Morning Preview: November 07, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, November 7, 2018

Stock futures are soaring as the results of yesterday’s mid-term elections may have been disappointing to President Trump and the future of his legislative agendas, but results were in-line with market forecasts. Results from the mid-term elections showed Republicans maintained control of the Senate (which was expected), by a margin of 51 to 45. However, Democrats won the House after a record turnout by a margin of 219 to 193 as claiming at least 26 GOP-held House seats. A Democratic House may leave President Trump short of support for more tax cuts, a border wall and undoing Obamacare while opens up the door for Democrats to probe his tax returns and Russian meddling in 2016. Treasuries gained and the dollar slumped, while WTI crude oil bounced back after a 7-day losing streak on reports OPEC Ministers gathering in Abu Dhabi this weekend will discuss the possibility of cutting production again next year, according to delegates, a move that would mark an abrupt end to six months of supply increases. Now with election results complete, attention turns back to corporate earnings today and the Federal Reserve tomorrow at its policy meeting, though no changes are expected at this time for interest rates. Stocks surged on Tuesday with major averages ending the day near its best levels after a midday pullback that saw gainer erased, looking to add to those gains today. The Dow closed at a session high, while the S&P 500 and Nasdaq ended the day just shy of Tuesday’s best levels. On Monday, the Dow had gained 0.8%, and the S&P 500 rose 0.6%, while the Nasdaq Index fell 0.4%. Markets awaited. The Nikkei Index slipped -61 points to settle at 22,085, the Shanghai Index fell -18 points to 2,641 while the Hang Seng Index rose 26 points to 26,147. In Europe, the German DAX is up about 115 points at 11,600, while the FTSE 100 gains 80 points to around 7,125.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 17.14 points, or 0.63%, to 2,755.45

· The Dow Jones Industrial Average rose 173.31 points, or 0.68%, to 25,635.01

· The Nasdaq Composite spiked 47.11 points, or 0.64%, to 7,375.96

· The Russell 2000 Index advanced 8.59 points, or 0.55% to 1,556.10

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 10:30 AM EST Weekly DOE Inventory Data

· 3:00 PM EST Consumer Credit for Sept…est. $15.0B

Earnings Calendar:



Other Key Events:

· RW Baird 48th annual Industrials Conference, 11/6-11/8, in Chicago

· Stephens Investment Conference, 11/6-11/8, in New York

· Piper Western Bank Symposium, 11/7-11/8, in CA

· REITWorld 2018 Annual Conference, 11/7-11/9, in San Francisco

Sector News Breakdown


· Camping World (CWH) Q3 EPS 38c/$1.31B vs. est. 61c/$1.42B; reports adjusted EBITDA decreased 17.0% to $100.1M

· Chuy’s (CHUY) Q3 EPS 20c/$101.2M vs. est. 29c/$104.57M; lowers 2018 adjusted EPS outlook to 88c-92c from $1.09-$1.13; sees FY comparable sales growth 0%; 3Q comparable sales +0.5%, vs. estimate +1.8%

· Darling Ingredients (DAR) Q3 GAAP EPS (4c)/$812.6M vs. est. 8c/$873.09M; raises share repurchase program for up to $200M from $100M

· Etsy (ETSY) announces $200M stock repurchase program; raises FY18 revenue view to $596M-$600M from $587M-$596M (est. $595.4M); raises GMS year-over-year growth view to 19-20%, or $3.87B-$3.90B, from 18-20%, or $3.84B-$3.90B; raises adjusted EBITDA margin view to 22%-23% from 21%-23%; Q3 EPS and revs topped views

· Masonite (MASI) Q3 adjusted EPS $1.03/$557M vs. est. $1.08/$560.02M

· Papa John’s (PZZA) Q3 adjusted EPS 20c/$364.007M vs. est. 22c/$393.68M; Q3 System-wide North America SSS down 9.8%; reports Q3 International comparable sales down 3.3% and total international sales up 10.0%; backs year EPS view

· Red Robin (RRGB) Q3 EPS 16c/$294.9M vs. est. 11c/$304.54M; Q3 comparable restaurant revenue down 3.4%; reports Q3 comparable restaurant guest counts down 1.9%; cuts FY18 EPS view to $1.60-$1.80 from $1.80-$2.20

· Turtle Beach (HEAR) Q3 EPS 91c/$74.4M vs. est. $1.02/$73.4M; sees Q4 EPS $1.02 on revs $94M vs. est. $1.01/$89.34M; sees Q4 net income up 18% to approximately $16.7M compared to $14.2M in the prior year

· Wendy’s (WEN) Q3 adjusted EPS 17c/$400.6M vs. est. 15c/$405.36M; Sees FY adjusted EPS 56c to 58c, vs. estimate 56c; 3Q comparable sales +1.2% vs. estimate +1.7%

