Morning Preview: August 08, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, August 8, 2018

Stock futures are little changed as major averages look to build on their recent winning streak. Global markets mixed overnight amid renewed trade concerns after the Trump administration confirmed it will impose 25% tariffs on $16 billion in Chinese imports, starting on Aug. 23, the office of the U.S. Trade Representative said. The administration already placed tariffs on $34 billion of Chinese goods last month but delayed on the additional tariffs to hear from U.S. companies. Oil prices ticked marginally higher Wednesday, trying for a third gain in four days, ahead of weekly U.S. data later this morning (and after private data last night reported a weekly drawdown in inventories). The UK pound took a fresh fall on Wednesday, falling to the lowest level in almost a year against the dollar amid persistent worries over Brexit, dropping under the $1.29 level.

Stocks pushed higher again on Tuesday, as the Nasdaq Composite made it a 6th straight day of gains while the benchmark S&P 500 index made it a 4th straight day win streak as markets attention remains on the stellar corporate earnings season and away from worries over U.S. trade relations with international counterparts. The top stocks story yesterday was Tesla (TSLA) after CEO Elon Musk suggested that the electric-car maker was considering taking the company private. He later made public a letter that indicated that no deal had been secured. However, shares of the company finished the day up 11%, after spending much of Tuesday afternoon halted. S&P indexes tracking small- and mid-cap stocks closed at or near record closes, as the S&P Mid Cap 400 Index and the S&P Small Cap 600 rose.


In Asian markets, The Nikkei Index slipped-18 points to settle at 22,644, the Shanghai Index dropped -35 points to settle at 2,744 (after prices jumped over 2% the day prior off yearly lows), the Hang Seng Index rose 110 points to finish at 28,359. In Europe, the German DAX is down around -20 points at 12,630, while the FTSE 100 is up around 50 points at 7,765.

Market Closing Prices Yesterday

· The S&P 500 Index gained 8.05 points, or 0.28%, to 2,858.45

· The Dow Jones Industrial Average rose 126.73 points, or 0.50%, to 25,628.91

· The Nasdaq Composite climbed 23.99 points, or 0.31%, to 7,883.66

· The Russell 2000 Index advanced 3.99 points, or 0.24% to 1,688.30

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:45 AM EST Fed’s Barkin speaks in Virginia

· 10:30 AM EST Weekly DOE Inventory Data

Earnings Calendar:

· Earnings Before the Open: CARS, CHH, CVS, EXTR, FWON, GOGO, KDP, KORS, LBRDA, LITE, MYL, SBGI, SINA, TRI, VSI

· Earnings After the Close: ADT, AVT, CTL, DNB, ELF, EQIX, FOX, IAC, LBTYA, MNST, MUR, NTES, NUAN, ROKU, TIVO, YELP.

Other Key Events:

· Jefferies 2018 Global Industrials Conference, 8/7-8/9 in New York

· Oppenheimer 21st Annual Technology, Internet and Communications Conference in Boston

· UBS Financial Services Conference, 8/7-8/8, in Chicago

· Canaccord 38th Annual Growth Conference, 8/8-8/9, in Boston

· JPMorgan Auto Conference, 8/8-8/9, in New York

· China monthly import/export data for July

World News

· China’s trade surplus narrowed sharply last month, with imports surging as trade tensions with the U.S. escalated. China reported a trade surplus of $28.05 billion in July, compared with a surplus of $41.61 billion a month earlier

· Bitcoin: The Securities and Exchange Commission late Tuesday delayed a decision on an application for the first bitcoin-related exchange-traded-fund. The regulator said it planned on deciding on the proposed ETF from VanEck and SolidX on Sept. 30.

