Morning Preview: November 2, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, November 2, 2018

U.S. futures are soaring, adding to big gains yesterday and tracking a massive rally in Asia overnight after reports U.S. President Donald Trump is interested in reaching an agreement on trade with Chinese President Xi Jinping at the Group of 20 nations summit in Argentina this month, and has asked key officials to begin drafting potential terms (according to Bloomberg). The positive news on the trade front overshadowed lower sales guidance and a miss on some key metrics from Dow component Apple last night when it reported quarterly earnings (shares are down 5%). The other big piece of news today (other than sifting through all the earnings results overnight), is the monthly jobs report, as American employers are expected to have created 200,000 new jobs in October, up from 134,000 the month before, showing a hiring rebound after the impact of Hurricane Florence.

U.S. indexes closed in the green for the third straight day, continuing a rebound from the October sell-off. Investors were got a lift amid positive news on the trade front and the latest batch of strong earnings, including from DowDuPont and NXP Semiconductors. The S&P clocked its best three days since the November 2016 election, the Nasdaq closed out of correction territory and the Russell 2000 index outperformed, rising over 2% into the jobs data on Friday.

In Asian markets, The Nikkei Index jumped 556 points (2.56%) to end the week at 22,243, the Shanghai Index gained 70 points (2.7%) to end at 2,676 and the Hang Seng Index surged and ended near its best levels, rising over 1,070 points (4.21% gain). In Europe, the German DAX is higher by about 150 points at 11,620, while the FTSE 100 is up about 50 points at 7,165. The Stoxx 600 was poised its best week since December 2016 as European equities joined the global rally on prospects for an end to the trade war.

Market Closing Prices Yesterday

· The S&P 500 Index gained 28.63 points, or 1.06%, to 2,740.37

· The Dow Jones Industrial Average rose 264.98 points, or 1.06%, to 25,380.74

· The Nasdaq Composite spiked 128.16 points, or 1.75%, to 7,434.06

· The Russell 2000 Index advanced 33.57 points, or 2.22% to 1,544.98

Events Calendar for Today

· 8:30 AM EST Change in Nonfarm Payrolls for Oct…est. 200k

· 8:30 AM EST Change in Private Payrolls for Oct…est. 195K

· 8:30 AM EST Changes in Manufacturing for Oct…est. 16K

· 8:30 AM EST Unemployment Rate for Oct…est. 3.7%

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

· 8:30 AM EST Trade Balance for September…est. (-$53.6B)

· 10:00 AM EST Factory Orders for September…est. 0.5%

· 10:00 AM EST Durable Goods Orders for Sept

· 1:00 PM EST Baker Hughes Weekly Rig Count

Earnings Calendar:

· Earnings Before the Open: ABBV, ATHN, AXL, BABA, CBOE, CVX, EXTR, ITT, NWL, OZM, STX, WLTW, XOM

World News

· Bloomberg News reported U.S. President Donald Trump is interested in reaching an agreement on trade with Chinese President Xi Jinping at the Group of 20 nations summit in Argentina this month, and has asked key officials to begin drafting potential terms

· Italian manufacturing shrank the most in almost four years in October. The PMI fell below 50 into its first contraction since August 2016. The reading for the euro area fell to 52 last month from 53.2 in September, the lowest in more than two years.

Sector News Breakdown

Consumer

· Starbucks (SBUX) Q4 EPS 62c/$6.30B vs. est. 60c/$6.27B; Q4 global comparable store sales increased 3%, driven by a 4% increase in average ticket. Americas and U.S. comparable store sales increased 4%. CAP and China comparable store sales increased 1%; sees FY19 adjusted EPS $2.61-$2.66 vs. est. $2.64; sees FY19 global comparable store sales growth near the lower end of current 3% to 5% range; loyalty program grew to 15.3M active members in the U.S., up 15% yoy; 4Q comparable sales +3%, vs. estimate +2.2%

· Caesars (CZR) Q3 EPS 16c/$2.19B vs. est. 0c/$2.21B; Q3 enterprise-wide adjusted EBITDAR decreased 2.1%, or $13M, from $613M to $600M; enterprise-wide hold adjusted EBITDAR decreased 2.7%, or $17M, from $633M to $616M; CEO Mark Frissora to leave company; also says offer from Golden Nugget rejected

