Morning Preview: May 9, 2018

Scott GreenDaily Market Report

Early Look

Wednesday, May 9, 18

Stock futures are significantly higher, led by a surge in energy stocks overseas amid concerns Iran will be hit by US sanctions. The dollar stays strong as the 10-year yield tops the 3% level once again, meanwhile oil prices quickly recover from their more than $4 decline yesterday (lows around $67.20) to move back near fresh 4-year highs above the $70.75 level amid fears of reduced supply from Iran due to the U.S. withdrawing from the nuclear deal and after weekly inventory data showed a drawdown in inventories last night (API data). With the push higher in futures, major averages are on track to open above yesterday’s best levels. In Asian markets, The Nikkei Index slumped 99 points to settle at 22,408, the Shanghai Index slipped -2 points to end at 3,159 and the Hang Seng Index jumped 133 points to finish at 30,536. In Europe, the German DAX is higher by around 20 points at 12,940, while the FTSE 100 is up around 40 points above 7,600. In addition to another round of earnings, today includes a few Fed speakers (Bostic) and monthly producer prices (inflation reading).

U.S. stocks finished Tuesday little changed, rebounding from earlier losses as markets digested news of President Trump’s withdrawal from the 2015 Iran nuclear agreement. Stocks initially spiked after the announcement that had been telegraphed, then dipped to the day’s low before making a comeback to finish the day down less than 0.1%. Energy shares erased losses to become the biggest gainer among major industries while rising bond yields weighed on high dividend payers such as utilities and telecom while lifting banks. With yesterday’s gains, the Dow Industrial average recorded its 4th straight gain, the longest stretch of wins since the six-session period ended Feb. 16th. The Russell 2000 index rose as Small Caps are seen as more resilient to worries about global trade and a strengthening dollar. Speaking of, the Russell has outperformed the other major equity indexes of late, rising 8.3% over the past three months, more than twice the 3.4% rise of the S&P over the same period, and four times the 2% gain of the Dow. That gain has brought it within 2% of record levels.

Market Closing Prices Yesterday

· The S&P 500 Index slipped -0.71 points, or 0.03%, to 2,671.92

· The Dow Jones Industrial Average rose 2.89 points, or 0.01%, to 24,360.21

· The Nasdaq Composite gained 1.69 points, or 0.02%, to 7,266.90

· The Russell 2000 Index advanced 7.44 points, or 0.47% to 1,586.39

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Producer Price Index (PPI) MoM for April…est. 0.2%

· 8:30 AM EST PPI Ex: Food & Energy MoM for April…est. 0.2%

· 8:30 AM EST PPI Ex: Food & Energy YoY for April…est. 2.4%

· 10:00 AM EST Wholesale Inventories MoM, Mar-F…est. 0.5%

· 10:30 AM EST Weekly DOE Inventory Data

· 1:15 PM EST Fed’s Bostic speaks on economic outlook and monetary policy

Earnings Calendar:

· Earnings Before the Open: AEE, ADT, Ahold, AMBC, CEVA, COTY, DTEGY, DLPH, SBGI, WIX

· Earnings After the Close: ALB, ATUS, BKNG, CTL, FOXA, FTI, GKOS, IAC, INFN, MTCH, OTEX, RNG, ROKU, SYNA, TROX

Other Key Events:

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

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

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

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

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

· Jefferies Technology Conference, 5/9-5/10, in Los Angeles

Sector News Breakdown

Consumer

· Marriott International (MAR) Q1 adjusted EPS $1.34/$5B vs. est. $1.22/$5.75B; boosted its adjusted Ebitda forecast for the full year; to $3.45B-$3.5B from prior $3.32B-$3.42B; sees 2Q Worldwide REVPAR change in constant currency +3% to +4% after 1Q Worldwide REVPAR change in constant currency +3.6%and 1Q North America REVPAR change in constant currency +2%

· TripAdvisor (TRIP) shares up 17%; Q1 EPS 30c/$378M vs. est. 16c/$362.11M; average monthly unique visitors on TripAdvisor-branded websites and apps grew 12% YoY to approximately 433M

