Morning Preview: July 27, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, July 27, 2018

Stock futures are up slightly, with the Nasdaq Composite moving higher following a record quarterly profit for last night, helping lift the beaten tech sector after weaker Facebook revenue results the night prior sunk the index yesterday. However, AMZN gains are accompanied by weaker results and or guidance from INTC, JNPR, EA, FSLR that are keeping the broader market gains in check. In the busiest a week of corporate quarterly results, fresh developments in global trade relations (between the EU, China and Nafta talks) and a historic stock tumble by Facebook Inc, the possibly most important data point is in a few hours. Today’s highlight remains the second-quarter GDP reading at 8:30 AM EST, which is expected to register a reading of 4.2%. A strong number may give the Trump administration the fuel to claim the late-2017 corporate tax cuts and a number of other stimulative measures enacted have taken effect. A big number is also likely to allow the Fed to remain on its aggressive rate hike trajectory, with a total of four rate hikes this year to hold off inflation.

Stocks closed mixed on Thursday as pressure from Facebook (shares fell -20%) following lower-than-expected quarterly revenue, slowing user growth and weak guidance pressured the Internet space and drove the Nasdaq Composite lower by 1%. Meanwhile, the Dow Industrials managed to rise to its best levels since late February, gaining over 100 points. Treasury yields rallied on Thursday ahead of today’s GDP reading amid expectations of strong number (est. 4.2%) that could put pressure on the Federal Reserve to stay on track with its current pace of rate hikes. The 10-year Treasury note yield rose nearly 4 bps to 2.975%, its highest in about 6-weeks, while the 30-year yield gained over 3 bps to 3.10%. The 2-yr yield moved to its best levels in a decade, rising 3 basis points at 2.686%.

In Asian markets, The Nikkei Index gained 125 points to settle at 22,712, the Shanghai Index dipped -8 points to end at 2,873 and the Hang Seng Index gained 23 points to finish at 28,804. In Europe, the German DAX is up about 50 points at 12,860, while the FTSE 100 is up around 40 points at 7,700. Bitcoin slid after the SEC rejected a proposal for a crypto exchange-traded fund for the second time. The SEC first rejected a plan by Tyler and Cameron Winklevoss, the founders crypto exchange Gemini, to list a bitcoin ETF in March 2017 – shares dropped below $8,000 overnight.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -8.63 points, or 0.30%, to 2,837.44

· The Dow Jones Industrial Average rose 112.97 points, or 0.44%, to 25,527.07

· The Nasdaq Composite slumped -80.05 points, or 1.01%, to 7,852.18

· The Russell 2000 Index advanced 10.16 points, or 0.60% to 1,695.36

Events Calendar for Today

· 8:30 AM EST GDP Annualized QoQ, Q2-A…est. 4.2%

· 8:30 AM EST Personal Consumption for Q2-A…est. 3.0%

· 8:30 AM EST GDP Price Index for Q2-A…est. 2.3%

· 8:30 AM EST Core PCE QoQ, Q2-A…est. 2.2%

· 10:00 AM EST University of Michigan Sentiment, July-F…est. 97.1

· 1:00 PM EST Baker Hughes Weekly Rig Count

Earnings Calendar:


Sector News Breakdown


· Starbucks (SBUX) Q3 EPS 62c/$6.31B vs. est. 61c/$6.25B; Q3 global comp store sales increased 1%, driven by a 3% increase in average ticket; Americas and U.S. comparable store sales increased 1% vs. est. 0.8%; CAP comparable store sales decreased 1%. China comparable store sales decreased 2%; cuts FY18 EPS view to $2.40-$2.42 from $2.48-$2.53 (est. $2.41); now expects full year global comparable store sales growth to be just below the 3-5% targeted range; Q4 expected to be at the lower end of the 3-5% range

· Chipotle (CMG) Q2 adjusted EPS $2.87/$1.27B vs. est. $2.76/$1.26B; Q2 comp restaurant sales increased 3.3% vs. est. 2.7% and restaurant level operating margin was 19.7%, an increase from 18.8%; sees FY18 comparable restaurant sales up in low to mid-single digits

· Decker’s (DECK) Q1 EPS loss (98c)/$250.6M v. est. loss ($1.42)/$226.8M; sees Q2 EPS $1.60-$1.70 vs. est. $1.89 and year EPS $6.25-$6.45 vs. est. $6.32