· El Pollo Loco (LOCO) Q3 EPS 19c/$106.7M vs. est. 18c/$109.38M; system-wide comparable restaurant sales increased 2.6%, including a 2.0% increase for company-operated restaurants, and a 3.0% increase for franchised restaurants; sees FY18 EPS 70c-73c vs. est. 71c and sees FY18 system-wide comparable restaurant sales growth of flat to 1%

· GoPro (GPRO) Q3 EPS (4c)/$286M vs. est. loss (6c)/$272.27M; 3Q adjusted gross margin 33.2% vs estimate 34.1%; Hero7 Black had the strongest first month unit sell-through in company history, with record camera unit sales on GoPro.com

· Kraft Heinz (KHC) Q3 EPS 78c/$6.38B vs. est. 81c/$6.31B; Organic sales were up 2.6% Y/Y in Q3 as volume gains offset lower pricing; Adjusted EBITDA of $1.62B vs. $1.75B consensus

· Shake Shack (SHAK) Q3 EPS 17c/$119.6M vs. est. 13c/$117.01M; same-Shack sales decreased (-0.7%); raises FY18 revenue view to $450M-$452M from $446M-$450M (est. $452.08M); sees comp-Shack sales of 0% to 1.0% year over year

· Walmart Inc. (WMT) filed a lawsuit Thursday against its longtime credit-card issuer Synchrony Financial (SYF), alleging the lender breached terms of its contract with the retail giant.

· Weight Watchers (WTW) Q3 EPS $1.00/$365.8M vs. est. 99c/$379.5M; sees FY EPS $3.15-$3.25, vs. estimate $3.01; 3Q subscribers +25%

Energy

· EOG Resources (EOG) Q3 EPS $1.75/$4.78B vs. est. $1.53/$4.58B; raises 2018 Capex guidance range to $5.8-$6.0B; targets further well cost reductions in 2019; sees year crude oil production growth 19%

· Eversource Energy (ES) Q3 EPS 91c/$2.27B vs. est. 90c/$2.03B; backs FY18 EPS view $3.20-$3.30, vs. consensus $3.26

· Gulfport Energy (GPOR) Q3 EPS 49c vs. est. 38c; sees FY production 1,360 to 1,370 mmcfe/d; sees FY E&P capex about $815 million

· Parsley Energy (PE) Q3 EPS 45c/$511.02M vs. est. 44c/$489.24M; Q3 net oil production increased 9% quarter-over-quarter and 56% year-over-year to 73.5 MBoe per day; total net production averaged 116.2 MBoe per day

· Quaker Chemical (KWR) Q3 EPS $1.60/$222M vs. est. $1.53/$221.46M; said they do expect some potential headwinds such as a strong U.S. dollar and higher raw material costs

· SolarEdge (SEDG) Q3 EPS 86c/$236.6M vs. est. 82c/$234.18M; reports 1,083 Megawatts of inverters shipped; sees Q4 revenue $245M-$255M vs. est. $219.71M; sees non-GAAP gross margins expected to be within the range of 32% to 34%

· Three large utilities in California are ahead of schedule to hit their targets under a law requiring them to source 33 percent of their electricity from renewables by 2020, according to a California Public Utilities Commission report PCG (33%), EIX (32%) and SRE (44%)

Financials

· Dun & Bradstreet (DNB) Q3 EPS $1.85/$416.7M vs. est. $1.98/$432.51M; Q3 Organic revenue decreased 3% year over year

· Lincoln National (LNC) Q3 EPS $2.34/$4.26B vs. est. $2.17/$4.25B; Q3 book value per share, including AOCI, of $70.17, down 6%; BVPS, excluding AOCI, of $66.27, up 8%; raises dividend 12%

· MetLife (MET) announces new $2B buyback; Q3 adjusted EPS $1.38/$16.3B vs. est. $1.27/$16.1B; Q3 Book value of $48.94 per share, down 6% from last year