· Zillow (ZG) shares fell -18%; Q3 revenue $343.1M vs. est. $344.2M; reports Q3 loss of ($492,000) vs. income of $9.21M a year ago; sees 4Q revenue $340M-$357M vs. est. $367.7M; sees 4Q adjusted Ebitda $26M-$38M vs. est. $74.3M

· Kraft Heinz Company (KHC) announced that it has entered into a definitive agreement to sell its Canadian natural cheese business to Parmalat for a purchase price of C$1.62B, or approximately $1.23B at current FX rates


· The American Petroleum Institute (API) reported that U.S. crude supplies rose by 7.8 million barrels for the week ended Nov. 2, showed supply declines of -1.2 million barrels for gasoline and 3.6 million barrels for distillates

· Callon Petroleum (CPE) Q3 EPS 21c vs. est. 20c; sees FY production 32.0 to 33.0 mboe/d, saw 31.5 to 33; 3Q production 34,913 boe/d

· Cimarex Energy (XEC) Q3 adjusted EPS $1.99/$591.49M vs. est. $1.55/$557.1M; daily production averaged 218.6 MBOE; oil production averaged 63,909 barrels per day; sees Q4 oil production averaging 73.0-78.0 MMbbl per day; says total 2018 daily production volumes are now expected to average 218 – 221 MBOE per day with annual oil volumes estimated to average

· Diamondback Energy (FANG) Q3 EPS $1.67/$538.03M vs. est. $1.60/$515.84M; Q3 production was 123 Mboe/d, up 45% year over year from 85 Mboe/d in Q3 2017, and up 9% quarter over quarter from 112.6 Mboe/d in Q2; raises FY production 118.5 to 119.5 mboe/d, saw 115 to 119

· Devon (DVN) Q3 EPS 63c vs. est. 42c; sees 4Q production 515 to 543 mboe/d, estimate 548.28; sees 4Q capital expenditure $555M-$665M

· Mountain Valley Pipeline, LLC, formally applied to the Federal Energy Regulatory Commission for authorization to build the MVP Southgate project, a proposed interstate natural gas transmission pipeline designed to provide reliable, cost-effective access to natural gas to meet increasing residential and commercial demand in central North Carolina

· Pioneer Natural (PXD) Q3 EPS $2.07 vs. est. $1.66; 3Q production 321 mboe/d; 3Q oil & gas revenue $1.32 billion

· Plains All American (PAA) Q3 adjusted EPS 43c/$8.79B vs. est. 36c/$8.66B

· ProPetro Holding (PUMP) Q3 EPS 53c/$434.0M vs. est. 54c/$448.76M; Q3 revenue was 6% lower than $459.9 million for the second quarter of 2018

· Vivint Solar (VSLR) Q3 EPS loss (61c)/$77.8M vs. est. 16c/$88.54M


· High-speed trading firm Virtu Financial Inc (VIRT) is buying independent brokerage Investment Technology Group Inc (ITG) for about $1 billion, with ITG shareholders to receive $30.30 in cash for each share they hold

· Assurant (AIZ) Q3 operating EPS $1.06/$2.27B vs. est. $1.01/$2.08B

· Barrett Business (BBSI) Q3 EPS $2.50/$247.3M vs. est. $2.26/$249.95M; sees FY18 EPS $4.31, vs. consensus $4.28

· LendingClub (LC) Q3 EPS 3c/$184.6M vs. est. 2c/$182.11M; Sees FY net revenue $688 million to $698 million vs. estimate $696.2 million

· MBIA (MBI) Q3 EPS adjusted EPS loss (35c) vs. est. loss (19c); book value per share was $12.22 as of September 30 compared with $15.44 as of December 31, 2017. Adjusted Book Value per share was $26.80 compared with $28.77 as of December 31, 2017

· Primerica (PRI) Q3 EPS $1.93 vs. est. $1.86; 3Q net investment income $20.6 million; 3Q adjusted operating revenue $485.2M


· Bristol-Myers Squibb (BMY) said the FDA approved Empliciti injection for intravenous use in combination with pomalidomide and dexamethasone for the treatment of adult patients with multiple myeloma who have received at least two prior therapies

· DexCom (DXCM) Q3 EPS 17c/$266.7M vs. est. loss (10c)/$241.3M; raises FY18 revenue view to $975M from $925M vs. est. $930.83M and backs FY18 gross profit margin view of approximately 64%.

