Morning Preview: August 1, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, August 1, 2018

U.S. stock futures are mixed, with markets attention likely to focus on the FOMC, as it concludes its 2-day policy meeting and is expected to release the details of its meeting at 2:00 PM EST. No expected changes to rates or policy are expected at the meeting but is likely to signal that more interest-rate hikes are in the pipeline. Concerns about a possible U.S.-China trade war was revived after a report late Tuesday that some advisers are urging President Donald Trump to hike planned tariffs on $200 billion in Chinese imports to 25%, from the 10% originally proposed. The development came after a Bloomberg News report that U.S. and Chinese officials are in private talks on how to restart negotiations aimed at averting a full-blown trade war between the world’s largest economies. Outside of trade and central banks, earnings remain in full force, with Dow component and technology giant Apple trading higher by 3% after its results and guidance topped views last night, a sigh of relief for the tech sector that has seen names like Facebook, Netflix and Twitter disappoint the last 2-weeks.

Stocks closed moderately higher Tuesday, lifted by gains for industrial stocks on hopes for progress on U.S.-China trade talks, while major U.S. averages booked solid monthly gains. For July, the S&P 500 posted a gain of around 3.6%, while the Nasdaq advanced 2.2% and the Dow rose 4.7%. In Asian markets, The Nikkei Index gained 192 points to settle at 22,746, the Shanghai Index declined -51 points to close at 2,824 and the Hang Seng Index fell -242 points to settle at 28,340. In Europe, the German DAX is down around -45 points at 12,760, while the FTSE 100 is down around -80 points at 7,660.

Market Closing Prices Yesterday

· The S&P 500 Index climbed 13.69 points, or 0.49%, to 2,816.29

· The Dow Jones Industrial Average rose 108.36 points, or 0.43%, to 25,415.19

· The Nasdaq Composite jumped 41.78 points, or 0.55%, to 7,671.79

· The Russell 2000 Index advanced 17.67 points, or 1.07% to 1,670.80

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:15 AM EST ADP Employment Change in July…est. 186K

· 9:45 AM EST Markit US Manufacturing PMI…est. 55.5

· 10:00 AM EST Construction Spending MoM for June…est. 0.3%

· 10:00 AM EST ISM Manufacturing for July…est. 59.3

· 10:30 AM EST Weekly DOE Inventory Data

· 2:00 PM EST FOMC Rate Decision

· N/A Monthly auto sales data for July

Earnings Calendar:

· Earnings Before the Open: ADP, AMC, AN, BAESY, BDC, BNP, CG, DBD, ENR, FLOW, GRMN, H, HUM, LYG, MT, PBI, RDC, S, SODA, SSYS, TAP, TEX, VG, VW

· Earnings After the Close: ALL, APTI, ARRS, CBL, CENX, CF, CLVS, CONE, CRUS, CSGS, DVA, DXCM, FEYE, FIT, FTNT, HLF, HUBG, HUBS, LNC, LPSN, MAC, MET, MRO, MUSA, PRU, SQ, TDOC, THG, TRIP, TSLA, TTMI, VOYA, WMB, WYNN, X, XPO, YUMC, ZNGA

Sector News Breakdown

Consumer

· Big 5 Sporting (BGFV) Q2 EPS loss (1c)/$240M vs. est. 11c/$247.02; Q2 comp sales decreased 2.1% for Q2, compared to a 0.9% increase in same store sales for Q2 2017; said 2Q same-store sales slid 2.1% amid weak sales of camping and water sports products

· Cheesecake Factory (CAKE) shares fell -8%; Q2 EPS 65c/$593.2M vs. est. 81c/$592.2M; Q2 comparable restaurant sales at The Cheesecake Factory restaurants increased 1.4% vs. est. 1.2%; boosts quarterly dividend by 14% to 33c; cuts FY18 EPS view to $2.40-$2.48 from $2.62-$2.74 and raises FY18 comparable sales view to up 1.5%-2% from up 1%-2%

· Container Store (TCS) Q1 EPS loss (8c)/$195.8M vs. est. loss (13c)/$190.61M; Q1 comp sales rose 4.7%; raises FY18 EPS view to 38c-48c from 35c-45c and raises FY18 revenue view to $890M-$900M from $880M-$890M vs. est. $882.48M

