Morning Preview: June 7, 2018

Scott GreenDaily Market Report

Early Look

Thursday, June 7, 18

U.S. stocks futures are mixed, with the Dow pointing to a higher open, though the S&P is flat and the Nasdaq down slightly while the dollar slides. Stocks look to extend recent gains after the Dow Jones Industrial Average ended more than 300 points higher Wednesday and recorded its best daily gain since mid-April amid a rally in financials and the continued gains in internet and technology shares. The Nasdaq Composite Index posted its third straight all-time closing peak and its fourth consecutive advance, while the Russell 2000 Small Cap index also record another all-time record close. Treasury yields are rising again this morning, with the benchmark 10-year yield up 2 bps to 2.99%, extending yesterday’s gains that saw rates go from 2.91% to 2.97% on rising rate hike expectations. Geopolitical concerns remain however amid Brexit negotiations and the upcoming G7 summit that will focus on trade. The euro climbed to a three-week peak against the dollar on Thursday, as the dollar index slipped for a 3rd-straight session after signals from ECB policy makers that the Central Bank is ready to focus on winding down its massive stimulus program. In Asian markets, The Nikkei Index gained 197 points to settle at 22,823, the Shanghai Index lost 5 points to close at 3,109 and the Hang Seng Index jumped 253 points to settle at 31,512. In Europe, the German DAX is up a few points at 12,840, while the FTSE 100 is down a few points around 7,700.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 23.55 points, or 0.86%, to 2,772.35

· The Dow Jones Industrial Average rose 346.41 points, or 1.40%, to 25,146.39

· The Nasdaq Composite gained 51.38 points, or 0.67%, to 7,689.24

· The Russell 2000 Index advanced 11.32 points, or 0.68% to 1,675.95

Events Calendar for Today

· 8:30 AM EST Weekly Jobless Claims…est. 221K

· 8:30 AM EST Continuing Claims…est. 1.738M

· 9:45 AM EST Bloomberg Consumer Comfort Index…prior 55.2

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

· 12:00 PM EST Change in Household Net Worth

· 3:00 PM EST Consumer Credit for April…est. $14.0B

Earnings Calendar:

· Earnings Before the Open: CPST, FCEL, FGP, HLNE, MTN, SJM

· Earnings After the Close: AVGO, CBLK, HOME, HOV, ZUMZ

Other Key Events:

· Bank of America Global Tech Conference, 6/5-6/7, in San Francisco, CA

· Baird Global Consumer, Technology and Services Conference, 6/5-6/7, in NY

· REITWeek 2018, 6/5-6/7, in New York

· Jefferies Global Healthcare Conference, 6/5-6/8, in NY

· Deutsche Bank Industrials Conference, 6/6-6/7, in Chicago

World News

· President Donald Trump, heading into this weekend’s meeting of the Group of Seven industrialized nations, has signaled his intention to continue pursuing an aggressive trade agenda even if it comes at the expense of the country’s standing in the world – WSJ

· German manufacturing orders dropped sharply and unexpected in April, as total manufacturing orders fell by -2.5% compared with March, which marks the fourth straight monthly decline (estimates were for a 0.6% gain).

· China’s foreign-exchange reserves in May dropped for a second straight month, falling $14.23 billion from the previous month to $3.111 trillion, after dropping $17.97 billion in April.

Sector News Breakdown

Consumer

· Five Below (FIVE) shares rose 15%; Q1 EPS 39c/$296.3M vs. est. 32c/$290.7M; Q1 comp sales 3.2% vs. est. 3.6%; sees 2Q EPS 36c-38c on sales $332M-$335M vs. est. 33c/$322.7M; sees FY EPS $2.42-$2.48 and sales $1.50B-$1.52B

· Thor Industries (THO) Q3 EPS $2.53/$2.25B vs. est. $1.58/$2.24B

· United Natural Foods (UNFI) Q3 adjusted EPS $1.04/$2.65B vs. est. 93c/$2.58B; raises FY18 adj EPS view to $3.18-$3.23 from $3.06-$3.14 (est. $3.10) and raises FY18 revenue view to $10.23B-$10.28B from $10.01B-$10.16B (est. $10.1B)

· S&P SmallCap 600 constituent Ollie’s Bargain Outlet (OLLI) will replace Orbital ATK (OA) in the S&P MidCap 400 effective prior to the open of trading on Monday, June 11

Energy

· Entergy Corporation (ETR) announced today the commencement of a registered underwritten offering of $1 billion of shares of its common stock

Financials

· Equifax (EFX) shares rose 6% on Wednesday and earlier touched $125.63, a four-month high, as its CEO and CFO meet with some investors in Boston yesterday

