Morning Preview: February 27, 2019

Auto PostDaily Market Report

Early Look

Wednesday, February 27, 2019

Futures

Up/Down

%

Last

DJ Industrials

-68.00

0.26%

25,969

S&P 500

-6.50

0.23%

2,785

Nasdaq

-15.50

0.21%

7,102

 

 

Stock futures are lower ahead of a busy day of earnings, economic data and Fed Chairman Powell speaking on Capitol Hill. Donald Trump and North Korean leader Kim Jong Un are meeting one-on-one, kicking off a summit aimed at a deal for North Korea to surrender its nuclear arsenal. Today marks day two of Fed Chairman Powell semi-annual testimony, this time speaking to the Senate starting at 10:00 AM EST on the economy and monetary policy. Today also marks a busy day of earnings with retailers LOW, BBY. TJX among those reporting results. Overnight, shares of WTW plunged 30% on sub losses and a weak outlook, while generic drug maker MYL slips on earnings miss. In Asian markets, The Nikkei Index rose 107 points to 21,556, the Shanghai Index gained 12 points to close at 2,953 and the Hang Seng Index slipped -14 points to 28,757. In Europe, the German DAX is down around -70 points at 11,470, while the FTSE 100 is down over -60 points back under the 7,100 level. Stocks slipped late Tuesday, failing to hold gains and closing slightly lower across the board.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -2.21 points, or 0.08%, to 2,793.90

·     The Dow Jones Industrial Average fell -33.97 points, or 0.13%, to 26,057.98

·     The Nasdaq Composite dropped -5.16 points, or 0.07%, to 7,549.30

·     The Russell 2000 Index declined -11.32 points, or 0.71% to 1,577.48

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Advance Goods Trade Balance for December…est. (-$74.1B)

·     8:30 AM EST      Retail Inventories MoM for December…est. 0.2%

·     10:00 AM EST    Fed Chairman Powell testifies before House panel

·     10:00 AM EST    Pending Home Sales MoM for January…est. 1.0%

·     10:00 AM EST    Factory Orders for December…est. 0.6%

·     10:00 AM EST    Durable Goods Orders, Dec-F…est.

·     10:30 AM EST    Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AMT, BBY, CHK, CPB, DF, HZNP, LOW, MDCO, OAS, TJX

·     Earnings After the Close: APA, BKNG, BOX, CRC, CVNA, ESTC, FIT, HPQ, LB, MNST, PDCE, SQ, SRPT, TDOC, TROX

 

Other Key Events:

·     Bank America Agriculture and Chemicals Conference, 2/27-2/28, in Florida

·     BMO Capital 28th annual Global Metals and Mining Conference, 2/24-2/27, in Florida

·     JPMorgan Global High Yield & Leveraged Finance Conference, 2/25-2/27, in Florida

·     KeyBanc 14th Annual Emerging Technology Summit, 2/26-2/27, in San Francisco

·     Leerink 8th Annual Global Healthcare Conference, 2/27-3/1, in New York

·     Mobile World Congress 2019, 2/25-2/29, in Barcelona Spain

·     Morgan Stanley Technology, Media, Telecom Conference, 2/25-2/28, in San Francisco

·     Piper 19th Annual Energy Conference, 2/26-2/28, in Las Vegas

 

 

Macro

Up/Down

Last

WTI Crude

0.94

56.44

Brent

0.82

66.03

Gold

0.80

1,329.30

EUR/USD

0.0006

1.1395

JPY/USD

-0.12

110.47

10-Year Note

-0.013

2.629%

 

 

World News

·     Investor Intelligence Poll equity newsletter writers classified as bulls now at 52.4% vs 51.9%; the eight-week streak of gains in bullishness is longest since Nov./Dec. 2016. Bearish sentiment slips to 10-week low of 20.4% from 20.7% and those expecting a correction remain at four-month low, falling to 27.2% from 27.4%

·     Pakistani fighter jets shot down two Indian aircraft over the disputed region of Kashmir a day after India claimed air strikes killed more than 300 terrorists at a training camp. India said it lost one plane and its pilot is missing. India also said it shot down a Pakistani jet.

