Morning Preview: September 7, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, September 7, 2018

Stock futures are slipping, while Japanese stocks fall for a 6th straight day after President Donald Trump’s comments late yesterday about turning an eye toward Japan next on trade, while the country also deals with this week’s typhoon and earthquake. Markets also await the latest move in the U.S.-China trade war, await details of talks between Canada and the US on a new NAFTA and key payroll data later this morning in the form on nonfarm payrolls (after weaker private payroll data from ADP yesterday). Emerging-market equities are on track to snap a seven-day losing streak while the dollar slips vs. other currencies. In Asian markets, The Nikkei Index declined for a 6th straight session, falling -180 points to settle at 22,307, the Shanghai Index gained 10 points to close at 2,702 and the Hang Seng Index ended little changed at 26,973. In Europe, the German DAX is lower by -30 points, dropping under the 12,000 level, while the FTSE 100 is off about -40 points at 7,275. The Shanghai Composite gained after dropping in seven of the past eight days to move within 1% of last month’s multiyear closing low yesterday. Stocks ended mostly lower on Thursday, with weakness for tech shares pressuring the Nasdaq Composite for a second straight day (losing nearly 1% back-to-back days). The Dow industrials eked out a small gain, while the S&P 500 dropped slightly. Tech shares were under pressure, with chip-related stocks slammed after disappointing outlooks from KLAC and MU at an investor conference.

Events Calendar for Today

· 8:30 AM EST Change in Nonfarm Payrolls for Aug…est. 195K

· 8:30 AM EST Change in Private Payrolls for Aug…est. 194K

· 8:30 AM EST Change in Manufacturing Payrolls for Aug…est. 24K

· 8:30 AM EST Unemployment Rate for Aug…est. 3.8%

· 8:30 AM EST Average Hourly Earnings for Aug…est. 0.2%

· 8:30 AM EST Fed’s Rosengren makes opening comments at Boston Fed conference

· 9:00 AM EST Fed’s Mester moderates’ panel at Boston Fed conference

· 12:45 PM EST Fed’s Kaplan speaks at Energy conference in Dallas

· 1:00 PM EST Baker Hughes Weekly Rig Count

Market Closing Prices Yesterday

· The S&P 500 Index slipped -10.55 points, or 0.37%, to 2,878.05

· The Dow Jones Industrial Average rose 20.88 points, or 0.08%, to 25,995.87

· The Nasdaq Composite dropped -72.45 points, or 0.91%, to 7,922.73

· The Russell 2000 Index declined -13.18 points, or 0.76% to 1,714.47

World News

· Germany’s trade surplus narrowed in July to its smallest level in more than four years, as exports slipped while imports jumped

· The Turkish lira and South African rand, two of the hardest-hit emerging markets currencies of recent weeks, climbed on Friday.

Sector News Breakdown

Consumer

· Costco Wholesale (COST) August total comp sales up 9.2% vs. est. up 6.6%; reported net sales of $11 billion for the month ended Sept. 2, up 12.2%from $9.8 billion a year ago; comparable sales excluding the impact from changes in gasoline prices and foreign exchange rose 8%

· Five Below (FIVE) Q2 EPS 45c/$347.7M vs. est. 38c/$334.84M; sees Q3 EPS 17c-19c on revs $301M-$304M vs. est. 17c/$303.06M; sees FY18 EPS $2.51-$2.57 up from prior view $2.36-$2.42 on revs $1.53B-$1.54B, vs. est. $2.48/$1.52B

· GameStop (GME) Q2 EPS 5c/$1.65B vs. est. 8c/$1.61B; Q2 comp sales fell (-0.5%) vs. est. (-3.1%); sees FY comparable sales -5% to 0%; sees FY adjusted EPS $3.00-$3.35 vs. est. $3.09; 2Q new hardware sales +20.1% and Q2 new software sales -18.5%; says continues talks with 3rd parties on possible deal

· Quanex Building (NX) Q3 EPS 33c/$239.8M vs. est. 32c/$237.5M; Q3 adjusted Ebitda $30.8M; authorizes $60M share buyback program and raises quarterly dividend to 8c from 4c; said evaluated a broad range of options