· Beacon Roofing (BECN) Q2 adjusted EPS loss (35c)/$1.43B vs. est. loss (9c)/$1.41B; said Q2 pricing improved more than 200 basis points versus last year, representing a 2nd consecutive quarterly gain and our highest increase in more than five years; cuts FY18 adjusted EPS view to $3.35-$3.55 from $3.40-$3.70; raises FY18 revenue view to $6.75B-$7B from $6.6B-$6.9B

· Bojangles (BOJA) Q1 EPS 18c/$137.5M vs. est. 16c/$134.1M; Q1 system-wide comparable restaurant sales decreased 0.6%, while company-operated comparable restaurant sales decreased 1.8% and franchised comparable restaurant sales increased 0.2%

· Chuy’s (CHUY) Q1 EPS 27c/$93.9M vs. est. 22c/$94.65M; Q1 comparable sales decreased 1.5%; backs FY18 EPS view $1.12-$1.16 vs. est. $1.12; cuts FY18 SSS growth view to roughly 1% from 1%-1.5%

· Etsy (ETSY) Q1 EPS 10c/$120.9M vs. est. 10c/$119.6M; sees FY adjusted Ebitda margin +21% to +23%; sees FY revenue +22% to +24% and sees FY gross merchandise sales +16% to +18%; Q1 GMS was $861.1M, up 19.8% YoY; revenue growth view to 22%-24% from 21%-23%

· Inter Parfums (IPAR) Q1 EPS 51c/$171.8M vs. est. 45c/$148.32M; backs FY18 EPS view $1.59, vs. consensus $1.49 and backs FY18 revenue view $665M vs. est. $638.8M

· La Quinta (LQ) Q1 EPS loss (5c)/$228.8M vs. est. loss (1c)/$229.3M; 1Q comparable hotel RevPAR +4.3%; not providing guidance for 2018 given the expected timeline to close Wyndham

· Monster Beverage (MNST) Q1 sales $850.9M vs. est. $850.1M; Q1 gross profit margin 60.6%, vs. estimate 61.9%; Q1 volume 92.3 million unit cases

· Overstock.com (OSTK) Q1 EPS loss ($1.74)/$445.3M

· Papa John’s (PZZA) Q1 revs 50c/$427.4M vs. est. 62c/$440.7M; 1Q systemwide international comparable sales +0.3% vs. estimate +2.7% and Q1 Systemwide North America comparable sales -5.3%

· Potbelly (PBPB) Q1 EPS 3c/$102.9M vs. est. 1c/$103.16M; 1Q comparable sales -3.6% and reports $65M stock buyback program

· Tyson Foods (TSN) and Cargill have shown interest in potentially buying Keystone Foods, the U.S. supplier of chicken nuggets to McDonald’s (MCD), Bloomberg reports https://bloom.bg/2K7iN8f

· UAL’s (UAL) April 2018 consolidated traffic increased 5.1% and consolidated capacity increased 6.1% versus April 2017; April consolidated load factor decreased 0.8% YoY

· Wendy’s (WEN) Q1 adjusted EPS 11c/$380.6M vs. est. 10c/$379.98M; North America same-restaurant sales increase 1.6% in 1Q vs. est. 1.8%; sees FY18 adjusted EPS 55c-57c vs. est. 55c; sees FY18 adjusted tax rate of approximately 21%-23%

Energy

· Abraxas Petroleum (AXAS) Q1 adjusted EPS 9c/$40.6M vs. est. 8c/$37.35M; Q1 production about 10,485 Boepd. Abraxas did not complete or put any wells onto production during the quarter; production guidance for the year ending December 31, 2018 remains unchanged at 10,000-12,000 Boepd at a planned capital expenditure budget of $140M

· Bonanza Creek (BCEI) Q1 EPS $1.07 vs. est. 64c; sees 2Q production 18.0 to 18.6 mboe/d and sees FY production 17.7 to 18.7 mboe/d

· Diamondback Energy (FANG) Q1 EPS $1.65/$480.2M vs. est. $1.57/$435.11M; said in 1Q earnings release it will continue to be “active, yet selective” in its acquisition strategy, with accretion and full-cycle economics being key drivers in decision making