·     The House voted to block Trump’s national emergency declaration, sending the measure to the GOP-majority Senate, where it already has the support of three Republicans, just one short of the number needed to send it to the president’s desk

 

Consumer

·     Lowe’s (LOW) Q4 EPS 80c/$15.65B vs. est. 79c/$15.74B; Q4 comp sales were up 1.7%; reports $1.6B pre-tax charges in Q4; backs FY19 EPS view of $6.00-$6.10 (est. $6.04) and backs FY19 revenue growth guidance of approximately 2%

·     B&G Foods (BGS) Q4 EPS 34c/$458.1M vs. est. 50c/$463.44M; Q1 adjusted EBITDA down 15.2% to $58.5M; sees Q1 EPS 47c-52c on revs $400M-$412M vs. est. 53c/$416.73M; sees FY19 EPS $1.85-$2.00 on revs $1.64B-$1.67B vs. est. $2.03/$1.65B

·     Dean Foods (DF) said that it had hired financial advisers to review strategic options that could include the outright sale of the dairy company; Q4 EPS loss (50c)/$1.93B vs. est. (26c)/$1.91B

·     e.l.f. Beauty (ELF) shares fell -17%; Q4 EPS 30c/$78.6M vs. est. 22c/$83M; sees Q1 EPS 4c-6c on revs $55M-$58M vs. est. 11c/$67M

·     Fox Factory Holding Corp. (FOXF) announced Larry Enterline will retire from the role of CEO after eight years with the company, and become executive chairman

·     Gap board (GPS) approves new $1B share repurchase authorization

·     Papa John’s (PZZA) Q4 adjusted EPS 15c/$373.98M vs. est. 17c/$390.09M; Q4 system-wide North America comparable sales decreases of -8.1% and -7.3% for the full year. Jeff Smith, Chairman of the Papa John’s Board of Directors, added; sees FY19 adjusted EPS $1.00-$1.20, vs. consensus $1.20 and sees FY19 NA SSS growth (5%)-(1%)

·     Planet Fitness (PLNT) Q4 adjusted EPS 34c/$174.4M vs. est. 32c/$173.69M; sees 2019 revenue about +15%; 4Q comparable sales +10.1%; sees 2019 system-wide same store sales in the high single digits

·     Red Robin (RRGB) Q4 adjusted EPS 43c/$306.8M vs. est. 38c/$309.22M; Q4 comparable restaurant revenue decreased -4.5% vs. est. -3.3% and compared to the same period a year ago, driven by a 4.4% decrease in guest counts and a 0.1% decrease in average guest check; sees FY19 EPS $1.30-$1.70 vs. est. $1.82 and currently expects the following in 2019: Comparable restaurant revenue growth of 0.0% to 1.5%

·     Toll Brothers (TOL) Q1 EPS 76c//$1.36B vs. est. 61c/$1.26B; 1Q backlog $5.37 billion, 1Q cancellation rate 9.6%, 1Q net signed contracts units -24%

·     WW (formerly known as Weight Watchers (WTW) shares fell -24%; Q4 EPS 63c/$330.4M vs. est. 60c/$346.98M; sees 2019 EPS $1.25-$1.50 well below est. $3.36; CEO Mindy Grossman said the company “had a soft start to 2019 versus last year’s strong performance with the launch of WW Freestyle;” lost 300,000 subscribers within three months

 

Energy

·     The American Petroleum Institute (API) reported U.S. crude supplies fell by -4.2M barrels for the week ended Feb. 22, showed that gasoline stockpiles declined by -3.8M barrels, while distillate inventories rose by 400,000 barrels

·     Saudi Arabia rebuffed Trump’s call for lower prices, saying OPEC cuts will probably be extended into the second half. Reducing the glut remains the priority, Energy Minister Khalid Al-Falih said, adding that the kingdom is planning further output reductions in March – Bloomberg