· Expedia (EXPE) shares rose 9%; Q2 EPS $1.38/$2.88B vs. est. 89c/$2.88B; Q1 room night growth 12% and reports Q2 gross bookings up 13%; raises dividend to 32c; raises adjusted FY18 EBITDA growth view to 7%-12% from 6%-11%

· Fortune Brands (FBHS) Q2 EPS $1.00/$1.4B vs. est. $1.02/$1.44B; raises FY18 EPS ex-items view to $3.62-$3.72 from $3.58-$3.70 (est. $3.64); sees FY18 sales growth 6%-7%

· BJ’s Restaurants (BJRI) Q2 EPS 79c/$287.6M vs. est. 63c/$283.4M; Q2 comparable sales +5.6%, vs. estimate +4.3%

· Boston Beer (SAM) Q2 EPS $1.98/$273.1M vs. est. $2.77/$273.1M; still sees FY18 non-GAAP EPS $6.30-$7.30 below est. $7.86; raises 2018 cap-ex view to $65M-$75M, up from the previous estimate of $55M-$65M

· Boyd Gaming (BYD) Q2 EPS 38c/$616.8M vs. est. 36c/$605.7M; 2Q Las Vegas Local Adjusted EBITDA $70.2M and 2Q Las Vegas Downtown adjusted Ebitda $13.5M; sees FY Adj Ebitda $618M to $633M, vs. prior $600M-$620M

· Columbia Sportswear (COLM) Q2 EPS 16c/$474.1M vs. est. loss (10c)/$445.6M; now sees FY18 EPS $3.37 to $3.47 vs. est. $3.35 and now sees FY18 non-GAAP net sales growth of 7.5%-9.0%

· Del Taco (TACO) Q2 EPS 14c/$117.8M vs. est. 14c/$116.91M; Q2 system-wide comparable restaurant sales grew 3.3%, marking the 19th consecutive quarter of gains; Company-operated comparable restaurant sales grew 2.5%

· SkyWest (SKYW) Q2 EPS $1.43/$805.5M vs. est. $1.22/$801.12M; In pact to place 20 used CRJ700s with American Airlines under a four-year term; in pact to place 20 internally-sourced CRJ200s under a three-year contract with United


· BP Plc (BP) has agreed to acquire a portfolio of unconventional oil and gas assets from BHP Billiton (BHP) for $10.5B. The acquisition will bring BP extensive oil and gas production and resources in the liquids-rich regions of the Permian and Eagle Ford basins in Texas and in the Haynesville gas basin in Texas and Louisiana

· National Oilwell (NOV) Q2 EPS 6c/$2.11B vs. est. 2c/$2.0B

· Covanta (CVA) Q2 EPS loss (1c)/$454M vs. est. loss (10c)/$450.97M

· Cloud Peak (CLD) Q2 EPS loss (39c)/$205.7M vs. est. loss (14c)/$233.66M

· First Solar (FSLR) shares fall 7%; Q2 EPS loss (46c)/$309M vs. est. loss (3c)/$503M; narrows FY18 revenue view to $2.5B-$2.6B vs. est. $2.52B and sees FY18 gross margin 20.5% to 21.5%; sees FY gross margin +20.5% to +21.5% vs. estimate +22.1%

· World Fuel Services (INT) Q2 EPS 47c/$10.15B vs. est. 45c/$9.49B


· Aflac (AFL) Q2 EPS $1.07/$5.59B vs. est. 99c/$5.5B; boosts FY18 adjusted EPS view to $3.90-$4.06 from $3.72-$3.88 vs. est. $3.97; assuming the 2017 weighted-average exchange rate of 112.16 yen to the dollar

· Cincinnati Financial (CINF) Q2 EPS 81c/$1.56B vs. est. 60c/$1.43B; Q2 net premiums written $1.35 billion and 2Q book value per share $48.68

· Discover (DFS) Q2 EPS $1.91/$2.60B vs. est. $1.88/$2.63B; Q2 total loans grew $6.8 billion, or 9%, from the prior year to $84.8 billion; Q2 credit card loans grew $6.0 billion, or 10%, to $67.8B

· Ellie Mae (ELLI) Q2 EPS 54c/$125.0M vs. est. 42c/$1 23.6M; sees Q3 adjusted EPS 52c-57c on revs $127M-$129M vs. est. 54c/$130M