· Hyatt (H) Q2 EPS 72c vs. est. 48c; 2Q comparable hotel RevPAR +4%, 2Q comparable U.S. hotel RevPAR +3.4%, 2Q comparable owned, leased hotels RevPAR +4.1%; sees FY RevPAR +3% to +4% and sees FY capital expenditure $375M; narrows FY18 net income view to $508M-$550M from $495M-$553M

· Scotts Miracle-Gro (SMG) Q3 EPS $2.67/$994.6Mvs. est. $2.58/$1B; Sees FY adjusted EPS $3.70 to $3.90 vs. estimate $3.80 and sees FY net sales change 0% to +2%

· Zagg (ZAGG) Q2 EPS of 11c/$118.6M vs. est. $116.8M; reiterated forecast for 2018 sales and EPS even after lowering estimated tax rate to 25% from 27%; separately announced purchase of Braven Audio from Incipio Group; terms weren’t disclosed; sees FY18 gross profit margin as a percentage of net sales in the low to mid 30’s range

Energy

· The American Petroleum Institute (API) reported U.S. crude supplies rose by 5.6M barrels for the week ended July 27, showed supplies of gasoline fell by 791,000 barrels, while distillate stockpiles added 2.9M barrels

· Anadarko (APC) Q2 EPS 54c vs. est. 58c; sees 3Q sales volume 60 to 65 MMBoe and sees FY sales volume 240 to 250 MMBoe; Q2 sales vol. 637,000 mboe/d

· Devon Energy (DVN) Q2 core EPS ex-items 34c/$2.25B vs. est. 36c/$3.69B; total companywide production averaged 541,000 Boe per day in Q2

· FirstEnergy (FE) Q2 adjusted EPS 62c/$2.7B vs. est. 53c/$2.57B; sees Q3 adjusted EPS 65c-75c, vs. consensus 79c and raises FY18 EPS view

· Hi-Crush Partners (HCLP) Q2 EPS 67c/$248.5M vs. est. 76c/$245.48M; sees 3q total sales volumes to increase to a range of 3.0 to 3.2 million tons

· Eversource (ES) Q2 EPS 76c/$1.85B vs. est. 75c/$1.82B

· MDU Resources (MDU) Q2 EPS 22c/$1.06B vs. est. 26c/$1.12B; reaffirms guidance

· Newfield Exploration (NFX) Q2 EPS 94c vs. est. 83c; sees 3Q production 185,000 to 195,000 mboe/d; sees FY capital expenditure $1.35 billion; Q2 production 195,300 boe/d; raises 2018 expectations for total production and capital investments

· Viper (VNOM) announced that production for the second quarter of 2018 was 16.3 Mboe/d, an increase of approximately 16% from its Q1 2018 average daily production of 14.1 Mboe/d; files to sell 9M shares of common stock

· Whiting Petroleum (WLL) Q2 EPS 62c vs. est. 65c; sees FY capital expenditure $750.0 million and sees FY production 47.0 to 47.7 MMBoe; 2Q production 126.18 mboe/d; raises FY18 production view to 47-47.7 MMBOE

Financials

· Arch Capital (ACGL) Q2 EPS 59c vs. est. 53c; 2Q book value per share $20.68; 2Q net premiums written $1.30 billion and 2Q net premiums earned $1.34 billion

· AGNC Investment (AGNC) files to sell 38M shares of common stock

· Credit Acceptance (CACC) Q2 EPS $6.95/$315.4M vs. est. $6.52/$302.82M

· Fiserv (FISV) Q2 adjusted EPS 75c/$1.42B vs. est. 74c/$1.41B; backs FY18 adjusted EPS view of $3.02-$3.15 and backs FY18 internal revenue growth view of at least 4.5%,

· Regional Management (RM) Q2 adjusted EPS 70c/$72.4M vs. est. 67c/$73.49M; Q2 provision for credit losses was $20.2 million, an increase of 8.7% from the prior-year period, while total finance receivables increased 16.6%

