Morning Preview: November 16, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, November 16, 2018

U.S. equity futures are lower, pressured by weakness in the chip sector following lowered sales outlooks from NVDA and AMAT, while the retail space is also poised for losses after WSM and JWN results disappointed investors as well. The British Pound rebounded modestly overnight as no other key cabinet members quit in the UK last night (after four members resigned the day prior), as Pro-Brexit minister Michael Gove confirmed he’s not resigning while Theresa May received support from chief Brexit negotiator Michel Barnier. That said, the negotiator signaled that the bloc couldn’t and won’t offer any more concessions. Oil prices are on track for a 3rd day of gains, as it pares a sixth straight week of losses. In utility news, shares of recently battered PCG shares jumped over 40% last night after the head of the California state regulator said he can’t imagine allowing the utility to go bankrupt as it faces potential liability for the wildfires. In trade news, late yesterday, Commerce Secretary Wilbur Ross said the U.S. still plans to raise tariffs on China in January, with Donald Trump and Xi Jinping only likely to agree a “framework” for further talks when they meet at the G-20 at the end of month. In Asian markets, The Nikkei Index fell -123 points to 21,680, the Shanghai Index rose 10 points to close at 2,679 and the Hang Seng Index rose 80 points to settle at 26,183. In Europe, the German DAX is up a few points at 11,370, while the FTSE 100 is little changed at 7,030.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 28.62 points, or 1.06%, to 2,730.20

· The Dow Jones Industrial Average rose 208.77 points, or 0.83%, to 25,289.27

· The Nasdaq Composite spiked 122.64 points, or 1.72%, to 7,259.03

· The Russell 2000 Index advanced 21.62 points, or 1.44% to 1,524.12

Events Calendar for Today

· 9:15 AM EST Industrial Production MoM for Oct…est. 0.2%

· 9:15 AM EST Capacity Utilization for Oct…est. 78.2%

· 11:00 AM EST Kansas City Fed Manufacturing for Nov…est. 11

· 11:30 AM EST Feds Evans speaks at fixed income forum roundtable

· 1:00 PM EST Baker Hughes Weekly Rig Count

· 4:00 PM EST Net Long-term TIC Flows for Sept…prior $131.8B

Sector News Breakdown


· Nordstrom (JWN) shares fell -13%; Q3 EPS 67c/$3.65B vs. est. 66c/$3.69B; Q3 comp sales rose 2.3% vs. est. 2.4%; 3Q full-price (stores, comp sales +0.4%, vs. estimate +2%; raises FY18 revenue view to $15.5B-$15.6B from $15.4B-$15.5B while narrows FY18 EPS view to $3.55-$3.65 from $3.50-$3.65; narrows FY18 SSS to ~2% from 1.5%-2.0%; 3Q gross margin +33.3% below Bloomberg estimate +34.2%

· Williams-Sonoma (WSM) Q3 EPS 95c/$1.36B vs. est. 94c/$1.37B; Q3 comparable brand revenue up 3.1%. Q3 Merchandise inventories increased of 1.8%; backs FY18 EPS view of $4.26-$4.36, vs. consensus $4.34; backs FY18 revenue view of $5.57B-$5.67B, consensus $5.65B; announces partnership with Reliance Brands for India market

· Sonos (SONO) Q4 EPS loss (2c)/$273M vs. est. loss (10c)/$248.6M; reports Q4 adjusted EBITDA $20M; sees Q1 revenue $485M-$495M vs. est. $469.41M and sees Q1 adjusted EBITDA $66M-$69M; sees 2019 revs $1.25B-$1.275B vs. est. $1.21B

· Shoe Carnival (SCVL) Q3 EPS 76c/$269.18M vs. est. 59c/$266.37M; Q3 comp sales up 4.5% vs. 4.4% last year; raises FY18 EPS view to $2.36-$2.38 from $2.07-$2.15 (est. $2.16) and raises FY18 revenue view to $1.02B-$1.22B from $1.016B-$1.02B (est. $1.02B)

· Natural Grocers (NGVC) Q4 EPS 9c/$217.5M vs. est. 4c/$214.5M; 4Q daily average comparable sales +6.3% and 4Q gross margin +26.3%; sees FY EPS 33c-40c vs. est. 36c

· Post Holdings (POST) Q4 EPS $1.08/$1.63B vs. est. $1.18/$1.64B; to pursue IPO of Active Nutrition Business

· Huazhu (HTHT) Q3 ADS 24c/$403M vs. est. 30c/$384.6M; sees 4Q revenue +17% to +19%; Q3 adjusted Ebitda $146.6M; sees FY18 revenue growth at high end of 18%-22% range

· Matthews (MATW) Q4 EPS $1.23/$407.4M vs. est. $1.21/$406.71M; sees FY19 adjusted EBITDA growth in mid-to-high single digits; raises quarterly dividend 5.3% to 20c per share

· Laureate Education (LAUR) 12.25M share Secondary priced at $14.00


· PG&E (PCG) shares rose over 40% last night after a California Public Utilities Commission official told investors on a conference call that the agency doesn’t want PG&E to go into bankruptcy, according to a person familiar with the matter, Bloomberg reported. The call was hosted by Bank of America Corp. analysts and included PUC President Michael Picker and other commission officials

· PG&E Corp. (PCG) long-term credit rating was downgraded by Moody’s Investors Service to Baa3 from Baa2, and it was further placed on review for downgrade to junk, citing the material exposure to new potential liabilities associated with the Camp fire and the uncertainties associated with how the fire-related liabilities will be recovered.