· GAIN Capital (GCAP) Q2 EPS 10c/$84.7M vs. est. 16c/$92.95M

· Hartford Financial (HIG) Q2 core EPS $1.13/$4.79B vs. est. $1.04/$4.7B

· LPL Financial (LPLA) Q2 EPS $1.30/$1.298B vs. est. $1.20/$1.28B

· Principal Financial (PFG) Q2 EPS $1.35 vs. est. $1.37; said assets under management of $666.6B for the quarter, up 6%

· State Street (STT) 13.244M share Spot Secondary priced at $86.93


· Amgen (AMGN) Q2 EPS $3.83/$6.1B vs. est. $3.54/$5.73B; raises FY18 adjusted EPS view to $13.30-$14.00 from $12.80-$13.70 (est. $13.75) and raises rev outlook; 2Q revenue by product: Neulasta $1.1B, Enbrel $1.30B, Prolia $610M, Kyprolis $263M, Aranesp $472M;

· Achaogen (AKAO) strategic update and corporate restructuring to focus resources on the successful commercialization of Zemdritm in the U.S., the Marketing Authorization Application filing for Zemdri in the European Union, and continued development of the C-Scape program; restructuring will result in the elimination of approximately 80 positions, or approximately 28%

· Community Health (CYH) Q2 EPS ex-items (1c)/$3.562B vs. est. loss(43c)/$3.52B; sees FY18 EPS ($1.85)-($1.70) on revs $13.9B-$14.2B vs. est. loss ($1.26)/$13.73B

· Edwards Lifesciences (EW) Q2 EPS $1.24/$944M vs. est. $1.14/$969.26M; raises FY18 adjusted EPS to $4.60-$4.75 from $4.50-$4.70 (est. $4.63); sees Q3 adjusted EPS 93c-$1.03 on revs $900M-$950M vs. est. $1.08/$933.98M

· eHealth (EHTH) Q2 EPS loss (40c)/$32.7M vs. est. loss (37c)/$34.6M; Q2 adjusted EBITDA was ($10.1) million; backs FY18 EPS view 69c-95c on revs $217.5M-$227.5M vs. est. 83c/$222.87M; backs Adjusted EBITDA in the range of $21.9M-$26.9M

· Mettler-Toledo (MTD) Q2 EPS $4.65/$722M vs. est. $4.58/$713.99M; sees FY18 adjusted EPS $20.10-$20.25 vs. est. $20.20; sees FY18 local currency revenue growth 6%

· MiMedx Group Inc. (MDXG) said Thursday that the Nasdaq Stock Market has notified the company that it faces a possible delisting of its shares.

· NewLink Genetics (NLNK) files $250M mixed securities shelf

· Nabriva Therapeutics (NBRV) 18.182M share Secondary priced at $2.75

Industrials & Materials

· Eastman Chemical (EMN) Q2 EPS $2.22/$2.62B vs. est. $2.20/$2.59B; sees FY EPS +10% to +14%

· Fortive (FTV) Q2 EPS 91c/$1.86B vs. est. 89c/$1.83B; sees FY18 adjusted EPS $3.42-$3.50 vs. prior view $3.40-$3.50 vs. est. $3.47; sees Q3 adjusted EPS 83c-87c vs. est. 90c

· Republic Services (RSG) Q2 EPS 73c/$2.52B vs. est. 75c/$2.53B

Technology, Media & Telecom

· (AMZN) shares rise 4%; Q2 EPS $5.07/$52.9B vs. est. $2.50/$53.27B; sees Q3 revenue $54.0B-$57.5B vs. est. $58.02B; said revenue guidance anticipates an unfavorable impact of approximately 30 bps from FX; Q3 operating income is expected to be between $1.4B-$2.4B, compared with $347M in third quarter 2017; 2Q operating income $2.98B vs. est. $1.71B; Q2 AWS net sales $6.11 billion and 2Q Amazon Web Services net sales +49%

· Intel Inc. (INTC) shares fall -6%; Q2 EPS $1.04/$17.08B vs. est. $96c/$16.79B; Q2 margins 63%; sees year revs $69.5B +/- $1B, vs. est. $68.4B and sees year adj. eps $4.15 +/- 5%, vs. est. $4.02

· Electronic Arts (EA) Q1 adjusted EPS 15c/$749M vs. est. 6c/$742.42M; sees FY adj. EPS about $4.85 on revs $5.55B vs. est. $5.00/$5.6B; sees 2Q EPS about 55c /$1.16B vs. est. 70c/$1.23B; sees FY19 EPS approximately $3.55/$5.6B vs. est. $5.02/$5.6B