· Western Union Company (WU) is strengthening its presence across the US, after signing a deal with Albertsons Companies, one of the largest food and drug retailers in the country

· XL Group (XL) Q2 operating EPS 84c vs. est. 90c; 2Q net premiums written $2.82 billion, 2Q net investment income $231.8 million, 2Q property & casualty combined ratio 95.8%, 2Q Reinsurance gross premiums written +10.6%

· Blackstone Mortgage (BXMT) files to sell 6M shares of common stock

· Triumph Bancorp (TBK) to replace Abaxis (ABAX) in S&P 600 at open on 8/6

· Genworth (GNW) Q2 adjusted EPS 40c/$2.16B vs. est. 26c/$2.14B

Healthcare

· Amedisys (AMED) Q2 EPS 98c/$411.6M vs. est. 78c/$403.62M; sees FY18 diluted EPS $3.32-$3.41 on revs $1.63B-$1.65B vs. est. $3.11/$1.63B

· Hologic (HOLX) Q3 EPS 58c/$824.0M vs. est. 56c/$800.44M; sees FY18 non-GAAP EPS $2.24-$2.26 on revs $3.20M5-$3.220M vs. est. $2.23/$3.2B

· Molina (MOH) Q2 EPS $3.08/$4.88B vs. est. $1.08/$4.67B; raises FY18 EPS view

· NewLink Genetics (NLNK) Q2 EPS loss (47c)/$2.25M vs. est. loss (6c)/$5.01M; has completed an organizational realignment that will support these clinical development efforts within its current financial capacity, substantially cut future expenses, and extend its cash runway into the second half of 2021

· NuVasive (NUVA) Q2 EPS 58c/$281.6M vs. est. 58c/$276.26M

· Qiagen (QGEN) Q2 EPS 33c/$377.2M vs. est. 32c/$375.64M; reaffirms FY18 outlook for net sales growth

· Quality Systems (QSII) Q1 EPS 19c/$133.2M vs. est. 18c/$132.63M; reaffirms FY19 EPS outlook 70c-78c and reaffirms FY19 revenue outlook $532M-$548M vs. est. 74c/$540.55M

· TherapeuticsMD (TXMD) enters exclusive license agreement with Population Council to commercialize one-year vaginal contraceptive system in the U.S. New Drug Application for the system is under review by FDA, with target date for review completion of Aug. 17, 2018

· Acer Therapeutics (ACER) files to sell $40M in common stock

Industrials & Materials

· C.H. Robinson (CHRW) Q2 EPS $1.13/$4.3B vs. est. $1.06/$4.18B

· Matson (MATX) Q2 EPS 76c/$557.1M vs. est. 67c/$523.78M

· McDermott (MDR) Q2 EPS 29c/$1.735B vs. est. 22c/$1.95B

· Mercy Systems (MRCY) announced the acquisition of Germane Systems for $45M

· Olin (OLN) Q2 EPS 35c/$1.73B vs. est. 40c/$1.73B; said increasing our 2018 adjusted EBITDA forecast to $1.3 billion with upside vs. est. $1.26B

· Rio Tinto (RIO) Q2 profit rose of $4.42 billion, falling short of a consensus estimate of $4.6 billion for the first half; said plans to raise its dividend and buy back a further $1 billion in stock, as its net profit climbed 33%

· Terex (TEX) Q2 EPS 98c/$1.4B vs. est. 92c/$1.4B; tightens FY18 EPS view to $2.80-$3.00 from $2.70-$3.00 (est. $2.90)

· Volkswagen (VLKAY) warned that full-year operating return on sales of group and passenger cars will fall moderately short of an expected range, after special items

Technology, Media & Telecom

· Apple (AAPL) shares rose 3%; Q3 EPS $2.34/$53.3B vs. est. $2.18/$52.34B; sees Q4 revenue $60B-$62B above consensus $59.57B; sees Q4 gross margin between 38%-38.5% and operating expenses between $7.95B-$8.05B; Q3 segment breakdown: 3 iPhone units sold 41.3M vs. estimate 41.6M; iPad units 11.55M vs. 11.42M YoY; reports Mac units 3.72M vs. 4.29M last year

