Morning Preview: February 20, 2019

Auto PostDaily Market Report

Early Look

Wednesday, February 20, 2019

Futures

Up/Down

%

Last

DJ Industrials

-39.00

0.15%

25,844

S&P 500

-3.50

0.12%

2,775

Nasdaq

-5.50

0.07%

7,063

 

 

U.S. stocks remain steady, down slightly ahead of the Fed minutes from its January meeting which should show how the Fed turned so dovish while investors prepare for another busy day of earnings as well. Stocks managed small gains as investors returned from a three-day weekend as markets continue to push higher amid optimism over U.S.-China trade talks. Markets also got positive earnings results out of Dow component Wal-Mart yesterday as well. Stock got a boost late day after President Donald Trump said that a March 1 deadline isn’t a “magical” date, which investors took as a further suggestion that a hike in tariffs on Chinese goods scheduled to go into effect if a deal isn’t reached could be postponed. In Asian markets, The Nikkei Index rose 128 points to settle at 21,431, the Shanghai Index gained 5 points to close at 2,761 and the Hang Seng Index gained 285 points to 28,514. In Europe, the German DAX is up around 20 points at 11,325, while the FTSE 100 is up a few points just shy of the 7,200 level. Today’s action likely centers around trade and the Fed once again.

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 4.16 points, or 0.15%, to 2,779.76

·     The Dow Jones Industrial Average rose 8.07 points, or 0.03%, to 25,891.32

·     The Nasdaq Composite gained 14.36 points, or 0.19%, to 7,486.77

·     The Russell 2000 Index advanced 5.22 points, or 0.33% to 1,574.47

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     1:30 PM EST       Fed’s Bullard takes part in Monetary Policy Forum in NY

·     2:00 PM EST       FOMC Meeting Minutes from January 30 meeting

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ADI, BDC, BHC, CNDT, CVS, DAKT, ETR, GCI, GEL, GVA, HFC, HSIC, IPHS, LAMR, NI, OC, OMI, SAH, SO, TRGP, VPG, WWW

·     Earnings After the Close: A, ALB, ATR, AXTI, CAI, CAKE, CAR, CBLK, CDE, CECO, CHE, CLI, CONE, CVI, CYH, ET, FLS, GDDY, GDOT, IVR, JACK, KALU, LASR, LOPE, MANT, MMI, NDSN, NUVA, O, PI, RGR, SAM, SM, SNPS, SPTN, SUN, TRN, TYL, VMI, WK, WPG, WRI, XEC, Y

 

Other Key Events:

·     Consumer Analyst Group of New York (CAGNY) Conference, 2/18-2/22, in New York

 

 

Macro

Up/Down

Last

WTI Crude

-0.25

55.84

Brent

-0.40

66.05

Gold

2.20

1,347.00

EUR/USD

-0.0007

1.1334

JPY/USD

0.21

110.84

10-Year Note

-0.005

2.632%

 

 

World News

·     Investor Intelligence Poll shows equity newsletter writers classified as bulls rises to 51.9% from 49.5%; it’s the first-time bulls exceed 50% level since October 24 and the seven-week streak of gains in bullishness is longest since Nov./Dec. 2016. Those considered bearish slips to 20.7% from 21.5% and those expecting a correction remain at four-month low, falling to 27.4% from 29.0%

·     Japan logged its biggest trade deficit in nearly five years in January, as exports fell by a faster than-expected 8.4% from a year ago to 5.574 trillion yen, a two-year-low. The country logged its fourth straight monthly trade deficit, which grew by almost 50% to Y1.415 trillion–the biggest since March 2014.

