Morning Preview: May 8, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, May 8, 18

U.S. equity futures are slipping, pulling back as markets await President Donald Trump’s decision on whether he will abandon a key nuclear deal with Iran later today. U.S. stocks were moving steadily higher on Monday until President Trump on Twitter said ““I will be announcing my decision on the Iran Deal tomorrow from the White House at 2:00pm.” The announcement caught markets by surprise as oil prices pulled back from more than 4-year highs and stocks pared gains. If Trump decides to abandon the Iran deal it would trigger a reimposition of economic sanctions on the Middle Eastern country and could cut into global supplies for oil. In addition to that, markets will also be digesting a fresh round of earnings reports and economic data. There was also a $60B deal announcement in the pharma space as Takeda agrees to acquire Shire, while in the media space, Reuters reported Comcast is preparing an all-cash deal to top Disney $52B offer for Fox. Data, earnings, sanctions, M&A and trade all key topics for major averages today.

U.S. stocks ended Monday higher, but well off its highs after dipping briefly late afternoon following President Donald Trump’s tweet that he’ll announce his decision on Iran Tuesday (ahead of the Saturday deadline). As earnings season passed its peak, investors shifted focus back to politics, with the world’s largest economy stuck in trade talks around the world. The Nasdaq Composite advanced 0.8% as Apple advanced for sixth day to a record. Both the S&P and the Nasdaq posted their second straight daily gain, while the Dow extended its winning streak to a third, including a rise of 0.02% on Thursday.

In Asian markets, The Nikkei Index advanced 41 points to settle at 22,508, the Shanghai Index rose 24 points to settle at 3,161 and the Hang Seng Index jumped 408 points to settle at 30,402. In Europe, the German DAX is down over -50 points under 12,900, while the FTSE 100 is up a few points holding around 7,575.

Market Closing Prices Yesterday

· The S&P 500 Index gained 9.21 points, or 0.35%, to 2,672.63

· The Dow Jones Industrial Average rose 94.81 points, or 0.39%, to 24,357.32

· The Nasdaq Composite spiked 55.60 points, or 0.77%, to 7,265.21

· The Russell 2000 Index advanced 13.34 points, or 0.85% to 1,578.95

Events Calendar for Today

· 6:00 AM EST NFIB Small Business Optimism for April…est. 104.5

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 10:00 AM EST JOLTs Job Openings for March…est. 6100

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: ACM, Adecco, AES, AFI, ARMK, BLD, CRCM, CROX, CWH, DF, DISCA, DSM NV, ENDP, EVHC, HSIC, IT, JEC, LXP, MCHP, MGI, MLM, MNK, PRGO, USFD, VPG, VRX, VSH, VSM

· Earnings After the Close: AAOI, AMBC, BECN, CA, CALX, CSOD, DIOD, DIS, EA, EXTR, GDDY, HDP, IMI, LBTYA, LC, MAR, MB, MNST, MODN, MXL, NEWR, NSTG, O, OXY, SCSC, TRIP, TWLO, WEN, WTR

Other Key Events:

· Morgan Stanley Energy Conference, 5/7-5/9, in Houston

· DA Davidson Financial Conference, 5/8-5/10, in Denver

· Deutsche Bank Healthcare Conference, 5/8-5/9, in Boston

· Oppenheimer 13th Annual Industrial Conference, 5/8-5/9, in New York

· Wells Fargo Industrials Conference, 5/8-5/9, in New York

World News

· China’s trade surplus with the U.S. widened last month, as both inbound and outbound shipments accelerated, official data showed. The country’s trade surplus with the U.S. reached $22.19 billion in April, up 43.8% compared with March’s surplus, according to data released by the General Administration of Customs.

· The index of small-business optimism from the National Federation of Independent Businesses ticked up fractionally to 104.8 in April, slightly above the 104.5 estimate

· Federal Reserve Bank of Dallas President Robert Kaplan says “I am very concerned about the percentage of trading in markets, or very mindful, I should say, about the trading in markets that is quant driven or machine driven, especially in the last hour or two of trading.” Risk parity and other strategies like that are creating dangers

· U.S. President Donald Trump will request a package of $15 billion in spending cuts from Congress on Tuesday, including some $7 billion from the Children’s Health Insurance Program championed by Democrats, senior administration officials said on Monday

· New York state Attorney General Eric Schneiderman resigned on Monday after allegations of physical abuse by four women were reported in an article in the New Yorker magazine

Sector News Breakdown

Consumer

· Central Garden & Pet (CENT) Q2 adjusted EPS 86c/$613.1M vs. est. 82c/$591.76M; Q1 organic sales rose 6.1%