· Halozyme (HALO) raises FY18 revenue view to $150M-$160M from $125M-$135M; FY18 revenue was driven by the $25M upfront payment from the recent Roche ENHANZE license agreement expected in the Q4; operating expenses to $220M-$230M, a reduction from the prior range of $230M-$240M

· Jazz Pharmaceuticals (JAZZ) Q3 EPS $3.58/$469M vs. est. $3.32/$482.48M; backs FY18 adj. EPS $12.75-$13.25 vs. est. $13.11 and lowers FY18 revenue view to $1.86B-$1.9B from $1.88B-$1.93B vs. est. $1.92B.

· Momenta Pharmaceuticals (MNTA) announced that it has executed agreements with AbbVie (ABBV) providing license rights for the global launch of M923, Momenta’s proposed biosimilar to Humira

· Myriad Genetics (MYGN) Q1 EPS 43c/$202.3M vs. est.30c/$202.37M; sees Q2 adj. EPS 36c-38c on revs $216M-$218M vs. est. 43c/$224.5M; sees FY19 adj. EPS $1.70-$1.75 on revs $855M-$865M vs. est. $1.72/$887.98M

Industrials & Materials

· Boeing (BA) has warned operators of its new 737 Max jet about potentially suspect flight-control software following the Lion Air crash last week that killed 189 people in Indonesia

· Kratos Defense (KTOS) Q3 EPS 8c/$159.4M vs. est. 3c/$157.73M; increasing its full year 2018 financial guidance for Adjusted EBITDA, up to $56 to $60M;

· Versum Materials (VSM) Q4 adjusted EPS 60c/$351M vs. est. 57c/$330.86M; sees FY19 revenue $1.425B-$1.475B vs. est. $1.42B; sees FY19 adjusted EBITDA $475M-$495M

Media & Telecom

· Match Group (MTCH) Q3 EPS 39c/$444M vs. est. 36c/$436.65M; average subscribers increased to 8.1M, a 23% increase over the prior year quarter; declared a special dividend of $2.00 on each share of Match Group common stock and class B common stock; sees Q4 revenue $440M-$450M vs. est. $454.01M; sees Q4 adjusted EBITDA $165M-$170M; Tinder saw revenue double in the third quarter from a year earlier, and is on track to pull in about $800 million in sales this year.

· CenturyLink (CTL) announced that Neel Dev has been named executive vice president and CFO, effective immediately

· Dish Network (DISH) Q3 EPS 82c/$3.4B vs. est. 67c/$3.4B; DISH loses 367K satellite subscribers


· Arris International PLC (ARRS) shares rallied following a report that the set-top-box maker was going to be acquired by CommScope Holding Co. (COMM).Late Tuesday, CNBC reported that CommScope was near a deal to acquire Arris for more than $5.6B

· Five9 (FIVN) Q3 EPS 18c/$65.3M vs. est. 9c/$61.75M; Q3 gross margin was 64.3% vs 63.1% last year; raises FY18 EPS view to 49c-51c from 39c-42c and raises FY18 revenue view to $251.1M-$252.2M from $244.5M-$246.5M

· Frontier Communications (FTR) Q3 adjusted EPS loss (7c)/$2.13B vs. est. loss (23c)/$2.13B; cuts FY18 adjusted EBITDA view to $3.55B from $3.6B

· GoDaddy (GDDY) authorizes $500M share repurchase; Q3 EPS 8c/$679.5M vs. est. 17c/$673.86M; reports Q3 total bookings of $741.8M, up 11.0% year over year; Q3 customers of 18.3M as of September 30, 2018, up 6.7% year over year; raises FY18 revenue view

· Infinera (INFN) shares fell -25%; forecast 4Q sales that fell short of the lowest analyst estimate; sees Q4 revenue of $315-$335 million below estimate $432.3 million (watch CIEN, FNSR); Q3 EPS (4c)/$200.4M vs. est. loss (4c)/$209.9M

· DXC Technology (DXC) Q2 EPS $2.02/$5.01B vs. est. $1.94/$5.3B

· New Relic (NEWR) Q2 EPS 20c/$114.9M vs. est. 12c/$112.18M; raises FY19 EPS view to 42c-48c from 39c-46c (est. 45c) and raises FY19 revenue view to $466.5M-$469.5M from $457.5M-$462.5M (est. $462.82M)

· Tableau Software (DATA) Q3 EPS loss (7c)/$239.6M vs. est. loss (11c)/$242.2M; 3Q license revenue $138.1 million

· TrueCar (TRUE) Q3 EPS 4c/$93.6M vs. est. 5c/$93.84M; sees Q4 revenue $95.5M-$97.5M, vs. consensus $98.71M; lowers FY18 revenue to $358M-$360M from $360M-$365M

· Twilio (TWLO) Q3 EPS 7c/$168.9M vs. est. 2c/$150.3M; sees FY adjusted EPS 10c-11c on revs $629.0M-$631.0M vs. est. 3c/$589.6M


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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