· Helmerich & Payne (HP) Q4 revenue $696.8M vs. $682.2M est.; 4Q U.S. Land ops average rig revenue per day $24,449 vs. $21,944 y/y; 4Q International land ops average rig revenue per day $30,909 vs. $40,540 y/y; 4Q U.S. Land ops rig expense per day $14,109 vs. $13,905 y/y; 4Q offshore rig expense per day $24,972 vs. $22,709 y/y

· Anadarko Petroleum (APC) raises share repurchase authorization by $1B, hikes dividend 20% and said 2019 capex is $4.3B-$4.7B a decrease relative to its 2018 program and delivers 10% oil growth year over year

· Hi-Crush Partners (HCLP) files to sell 11M common units for selling unitholders


· Employers Mutual Casualty Company (EMCC) announced today that it has proposed to acquire all of the outstanding shares of common stock of EMC Insurance Group Inc. (EMCI) that EMCC does not already own for $30 per share in cash

· PennantPark Investment (PNNT) Q4 Total investment income $27.6M, 4Q net investment income per share 20c and 4Q net asset value per share $9.11


· Boston Scientific (BSX) approved a new global restructuring program, and sees limited headcount reductions to result from these activities; sees activities initiated in 2019 and substantially done by end of 2021; sees pre-tax charges about $200M-$300M, of which about $180M-$280M is expected to result in future cash outlays

· Bristol-Myers Squibb Company (BMY) said the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency adopted a positive opinion recommending approval of the Opdivo (nivolumab) plus low-dose Yervoy (ipilimumab) combination to include first-line treatment for patients with intermediate- and poor-risk advanced renal cell carcinoma

· Cardinal Health (CAH) downgraded to market perform at Leerink

Industrials & Materials

· Adecoagro (AGRO) Q3 Ebitda $79.6M vs. Bloomberg est. $62.3M

· Esco Tech (ESE) Q4 EPS $1.22/$231.1M vs. est. $1.16/$232.3M; sees 1Q adjusted EPS 40c-45c vs. est. 58c and year EPS $2.95-$3.05 vs. est. $3.05; 4Q backlog $382.8 million and 4Q orders $188.3 million

· Haynes (HAYN) Q4 EPS 25c/$122.3M vs. est. 27c/$119.0M; 4Q backlog $216.0 million; says undergoing a significant planned equipment outage and upgrade; says additional capital expenditure related to outage about $2.0 million; expects Q1 1q revenue and earnings to be lower than Q4

· Wesco Aircraft (WAIR) Q4 EPS 18c/$406.8M vs. est. 21c/$377.97M; sees FY19 revenue growth at mid-single-digit percentage rate; says higher sales volume, Wesco 2020 benefits and expense leverage are expected to drive a high-single-digit percentage increase in adjusted EBITDA

· Teck Resources (TECK) announces $400M stock buyback

Technology, Media & Telecom

· Applied Materials (AMAT) shares fell -9%; Q4 EPS 97c/$4.01B vs. est. 97c/$4B; sees 1Q net sales $3.56B-$3.86B vs. est. $3.96B; sees 1Q adjusted EPS 75c-83c below the consensus est. 92c; 4Q adjusted gross margin +45.5% vs. estimate +45.4%

· Nvidia (NVDA) shares fell -16%; Q3 EPS $1.84/$3.18B vs. est. $1.71/$3.24B; board authorizes additional $7B under share buyback program; raises quarterly dividend 7% to 16c per share; sees Q4 revenue $2.7B, +/- 2% vs. est. $3.4B; sees Q4 GAAP and non-GAAP gross margins are expected to be 62.3% and 62.5%, respectively, plus or minus 50 basis points

· Intel Corp. (INTC) board approves $15B increase in authorized stock repurchase program

· Qualcomm (QCOM) upgraded to Equal Weight at Morgan Stanley

· Super Micro Computer (SMCI) Q1 EPS 66c-70c on sales $952M-$962M vs. est. 49c/$822M; sees 2Q sales $830M-$890M vs. est. $934.0M; restates financials on timing of recognition of revenue and classification of certain inventory

· Globant (GLOB) Q3 EPS 46c/$134.6M vs. est. 44c/$132.6M; sees Q4 adjusted EPS 45c-49c on revs $138M-$140M vs. est. 46c/$136.3M; sees FY18 adjusted EPS $1.69-$1.73 on revs $520M-$522M vs. est. $1.68/$515.13M


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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