Morning Preview: September 6, 2018

Terrie AmengualDaily Market Report

Early Look

Thursday, September 6, 2018

Stock futures in the U.S. are pointing to a mixed open after stocks slumped on Wednesday. U.S. stocks closed mostly lower yesterday, led by a plunge in technology shares as the Nasdaq Composite logged its worst single-day decline since late July, though the Dow Industrials snapped a three-day losing streak, closely modestly higher led by industrials (CAT, MMM) and pharma (JNJ, PFE). The weakness in tech stocks came as social media stocks Facebook Inc. and Twitter Inc. executives testified on Capitol Hill about online misinformation. Trade-related concerns also weighed on the market, with the U.S. and Canada set to restart high-stakes efforts to resolve differences as they work toward recasting the North American Free Trade Agreement. In trade with China, China will be forced to retaliate if the United States implements any new tariff measures, China’s commerce ministry warned on Thursday. Bitcoin prices drop another 8% overnight to around $6,400 after sliding about 6% on Wednesday on a report that Goldman Sachs is pulling back on near-term plans to set up a cryptocurrency trading desk. In Asian markets, more weakness as the Nikkei Index slips -92 points to end at 22,487, the Shanghai Index slides -12 points to close at 2,691 and the Hang Seng Index drops another 1% or -269 points to settle at 26,974. In Europe, the German DAX is up a few points at 12,050, while the FTSE 100 is little changed at 7,380. Europe markets slide to 5-month lows as the Stoxx 600 index falls on trade concerns and contagion of the sell-off in emerging-market assets.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -8.12 points, or 0.28%, to 2,888.60

· The Dow Jones Industrial Average rose 22.51 points, or 0.09%, to 25,974.99

· The Nasdaq Composite slumped -96.07 points, or 1.19%, to 7,995.17

· The Russell 2000 Index declined -5.73 points, or 0.33% to 1,727.65

Events Calendar for Today

· 7:30 AM EST Challenger Job Cuts YoY for Aug

· 8:30 AM EST ADP Employment Data for Aug…est. 200K

· 8:30 AM EST Weekly Jobless Claims…est. 213K

· 8:30 AM EST Continuing Claims…est. 1.72M

· 8:30 AM EST Nonfarm Productivity for Q2-F…est. 2.9%

· 8:30 AM EST Unit Labor Costs for Q2-F…est. (-0.9%)

· 9:45 AM EST Markit US Services PMI, Aug-F…est. 55.2

· 9:45 AM EST Bloomberg Consumer Comfort Index…prior 58.3

· 10:00 AM EST ISM Non-Manufacturing Index for Aug…est. 56.8

· 10:00 AM EST Factory Orders for July…est. (-0.6%)

· 10:00 AM EST Durable Goods Orders, July-F…est. (-1.7%)

· 10:00 AM EST Fed’s Williams speaks at University of Buffalo

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

· 11:00 AM EST Weekly DOE Inventory Data

Earnings Calendar:

· Earnings Before the Open: BKS, DCI, DVMT, FCEL, GIII, JW/A, LE, MBUU, NAV


Other Key Events:

· Barclay’s CEO Energy Power Conference, 9/4-9/6 in New York

· Barclay’s Global Consumer Staples Conference, 9/4-9/6, in Boston

· Citigroup 13th Annual Biotech Conference, 9/5-9/6, in Boston

· Citigroup 25th Annual Technology Conference, 9/5-9/7, in New York

· Cowen 11th Annual Global Transportation Conference, 9/5-9/6, in Boston

· Goldman Sachs Global Retail Conference, 9/5-9/6, in New York

· KBW Insurance Conference, 9/5-9/6, in New York

· RBC Capital Global Industrials Conference, 9/5-9/6, in Las Vegas

· RW Baird Global Healthcare Conference, 9/5-9/6, in New York

· UBS Global Chemicals, Paper & Packaging Conference, 9/5-9/6, in New York

· Wells Fargo 13th Annual Healthcare Conference, 9/5-9/6, in Boston

Sector News Breakdown


· Ollie’s Bargain Outlet (OLLI) Q2 adjusted EPS 40c/$288.1M vs. est. 36c/$284.68M; Q2 comparable net store sales increase of 4.4%; sees FY18 comparable sales growth of 2.5%-3% and sees the opening of 36 to 38 new stores and one relocation in FY18.; sees FY18 EPS $1.73-$1.76 on revs $1.22B-$1.23B, vs. est. $1.73/$1.22B

· International Flavors & Fragrances (IFF) boosted its average sales growth target for the period to 5%-7% on a currency neutral and pro forma basis and its adjusted cash EPS growth target for the period to 10% or more – Barclays conference

· Cedar Fair (FUN) announced that preliminary results for the five weeks ended Monday, September 3, represented record revenues for the fiscal month of August. For the five weeks, preliminary net revenues were $288M, up 6%, or $17M YoY

· Couche-Tard (ATD/B) Q1 EPS 88c/$14.79B vs. est. 82c/$13.87B; Q1 adjusted Ebitda $897.5M


· The American Petroleum Institute (API) reported that U.S. crude supplies fell -1.2M barrels for the week ended Aug. 31, while supplies of gasoline rose 1 million barrels and distillate stockpiles climbed by 1.8 million barrels

· Chevron (CVX) downgraded to neutral at Bank America and cut tgt to $135 from $150 and Conoco (COP) downgraded to neutral as well

· Patterson-UTI (PTEN) reported that for the month of August, the company had an average of 178 drilling rigs operating

· Range Resources (RRC) said at Barclays conference that remains on track for 2018 spending and production forecasts


· Cushman & Wakefield (CWK) Q2 EPS 46c/$1.98B vs. est. 39c/$1.71B; Q2 adjusted Ebitda $169.8M vs. Bloomberg estimate $168.2M

· MarketAxess Holdings Inc. (MKTX) announced total monthly trading volume for August 2018 of $124.4 billion, consisting of $66.1 billion in U.S. high-grade volume, $53.3 billion in other credit volume, and $5.0 billion in liquid products volume.