Sector News Breakdown

Consumer

· Michael Kors (KORS) Q1 adjusted EPS $1.32/$1.2B vs. est. 95c/$1.14B; raises FY19 adjusted EPS view to $4.90-$5.00 from $4.65-$4.75 (est. $4.77); reports Q1 flat comparable store sales for Michael Kors

· Wolverine World Wide (WWW) Q2 EPS 54c/$566.9M vs. est. 46c/$568.79M; Q2 gross margin 41.3%, as compared to 37.9% in the prior year

· Southwest Airlines (LUV) July traffic rose 2.1% y/y, capacity rose 3.2% y/y; load factor 86.3% vs 87.3% y/y

· Beacon Roofing (BECN) Q3 EPS $1.18/$1.93B vs. est. $1.31/$2.07B; Q2 gross margins expanded by 100 bps to 25.5%, as margins were favorably impacted by positive price-cost realization

· Boot Barn (BOOT) Q1 EPS 15c/$162.0M vs. est. 12c/$159.27M; Q1 Same store sales increased 11.6%; raises FY19 EPS view to $1.04-$1.14 from 92c-$1.02 (est. $1.04)

· Camping World (CWH) Q2 EPS 96c/$1.445B vs. est. $1.06/$1.48B

· Inter Parfums (IPAR) Q2 EPS 35c/$149.4M vs. est. 27c/$145.21M; backs FY18 EPS view at $1.59 and backs FY18 revenue $665M

· International Flavors (IFF) Q2 EPS $1.66/$920.0M vs. est. $1.56/$908.73M; sees FY18 adjusted EPS up 5.5%-7.5% and sees FY18 revenue up 5.0%-7.0%

· Fossil (FOSL) Q2 EPS loss (16c)/$577M vs. est. loss (57c)/$561.85M; sees Q3 net sales in the range of (16%)-(10%)

· Papa John’s (PZZA) shares -13%; Q2 adjusted EPS 49c/$407.96M vs. est. 54c/$425.5M; Q2 System-wide North America comparable sales decrease of 6.1%; Q2 International comparable sales decrease of 0.8%; total international sales increase of 12.2%, driven by unit growth; cuts FY18 adjusted EPS view to $1.30-$1.80 from $2.40-$2.60

· Shutterfly (SFLY) Q2 EPS (80c)/$443.4M vs. est. loss (13c)/$447.01M; raises FY18 EPS midpoint view to $3.27 from $3.06 (est. $2.96) and raises FY18 net revenue midpoint view to $2.038B from $2.035B (est. $2.03B)

· Wendy’s (WEN) Q2 EPS 14c/$411M vs. est. 16c/$407.69M; Q2 North America same-restaurant sales increased 1.9%; sees FY18 adjusted EPS 55c-57c, consensus 56c and sees FY18 North America same-restaurant sales growth of approximately 2%-2.5%

Energy

· Pioneer Natural (PXD) Q2 EPS $1.41/$2.11B vs. est. $1.49/$1.25B; Q2 sales volumes averaged 328 MBOEPD. Oil sales averaged 185 thousand barrels per day, NGL sales averaged 64 MBPD and gas sales averaged 466 million cubic feet per day

· The American Petroleum Institute (API) said that U.S. crude supplies declined by -6 M barrels for the week ended Aug. 3, while also showed supplies of gasoline gained 3.1M barrels, while distillate stockpiles added 1.8M barrels

· Continental Resources (CLR) Q2 adjusted EPS 73c/$1.14B vs. est. 71c/$1.14B; raises FY18 production view to 290,000 to 300,000 Boe/d and 2018 exit rate guidance increased to 315,000 to 325,000 Boe per Day; 2018 capital expenditures guidance increased from $2.3B-$2.7B

· Parsley Energy (PE) Q2 EPS 44c/$467.79 vs. est. 40c/$431.57M; raises FY18 net oil production view to 68.0MBo/d-70.5MBo/d from prior guidance 65MBo/d-70MBo/d; raised total development expenditures to $1.650B-$1.750B from $1.350B-$1.550B

· DCP Midstream (DCP) raises FY18 adjusted EBITDA view to $1.065B-$1.135B and $635M-$670M forecasted distributable cash flow, increasing the low end and midpoint of these ranges

· Extraction Oil & Gas (XOG) Q2 EPS 3c/$260.2M vs. est. 7c/$236.31M; Q2 average net sales volumes of 73,563 barrels of oil equivalent per day (BOE/d) including 38,804 barrels per day of crude oil

· Plains All American (PAA) Q2 EPS 38c vs. est. 23c; reports Q2 adjusted EBITDA $506M; sees FY18 adjusted EBITDA $2.4B