· Fiesta Restaurant (FRGI) Q1 EPS 16c/$169.5M vs. est. 14c/$164.25M; Q1 comparable restaurant sales at Pollo Tropical increased 1.1%; says April comp sales rose 2.8% at Pollo Tropical, 0.9% at Taco Cabana

· Fred’s (FRED) announced that it has reached a definitive agreement to sell certain assets of EntrustRx, its specialty pharmacy unit, to a subsidiary of CVS (CVS). The aggregate consideration to be paid is $40.0M, plus an amount equal to the value of inventory of EntrustRx

· Hawaiian Airlines (HA) April traffic up 7.1%, capacity up 7.3% and load factor was down 0.1%

· Hertz (HTZ) shares fell 8%; Q1 EPS loss ($1.58)/$2.1B vs. est. loss ($1.28)/$1.97B

· Nautilus (NLS) Q1 EPS 26c/$114.8M vs. est. 20c/$111,77M; affirms 2018 revenue, operating income guidance

· Trex Company (TREX) Q1 EPS $1.25/$171M vs. est. $1.19/$172.22M; sees Q2 revenue $191M, vs. consensus $187.5M; approves 2-for-1 stock split

· Weight Watchers (WTW) files common stock shelf for holders

· Zillow (ZG) Q1 diluted EPS 7c/$299.88M vs. est. 6c/$299.44M; sees FY18 revenue $1.43B-$1.58B vs. est. $1.52B; sees FY18 EBITDA $260M-$285M; sees Q2 revenue $322M-$327M vs. est. $354.87M and sees Q2 adjusted EBITDA $57M-$62M

Energy

· Carrizo Oil & Gas (CRZO) Q1 adjusted EPS 48c/$225.3M vs. est. 33c/$200.89M; reports Q1 production 51.3K BOE/d, up 11% from last year; reports Q1 crude oil production of 34,136 Bbls/d, 18% above the first quarter of 2017

· DCP Midstream (DCP) reports Q1 Ebitda $268M vs. est. 4266.4M; Q1 revs $2.14B vs. est. $2.64B; says Southern Hills NGL pipeline will connect DJ Basin to Cushing, Oklahoma, via the White Cliffs pipeline operated by SemGroup

· Spire (SR) files to sell 2M shares of common stock

Financials

· Black Knight (BKI) Q1 EPS 43c/$271.2M vs. est. 40c/$267.68M; sees FY18 EPS $1.73-$1.81 on adjusted revenue $1.1B-$1.12B vs. est. $1.78/$1.12B

· Brookdale Senior Living (BKD) Q1 EPS with items ($2.45)/$1.19B vs. est. loss (24c)/$1.15B; Q1 net loss included $430.4M of non-cash impairment expense

· Hope Bancorp (HOPE) announces offering of $200M of convertible senior notes; authorizes $100M share repurchase

· MoneyGram (MGI) Q1 adjusted EPS 15c/$380.0M vs. est. 24c/$386.32M; Q1 Adjusted EBITDA was $66.6M

· Redwood Trust (RWT) Q1 non-GAAP EPS 35c (in-line); at March 31 Redwood reported GAAP book value per share of $16.12, as compared with $15.83 at December 31, 2017

· Sunstone Hotel (SHO) Q1 adjusted FFO 20c/$271.45M vs. est. 19c/$263.16M; Sees FY AFFO/share $1.07-$1.16 vs. est. $1.12; sees 2Q AFFO/share 34c-36c vs. est. 36c

Healthcare

· Takeda Pharmaceutical agreed to buy Shire Pharmaceuticals (SHPGY) for 45.3 billion pounds ($61.50 billion) after the Japanese company raised the amount of cash in its offer to secure a recommendation https://reut.rs/2rrptXw

· AxoGen (AXGN) files to sell 2M shares of common stock

· Envision Healthcare (EVHC) Q1 EPS 71c/$2.08B vs. est. 64c/$2.02B; sees Q2 EPS 83c-90c vs. est. 91c; sees Q2 Adjusted EBITDA of $234M-$246M; says while it has not set a definitive timetable for the completion of its strategic review, the board “is moving toward identification of the optimal outcome for our shareholders during the current quarter

· Lannett (LCI) Q3 adjusted EPS 80c/$174.4M vs. est. 79c/$176.33M; narrows FY18 revenue view to $685M-$695M from $680M-$700M (est. $687.32M); sees FY18 gross margin approximately 48%, down from 48% to 49%

· Luminex (LMNX) Q1 GAAP EPS 30c/$82.7M vs. est. 20c/$80.47M; sees Q2 revenue $78.5M-$80M vs. consensus $79.95M

