Morning Preview: October 25, 2018

Terrie AmengualDaily Market Report

Early Look

Thursday, October 25, 2018

U.S. stock futures are pointing to a strong open, looking to rebound from one of the worst daily market performances in several years that wiped out all the gains for the Dow and S&P 500 for the year and put the Nasdaq into correction territory for the first time in two years. Thus far in October, the S&P has lost 8.9%, the Dow is down 7.1%, and the Nasdaq has shed 11.7% for the month. Note the Dow Industrial Average is down for five straight weeks, its longest string of weekly losses since July 2008, when the market fell for six straight weeks. The S&P 500 comes into the day with a six-day losing streak ahead of another busy round of earnings due today. A combination of a global economic slowdown, the Federal Reserve’s rate-hike path and weaker-than-expected earnings outlooks have all played a part in the negative returns for October. In Asian markets, The Nikkei Index dropped -822 points (3.7%) to 21,268, the Shanghai Index ended flat at 2,603 and the Hang Seng Index declined -255 points (or 1%) to 24,994. In Europe, the German DAX is up about 50 points at 11,250, while the FTSE 100 is little changed at 6,970. Also today, the European Central Bank will release its policy statement at 7:45 AM EST, followed by a news conference hosted by its president, Mario Draghi, at 8:30 AM EST.

U.S. stocks got hammered on Wednesday, with major averages tumbling into negative territory for the year (S&P and Dow Industrials), with the Dow down over 600 points, the Nasdaq Comp falling over 300 points (or 4.4%) for its biggest one-day decline since August 2011 and the S&P 500 falling to the lowest levels since early May, breaking well below key technical levels. Same macro fears including China, trade and tariff concerns, issues in Europe (Brexit/Italy debt), rising borrowing costs all played a part again but also included market concern amid the discovery of several suspected bombs mailed to politicians and media outlets reported throughout the day (ahead of mid-term elections). Note the S&P 500 is now in the red for 2018, while just 24 days ago it was up 9.6% on the year!

Market Closing Prices Yesterday

· The S&P 500 Index plunged -84.59 points, or 3.09%, to 2,656.10

· The Dow Jones Industrial Average fell -608.01 points, or 2.41%, to 24,583.42

· The Nasdaq Composite plummeted -329.14 points, or 4.43%, to 7,108.40

· The Russell 2000 Index declined -57.89 points, or 3.79% to 1,468.70

Events Calendar for Today

· 8:30 AM EST Weekly Jobless Claims…est. 215K

· 8:30 AM EST Continuing Claims…est. 1.64M

· 8:30 AM EST Advance Goods Trade Balance, for September…est. (-$75.1B)

· 8:30 AM EST Durable Goods Orders, Sept-P…est. (-1.5%)

· 9:45 AM EST Bloomberg Consumer Comfort Index

· 10:00 AM EST Pending Home Sales MoM for Sept…est. 0.0%

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

· 11:00 AM EST Kansas City Fed Manufacturing, for Oct…est. 14

Earnings Calendar:

· Earnings Before the Open: AAL, ALK, ALLY, Anheuser Bush, AXTA, BC, BEN, BHGE, BMY, BWA, CELG, COP, CMCSA, CME, DDAIF, DNKN, ENTG, HSY, IP, KIM, LAZ, LEA, LYG, LSTR, LUV, MCK, MMC, MO, MRK, NEM, SAVE, SHOP, SHW, SPG, SWK, THRM, TROW, TSCO, TWTR, USG, VC, WPP, WSO, WWE

· Earnings After the Close: AKS, AVT, CENX, CINF, CMG, CY, DFS, EMN, EXPE, FBHS, FII, FLEX, FSLR, FTV, GILD, GOOGL, HIG, INTC, JEF, LOGM, LPLA, MAT, MHK, NTGR, PFPT, PRO, RGA, SAM, SIVB, SNAP, SYK, VRSN, WDC

Sector News Breakdown

Consumer

· Tesla Inc. (TSLA) shares rose 7%; posted only its third quarterly profit ever and generated more cash than expected/reaffirmed its forecast for profit and positive free cash flow in the fourth quarter; Q3 EPS $2.90/$6.82B vs. est. loss (15c)/$6.31B; Q3 free cash flow $881.0M vs. est. $280.0M; reaffirms expectation of continued GAAP net income and free cash flow in 4Q; expects Model 3 quarterly production and deliveries to continue to increase in 4Q compared to 3Q; target of delivering 100,000 Model S and X vehicles this year remains unchanged; target of delivering 100,000 Model S and X vehicles this year remains unchanged

· Ford (F) Q3 adjusted EPS 29c/$37.6B vs. est. 28c/$33.3B; backs 2018 adjusted EPS outlook $1.30-$1.50 vs. est. $1.31; balance sheet remains strong, with $23.7 billion of cash and $34.7 billion of total liquidity; also reaffirming positive cash flow that will be lower than 2017; said that as a result of the higher costs and uncertainty impacting the entire sector

· Anheuser-Busch InBev SA (BUD) cut the interim dividend as Q3 net profit fell as a result of losses linked to the hedging of the group’s share-based payment programs.