· Gulfport Energy (GPOR) Q1 EPS 56c/$325.4M vs. est. 42c/$350.97M; announces $100M stock repurchase plan; sees Q2 average net production 1,300-1,320 MMcfe per day

· Occidental (OXY) Q1 core EPS 92c vs. estimate 71c; 1Q production 609,000 boe/d

· PPL Corp. (PPL) prices 55M secondary offering at $27 per share

· Plains All American (PAA) Q1 adjusted EPS 36c vs. est. 32c; reports Q1 adjusted EBITDA $593M vs. $512M last year; says on target with leverage reduction plans and execution of expansion capital program

· SunPower (SPWR) Q1 non-GAAP EPS loss (20c)/$391.9M vs. est. loss (33c)/$359.29M; sees Q2 revenue $360M-$410M vs. est. $436.92M; sees Q2 gross margin 2.5%-4.5% and a net loss of $125M-$100M; sees FY18 Adjusted EBITDA $75M-$125M and sees FY18 adjusted EBITDA guidance assumes a $55M negative impact related to tariffs associated with section 201

· The American Petroleum Institute (API) reported that U.S. crude supplies fell by nearly -1.9M barrels for the week ended May 4; showed a fall of about -2.1M barrels in gasoline stockpiles, while inventories of distillates dropped -6.7M barrels

Financials

· Ambac Financial (AMBC) Q1 EPS $7.22; 1Q adjusted book value per share $31.56; 1Q net premiums earned $30.9 million

· LendingClub (LC) Q1 adjusted EPS 1c/$151.7M vs. est. loss (1c)/$152.75M

· Primerica (PRI) Q1 adjusted EPS $1.47/$459.9M vs. est. $1.49/$459.83M; reports 8% increase in life insurance licensed representatives to over 127,000 in Q1 and 15.5% growth in Term Life net premiums in Q1

· Origin Bancorp (OBNK) 3.636M share IPO priced at $34.00

· HSBC Bank (HSBC) announces $2B buyback of common stock

· Outstanding student debt reached $1.521 trillion in the first quarter of 2018, according to the Federal Reserve, hitting $1.5 trillion for the first time

Healthcare

· Evelo Biosciences (EVLO) 5.31M share IPO priced at $16.00

· Enanta (ENTA) Q2 EPS 61c/$44.0M vs. est. 33c/$35.77M; Q1 cash, cash equivalents and short-term and long-term marketable securities totaled $288.9 million at March 31, 2018

· Insys Therapeutics (INSY) Q1 EPS loss (28c)/$23.91M vs. est. loss (18c)/$25.66M; announces license partnership to commercialize Subsys in Middle East

· Jazz Pharmaceuticals (JAZZ) Q1 adjusted EPS $2.98/$444.61M vs. est. $2.78/$435.46M; sees FY18 adjusted EPS $12.75-$13.25 on revs $1.880B-$1.930B vs. est. $12.78/$1.89B

· Ligand (LGND) Q1 adjusted EPS $1.55/$56.2M vs. est. $1.15/$43M; affirms 2018 revenue outlook of approximately $188M vs. est. $183.22M

· Quidel (QDEL) Q1 EPS $1.29/$169.1M vs. est. $1.01/$150.87M; Q1 Influenza revenue increased 59% to $64.6M and total Rapid Immunoassay revenue increased 40% from last year

Industrials & Materials

· Axon (AAXN) raises FY18 revenue growth view to 18%-20% from 16%-18%; Operating margin expansion of 300 basis points to 400 basis points over 2017

· Kinross Gold (KGC) Q1 adjusted EPS 10c/$897.2M vs. est. 4c/$833.05M; Q1 production 653,937 ounces of gold equivalent

Media & Telecom

· Disney (DIS) Q2 adjusted EPS $1.84/$14.55B vs. est. $1.69/$14.08B; Q2 Media Networks revenue $6.14B vs. $5.95B last year; Q2 Parks and Resorts revenue $4.88B vs. $4.3B a year ago; Studio Entertainment revenue $2.45B vs. 2.03B last year; Consumer Products & Interactive Media revenue $1.08B vs. $1.06B last year; says Q2 results driven by parks/resorts and studio business