· Nevro (NVRO) Q1 EPS loss (59c)/$87.6M vs. est. loss (32c)/$89.48M; reaffirms FY18 revenue view $400M-$410 vs. consensus $405.99M

· Phibro Animal Health (PAHC) Q3 EPS 49c/$208.9M vs. est. 44c/$202.94M

· Premier (PINC) Q3 adjusted EPS 67c/$425.3M vs. est. 66c/$407.99M; reaffirms FY18 revenue view $310M-$316M vs. est. $312.96M; narrows FY18 adjusted EPS view to $2.24-$2.28 from $2.24-$2.37 and raises FY18 revenue view to $1.612B-$1.649B from $1.564B-$1.648B; approves repurchase of up to $250M of Class A stock

· Tactile Systems (TCMD) Q1 EPS 0c/$26.8M vs. est. loss (13c)/$23.72M; sees FY18 revenue $132M-$134M vs. est. $132.26M and now expects revenues in the range of $132 million to $134 million, representing growth of 21% to 23% YoY

· Valeant Pharmaceuticals International Inc. (VRX) said it plans to change its name to Bausch Health Cos., as management takes another step toward remaking the company and distancing it from past controversies; will change its ticker symbol from VRX to BHC

Industrials & Materials

· Manitowoc (MTW) Q1 adjusted EPS loss (12c)/$386.1M vs. est. loss (21c)/$373.79M; sees FY18 revenue roughly $1.775B-$1.85B vs. est. $1.76B; raises FY18 adjusted EBITDA view to roughly $100M-$120M from $96M-$116M

· Mosaic (MOS) Q1 adjusted EPS 20c/$1.93B vs. est. 28c/$1.83B; sees Q2 Potash sales volumes 2.1M-2.4M tonnes and sees Q2 Phosphates sales volumes 2.1M-2.4M tonnes

· Navios Maritime (NMM) buys three containerships for $117.3M total; expects to take delivery of all three vessels in the second quarter of 2018

· Nutrien (NTR) Q1 adjusted EPS 16c/$3.74B vs. est. 29c/$3.99B; raises FY18 EPS view to $2.20-$2.60 from $2.10-$2.60 (est. $2.34)

· Regal Beloit (RBC) Q1 adjusted EPS $1.34/$878.8M vs. est. $1.23/$869.64M; raises FY18 adjusted EPS view to $5.60-$6.00 from prior $5.35-$5.75 (est. $5.57)

· Sun Hydraulics (SNHY) Q1 adjusted EPS 46c/$97.3M vs. est. 49c/$96.34M; raises FY18 revenue view to $490M-$505M from $370M-$385M

· Air Transport Services (ATSG) backs FY18 adjusted EBITDA view $310M

Technology, Media & Telecom

· Comcast Corp (CMCSA) is speaking to investment banks about obtaining bridge financing for an all-cash bid to displace Walt Disney Co (DIS) on its $52 billion deal to acquire most of Twenty-First Century Fox Inc’s (FOXA) assets https://reut.rs/2KHTx9v

· AMC Entertainment (AMC) Q1 adjusted EPS 14c/$1.38B vs. est. 9c/$1.35B; Q1 Admissions revenues increased 7.0% to $875.0M, food and beverage revenues increased 2.1% to $405.8M; Q1 Adjusted EBITDA increased 10.7% to $277.9M

· Carbonite (CARB) Q1 EPS 27c/$64M vs. est. 22c/$63.88M; sees Q2 EPS 34c-38c on revs $75.8M-$77.8M vs. est. 34c/$79.76M

· Fabrinet (FN) Q3 adjusted EPS 71/$332.2M vs. est. 71c/$319.17M; sees Q4 adjusted EPS 73c-77c on revenue $334M-$342M vs. est. 76c/$334.47M

· Impinj (PI) Q1 EPS loss (38c)/$25.1M vs. est. loss (37c)/$23.96M; sees Q2 EPS loss (38c)-(30c) on revs $25M-$27M vs. est. loss (32c)/$24.37M

· Snap Inc. (SNAP) announced they and Andrew Vollero, their Chief Financial Officer, agreed that he will depart Snap

· Trimble (TRMB) Q1 adjusted EPS 44c/$742.2M vs. est. 40c/$723.94M; sees Q2 adjusted EPS 42c-46c on revs $755M-$785M vs. est. 45c/$761.26M

· Veeco ((VECO) Q1 EPS 20c/$158.4M vs. est. 6c/$151.17M; sees Q2 EPS 1c-20c on revs $145M-$170M vs. est. 13c/$157.57M

· Vishay (VSH) increases quarterly dividend 26%

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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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