· Cimarex Energy (XEC) Q2 EPS $1.59/$556.27M vs. est. $1.63/$552.92M; sees Q3 production volumes 206 -215 MBOE per day

Financials

· BofI Holding (BOFI) Q4 EPS 58c vs. est. 61c; firm said “we generated strong loan growth in the fourth quarter, led by robust loan originations in jumbo single-family mortgage, multifamily, and C&I lending”

· Envestnet (ENV) Q2 EPS 41c/$201.1M vs. est. 37c/$199.36M; sees Q3 adjusted EPS 50c on revs $202M-$205M vs. est. 50c/$206.34M and raises year EPS view and narrows rev outlook

· LendingClub (LC) Q2 adjusted EPS 3c/$177M vs. est. 2c/$166.8M; sees FY18 revenue $680M-$705M vs. est. $687.54M

· TPG RE Finance (TRTX) announce offering of 7M shares of common stock

Healthcare

· Ampio Pharma (AMPE) shares fall -56%; after reporting that the FDA said that a single trial the “AP-003-A” study for Ampion does not appear to provide sufficient evidence of effectiveness to support a BLA following a meeting in July.

· Medpace (MEDP) 4.5M share Spot Secondary priced at $55.00

· Zogenix (ZGNX) 6M share Secondary priced at $52.00

· Enanta (ENTA) Q3 EPS 97c/$57.3M vs. est. 98c/$56.93M; said continues to benefit from the increasing royalty income from AbbVie’s net sales of MAVYRET, the best-selling drug for Hep C

· FibroGen (FGEN) Q2 EPS loss (28c)/$44M vs. est. loss (59c)/$27.7M

· Inovio (INO) Q2 EPS loss (8c) on revenue $24.4M vs. est. (22c)/$9.9M

· Jazz Pharmaceuticals (JAZZ) Q2 EPS $3.49/$500M vs. est. $3.23/$469.62M; sees FY18 adj. EPS $12.75-$13.25 on revs $1.88B-$1.93B vs. est. $13.09/$1.9B

· PTC Therapeutics (PTCT) Q2 EPS loss (21c)/$68.7M vs. est. loss (29c)/$65.7M; sees FY18 revenue $260M-$295M vs. est. $271.82M and sees Translarna FY18 net product revenue $170M-$185M

· Smith’s Group is near halting talks with ICU Medical (ICUI) about a GBP7B merger that would have formed a transatlantic healthcare giant, Sky news reports. Smiths is leaning towards a decision to call off discussions with ICU about a tie-up more than two months after the talks began https://bit.ly/2M3y9Qk

· Supernus (SUPN) Q2 EPS 57c/$99.5M vs. est. 43c/$99.9M; updating its prior view of net product sales to $385M-$400M, compared to the previously expected range of $375M-$400M; sees operating earnings in the range of $130M-$140M, up from prior $125M-$135M

· STAAR Surgical (STAA) announces offering of 1.74M shares of common stock

Industrials & Materials

· Avis Budget (CAR) Q2 EPS 57c/$2.3B vs. est. 57c/$2.35B; increases share repurchase authorization by $250M; sees FY18 EPS $3.00-$3.85 on revs $9.05B-$9.3B vs. est. $3.54/$9.27B; sees FY18 adjusted free cash flow of $325M-$375M

· Axon (AAXN) Q2 EPS 15c/$99.2M vs. est. 9c/$95.84M; reaffirms FY18 revenue growth view 18%-20%; sees FY18 adjusted EBITDA margins of 14%-16%

· Albemarle (ALB) Q2 EPS $1.36/$853.9M vs. est. $1.28/$798.22M; said they saw strength in all three businesses in the second quarter, with each delivering double-digit adjusted EBITDA growth; sees 2018 adjusted EPS $5.30-$5.50 vs. est. $5.27; sees 2018 revenue $3.3B-$3.5B and sees 2018 adjusted EBITDA $990M-$1.02B

· Tutor Perini (TPC) Q2 EPS 49c/$1.12B vs. est. 31c/$1.21B; reports new awards of $1.3B, reflecting a book-to-burn ratio of 1.2, and a backlog up 15% year-over-year to $8.7B; sees 2018 EPS $1.90-$2.05 vs. est. $1.90

Media & Telecom:

· Disney (DIS) Q3 EPS $1.87/$15.23B vs. est. $1.94/$15.36B; Q3 Media Networks revenue $6.16B vs. $5.87B last year, Q3 Parks and Resorts revenue $5.19B vs. $4.89B a year ago, Studio Entertainment revenue $2.88B vs. $2.39B last year; Consumer Products & Interactive Media revenue $1.0B vs. $1.09B last year and Media Networks revenues increased 5% to $6.2B; said Increase at ESPN was due to affiliate revenue growth and the comparison to severance and contract termination costs incurred in the prior-year quarter

· Match Group (MTCH) Q2 EPS 45c/$421M vs. est. 34c/$412.81M; Q2 Average Subscriber growth 27%, 8% ARPU growth; Tinder Average Subscribers were 3.8M in Q2 2018, increasing 299,000 sequentially and 1.7M year-over-year; sees Q3 revs $430M-$440M vs. est. $462.4M

Technology

· Snap (SNAP) Q2 EPS loss (14c)/$262.26M vs. est. loss (17c)/$251.19M; sees 3Q revenue $265M-$290M vs. estimate $289.9M; said 2Q daily active users down 2% q/q but up 8% YoY to 188M vs. estimate 193M; Average revenue per user up 34% y/y to $1.40; also, Prince Alwaleed Bin Talal reports 2.3% stake in Snap

· Applied Optoelectronics (AAOI) shares rose 22%; Q2 EPS 64c/$87.8M vs. est. 44c/$77.82M; sees 3Q adjusted EPS 54c-75c on revs $82M-$92M vs. est. 64c/$90.5M

· Cornerstone OnDemand (CSOD) Q2 EPS 12c/$132.5M vs. est. 12c/$128.36M; sees Q3 revenue $129M-$131M vs. est. $122.81M; sees Q3 Subscription revenue between $115M-$117M, representing year-over-year growth at the mid-point of 15%

· Convergys (CVG) Q2 EPS 36c/$649.4M vs. est. 36c/$634.7M; still expects sequential revenue growth in Q3, Q4

· CyberArk (CYBR) Q2 EPS 36c/$77.7M vs. est. 24c/$72.91M; sees Q3 EPS 25c-28c on revs $77.75M-$79.25M vs. est. 30c/$78.33M; sees 2018 EPS $1.43-$1.50 on revs $320M-$324M, vs. est. $1.35/$317.96M

· 3D Systems (DDD) Q2 EPS 6c/$176.6M vs. est. 1c/$165.93M; Q2 gross margins 48.8%

· DXC Technology (DXC) and Amazon Web Services (AMZN), announced a multi-year, global agreement to build a new multi-billion-dollar DXC – AWS Integrated Practice that will deliver IT migration, application transformation, and business innovation to global Fortune 1000 clients

· Genpact (G) Q2 adjusted EPS 41c/$729M vs. est. 40c/$731.27M; backs FY18 adjusted EPS view $1.72-$1.76 and raises FY18 revenue view to $2.945B-$3.01B from $2.93B-$3B

· Hortonworks (HDP) Q2 EPS loss (12c)/$86.3M vs. est. loss (23c)/$80.52M; sees Q3 revenue $87.0M vs. est. $82.75M; sees Q3 GAAP operating margin between (45%)-(40%)

· Infinera (INFN) Q2 EPS (1c)/$208.2M vs. est. loss (4c)/$209.11M; sees Q3 EPS (5c)-2c on revs Q3 revenue $200M-$220M vs. est. loss (2c)/$209.8M; Continues to expect revenue in the second half of 2018 2% to 4% higher than in the first half

· Maxar Technologies (MXAR) said that the report on the company released by Spruce Point Capital Management contains “a number of inaccurate claims and misleading statements. “Maxar believes it is a direct attempt by a short-seller to profit, at the expense of Maxar shareholders, by manipulating Maxar’s stock price

· New Relic (NEWR) Q1 EPS 15c/$108.2M vs. est. 11c/$106.13M; sees Q2 adjusted EPS 11c-12c on revs $110.5M-$112.5M vs. est. 5c/$110.42M; raises year outlook

· Rapid7 (RPD) announces proposed private offering of $175M of convertible senior notes

 

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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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