· Synaptics Inc. (SYNA) shares plunged after the company’s merger talks with Dialog Semiconductor PLC fell apart. Synaptics stock was down 13.6% at the end of the extended session, after reports that Dialog had called off talks to acquire Synaptics. Synaptics confirmed the end of discussions in a press release later Tuesday evening

· Akamai (AKAM) shares fell -5%; Q2 EPS 83c/$663M vs. est. 80c/$661.98M; 2Q cloud security revenue $155.3M, 2Q Web Division revenue was $351M and 2Q Cloud Security Solutions revenue was $155M; raises FY18 adjusted EPS view to $3.26-$3.38 from $3.20-$3.30 and narrows FY18 revenue view to $2.68B-$2.705B from $2.675B-$2.705B, consensus $2.7B

· Amdocs (DOX) Q3 EPS $1.03/$1B vs. est. $1.03/$1.01B; sees FY18 EPS growth 5%-7% YoY; announces collaboration with Amazon Web Services; wins Verizon managed services deal for on-demand content

· Coherent (COHR) Q2 EPS $3.51/$482.3M vs. est. $3.54/$490.4M

· Macom (MTSI) Q2 EPS 13c/$144.9M vs. est. 13c/$146.36M

· Mindbody (MB) Q2 EPS loss (6c)/$61.6M vs. est. loss (8c)/$60.51M; sees Q3 revenue $63M-$65M vs. est. $65.41M and year revs $246M-$250M vs. est. $249.23M

· Nanometrics (NANO) Q2 EPS 71c/$88.6M vs. est. 66c/$86.53M; sees Q3 EPS 36c-52c vs. est. 44c; sees Q3 revs $70M-$78M and gross margin is expected to be approximately 57%, plus or minus 1%, on both a GAAP and non-GAAP basis

· Pandora (P) Q2 EPS loss (15c)/$384.8M vs. est. loss (16c)/$372.78M; 2Q total listener hours 5.09 billion, 2Q active listeners 71.4 million, 2Q total subscriptions 6 million; sees Q3 revenue $390M-$405M vs. est. $394.57M; sees Q3 adjusted EBITDA ($25M)-($10M), includes significant increase in marketing expense of at least $10M relative to last year

· Paycom (PAYC) Q2 EPS 59c/$128.8M vs. est. 48c/$124.35M; sees Q3 revenue $129M-$131M vs. est. $127.43M; sees Q3 adjusted EBITDA $45.5M-$47.5M

· Qualys (QLYS) Q2 EPS 39c/$68.2M vs. est. 34c/$67.06M; raises FY18 non-GAAP EPS view to $1.46-$1.50 from $1.43-$1.48 and raises FY18 revenue $278.0M-$279.2M from $276.8M-$278.5M; sees FY18 growth over the FY17 20%-21%; and GAAP EPS 84c-88c

· Rogers Corporation (ROG) Q2 EPS $1.19/$214.7M vs. est. $1.32/$214.33M; sees Q3 adjusted EPS $1.25-$1.40 on revs $220M-$230M vs. est. $1.47/$220.1M

· Unisys (UIS) Q2 EPS 39c/$667.4M vs. est. 18c/$657M; reaffirms year guidance

· SendGrid (SEND) Q2 EPS 5c/$35.7M vs. est. 1c/$34.32M; sees Q3 revenue $35.9M-$36.1M vs est. $35.36M and sees Q3 adjusted net income $1.25M-$1.75M

· Ultimate Software (ULTI) Q2 EPS $1.32/$271.2M vs. est. $1.28/$268.6M; sees Q3 revenue $286M-$288M vs. est. $278.38M; sees FY18 revenue growth roughly 21%

· Verisk Analytics (VRSK) Q2 EPS $1.06/$601M vs. est. $1.00/$588.15M; Q2 net income grew 26.9%; organic constant currency adjusted EBITDA growth was 8.9%

· Zendesk (ZEN) Q2 EPS 3c/$141.9M vs. est. 0c/$137.49M; sees Q3 revenue $150M-$152M vs. consensus $146.31M; sees FY18 revenue $582M-$586M vs. est. $571.28M; sees FY18 free cash flow $28M-$32M

 

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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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