· Allegiant Travel (ALGT) Q3 EPS 94c/$393.1M vs. est. 97c/$390.39M; sees FY18 EPS $9-$10, vs. est. $9.66 and 2018 full year ASM growth is expected to be between 9.5 and 10.5%; said 4Q scheduled and system ASMs are expected to grow between four and six percent versus last year

· Callaway Golf (ELY) Q3 EPS 10c/$263M vs. est. 1c/$250.63M; raises full year EPS view to $1.01-$1.05, compared to prior guidance of 95c-$1.00

· Ethan Allen (ETH) Q1 EPS 32c/$187.8M vs. est. 32c/$185.66M

· Las Vegas Sands (LVS) Q3 EPS 77c/$3.37B vs. est. 81c/$3.4B; raises annual dividend to $3.08 per share for 2019; 3Q Sands China revenue $2.15B and 3Q Sands China adjusted property EBITDA $754M

· Meritage Homes (MTH) Q3 EPS $1.33/$877.73Mvs. est. $1.36/$892.23M; said home closing revenue increased 9% with a 10% increase in closing volume; total orders for the Q3 were 2% below 2017’s Q3

· O’Reilly Automotive (ORLY) Q3 EPS $4.50/$2.48B vs. est. $4.31/$2.49B; sees 4Q EPS $3.60-$3.70 vs. est. $3.74 and sees 4Q comparable sales +2% to +4%; sees FY EPS $15.95-$16.05 vs. $15.93

· Puma SE (PUM.XE) raised its full-year outlook on the back of a stronger-than-expected Q3; the German sportswear company said net profit for the quarter was 77.5 million euros ($88.5 million) compared with EUR62.1 million the year previous.

· Spirit Airlines (SAVE) Q3 EPS ex-items $1.47/$904.3M vs. est. $1.38/$897.05M; 3Q total revenue per available seat mile +5.5%; 3Q adjusted CASM excluding fuel 5.22c; 3Q operating margin 16%; 3Q adjusted operating margin +16.1%

· Whirlpool (WHR) Q3 EPS $4.55/$5.3B vs. est. $3.76/$5.34B; narrows FY18 ongoing EPS view to $14.50-$14.80 from $14.20-$14.80 (est. $13.95); cuts FY18 operating cash flow view to approximately $1.2B from $1.5B

· Interface (TILE) Q3 EPS 41c/$318M vs. est. 40c/$314.32M

· Noodles & Co (NDLS) shareholders elect not to proceed with offering of 10.1M shares

· Yeti (YETI) 16M share IPO priced at $18.00

Energy

· CVR Refining (CVRR) Q3 net sales $1.86B vs. est. $1.72B; sees 4Q cap-expenditure $30M-$40M

· TechnipFMC (FTI) Q3 EPS 31c/$3.14B vs. est. 39c/$3.22B; raises FY18 Onshore/Offshore revenue view to $5.8B-$6.1B from prior view $5.6B-$5.9B

· Valero Energy (VLO) Q3 EPS $2.01 vs. est. $1.95

Financials

· Visa (V) Q4 EPS $1.21/$5.43B vs. est. $1.20/$5.44B; raises quarterly dividend by 19% to 25c per share; sees FU19 revenue growth of low double-digits; sees FY19 Client incentives as a percentage of gross revenues: 22% to 23% range; sees Annual operating expense growth of mid-to-high single digit increase; 4Q payments volume growth +11%; 4Q cross-border volumes +10%

· Aflac (AFL) Q3 adjusted EPS $1.03/$5.58B vs. est. 99c/$5.46B; sees FY18 adjusted EPS at high end of $3.90-$4.06 vs. est. $4.07; says on track to achieve the high end of our revised 2018 adjusted earnings per diluted share guidance

· Pintec Technology (PT) 3.725M share IPO priced at $11.88

· StoneCo (STNE) 47.7M share IPO priced at $24.00

· AGNC Investment (AGNC) Q3 EPS 63c/ vs. est. 99c; tangible net book value per common share was $18.00 per share vs. $18.41 per share as of June 30