· Western Union (WU) Q3 EPS 52c/$1.4B vs. est. 48c/$1.43B; raises 2018 adjusted EPS outlook to $1.88-$1.95 from $1.80-$1.90 (est. $1.85) and sees low single-digit GAAP revenue increase and low to mid-single digit increase in constant currency revenue; sees cash flow from operating activities of approximately $800M

Healthcare

· Illumina (ILMN) to acquire Pacific Biosciences (PACB) at a price of $8.00 per share in an all-cash transaction with a total enterprise value of approximately $1.2B on a fully diluted basis https://on.mktw.net/2Qdw9mw

· An FDA advisory committee this afternoon voted 20 to 3 that Alkermes’ (ALKS) ALKS 5461 didn’t show substantial evidence of effectiveness as a proposed adjunctive treatment for major depression

· Aileron Therapeutics (ALRN) reports agreement with Dana-Farber/Boston Children’s Cancer and Blood Disorders Center for an open-label, multi-center, pediatric phase 1 clinical trial of ALRN-6924, Aileron’s lead clinical candidate

· Allscripts (MDRX) Q3 EPS 18c/$536M vs. est. 20c/$548.93M; sees FY18 EPS 72c-82c on revs $2.15B-$2.25B vs. est. 76c/$2.17B

· Insulet (PODD) Q3 EPS 3c/$151.1M vs. est.0c/$149.36M; Q3 gross margin of 67.5%, up 700 basis points; sees Q4 revenue $159M-$164M vs. est. $161.1M; sees FY18 revenue $558M-$563M, vs. consensus $557.41M

· NewLink Genetics (NLNK) Q3 EPS loss (20c) vs. est. loss (40c); ended the quarter on September 30, 2018, with cash and cash equivalents totaling $122.1M compared to $158.7M for the year ending December 31, 2017

· Puma Biotechnology (PBYI) shares fell -30%; reported $52.6M in Nerlynx net product revenue during the third quarter, up about 3.5% from $50.8M in Q2; total 3Q revenue of $62.6M included $10m in license revenue from a sub-licensee

· Sol-Gel Technologies (SLGL) signs agreement with Perrigo Israel, an affiliate of Perrigo Company (PRGO), for the development, manufacturing and commercialization of a generic product candidate; Perrigo will seek regulatory approval with the FDA

· Teladoc (TDOC) Q3 EPS loss (34c)/$111M vs. est. loss (36c)/$109.95M; narrows FY18 EPS view to ($1.48)-($1.50) from ($1.47)-($1.51) and raises FY18 revenue view to $414M-$416M from $409M-$413M vs. est. $411.63M

· Tesaro (TSRO) Q3 EPS loss ($2.49)/$63.23M vs. est. loss ($2.55)/$71.76M; narrows FY18 revenue view to $258M-$265M from $250M-$265M; 3Q cash and cash equivalents $476.8M

· Lipocine (LPCN) announced the completion of enrollment in the ambulatory blood pressure clinical study for TLANDO

Industrials & Materials

· ArcBest (ARCB) Q3 EPS $1.44/$826.2M vs. est. $1.12/$815.02M

· Chemours (CC) Q3 EPS $1.49/$1.63B vs. est. $1.42/$1.71B; sees FY18 adjusted EBITDA in lower half of $1.7B-$1.85B range citing reduced Ti-Pure titanium dioxide volume; sees FY18 adjusted EPS $5.10-$5.85 vs. est. $5.84 and says they expect each of our segments to deliver solid year-over-year top and bottom line growth

· Fluor (FLR) Q3 EPS 55c/$4.7B vs. est. 64c/$4.7B; cuts FY18 EPS view to $1.80-$1.90 from $2.10-$2.50 and below est. $2.04

· MasTec (MTZ) Q3EPS $1.33/$1.98B vs. est. $1.26/$1.99B;

· Orion Engineered (OEC) Q3 EPS 51c/$394.0M vs. est. 51c/$375.5M; adjusted EBITDA increased 13.2% to $72.6M; volumes decreased by 6.2 kmt or 2.3% to 266.7 kmt