· Zumiez (ZUMZ) Q2 EPS 17c/$219M vs. est. 14c/$219.25M; Q2 comp sales rose 6.3% vs. est. 5.5% and compared to a comparable sales increase of 4.7% YoY; total net sales for the four-week period ended September 1, 2018 increased 9.0% to $107.4M vs. $98.6M YoY; sees Q3 EPS 45c-51c vs. est. 46c and Q3 comp sales 4% to 6%

· Tilly’s (TLYS) 5.5M share Secondary priced at $18.50

· Fiat Chrysler (FCAU) new CEO Mike Manley will announce organizational plans for the automaker by the end of September, Reuters reports

· MCBC Holdings (MCFT) Q4 EPS 70c/$95.4M vs. est. 51c/$89.3M; Q4 gross margin grew 100 basis points to 29.2%; sees year net sales percentage growth at up in the low- teens; sees year adjusted EPS grow in the high-teens

· Korn/Ferry (KFY) Q1 EPS 78c/$465.6M vs. est. 71c/$459.37M; Q1 Adjusted EBITDA was $70.8M vs. $60.4M last year; sees Q2 EPS 76c-84c on revs $470M-$490M vs. est. 80c/$476.66M.

· At Home Group (HOME) files to sell 10M shares of common stock for holders

· Mattel (MAT) announced the creation of Mattel Films, a new division of the company focused on developing and producing motion pictures based on the company’s franchises

Energy, Industrials & Materials

· ABM Industries (ABM) Q3 EPS 57c/$1.62B vs. est. 53c/$1.65B; sees FY18 adjusted EPS $1.85-$1.95 vs. est. $1.84

· AK Steel (AKS) upgraded to Buy from Underperform at Bank America and downgraded Reliance Steel (RS) to underperform

· Dover (DOV) downgraded to Market Perform from Outperform at BMO Capital

Financials

· T. Rowe Price (TROW) downgraded to Hold from Buy at Deutsche Bank

· Wells Fargo (WFC) downgraded to Neutral from Outperform at Macquarie

· Comerica (CMA) downgraded to Neutral from Outperform at Macquarie

· Zion Bancorp (ZION) downgraded to neutral from buy at UBS

Healthcare

· Mirati Therapeutics (MRTX) files automatic mixed securities shelf

· Teva (TEVA) downgraded to Neutral from Outperform at Credit Suisse

Technology, Media & Telecom

· Broadcom (AVGO) Q3 EPS $4.98/$5.07B vs. est. $4.83/$5.06B; Q3 adjusted gross margin +67.3%; sees Q4 revs $5.4B +/- $75M vs. est. $5.36B; sees 4q gross margin 67.0% +/- 1%

· Finisar (FNSR) Q1 EPS 18c/$317.34M vs. est. 12c/$315.86M; sees Q2 EPS 19c-25c on revs $315M-$335M vs. est. 18c/$332.99M; says earnings exceeded guidance due to favorable product mix

· Palo Alto Networks (PANW) Q4 EPS $1.28/$658.1M vs. est. $1.17/$633.05M; sees Q1 non-GAAP EPS $1.04-$1.06 on revs $625M-$635M vs. est. $1.04/$619.35M; Q4 billings growth up 29%

· Marvell Technology (MRVL) Q2 EPS 28c/$665.3M vs. est. 34c/$615.8M; sees 3Q adjusted gross margin +64% to +65%; sees Q3 EPS 30c-34c on revs $825M-$865M

· eGain (EGAN) Q4 EPS 1c/$15.6M vs. est. 0c/$15.81M; SaaS revenue increased 37% year over year to $32.7M; total revenue, excluding legacy license revenue, increased 13% year over year to $60.7M; recurring revenue increased 16% year over year to $50.8M

· Okta (OKTA) Q2 EPS loss (15c)/$94.6M vs. est. loss (19c)/$84.82M; raises FY19 EPS view to (48c)-(46c) from (58c)-(54c) vs. est. (56c); raises FY19 revenue view to $372M-$375M from $353M-$357M vs. est. $356.46M

· Presidio (PSDO) Q4 EPS 33c/$766.3M vs. est. 32c/$756.82M; sees FY19 revenue $2.85B-$2.9B vs. est. $2.85B; sees FY19 pro Forma diluted EPS growth in the low double-digit range excluding the accretion from the share repurchase, or growth in the mid to high teens including the impact of the share repurchase; announces initiation of dividend, negotiated share repurchase

· nLight (LASR) 4.5M share Secondary priced at $26.50

 

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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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