Morning Preview: February 15, 2019

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Early Look

Friday, February 15, 2019

Futures

Up/Down

%

Last

DJ Industrials

35.00

0.14%

25,462

S&P 500

4.50

0.15%

2,747

Nasdaq

9.50

0.14%

7,029

 

 

Stock futures are edging higher, looking to close out the week on a positive note, as trade talks between the U.S. and China concluded with Treasury Secretary calling them “productive meetings” and will continue in Washington next week, but no final resolution was reached at this point. Meanwhile, President Trump will use emergency powers to redirect around $7 billion in federal funds to building his border barrier after Congress came up short, a White House official said. The move is sure to provoke a legal challenge and has divided Republicans. Oil futures look to make it an 8th straight day of gains after reports the U.S. may issue sanctions on Venezuela by blocking foreign entities from dealing with PDVSA. In Asian markets, The Nikkei Index lost -239 points to settle at 20,900, the Shanghai Index fell -37 points to 2,682 and the Hang Seng Index dropped -531 points (1.87%) to end the week at 27,900. In Europe, the German DAX is up around 80 points at 11,175, while the FTSE 100 is up around 30 points at 7,230.

 

U.S. stocks were mixed on Thursday as a weaker reading for monthly retail sales overshadowed optimism over U.S.-China trade talks and word that President Trump will sign a spending bill to keep the government open according to Senate Majority Leader Mitch McConnell, but will also declare a national emergency at the border. Tech outperformed as the Nasdaq Composite eked out gains to rise for a fifth session in a row while consumer staples (led by weakness in Dow component KO after earnings) and financial sectors (on lower yields/weaker data) were the biggest losers on the day. News that President Donald Trump may extend the tariff truce with Beijing by another 60 days if a trade deal appears near also helped sentiment into key trade meetings today between the two countries.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -7.30 points, or 0.27%, to 2,745.73

·     The Dow Jones Industrial Average fell -103.88 points, or 0.41%, to 25,439.39

·     The Nasdaq Composite gained 6.58 points, or 0.09%, to 7,426.95

·     The Russell 2000 Index advanced 2.16 points, or 0.14% to 1,545.11

 

Events Calendar for Today

·     8:30 AM EST      Empire Manufacturing for February…est. 7.0

·     8:30 AM EST      Import Prices MoM for January…est. (-0.2%)

·     9:15 AM EST      Industrial Production MoM for January…est. 0.1%

·     9:15 AM EST      Capacity Utilization for January…est. 78.7%

·     9:55 AM EST      Fed’s Bostic to speak on workforce development

·     10:00 AM EST    University of Michigan Confidence, Feb-P…est. 93.5

·     1:00 PM EST       Baker Hughes Weekly Rig Count

·     4:00 PM EST       Net Long term TIC flows for December

 

Earnings Calendar:

·     Earnings Before the Open: ABR, AXL, CHH, CPSI, DAN, DE, HE, MCO, NWL, PEP, SXT, WBC, ZEUS

 

Other Key Events:

·     Healthcare Information Info & Management Systems Conference, 2/11-2/15, in Orlando, FL

·     2019 ASCO Cancers Symposium, 2/14-2/16, in San Francisco, CA

 

 

Macro

Up/Down

Last

WTI Crude

0.31

54.72

Brent

0.39

64.96

Gold

7.70

1,321.60

EUR/USD

-0.002

1.275

JPY/USD

-0.03

110.45

10-Year Note

+0.00

2.655%

 

 

World News

·     President Trump will invoke an emergency declaration to redirect $3.5 billion Congress approved for the Defense Department’s military construction budget, a person familiar said. He’ll also use his ordinary executive authority to reprogram $2.5 billion from the agency’s drug interdiction efforts and $600 million from the Treasury department’s drug forfeiture program

·     China’s inflation slowed across its producer and consumer sectors last month, as the producer-price index edged up 0.1% in January, slowing from a 0.9% on-year gain in December. January’s reading for factory-gate prices is the slowest since September 2016.

·     China’s consumer-price index rose 1.7% in January from a year earlier, compared with a 1.9% increase in December, the bureau said. January’s increase was the slowest in 12 months.