· Match Group (MTCH) Q1 EPS 26c/$407.4M vs. est. 24c/$386.2M; sees 2Q revenue $405M-$415M vs. est. $391.6M; sees 2Q adjusted Ebitda $160M-$165M vs. est. $143.6M; says revenue growth will be driven by Tinder, stability at other brands; boosts 2018 revenue forecast by $100M to $1.6B-$1.7B vs. est. $1.6B; Tinder average subs 3.5M in 1Q, up 368K QoQ or 1.6M YoY

· Gannett (GCI) board approves $100M stock repurchase program

Technology

· Electronic Arts (EA) Q4 EPS $1.95 vs. est. $1.17; reports Q4 Net Bookings $1.26B vs. est. $1.24B; announces new $2.4B stock repurchase program; sees FY19 EPS $3.55 on revs $5.60B vs. est. $4.45/$5.61B; sees FY19 Net bookings is expected to be approximately $5.55B

· Applied Optoelectronics (AAOI) shares fell -9%; Q1 EPS 28c/$65.2M vs. est. 33c/$68.96M; sees Q2 EPS 39c-42c on revs $75M-$81M vs. est. 46c/$77.5M

· CA Technologies (CA) Q4 adjusted EPS 62c/$1.083B vs. est. 59c/$1.08B; sees FY19 non-GAAP EPS $2.75-$2.81 vs. est. $2.74

· Cornerstone OnDemand (CSOD) Q1 adjusted EPS 14c/$133.1M vs. est. 5c/$126.65M; sees Q2 revenue $127M-$129M vs. est. $125.37M; sees Q2 subscription revenue $111M-$113M; raises FY18 revenue view to $503M-$511M from $497M-$507M (est. $503.6M)

· Diodes (DIOD) Q1 EPS 48c/$274.5M vs. est. 40c/$269.48M; said EBITDA in the first quarter reached a record $54.2 million, or 20% of revenue

· GoDaddy (GDDY) Q1 EPS 2c/$633.2M vs. est. 2c/$622.4M; sees Q2 revenue $640M-$645M vs. consensus $635.91M; raises FY18 revenue view to $2.62B-$2.64B vs. est. $2.6B; full year revenue outlook includes roughly $10M per quarter in the back half of the year from the recently announced planned acquisition of Main Street Hub.

· Mindbody (MB) Q1 EPS 6c/$53.8M vs. est. 4c/$53.85M; sees Q2 revenue $59.5M-$61.5M vs. consensus $57.22M

· NeoPhotonics (NPTN) Q1 adjusted EPS loss (33c)/$68.6M vs. est. loss (26c)/$69.66M; sees Q2 adjusted EPS loss (26c)-(16c) on revs $70M-$76M vs. est. loss (15c)/$74.18M

· New Relic (NEWR) Q4 adjusted EPS 9c/$98.4M vs. est. 5c/$96.3M; sees Q1 adjusted EPS 10c-12c on revs $104.5M-$106.5M vs. est. 1c/$103.36M; sees FY19 adjusted EPS view 29c-37c on revs $452M-$458M vs. est. 23c/$450.28M

· ScanSource (SCSC) Q3 EPS 68c/$895.6M vs. est. 70c/$875.91M; sees Q4 adjusted EPS 74c-80c on revs $940M-$1B vs. est. 78c/$965.65M

· TrueCar (TRUE) Q1 EPS 1c/$81.1M vs. est. 1c/$81.37; sees Q2 revenue $87M-$89M vs. est. $86.97M; sees FY18 revenue $360M-$365M vs. est. $362.11M

· Twilio (TWLO) Q1 adjusted EPS loss (4c)/$129.1M vs. est. loss (7c)/$116.55M; sees Q2 adjusted EPS loss (6c)-(5c) on revs $129M-$131M vs. est. loss (6c)/$123.17M; raises FY18 revenue view to $538M-$544M from $506M-$514M

· Zagg (ZAGG) Q1 EPS 24c/$112.1M vs. est. loss (4c)/$96.63M; said both domestic and international markets posted double digit top-line gains; affirms year EPS and sales

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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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