the same as Q1 vs. est. $2.54; said volumes should build throughout the year, and new asset initiatives are also expected to gain momentum; raises FY18 EPS view to $10.20-$10.50 from $10.05-$10.35 (est. $10.33) and cuts FY18 revenue view to $2.39B-$2.45B from $2.49B-$2.55B

· Greenhill & Co. (GHL) Q1 EPS 21c with items on revs $87.5M vs. est. loss (3c)/$62.94M; Q1 EPS was negatively impacted by a tax charge of $3.9M for the tax effect of the difference between the grant price value and the market price value of restricted stock awards

· LPL Financial (LPLA) Q1 EPS ex-items $1.11/$1.24B vs. est. 78c/$1.17B; said EPS increased 94% YoY to $1.01; total Brokerage and Advisory Assets increased 22% YoY to $648B, up 5% sequentially

Healthcare
· Allscripts (MDRX) Q1 EPS 16c/$514.0M vs. est. 17c/$530.48M; sees FY18 EPS 72c-82c on revs $2.15B-$2.25B vs. est. 77c/$2.2B; announced that it signed a definitive agreement to acquire HealthGrid Holding Company, a mobile enterprise patient engagement platform business

· Bruker (BRKR) Q1 EPS 24c/$431.7M vs. est. 22c/$417.36M; reaffirms FY18 outlook

· DaVita (DVA) Q1 EPS $1.05/$2.85B vs. est. 93c/$2.78B; backs FY18 operating cash flow view $1.4B-$1.6B and sees FY18 effective tax rate approximately 26.5%-27.5%

· Insulet (PODD) Q1 EPS loss (11c)/$123.6M vs. est. loss (19c)/$121.7M; boosts low end of FY18 revenue view to $565M-$580M from $560M-$580M (est. $575.96M)

· Ironwood Pharmaceuticals (IRWD) and Allergan plc (AGN) announced that the companies have reached an agreement with Aurobindo Pharma Ltd., resolving patent litigation brought in response to Aurobindo Pharma’s abbreviated new drug application seeking approval to market a generic version of LINZESS prior to the expiration of the companies’ applicable patents

· Mettler-Toledo (MTD) Q1 EPS $3.74/$660.8M vs. est. $3.73/$651.86M; sees Q2 adjusted EPS $4.55-$4.60 vs. est. $4.55; management anticipates that local currency sales growth in the second quarter will be approximately 6% (est. $716.43M); raises FY18 adj. EPS view to $20.10-$20.25 from $19.95-$20.15 (est. $20.19)

· NewLink Genetics (NLNK) Q1 EPS loss (49c) vs. est. loss (55c); ended Q1 with cash and cash equivalents totaling $143.9M compared to $158.7M for the year ending December 31, 2017

· G1 Therapeutics (GTHX) CEO updates CDK4/6 inhibitor clinical programs view

· Sarepta (SRPT) Q1 EPS loss (28c)/$64.6M vs. est. loss (32c)/$64.8M; entered into an exclusive partnership with Myonexus Therapeutics, Inc., a clinical-stage biotechnology company developing transformative gene therapies for various forms of Limb-girdle muscular dystrophies

· Smith & Nephew (SNN) downgraded to sell from hold at Deutsche Bank

· Spectrum (SPPI) raises FY18 revenue view to $95M-$115M from $90M-$110M

· Tesaro (TSRO) Q1 EPS loss ($2.98)/$49.7M vs. est. $2.67/$57.43M;

Industrials & Materials
· Chemours (CC) Q1 adjusted EPS $1.41/$1.7B vs. est. $1.22/$1.65B; expects to deliver $700M of free cash flow in 2018

· Esterline (ESL) Q2 EPS 80c/$517.6M vs. est. 77c/$504.77M; sees FY18 EPS $3.65-$4.05 on revs $2B-$2.05B vs. est. $3.84/$2.04B

· Fluor (FLR) Q1 revs $4.82B vs. est. $4.72B; said EPS results for the quarter include an after-tax charge of approximately 69c per share for forecast revisions on a gas-fired power project; cuts FY18 EPS view to $2.10-$2.50 from $3.10-$3.50 (est. $3.30)

· General Electric Co. (GE) warned it might put its dormant subprime mortgage business, long-plagued by legal trouble, into bankruptcy protection. A bankruptcy filing could be a way for the lender, WMC Mortgage, to deal with potential courtroom losses and other future liabilities

· Global Brass and Copper (BRSS) Q1 EPS 82c/$471.8M vs. est. 76c/$427.8M; reports volume of 143.8 million pounds, an increase of 7.4% YoY; reaffirms 2018 volume guidance

· Stericycle (SRCL) Q1 EPS $1.21/$895M vs. est. $1.05/$882.38M; sees FY18 adjusted EPS $4.45-$4.85 on revs $3.5B-$3.64B vs. est. $4.55/$3.56B

Media & Telecom
· CBS Corp. (CBS) Q1 EPS $1.34/$3.8B vs. est. $1.19/$3.64B; Q1 Entertainment revenue up 16% to $2.72B; revenues increased 11% from the same prior-year period, driven by the acquisition of Network Ten in the fourth quarter of 2017; Q1 Cable Networks revenues of $609M, up 12%

· Boingo Wireless (WIFI) Q1 EPS loss (8c)/$58.2M vs. est. loss (17c)/$51.93M; sees Q2 EPS loss (17c)-(10c) on revs $54M-$58M vs. est. loss (13c)/$56.2M