 

Sector News Breakdown

Consumer

·     PepsiCo (PEP) Q4 core EPS $1.49/$19.52B vs. est. $1.49/$19.53B; sees FY19 core EPS about $5.50 vs. consensus $5.87 and sees FY19 organic revenue up 4%and sees a decline in core constant currency EPS of approximately 1%

·     Trex (TREX) Q4 EPS 43c/$140M vs. est. 36c/$131.44M; sees Q1 revenue $176M vs. est. $189.5M

·     TrueCar (TRUE) Q4 EPS 3c/$91.1M vs. est. 5c/$95.67M; sees Q1 revenue $84M-$86M below est. $93.06M and sees Q1 adjusted EBITDA is expected to be in the range of $3M to $5M; Q4 adjusted EBITDA was $8.1M vs. $7.5M a year ago; average monthly unique visitors fell 10% during the quarter to 6.5M; sees FY19 revenue $of $371M-$378M , consensus $410.24M

·     Mattel, Inc. (MAT) has entered into a three-year international licensing agreement with Illumination and Universal Brand Development for its Despicable Me franchise

·     Carl Icahn owns roughly 10% of Caesars (CZR) and plans to push the casino operator to consider selling itself after it received at least two approaches, according to people familiar with the matter reports indicated https://on.mktw.net/2S7o1V6

 

Financials

·     Credit card companies (MA, V) are set to raise fees U.S. merchants pay to process transactions from April, WSJ reports, citing unidentified people familiar with the matter.

·     Capital One (COF) reports January charge-offs 5.08% vs. 4.95% last month and said 30-plus day performing delinquencies 4.16% vs. 4.04% last month

·     Redfin (RDFN) Q4 GAAP EPS loss (14c)/$124.13M vs. est. loss (18c)/$117.02M; sees Q1 revenue $101.5M-$105.1M vs. est. $103.43M

·     Invitation Homes (INVH) Q4 core FFO 30c/$433M vs. est. 30c/$437.49M; sees FY19 adjusted FFO 98c-$1.06 vs. est. $1.24; sees FY19 core FFO per share $1.20-$1.28; sees same store core revenue growth 3.8%-4.4% and same store NOI growth 3.5%-4.5%

·     VICI Properties (VICI) Q4 AFFO 36c/$226M vs. est. 37c/$233.5M; sees 2019 FFO per share $1.45-$1.48 vs. est. $1.60; 4Q operating income $195.7M

 

Healthcare

·     Acorda (ACOR) Q4 EPS 45c/$69.2M vs. est. loss (75c)/$48.1M; 4Q Ampyra net sales $64.2M vs. Bloomberg est. $48.2M

·     Bristol-Myers Squibb (BMY) reported an objective response rate of 25% from cohort-1 data evaluating Opdivo in combination with Yervoy in patients with metastatic castration-resistant prostate cancer

·     Canopy Growth Corp. (CGC) reported that it beat revenue expectations; Q3 net losses of C$121 million, or losses of $C0.38 a share, compared with net income of C$11 million, or C$0.01 a share, in the year-ago period; Revenue rose to C$83.1 million from C$9.8 million in the year-ago period

·     Incyte (INCY) files to sell 34.13M shares of common stock for holders

·     Healthcare Trust (HT) Q4 normalized FFO 40c/$172.3M vs. est. 41c/$173.9M

 

Industrials & Materials

·     Deere & Co (DE) Q1 EPS $1.54/$6.94B vs. est. $1.75/$6.95B; reaffirms year net income forecast of $3.6B

·     Agnico Eagle (AEM) Q4 adjusted EPS 14c/$537.8M vs. est. 2c/$525.24M; raises dividend; 4Q gold production 410,712 oz; 4Q capital expenditure $289.9M; raises FY19 gold output forecast to 1.75M oz from 1.70M oz

·     Chemours (CC) Q4 adjusted EPS $1.05/$1.46B vs. est. 99c/$1.51B; raises share repurchase authorization to $1B from $750M; sees FY19 adjusted EPS $4.00-$5.05 below consensus $5.57; expects to deliver 2019 Adjusted EBITDA within a range of $1.35B-$1.6B; said sees weaker 1H outlook for TiO2