· Lam Research (LRCX) Q4 EPS 5.31/$3.13B vs. est. $4.94/$3.06B; 4Q shipments $3.03 billion and 4Q adjusted gross margin +48%; sees 1Q EPS $3.20 plus or minus 20c/$2.3B plus minus $150Mvs. est. $3.88/$2.76B

· Maxim Integrated (MXIM) Q4 EPS 73c/$633M vs. est. 70c/$630.37M; raises dividend to 46c from 42c; sees Q1 EPS 72c-78c on revs $615M-$655M vs. est. 69c/$626.3M

· Cypress Semiconductor (CY) Q2 EPS 33c/$624.09M vs. est. 29c/$618.53M; sees Q3 EPS 36c-40c on revs $685M vs. est. 34c/$656.6M

· Flex (FLEX) Q1 EPS 24c/$6.42B vs. est. 24c/$6.5B; sees Q2 adjusted EPS 26c-30c on revs $6.6M-$7.0M vs. est. 28c/$6.86B

· Imperva (IMPV) Q2 EPS loss (26c)/$84.8M vs. est. loss (33c)/$87.2M; Q2 billings in the quarter was $103.1M, a year-over-year increase of 24%; booked 201 deals with a value over $100,000, an increase of 18% YoY; agrees to acquire Prevoty in deal valued at $140M

· Juniper (JNPR) Q2 EPS 48c/$1.2B vs. est. 44c/$1.18B; sees Q3 EPS approximately 44c, plus or minus 3c vs. est. 51c; sees Q3 revenue about $1.17B, plus or minus $30M vs. est. $1.22B

· Lattice Semiconductor (LSCC) Q2 EPS 10c/$102.72M vs. est. 5c/$100.04M; 2Q adjusted gross margin +57.2% and sees Q3 revs to be between approximately $100M-$103M vs. est. $103.8M

· Live Nation (LYV) Q2 EPS 24c/$2.9B vs. est. 19c/$2.85B; 2Q adjusted operating income $260.3M; says 2018 is on track for the company to deliver double-digit operating income and AOI growth along with strong gains in revenue, operating cash flow and free cash flow

· LogMeIn (LOGM) shares fall -18%; Q2 EPS $1.32/$305.7M vs. est. $1.25/$305.05M; sees Q3 EPS $1.33-$1.35 on revs $302M-$304M vs. est. $1.37/$311.98M

· MicroStrategy (MSTR) Q2 EPS 42c/$120.6M vs. est. 53c/$122.06M

· NCR Corp. (NCR) shares fall -8%; Q2 EPS 65c/$1.54B vs. est. 63c/$1.59B; lowers FY18 EPS view to $2.55-$2.75 from $3.30-$3.45 (est. $3.31) saying the execution challenges surrounding product introductions, including supply chain constraints, is negatively impacting our revenue and costs versus our previous expectations; announces new organizational structure, new executives; adds $200M to share repurchase authorization

· Omnicell (OMCL) Q2 EPS 46c/$189M vs. est. 39c/$188.77M; sees Q3 non-GAAP EPS 52c-57c on revs $200M-$206M vs. est. 56c/$202.68M

· Power Integrations (POWI) Q2 EPS 74c/$109.5M vs. est. 69c/$109.33M; sees Q3 revenue $114M, plus or minus $3M vs. est. $117.9M and sees Q3 gross margins to be similar to Q2 level

· Proofpoint (PFPT) Q2 EPS 26c/$171.9M vs. est. 17c/$169.46M; Q2 total billings rose 35% to $197.9M; sees Q3 EPS 25c-29c on revs $180M-$182M vs. est. 26c/$179.98M

· VeriSign (VRSN) Q2 EPS $1.18/$302.5M vs. est. $1.14/$302.61M; 2Q new domain name registrations processed 9.6 million

· Western Digital (WDC) Q4 EPS $3.61/$5.12B vs. est. $3.51/$5.06B; authorizes new $5B share buyback program; raises long term gross margin view to 35%-40% from 33%-38%; sees Q1 EPS $3.00-$3.10 on revs $5.1B-$5.2B vs. est. $3.57/$5.4B

· WWE (WWE) to replace Quality Care Properties in S&P 400 at open on 8/1


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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