Morning Preview: November 09, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, November 9, 2018

Stock futures are indicated lower, tracking weakness in Asia and Europe as global markets pullback after recent gains earlier in the week. Defensive Treasuries rise as yields drop from multi-year highs, with commodity prices falling amid weakness in China. The Nikkei Index fell -236 points to 22,250, the Shanghai Index fell -36 points to 2,598, and the Hang Seng Index dropped -625 points to settle at 25,601. In Europe, the German DAX is lower by -70 points at 11,450, while the FTSE 100 is down about -50 points moving back under 7,100. Bloomberg noted Hong Kong and Chinese stocks led declines in Asia, with financial shares tumbling after Beijing said it plans to set quotas for banks to pump credit into private companies. The rout in oil continues as WTI crude on track for its 10th straight losing session, dropping under $60 per barrel, while Brent crude follows WTI into bear market territory (down over 20% from October highs) moving below $70 per barrel, the first time since April. Commodity prices drop in general, with further declines in copper as signs of cooling demand in China prompted a bearish outlook. Earnings season slowly wraps up next week while attention turns to inflation data in the U.S. today, with producer prices for November out at 8:30 AM EST today.

Market Closing Prices Yesterday

· The S&P 500 Index slipped -7.06 points, or 0.25%, to 2,806.83

· The Dow Jones Industrial Average rose 10.92 points, or 0.04%, to 26,191.22

· The Nasdaq Composite dropped -39.87 points, or 0.53%, to 7,530.88

· The Russell 2000 Index declined -3.95 points, or 0.25% to 1,578.21

Events Calendar for Today

· 8:30 AM EST Producer Price Index (PPI) MoM for Oct…est. 0.2%

· 8:30 AM EST PPI Ex: Food & Energy MoM for Oct …est. 0.2%

· 8:30 AM EST Producer Price Index YoY for Oct…est. 2.5%

· 10:00 AM EST University of Michigan Confidence, Nov-P…est. 98.0

· 10:00 AM EST Wholesale Inventories MoM, Sept-F…est. 0.3%

· 1:00 PM EST Baker Hughes Weekly Rig Count

World News

· The U.K. economy expanded in the third quarter at its fastest pace in almost two years, as it expanded in Q3 at an annualized rate of 2.5%, the fastest clip since the last three months of 2016, the Office for National Statistics said Friday. Compared with the previous quarter, the economy grew 0.6%

· China’s inflation rate held at 2.5% last month and factory-gate price growth slowed as domestic demand stayed sluggish. Producer-price inflation eased to 3.3% from 3.6%

Sector News Breakdown

Consumer

· Continental Building (CBPX) Q3 EPS 51c/$131.2M vs. est. 47c/$125.57M; Q3 EBITDA increased 21.4% to $38.6M; Q3 Gross margin increased to 28.1% compared to 24.5% last year

· Dean Foods (DF) cuts quarterly dividend to 3c from 9c

· Eldorado Resorts (ERII) Q3 EPS 48c/$503.9M vs. est. 60c/$490.69M; Q3 Adjusted EBITDA $379.1M vs. $342.6M last year; authorizes $150M share repurchase program

· Funko (FNKO) Q3 EPS 27c/$176.9M vs. est. 23c/$166.04M; raises FY18 EPS guidance to 68c-73c from 60c-70c (est. 69c) and raises FY18 revenue guidance to $645M-$650M from $620M-$630M; saying third-quarter gross margin fell below estimates due to lower average prices in Europe

· Hertz (HTZ) Q3 EPS $2.14/$2.8B vs. est. $1.71/$2.68B; Q3 adjusted corporate EBITDA improved 9% to $351M

· J & J Snack Foods (JJSF) Q4 EPS $1.24/$300.7M vs. est. $1.32/$306.49M

· Procter & Gamble Co. (PG) said it would revamp its management structure, shrinking the number of business units from 10 to six and giving the heads of those products control over regional sales teams as well as some functions previously run by headquarters

· United Continental (UAL) reported operating performance for October 2018. Consolidated traffic, measured by revenue passenger miles, increased 7.5% and consolidated capacity, measured by available seat miles, increased 5.9% versus October 2017.

Energy

· A federal judge in Montana on Thursday blocked the Trump administration’s permit allowing the Keystone XL pipeline and barred any construction of the long-delayed project until completion of a supplemental environmental review.

· Jagged Peak Energy (JAG) Q3 adjusted EPS 18c/$155.4M vs. est. 15c/$145.68M. Q3 production volumes grew 5% from Q2 and averaged 36.1 MBoe per day, 27.5 Mbbls/d oil; sees Q4 average daily equivalent production 36.0-38.0 MBoe/d; raises 2018 average daily equivalent production view to 33.6-34.1 MBoe/d from 32.0-34.0 MBoe/d

· Oasis Petroleum (OAS) announced that it has entered into a definitive agreement to sell additional interests in Bobcat DevCo and Beartooth DevCo to Oasis Midstream Partners (OMP) for $250M, subject to customary purchase price adjustments. The divested assets include a 15% interest in Bobcat DevCo and 30% interest in Beartooth DevCo

Financials

· MoneyGram (MGI) cuts FY18 revenue view to decline ~10% vs. decline of 4%-6% prior; Q3 EPS 24c/$347.2M vs. est. 15c/$378.74M; Q3 EBITDA was $59.5M, down $8.4M from last year

· Cohen & Steers (CNS) reports preliminary AUM $57.8B as of October 31, a decrease of $2.2B from September 30, 2018