·     Three pro-EU lawmakers from Britain’s governing Conservatives quit over the “disastrous handling of Brexit” on Wednesday, in a blow to Prime Minister Theresa May’s attempts to unite her party around plans to leave the European Union

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) CEO Elon Musk tweeted overnight, “Tesla made 0 cars in 2011, but will make around 500k in 2019…Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k

·     Herbalife (HLF) Q4 EPS 63c/$1.19B vs. est. 60c/$1.19B; sees 2019 sales +4% to +8%; reiterating FY 2019 volume point guidance range of 4.0% – 8.0% growth, as well as reported and adjusted1 diluted EPS guidance; sees Q1 adjusted EPS 68c-78c vs. est. 70c and sees Q1 revenue growth 0.5%-4.5%

·     La-Z-Boy (LZB) Q3 EPS 63c/$467.6M vs. est. 55c/$457.61M; Q3 same-store sales jumped 6.7% in the company-owned retail segment during the quarter; Q3 operating margin improved to 9.0% vs. 7.9% a year ago

·     KAR Auction (KAR) Q4 adjusted EPS 62c/$929.0M vs. est. 59c/$935.7M; sees FY19 adjusted EPS $2.90-$3.09 vs. est. $3.16; sees FY19 EBITDA $953.0M-$988.0M

·     Texas Roadhouse (TXRH) Q4EPS 42c/$605.9M vs. est. 41c/$599.4M; sees 2019 capital expenditure $210 million to $220 million; Q4 company-owned comp sales +5.6% vs. est. +4.6%; sees 25-30 company restaurant openings in FY19

·     Interface (TILE) Q4 adjusted EPS 41c/$337M vs. est. 39c/$344.6M; sees 1Q EPS down by about 13c-16c vs year ago and targets 2019 total net sales growth

·     Nutrisystem (NTRI) Q4 EPS 61c excluding expenses on revs $129.5M vs. est. 60c/$131.66M; Q4 EPS included approximately 12c of certain after-tax transaction expenses and 3c of additional tax expense due to additional analysis of and changes to interpretations of the tax reform act; sees FY19 revenue $682M-$702M vs. consensus $748.86M

 

Energy

·     Concho Resources (CXO) Q4 EPS 94c/$1.07B vs. est. $1.13/$1.19B. Production for fourth-quarter 2018 was 28 MMBoe, or an average of 307 Mboepd, an increase of 45% from fourth-quarter 2017 and 7% from third-quarter 2018; Cuts 2019 Capex to $2.9B from previous $3.5B guidance; sees generating 15% oil volume growth from fourth-quarter 2018 to fourth-quarter 2019

·     Diamondback Energy (FANG) Q4 EPS $1.21/$633.06M vs. est. $1.58/$660.72M; Q4 production of 182.8 Mboe/d was up 49% over Q3 and 97% year over year; sees 2019 production 275.0 to 290.0 mboe/d and sees 2019 capital expenditure $2.7 billion to $3.0 billion; expects realized pricing to be weaker than the current Midland market, but to improve from 2Q onward

·     Devon (DVN) Q4 core EPS 10c vs. est. 30c; said is pursuing separation of Canadian, Barnett assets and expect to complete separation by end of 2019; boosts share-repurchase authorization to $5B from $4B; raises dividend; Q4 production 532 MBOE/d vs. 548 MBOE/d last year

·     FirstEnergy (FE) Q4 adjusted EPS 50c/$2.7B vs. est. 47c/$2.72B; sees Q1 EPS 60c-70c vs. consensus 74c; backs FY19 EPS view $2.45-$2.75 vs. est. $2.56 and revenue growth of 6%-8%

·     Avangrid (AGR) Q4 adjusted EPS 56c/$1.67B vs. est. 61c/$1.32B; sees 2019 adj. EPS $2.25-$2.40 vs. est. $2.42

·     HollyFrontier (HFC) Q4 adjusted EPS $2.25/$4.34B vs. est. $1.92/$4.49B

 

Financials

·     Lloyds Banking Group PLC’s (LYG) 2018 profit missed analyst expectations while it announced plans for a major share buyback and brought forward its cost-cutting targets; made a pretax profit of 5.96 billion pounds ($7.73 billion), up from GBP5.28 billion in 2017