· Axis Capital (AXS) Q3 operating EPS $1.07/$1.33B vs. est. 69c/$969.2M; says book value per common share, calculated on a treasury stock basis, increased by 23c in the current quarter and decreased by $2.63 over the past twelve months, to $52.70

· CoreLogic (CLGX) Q3 EPS 72c/$451.8M vs. est. 77c/$476.8M; Adjusted EBITDA totaled $128M, 7% below prior year as organic growth and cost productivity were offset by the impact of lower market volumes

· Equifax (EFX) Q3 EPS $1.41/$834.2M vs. est. $1.42/$857.23M; sees FY18 adjusted EPS $5.70-$5.75 on revs $3.41B-$3.43B vs. est. $5.84/$3.46B

· Fidelity National (FNF) Q3 EPS 78c/$2.1B vs. est. 78c/$2.03B

· Greenhill & Co. (GHL) Q3 EPS 43c/$86.8M vs. est. 26c/$71.29M

· Legg Mason (LM) Q2 EPS 82c/$758.4M vs. est. 83c/$753.19M; reports End of Period AUM of $755.4B vs. $744.6B at previous quarter end

· Raymond James’s (RJF) Q4 EPS $1.76 vs. est. $1.82; said Q4 results were hurt by $11.9 million of unrealized losses on private-equity investments and an increase in other expenses, largely from higher legal and regulatory reserves

· Torchmark (TMK) Q3 EPS $1.59/$1.08B vs. est. $1.53/$1.07B; Sees FY operating EPS $6.08 to $6.14 vs. estimate $6.08

· Unum (UNM) Q3 operating EPS $1.37/$2.93B vs. est. $1.29/$2.89B; sees FY operating EPS +17% to +23%; 3Q book value per share $38.95

Healthcare

· Amgen (AMGN) is making Repatha, a biologic medicine for people with high cholesterol who are at risk for heart attacks and strokes, available at a reduced list price of $5,850 per year; it’s a 60% reduction from the medicine’s original list price

· AbbVie (ABBV) announced that it will assume full development and commercial responsibility for its collaboration with Galapagos (GLPG) to discover and develop new therapies to treat cystic fibrosis

· Align Technology (ALGN) Q3 EPS $1.24/$505.3M vs. est. $1.19/$502.65M; Q3 total Invisalign case shipments up 35.3% year-over-year to 319.3 thousand; sees Q4 EPS $1.10-$1.15 on revs $505M-$515M vs. est. $1.33/$545.11M.

· Icon (ICLR) Q3 EPS $1.54/$655.0M vs. est. $1.54/$654.38M; excluding the impact of ASC 606, gross business wins in the third quarter were $716M and cancellations were $111M. This resulted in net business wins of $605M, a book to bill of 1.27

· Sarepta (SRPT) Q3 EPS loss (56c)/$78.5M vs. est. loss (81c)/$79.26M; had approximately $793.9M in cash, cash equivalents and investments as of September 30 compared to $1.1B as of December 31, 2017

· Vertex (VRTX) Q3 revenue fell short of estimates as lower-than-expected sales of its two biggest drugs overshadowed a strong quarter for recently launched Symdeko; 3Q Orkambi revenue $282M trailed average estimate $300.6M and 3Q Kalydeco revenue $246M missed est. $253.3M

· Tonix Pharmaceuticals (TNXP) files to sell 4.3M shares

Industrials & Materials

· Agnico Eagle (AEM) Q3 adjusted EPS 1c/$518.7M vs. est. loss (4c)/$510.73M; raises FY18 production outlook to 1.60M oz from 1.58M oz ; Q3 payable gold production in Q3 was 421.7K ounces vs. 454.4K last year at production costs per ounce of $657 vs $578 last year

· Barrick Gold (ABX) Q3 EPS 8c/$1.84B vs. est. 5c/$1.86B; Q3 gold production was 1.15 million ounces; backs FY18 gold production view 4.5M-5M ounces and backs FY18 copper production view 345M-410M pounds

· Echo Global (ECHO) Q3 EPS 55c/$644.8M vs. est. 46c/$636.48M; adjusted EBITDA grew 68.3% to $28.2 million, compared to $16.8 million in the third quarter of 2017; sees Q4 revenue $570M-$610M vs. consensus $594.77M