·     Callon Petroleum (CPE) Q4 EPS 17c/$160.3M vs. est. 20c/$159.9M; sees 2019 production 39.5 to 41.5 mboe/d and 4Q avg production 41,087 boe/d, estimate 39,951; 4Q oil production 3,076 MMbbl vs. 1,936 y/y; 4Q natural gas production 4,225 MMcf vs. 3,018 y/y

·     EOG Resources (EOG) Q4 adjusted EPS $1.24/$4.57B vs. est. $1.35/$4.48B

·     Viper Energy (VNOM) 9.5M share Spot Secondary priced at $32.00

·     Lonestar Resources (LONE) forecast avg production for 2019 of 13,700 to 14,700 boe/d after 4Q avg production 13,152 boe/d vs. 7,272 y/y; sees 2020 Production 17k-18.3K BOE/D; previously issued 2019 drilling and completion guidance of $120M-$130M

·     Matador (MTDR) reports Q4 production up 2% from Q3 at 55.5K boe/d; reports Q4 oil production 33.5K boe/d vs. 32.3K last year and natural gas output of 132.3 MMCF/d vs. 133.8 last year; sees FY19 total oil production 12.9M-13.3M Bbl and sees FY19 adjusted EBITDA $520M-$550M

·     ProPetro Holding (PUMP) Q4 EPS 59c/$425.4M vs. est. 56c/$416.28M; 4Q avg active HHP deployed 905,000 vs. 677,900 y/y; 4Q pressure pumping capex $359.1M vs. $97.3M y/y

·     Ring Energy (REI) has entered into a definitive agreement with Wishbone Energy Partners and its affiliates to acquire its North Central Basin Platform assets located primarily in Southwest Yoakum County, Texas and East Lea County, New Mexico. Total purchase price for the acquisition is $300M, comprised of $270M of cash and $30M of common stock of the company

·     Whiting Petroleum (WLL) Q4 adjusted EPS (5c)/$473.23M vs. est. 53c/$496.51M; 4Q production 129.96 mboe/d vs. 128.05 y/y; 4Q capital expenditure $234.4M; 4Q realized crude price/barrel $47.25 vs. $50.86 y/y; plans to drill 132 gross wells, complete 154 gross wells and put on production POP 146 gross wells during the year

 

Financials

·     CME Group Inc.’s (CME) futures markets resumed late Tuesday after technical problems triggered an hours long trading halt. There were no live quotes for e-mini S&P 500 futures for three hours starting at around 7:40 p.m. Eastern time. CME said all its electronic markets reopened by 10:45 p.m. Eastern time. CME offers futures and options contracts for several assets including soybeans, wheat, crude oil and U.S. stocks

·     New York Mortgage (NYMT) 15M share Spot Secondary priced at $6.00

·     QTS Realty Trust (QTS) 6.75M share Secondary priced at $41.50

·     Equinix (EQIX) files to sell $900M in common stock

 

Healthcare

·     Mylan (MYL) shares fell -10%; Q4 adjusted EPS $1.30/$3.08B vs. est. $1.36/$3.08B; sees FY19 adjusted EPS $3.80-$4.80 below consensus $5.04 and sees FY19 revenue $11.5B-$12.5B vs. est. $11.86B

·     Arena Pharma (ARNA) Q4 EPS $1.35/$8.65M vs. est. loss (75c)/$3.34M; 4Q cash and cash equivalents $161.0 million

·     GW Pharmaceuticals (GWPH) Q4 EPS loss (20c)/$6.6M vs. est. loss ($2.90)/$5.35M; cash and cash equivalents at December 31, 2018 were $591.5 million compared to $354.9 million as of September 30, 2018

·     Heron Therapeutics, Inc. (HRTX) announced that the FDA approved Heron’s supplemental sNDA for CINVANTI (aprepitant) injectable emulsion, for intravenous (IV) use.