·     Arlington Asset Investment (AI) 6M share Spot Secondary priced at $8.33

·     LendingClub (LC) Q4 adjusted EPS loss (1c)/$181.5M vs. est. 2c/$181.86M; 4Q new originations $2.87 billion; Sees 1Q net revenue $162M-$172M vs. $180.5M; sees 2019 net revenue $765M-$795M vs. est. $801.4 million

·     CoreCivic (CXW) Q4 FFO 63c/$482.19M vs. est. 62c/$459.32M; sees 1Q normalized FFO per share 58c-60c vs. est. 57c; sees 2019 normalized FFO per share $2.36-$2.44 vs. est. $2.40; expects to invest approximately $186.5 million to $197.0 million in capital expenditures during 2019

 

Healthcare

·     Merck & Co. (MRK) said its Phase 3 Keynote-240 trial evaluating Keytruda did not meet its co-primary endpoints of overall survival and progression-free survival compared with placebo plus best supportive care.

·     Lantheus (LNTH) Q4 EPS 29c/$86.3M vs. est. 14c/$83.72M; sees FY19 EPS $1.14-$1.17 on revs $358M-$363M vs. est. 96c/$361.49M

·     Tivity Health (TVTY) Q4 adjusted EPS 73c/$153.0M vs. est. 58c/$154.02M; sees FY19 revenue $612M-$627M vs. est. $651.92M; sees FY19 adjusted EBITDA $140M-$145M; and free cash flow $95M-$100M

 

Industrials & Materials

·     Southwest Airlines (LUV) cuts forecasts; sees 1Q RASM up 3%-4% (down from prior view of up 4%-5%) as sees negative effect from government shutdown $60M in 1Q; saw negative effect $10M-$15M prior

·     Glencore (GLNCY) announced an extra $2B of cash returns alongside annual results that fell short of market forecasts

·     Waste Connections (WCN) announced that Ronald Mittelstaedt, Chairman and CEO, will take a temporary leave of absence to address health matters affecting him and his family.

 

Technology, Media & Telecom

·     Cadence Design (CDNS) Q4 EPS 52c/$570M vs. est. 47c/$550.35M; sees Q1 EPS 48c-50c on revs $565M-$575M vs. est. 46c/$549.16M; sees 2019 EPS $1.97-$2.07 on revs $2.27B-$2.31B, vs. est. $1.96/$2.26B

·     Everbridge (EVBG) Q4 EPS loss (9c)/$41.8M vs. est. loss (11c)/$41.07M; ended Q4 with 4,422 global enterprise customers, up from 3,430 at the end of Q4 of 2017; sees Q1 EPS loss (19c)-(18c) on revs $42.0M-$42.3M vs. est. loss (13c)/$41.8M

·     Five9 (FIVN) Q4 EPS 23c/$72.3M vs. est. 14c/$66.5M; sees 1Q adjusted EPS 11c-13c on revs $70M-$71M vs. est. 12c/$68.9M; Q4 adjusted gross margin 65.1%; sees 2019 EPS 58c-62c on revs $298.5M-$301.5M vs. est. 59c/$296.28M

·     OneSpan (OSPN) Q4 EPS 17c/$64.8M vs. est. 6c/$59.73M; revenue up 19% on solid contributions across our portfolio of software, services and hardware; Subscription revenue grew 50% and our mobile security software license revenue grew more than 50%

·     ShotSpotter (SSTI) Q4 EPS 3c/$9.71M vs. est. 0c/$9.47M; said was able to produce 49% topline growth in the fourth quarter along with increased gross margins and solid adjusted EBITDA; backs FY19 revenue view $45M-$47M vs. est. $46.19M

·     Verisk (VRSK) Q4 EPS $1.04/$613.9M vs. est. $1.07/$613.2M; 4Q adjusted Ebitda $289.1M and initiates dividend

·     Uniti Group (UNIT) has agreed to sell its Latin American towers business for about $100M; Uniti will sell that portfolio — including about 500 towers across Mexico, Colombia and Nicaragua

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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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