· Spectrum Pharma (SPPI) said poziotinib generated an overall response rate (ORR) of 58% at eight weeks of treatment in metastatic non-small cell lung cancer (NSCLC) patients with an EGFR Exon 20 mutation, according to an abstract from the World Conference on Lung Cancer in Toronto later this month

· Novartis (NVS) is selling U.S. dermatology and generic pill assets to India’s Aurobindo Pharma Ltd for up to $1 billion.

· AngioDynamics (ANGO) guides FY revs to $348M-$353M from prior $344M-$349M view in 8K

· Roche (RHHBY) said it was notified by the U.S. FDA on September 5 that the review period for the supplemental Biologics License Application for TECENTRIQ in combination with Avastin, carboplatin and paclitaxel for the initial treatment of people with metastatic non-squamous non-small cell lung cancer has been extended by three months

· ProQR Therapeutics (PRQR) files to sell $75M ordinary shares

· KalVista (KALV) files to sell common stock, no amount given

· Dicerna (DRNA) files to sell 6.15M shares of common stock

Industrials & Materials

· AeroVironment (AVAV) Q1 EPS 85c on revs $78M vs. est. $73.7M; sees FY revenue from continuing operations $290M-$310M vs. est. $305.2M

· DowDuPont (DWDP) files automatic mixed securities shelf

· Navistar (NAV) Q3 EPS $1.71 on sales $2.61B vs. est. $2.66B; Q3 included $66M in adjustments, including a $71M gain from a one-time settlement; sees FY revs $10.1B-$10.4B vs. est. $9.94B

· REV Group (REVG) Q3 EPS 38c/$597.7M vs. est. 44c/$649.56M; lowers FY18 revenue view to $2.4B-$2.5B from $2.4B-$2.6B (est. $2.51B) and sees FY18 adjusted EBITDA of $160M-$170M; said supply chain imbalances triggered by tariff discussions will take months to work through system but aren’t permanent

Technology, Media & Telecom

· Cloudera (CLDR) shares rise 16%; Q2 adjusted EPS loss (8c)/$110.3M vs. est. loss (15c)/$107.71M; subscription revenue was up 26% year-over-year to $93.1 million; subscription revenue represented 84% of total revenue, up from 82% in the 2H, non-GAAP subscription gross margin for the quarter was 87%, up from 85% in 2H; customers with annual recurring revenue greater than $100,000 were 568, up 30 for the quarter

· Ctrip (CTRP) Q2 ADS 29c/$1.11B vs. est. 20c/$1.07B; sees 3Q revenue +13% to +18%

· DocuSign (DOCU) Q2 EPS 3c/$167.0M vs. est. 1c/$159.6M; Q2 billings were $172.2M, an increase of 32% year-over-year and non-GAAP gross margin was 81% compared to 79% in the same period last year; sees Q3 revenue $172M-$175M vs. est. $165.59M and sees Q3 gross margin 78%-81%; sees Q3 billings $169M-$179M sees year revs $683M-$688M vs. est. $657.9M

· Guidewire (GWRE) Q4 EPS 81c/$248.6M vs. est. 75c/$238.86M; guides Q1 EPS and revs above views but for the full-year guides FY19 adjusted EPS $1.15-$1.26 on revs $740.5M-$752.5M, vs. est. $1.26/$779.56M

· MongoDB (MDB) Q2 adjusted EPS loss (41c)/$57.5M vs. est. loss (45c)/$51.73M; backs FY19 EPS view loss ($1.66)-($1.62) vs. est. loss ($1.62); raises FY19 revenue view to $228M-$230M from $217M-$220M vs. est. $219.71M

· SeaChange (SEAC) Q2 EPS loss (18c)/$11.9M vs. est. loss (12c)/$11.8M; sees Q3 EPS loss (5c) to 4c on revs $16M-$20M vs. est. $16.2M; sees FY revenue $70M-$75M vs. est. $62.3M

· Tencent Holdings (TCEHY) unveiled new checks aimed at restricting access to its popular games for underaged players, amid a government campaign to tackle gaming addiction among Chinese children

· Verint (VRNT) Q2 EPS 76c/$306.3M vs. est. 62c/$296.07M; raises FY19 EPS view to $3.15 at midpoint from $3.09 (est. $3.09) and raises FY19 revenue view to $1.24B with a range of +/- 2% from $1.23B (est. $1.23B)

· Zscaler (ZS) Q4 EPS loss (1c)/$56.2M vs. est. loss (5c)/$50.7M; sees Q1 EPS (6c)-(5c) on revs $58M-$59M vs. est. .loss (6c)/$53.53M; sees FY19 EPS loss (13c)-(12c) on revs revenue $250M-$260M vs. est. loss (17c)/$246.17M

· CBS Corp. (CBS) is in talks with Shari Redstone and her family’s holding company, National Amusements Inc., to settle their litigation over control of the broadcaster, less than a month before the matter is scheduled to go to trial, according to reports


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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