· Goosehead Insurance (GHDS) Q1 pro forma EPS 8c on revs $14.6M vs. est. 8c/$14.18M; total written premium for Q1 grew 43% to $100.9M from $70.7M in the prior-year period; total adjusted EBITDA rose 74% for Q1 to $5.1M

· First Internet Bancorp (INBK) files to sell $50M in common stock

· Berkshire Hills Bancorp (BHLB) will replace Ollie’s Bargain Outlet Holdings in the S&P SmallCap 600 effective prior to the open of trading on Monday, June 11

Healthcare

· Fortive Corp. (FTV) said it made a binding $2.7B cash offer to Johnson & Johnson (JNJ) to acquire its Advanced Sterilization Products business. Fortive said that the sterilization business generated sales of $775M

· Proteostasis Therapeutics (PTI) reports positive results from ongoing 14-day dosing study of PTI-801 in CF patients on background Orkambi therapy; company believes the results support the goal of studying PTI-801 as part of their proprietary double and triple combination therapy regimens; results show statistically significant improvement in sweat chloride, body mass index, weight and blood glucose

· Optinose (OPTN) 5M share Secondary priced at $22.25

· Zymeworks (ZYME) files to sell $85M in common stock

Industrials & Materials

· ABM Industries (ABM) Q2 EPS 47c/$1.58B vs. est. 43c/$1.55B; sees FY18 EPS $1.85 $1.95 vs. est. $1.94; is updating its outlook for fiscal 2018 to reflect higher than expected wage inflation and personnel costs driven by the current labor environment

· Greif (GEF) Q2 EPS 76c/$$968.3M vs. est. 85c/$972.8M; Q2 adjusted Ebitda $123.3M; raises FY18 EPS view to $3.45-$3.70 from $3.25-$3.55 (est. $3.44) and raises FY18 CapEx view to $120M-$140M from $100M-$120M

· Daimler (DDAIF) unveiled a new all-electric big rig truck, the 18-wheeler Freightliner eCascadia, which has a 250-mile range and is targeted to be in production in 2021 as well as a medium-duty Freightliner eM2 106, which has a range of up to 230 miles – Reuters

· REV Group (REVG) shares fell -18%; Q2 EPS 24c/$608.9M vs. est. 35c/$630.9M; sees FY18 revenue $2.4B-$2.6B vs. est. $2.56B and sees FY18 adjusted EBITDA of $175M-$185M, FY18 net income of $72M-$87M

Technology, Media & Telecom

· Cloudera (CLDR) Q1 EPS loss (17)/$102.7M vs. est. loss (18c)/$101.52M; sees Q2 adjusted EPS loss (15c)-(13c) on revs $107M-$108M vs. est. loss (15c)/$107.16M; sees Q2 subscription revenue in the range of $90M-$91M, representing approximately 22% YoY growth

· Comtech (CMTL) Q3 EPS 34c/$147.9M vs. est. 12c/$145.37M; sees Q4 EPS 24c-30c on revs roughly 15% higher than Q3 vs. est. 45c/$176.56M; raises FY18 EPS view to $1.17-$1.23 from $1.08-$1.23 (est. $1.16) while backs FY18 revenue view of $570M-$585M (est. $577.24M)

· Google (GOOGL) faces fines for hindering competition with its Android mobile phone system as European Union antitrust watchdogs get ready to add to last year’s record 2.4 billion-euro ($2.8 billion) penalty against the U.S. tech giant – Bloomberg

· MongoDB (MDB) Q1 EPS loss (43c)/$48.2M vs. est. loss (43c)/$46.41M; sees Q2 non-GAP EPS loss (46c)-(46c) on revs $51M-$52M vs. est. loss (46c)/$50.12M; sees FY18 non-GAAP EPS loss ($1.66)-$1.62) on revs $217M-$220M vs. est. loss ($1.63)/$214.28M

· Okta (OKTA) Q1 EPS adjusted EPS loss (9c)/$83.6M vs. est. loss (16c)/$78.84M; Okta sees FY19 adjusted EPS loss (58c)-(54c) on revs $353M-$357M vs. est. loss (64c)/$347.06M; announces continued expansion of U.S., European operations

· Zscaler (ZS) shares rose 10%; Q3 EPS loss (2c)/$49.2M vs. est. loss (8c)/$45.97M; sees Q4 EPS loss (6c)-(5c) on revs $50M-$51M vs. est. loss (10c)/$48.28M; sees FY18 EPS (18c)-(17c) on revs $184M-$185M vs. est. loss (29c)/$179.11M

· Vishay (VSH) plans to offer $525M in convertible senior notes due 2025

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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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