·     Masimo (MASI) Q4 adjusted EPS 83c/$223.1M vs. est. 73c/$219.96M; sees FY19 product EPS $3.08 on revenue $912M vs. est. $3.04/$909.68M

·     Jazz Pharma (JAZZ) Q4 adjusted EPS $3.64/$476.5M vs. est. $3.02/$459.72M; sees FY19 adj. EPS $14.30-$15.00 on revs $2.05B-$2.13B vs. est. $13.98/$2.03B

·     Tandem Diabetes (TNDM) Q4 EPS 2c/$76.2M vs. est. loss (19c)/$56.3M; sees 2019 sales $255M-$270M vs. est. $219.5M; named John Sheridan as new chief executive officer to succeed Kim Blickenstaff, who will become the new executive chairman of the board, effective March 1.

·     Adamis Pharmaceuticals (ADMP) received a refusal to file letter from the U.S. Food and Drug Administration regarding its new drug application for sublingual tadalafil.

·     Benefitfocus (BNFT) Q4 EPS 14c/$74.77M vs. est. 10c/$72.99M; sees FY19 revenue $301M-$309M vs. est. $297.51M; sees FY19 adjusted EBITDA $15M-$20M; files to sell 6.56M shares of common stock for holders

·     An FDA decision for the potential approval of Karyopharm Therapeutics’ (KPTI) blood cancer drug selinexor should be delayed until results of its randomized phase 3 trial “Boston” are available, advisers to the agency agreed in an 8 to 5 vote (shares fell 15%)

·     Ultragenyx (RARE) 5.1M share Secondary priced at $60.00

 

Industrials & Materials

·     Axon (AAXN) Q4 non-GAAP EPS 8c/$115M vs. est. 11c/$104.3M; 4Q adjusted Ebitda $10.9M vs. est. $11.99M, sees 2019 adjusted Ebitda $80M-$85M vs. est. $83.5M; 4Q gross margin also missed estimates

·     Curtiss-Wright (CW) Q4 adjusted EPS $1.90/$648.6M vs. est. $1.75/$688.44M; reports Q4 new orders up 7% at $608M, free cash flow up 3% to $214M, operating margin down 20bps at 17.0%; sees FY19 EPS $6.80-$6.95 vs. est. $6.81

·     Rio Tinto PLC (RIO) said it will pay a special dividend worth $4 billion as it recorded a 56% rise in annual net profit

 

Technology, Media & Telecom

·     Palo Alto Networks (PANW) Q2 adjusted EPS $1.51/$711.2Mvs. est. $1.22/$682.1M; announces $1B share repurchase program; sees Q3 adjusted EPS $1.23-$1.25 on revs $697M-$707M vs. est. $1.24/$696.95M; 2Q billings growth +27% and 2Q billings $852.5 million

·     MercadoLibre (MELI) Q4 EPS loss (5c)/$428M vs. est. loss (7c)/$405.8M; 4Q gross margin 47.8%, 4Q payment volume $5.30 billion and 4Q gross merchandise vol. $3.23B; gross merchandise volume was up 18% during the quarter and total payments transactions increased 72% to 126M.

·     Veeva (VEEV) Q4 adjusted EPS 45c/$232.3M vs. est. 40c/$226.84M; sees Q1 adjusted EPS 44c-45c on revs $238M-$239M vs. est. 40c/$232.92M.; sees FY19 adjusted EPS $1.91-$1.94 on revs $1.025B-$1.03B vs. est. $1.78/$1.02B

·     Imax (IMAX) Q4 adjusted EPS 26c/$109M vs. est. 24c/$102.54M. During the quarter, the company installed 88 theater systems, 67 of which were for new theater locations. IMAX also signed contracts for 12 new theaters and two upgrades in Q

·     TiVo (TIVO) Q4 revs $168.5M vs. est. $173.7M; reported adjusted Ebitda for Q4 that missed the lowest analyst estimate ($42.1M vs. est. $59.9M); 4Q includes $269 million goodwill impairment charge for product reporting unit; says “strategic transaction discussions” continue for product and IP licensing businesses

·     R.R. Donnelley (RRD) Q4 adjusted EPS 64/$1.76B vs. est. 66c/$1.74B; sees 2019 adjusted EPS 60c-90c on revs $6.5B-$6.7B vs. est. 85c/$6.48B

_________________________________________________________________

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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