· Forward Air (FWRD) Q3 EPS 76c/$331.4M vs. est. 80c/$327.8M; Consolidated revenues grew 11.1% driven by solid revenue management across the portfolio. Consolidated operating income grew 9.9% amid a tight truckload market; sees Q4 EPS 81c-85c vs. est. 90c; sees Q4 year-on-year revenue growth 11%-15%

· Graco (GGG) Q3 EPS 50c/$415.9M vs. est. 46c/$404.9M; said although planned investments in product development and unfavorable product mix weighed on Contractor segment profitability, sales growth in all segments and regions produced positive leverage in worldwide operating earnings; confirms FY18 view for mid-to-high single-digit organic sales growth

· Ingevity (NGVT) Q3 EPS $1.16/$311.2M vs. est. $1.06/$305.72M; Sees FY adjusted Ebitda $306M-$314M vs. est. $308.7M and year revs $1.10B-$1.13B vs. est. $1.11B

· Kraton (KRA) Q3 adjusted EPS $1.02/$523.1M vs. est. $1.29/$537.68M; Sees FY adjusted Ebitda about $380M vs. estimate $401.3M

· Landstar System (LSTR) Q3 EPS $1.63/$1.2B vs. est. $1.60/$1.2B; set new all-time Landstar records for trucks provided by BCOs with 10,443 as of the end of the quarter and net truck additions in a single quarter with the net addition of 288 trucks in the third quarter

Technology, Media & Telecom

· Microsoft (MSFT) Q1 EPS $1.14/$29.1B vs. est. 96c/$27.9B; reports LinkedIn revenue up 33%; reports Q1 Office commercial products and cloud services revenue up 17%, Windows OEM revenue up 3%; Q1 Productivity and Business Processes revenue up 19% to $9.8B

· AMD Corp. (AMD) shares fell over 20% after results; Q3 EPS 13/$1.65B vs. est. 12c/$1.7B; said client and server processor sales increased significantly although graphics channel sales were lower in the quarter

· Xilinx (XLNX) Q2 EPS 87c/$746M vs. est. 76c/$710.41M; sees Q3 revenue $760M-$780M, vs. consensus $719.86M; sees Q3 adjusted gross margin ~ 69%; raises FY19 revenue view to $2.95B-$3B from $2.8B-$2.9B (est. $2.85B) and backs FY19 adjusted gross margin ~ 69%-70%

· Citrix (CTXS) Q3 EPS $1.40/$732M vs. est. $1.25/$721.89M; sees FY18 EPS $5.55-$5.60 on revs $2.95B-$2.97B vs. est. $5.37/$2.94B

· CommScope Holding Co Inc. (COMM) is in talks to acquire set-top box maker Arris International Plc (ARRS) according to Reuters late day yesterday, citing people familiar with the matter said saying the negotiations are ongoing and there is no certainty a deal will be reached https://reut.rs/2PT4szt

· F5 Networks (FFIV) Q4 EPS $2.90/$562.7M vs. est. $2.63/$561.4M; sees 1Q adjusted EPS $2.51-$2.54 on revs $542M-$552M vs. est. $2.47/$546.2M

· Knowles (KN) Q3 EPS 34c/$236.2M vs. est. 30c/$219.76M; sees Q4 adjusted EPS 31c-37c on revs $210M-$240M vs. est. 34c/$224.99M

· Mellanox (MLNX) Q4 EPS $1.33/$279.2M vs. est. $1.20/$275.53M; sees Q4 revenue $280M-$290M vs. est. $280.57M; sees Q4 adjusted gross margins 68.5%-69.5%

· Plexus (PLXS) Q4 EPS 96c/$771.2M vs. est. 87c/$760.98M; sees Q1 GAAP EPS 85c-95c on revs $750M-$790M vs. est. 88c/$758.98M

· PTC (PTC) Q4 adjusted EPS 45c/$322M vs. est. 44c/$321.64M; Q4 subscription revenue $544M, up 61% from last year; sees Q1 EPS 8c-20c on revs $270M-$285M vs. est. 43c/$330.82M

· ServiceNow (NOW) Q3 EPS 68c/$673.1M vs. est. 59c/$658.8M; 3Q billings growth +32%; 3Q free cash flow $111.6M; raises FY18 adjusted subscription revenue view to $2.384B-$2.389B; sees FY18 adjusted subscription billings of $2.793B-$2.798B

· WPP PLC (WPP) cut full-year guidance and confirmed it is seeking to sell a stake in market-research unit Kantar Group, as it reported Q3 net sales below expectations; said it now expects like-for-like net sales to fall by between 0.5% and 1.0% for the year

____________________________________________________

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.

Live Trading

Open an Account

Paper Trading

Register