· PNC Financial (PNC) raises share repurchase authorization by $900M

· Redfin (RDFN) Q3 EPS 4c/$140.3M vs. est. 2c/$139.27M; sees Q4 revenue $115.1M-$118.3M vs. est. $121.34M; properties segment revenue between $15M-$16M is included in the guidance

Healthcare

· CareDx (CDNA) lifted its 2018 revenue forecast range to $74M-$75M from $68M-$70M and topping the $69.9M estimate

· Keryx (KERX) Q3 EPS loss (14c)/$28M vs. est. loss (15c)/$29.1M

· Sarepta (SRPT) 3.817M share Secondary priced at $131.00 per share

· Mettler-Toledo (MTD) Q3 EPS $5.12/$734.8M vs. est. $5.00/$738.16M; sees Q4 adjusted EPS $6.72-6.77 vs. est. $6.83; sees Q4 revenue growth 6% in local currency; narrows FY18 adj EPS view to $20.20-$20.25 from $20.10-$20.25

· Spectrum (SPPI) narrows FY18 revenue view to $100M-$110M from $95M-$115M

· Veracyte (VCYT) announced the publication of “real world” data showing that the Afirma(R) Genomic Sequencing Classifier (GSC) enables even more patients to avoid unnecessary surgery in thyroid cancer diagnosis compared to the company’s flagship, original Afirma Gene Expression Classifier

· Zogenix (ZGNX) Q3 EPS loss ($1.08) vs. est. loss (88c); as of September 30, 2018, the Company had $539.1 million in cash and cash equivalents and marketable securities, compared to $293.5 million at December 31, 2017

Industrials & Materials

· Air Lease (AL) Q3 EPS $1.32/$450.7M vs. est. $1.22/$435.08M

· Clearwater Paper (CLW) Q3 adjusted EPS $1.35/$426.5M vs. est. 44c/$430.0M

· Ferro (FOE) Q3 adjusted EPS 37c/$395.2M vs. est. 40c/$400.85M; Q3 Organic sales grew 7.3% on a constant currency basis. Q3 adjusted free Cash flow expanded 280% to $79.1 million; affirms FY18 EPS and adjusted EBITDA ‘at lower end of range’

· Trinseo (TSE) Q3 EPS $1.83/$1.2B vs. est. $1.88/$1.15B; sees Q4 adjusted EPS $1.27-$1.46, vs. consensus $1.78; sees Q4 adjusted EBITDA $110M-$120M; cuts FY18 adj. EPS view to $8.27-$8.46 from $9.15-$9.52

Technology, Media & Telecom

· Disney (DIS) Q4 EPS $1.48/$14.31B vs. est. $1.34/$13.74B; $1.16B, Q4 media networks revenue $5.96B, Q4 parks & resorts revenue $5.1B; 4Q studio entertainment revenue $2.15B; Q4 Consumer Products & Interactive revenue $1.1B

· Laser and optical products maker II-VI Inc. (IIVI) said it will buy Finisar Corp. (FNSR) for about $3.2B, paying $26 per share in cash and stock https://on.mktw.net/2yZiOrk

· Activision (ATVI) Q3 EPS 52c/$1.66B vs. est. 49c/$1.66B; sees year adj. EPS $2.58 on revs $7.475B vs. est. $2.62/$7.48B; sees 4Q adj. EPS $1.27 on revs $3.05B vs. est. $1.31/$3.05B

· AMC Entertainment (AMC) Q3 EPS loss (82c)/$1.22B vs. est. loss (47c)/$1.22B; admissions revenues were nearly unchanged at $751.4M compared to $753.5M YoY

· CenturyLink (CTL) Q3 adjusted EPS 30c/$5.82B vs. est. 30c/$5.88B; backs FY18 adjusted EBITDA view $9B-$9.15B; sees FY18 CapEx $3.15B-$3.25B; sees FY18 free cash flow $4B-$4.2B

· Dropbox (DBX) Q3 adjusted EPS 11c/$360.3M vs. est. 6c/$352.57M

· Hortonworks (HDP) Q3 EPS loss (6c)/$87.2M vs. est. loss (13c)/$87.07M

· Lionsgate (LGF/A) Q2 EPS 22/$901M vs. est. loss (15c)/$890.97M; Starz reported record growth in the quarter driven by a sequential increase of 1.3M subscribers to a total of 25.1M domestic subscribers

· Oclaro (OLCR) Q1 EPS 8c/$131.7M vs. est. 9c/$128.2M

· Skyworks (SWKS) Q4 EPS $1.94/$1.01B vs. est. $1.92/$1.00B; sees Q1 EPS $1.91 on revs $1.00B-$1.02B vs. est. $2.08/$1.07B

· Trade Desk (TTD) Q3 EPS 65c/$118.8M vs. est. 50c/$117.4M; sees 4Q Adjusted EBITDA of $53M; sees Q4 revenue $147M vs. est. $144.77M; raises FY18 revenue view to at least $464M from $456M and raises FY18 adjusted EBITDA view to $145M from $140M

· Unisys (UIS) Q3 EPS 39c/$688.3M vs. est. 41c/$669.6M

· Yelp (YELP) Q3 EPS 17c/$241.1M vs. est. 10c/$245.35M; sees 2018 revenue $938M-$942M, vs. est. $963M; sees 2018 adjusted EBITDA $178M-$180M; said “We do not believe there was a single or predominant factor that led to the shortfall relative to our expectations, but rather a combination of smaller operational factors that negatively affected productivity”; sees 2018 revenue $938M-$942M below consensus $963M

____________________________________________________

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