· Live Nation (LYV) Q1 EPS loss (24c)/$1.48B vs. est. loss (29c)/$1.32B; said Q1 delivered growth in revenue of 19%, operating income of 72%, adjusted operating income of 24%, operating cash flow of 2%, and free cash flow – adjusted of 76%; Q1 Ticketmaster revenue up 19%

· RealPage (RP) Q1 adjusted EPS 37c/$201.3M vs. est. 34c/$201.13M

· Zayo Group (ZAYO) Q3 EPS 9c/$649.4M vs. est. 10c/$654.8M; announces resignation of COO Andrew Crouch; enters next phase of evaluation for REIT conversion

Technology
· Skyworks (SWKS) Q2 EPS $1.64/$913.4M vs. est. $1.60/$910.96M; sees Q3 EPS $1.59 on revenue $875M-$900M vs. est. $1.67/$938.92M; said they anticipate a resumption of sequential revenue growth in the September quarter with sustained momentum into the December period

· Activision (ATVI): company said after the WSJ released quarterly results midday yesterday: Activision Blizzard says that “Not only did [the WSJ] report inaccurately, they did so in violation of our written embargo agreement.” Says WSJ has issued an apology. Comments taken from the Q1 earnings conference call

· Acacia Communications (ACIA) Q1 EPS 0c/$72.9M vs. est. 6c/$71.22M

· Alarm.com (ALRM) Q1 EPS 34c/$92.8M vs. est. 27c/$89.48M; sees Q2 SaaS and license revenue $69.4M-$69.6M; sees FY18 EPS $1.14-$1.15 on revs $381.5M-$383.5M vs. est. $1.13/$381.31M

· Appian (APPN) Q1 EPS loss (12c)/$51.7M vs. est. loss (18c)/$45.98M; sees Q2 EPS loss of (18c)-(17c) on revs $50.2M-$50.4M vs. est. loss (17c)/$48.97M

· Arista Networks (ANET) Q1 EPS $1.79/$472.5M vs. est. $1.51/$463.36M; sees Q2 revenue $500M-$514M vs. est. $506.19M; sees non-GAAP gross margin between 62% to 64%

· Computer Programs (CPSI) Q1 EPS 59c/$70.9M vs. est. 39c/$67.9M; reports 12-month backlog of $264.6M and quarterly bookings of $22.1M

· CyberArk (CYBR) Q1 EPS 32c/$71.8M vs. est. 21c/$69.24M; sees FY18 EPS $1.31-$1.37 on revenue $315M-$319M vs. est. $1.22/$314.62M

· Fortinet (FTNT) Q1 EPS 33c/$399.0M vs. est. 24c/$390.36M; sees Q2 EPS 34c-36c on revs $420M-$430M vs. est. 34c/$415.23M; sees FY18 EPS $1.51-$1.55 on revs $1.715B-$1.735B vs. est. $1.42/$1.71B

· Genpact (G) Q1 EPS 39c/$689M vs. est. 37c/$680.71M; raises FY18 adjusted EPS view $1.72-$1.76 from $1.70-$1.74 (est. $1.73) and sees FY18 revenue $2.93B-$3B vs. est. $2.97B

· GoPro (GPRO) Q1 EPS loss (34c)/$202.3M vs. est. loss (38c)/$184.19M

· Motorola Solutions (MSI) Q1 adjusted EPS $1.10/$1.47B vs. est. 87c/$1.37B; sees Q2 EPS $1.34-$1.39 vs. est. $1.36; raises FY18 EPS view to $6.70-$6.85 from $6.50-$6.65 (est. $6.61) and raises FY18 revenue growth view to up about 14% from up 10%-11%

· Pandora (P) Q1 EPS loss (55c)/$319.2M vs. est. loss (38c)/$304.34M; Q1 total listener hours were 4.96B, compared to 5.21B YoY; active listeners were 72.3Mn at the end of Q1; Pandora Plus and Pandora Premium subscribers were 5.63 million at the end of Q1; ad RPM hit an all-time Q1 high of $55.52, growing 9% YoY

· Stamps.com (STMP) Q1 EPS $2.54/$133.6M vs. est. $1.90/$122.99M; Q1 adjusted EBITDA was $62.1 million, up 21%; raises FY18 EPS view to $9.60-$10.60 from $8.80-$9.80 (est. $9.17); backs FY18 revenue view at $530M-$560M vs. est. $546.92M

· Twitter (TWTR) said: “When you set a password for your Twitter account, we use technology that masks it so no one at the company can see it. We recently identified a bug that stored passwords unmasked in an internal log. We have fixed the bug, and our investigation shows no indication of breach or misuse by anyone. Out of an abundance of caution, we ask that you consider changing your password on all services where you’ve used this password.”

· 2U (TWOU) Q1 adjusted EPS loss (12c)/$92.3M vs. est. loss (13c)/$91.44M; sees Q2 adjusted EPS loss (22c)-(21c) on revs $95.1M-$96.1M vs. est. loss (19c)/$93.53M

· Viavi (VIAV) Q3 EPS 13c/$219.4M vs. est. 10c/$201.03M; sees Q4 non-GAAP EPS 8c-12c on revenue $243M-$267M vs. est. 15c/$258M

· Web.com (WEB) Q1 revs $186.7M vs. est. $185.5M; total net subscribers were approximately 3,349,000 at the end of Q1, declining approximately 62,000 from the end of Q4 of 2017

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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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