· Stericycle (SRCL) Q3 EPS $1.03/$854.9M vs. est. $1.01/$856.36M; sees year revs $3.44B-$3.52B vs. est. $3.5B

· Terex (TEX) Q3 EPS 68c/$1.23B vs. est. 76c/$1.28B; sees FY adjusted EPS $2.60 to $2.70

· U.S. Steel (X) Q3 EPS $1.79/$3.73B vs. est. $1.73/$3.69B; cut its adjusted Ebitda forecast for the full year to $1.8B, down from prior view $1.85B-$1.9B; sees 4Q adjusted Ebitda $575M vs. est. $617.0M;

Technology, Media & Telecom

· Apple (AAPL) shares fell -5%; Q4 EPS $2.91/$62.9B vs. est. $2.78/$61.57B; Q4 iPhone units 46.89M vs. 46.68M last year and below est. 48.4M; sees Q1 revenue $89B-$93B vs. est. $92.91B and sees Q1 gross margin between 38% and 38.5%; sees operating expenses between $8.7B and $8.8B; Q4 iPad units 9.7M vs. 10.33M units last year; reports Q4 Mac units 5.3M vs. 5.39M last year

· Acacia Communications (ACIA) Q3 EPS 42c/$94.8M vs. est. 17c/$89.99M; sees Q4 EPS 30c-40c on revs $98M-$106M vs. est. 31c/$99.76M

· Arista Networks (ANET) Q3 EPS $2.11/$563.3M vs. est. $1.83/$548.4M; sees 4Q revenue $582M-$594M vs. est. $586.2M

· CBS Corp. (CBS) Q3 adjusted EPS $1.24/$3.26B vs. est. $1.22/$3.24B; 3Q Entertainment revenue $2.15 billion, 3Q Cable Networks revenue $569 million, 3Q publishing revenue $240.0 million, 3Q local media revenue $434 million

· Inphi (IPHI) Q3 EPS 30c/$78.0 vs. est. 29c/$77.9M; sees Q4 EPS 41c-43c on revs $84.3M-$88.3M, vs. est. 42c/$86.69M

· Live Nation (LYV) Q3 EPS 70c/$3.84B vs. est. 63c/$3.72B

· ManTech (MANT) Q3 EPS 55c/$497M vs. est. 52c/$485.81M; sees FY18 EPS $2.05-$2.09 on revs $1.94B-$1.96Bvs. est. $2.05/$1.95B

· RealPage (RP) Q3 EPS 38c/$225M vs. est. 35c/$221.18M; sees Q4 adjusted EPS 37c-38c on revs $226.2M-$229.4M vs. est. 37c/$231.97M; raises FY18 adj. EPS view to $1.48-$1.50 from $1.44-$1.48 and raises FY18 revenue view to $868.7M-$871.9M from $866.4M-$872.5M

· Symantec (SYMC) Q2 EPS 42c/$1.175B vs. est. 33c/$1.14B; sees Q3 adjusted EPS 37c-41c on revs $1.153B-$1.183B vs. est. 39c/$1.18B; Reaffirms guidance for fiscal year 2019

· Trimble (TRMB) Q3 EPS 49c/$804.7M vs. est. 46c/$806.7M; sees Q4 adjusted EPS 44c-48c on revs $791M-$821M vs. est. 46c/$826.52M

· Uniti Group (UNIT) Q3 FFO 62c on revs $252.6M vs. est. $253.97M

· Universal Display (OLED) shares fell -23%; Q3 EPS 72c/$77.6M vs. est. 66c/$91.41M; cuts FY18 revenue view to $240M-$250M from $280M-$310M vs. est. $298.7M

· Viavi (VIAV) Q1 EPS 15c/$268.5M vs. est. 14c/$268.5M; sees Q2 non-GAAP EPS 15c-17c on revs $270M-$290M vs. est. $281.94M

· BlackLine (BL) announced it has entered into a reseller agreement with SAP (SAP). Under the terms of the new agreement, SAP will have the ability to resell BlackLine’s market-leading cloud-based finance and accounting solutions to businesses around the world

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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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