·     XPO Logistics (XPO) shares fell -13%; Q4 EPS 72c/$4.39B vs. est. 84c/$4.55B; said missed Q4 forecast for adjusted EBITDA, primarily due to headwinds in France and the UK and a loss of profit in the postal injection business with our largest customer (sees year Ebitda $1.65B-$1.73B vs. est. $1.78B; to buy back up to added $1.5B in shares; sees 2019 rev growth 3%-5%

·     Covanta (CVA) Q4 adjusted EPS 4c/$500M vs. est. 10c/$474.35M; sees FY19 adjusted EBITDA $440M-$465M and sees FY19 free cash flow $120M-$145M

·     Mercer International (MERC) Q4 EPS 68c/$412.223M vs. est. 77c/$406.27M

·     Wabco (WBC) Q4 EPS $2.13/$911.6M vs. est. $1.98/$965.25M; sees FY19 EPS $7.60-$8.10 vs. est. $8.13 with FY19 sales growth of 1.5%-6.5% in local currencies

 

Technology, Media & Telecom

·     Nvidia (NVDA) shares rose 7%; Q4 EPS 80c/$2.21B vs. est. 78c/$2.2B; Q4 adjusted gross margin 56.0%; sees 1Q revenue $2.20B +/- 2%, vs. est. $2.29B and sees 2020 revenue flat to down slightly

·     Applied Materials (AMAT) Q1 EPS 81c/$3.75B vs. est. 79c/$3.71B; sees Q2 EPS 62c-70c on revs $3.33B-$3.63B below est. 78c/$3.69B; Q1 adjusted gross margin 44.6% and flat with consensus while the operating margin reported a slight beat with 24.6% compared to the 24.3% estimate

·     Arista Networks (ANET) shares rose 7%; Q4 adjusted EPS $2.25/$595.7M vs. est. $2.07/$591.35M; sees Q1 revenue $588M-$598M vs. est. $589.67M and sees Q1 adjusted gross margin 63%-65%

·     CBS Corp. (CBS) Q4 adjusted EPS $1.50/$4.02B vs. est. $1.52/$4.19B; 4Q Entertainment revenue $2.83B vs. $2.82B YoY, 4Q Cable Networks revenue $551M vs. $547M YoY, 4Q publishing revenue $218M vs. $235M YoY, and 4Q local media revenue $561M vs. $450.0M YoY

·     BlackLine (BL) Q4 EPS 3c/$62.3M vs. est. 1c/$61.68M; said added 137 net new customers in Q4 for a total of 2,631 customers at December 31, 2018 and expanded the company’s user base to 222,619 at December 31, 2018; sees Q1 EPS (2c)-0c on revs $62.8M-$63.8M vs. est. 1c/$61.68

·     Cognex (CGNX) Q4 EPS 26c/$193.3M vs. est. 22c/$184.81M; sees Q1 revenue $165M-$175M below est. $177.03M; expects Q1 gross margin to be in the mid-70% range, similar to the gross margin reported for Q4 of 18; said operating expenses are expected to increase slightly on a sequential basis

·     Globant (GLOB) Q4 adjusted EPS 50c/$140.1M vs. est. 48c/$139.32M; sees Q1 adjusted EPS 45c-49c on revs $144M-$146M vs. est. 47c/$143.36M; sees FY19 adjusted EPS 45c-49c on revs $635M-$645M vs. est. $2.10/$627.31M

·     LogMeIn (LOGM) Q4 EPS $1.47/$310.7M vs. est. $1.41/$306.56M; sees Q1 EPS $1.12-$1.15 on revs $304M-$306M vs. est. $1.37/$304.07M; sees 2019 adjusted EPS $4.90-$4.97 on revs $1.25B-$1.26B vs. est. $5.78/$1.26B

·     Talend (TLND) Q4 EPS loss (13c)/$55.69M vs. est. loss (15c)/$55.92M; CEO said “believe we are entering 2019 well positioned to capture an increasing share of the data integration market”

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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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