Morning Preview: February 28, 2019

Auto PostDaily Market Report

Early Look

Thursday, February 28, 2019

Futures

Up/Down

%

Last

DJ Industrials

-53.00

0.20%

25,955

S&P 500

-7.50

0.27%

2,787

Nasdaq

-29.00

0.41%

7,092

 

 

U.S. equity markets are indicating a weaker open following a failed agreement between President Trump and North Korea lead Kim, disappointing China manufacturing data and a slew of weaker earnings results overnight dragging down stocks. President Trump walked out of his summit with Kim Jong Un after the two leaders failed to agree on a deal that would lift U.S. sanctions on North Korea and have Kim give up much of his nuclear weapons program. Trump said Kim had offered to dismantle the main facility at Yongbyon, but it wasn’t enough. Meanwhile, China’s manufacturing contracted again, with the PMI slipping to 49.2 this month, below consensus and holding under the 50 level which is the line between expansion and contraction. The new export orders component slumped to 45.2 from 46.9, indicating weaker external demand. In corporate news, several companies are plunging after either weaker earnings results or guidance with shares of BKNG, BOX, FIT, HPQ and TDOC all falling sharply. In M&A news, shares of CELG fall over 8% while BMY rises after the company’s top shareholder said it was not supportive of BMY’s $74B deal to acquire the biotech company. In Asian markets, The Nikkei Index fell -171 points to 21,385, the Shanghai Index slipped -12 points to 2,940 and the Hang Seng Index dropped -124 points to 28,633. In Europe, the German DAX is off about -20 points at 11,460, while the FTSE 100 is down about -50 points at 7,050. U.S. stocks were mixed at market close Wednesday after three separate Congressional testimonies captured the attention of investors. The S&P 500 edged lower, dropping for a second day as U.S. Trade Representative Robert Lighthizer dialed back expectations for a broad trade deal with China.

 

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -1.52 points, or 0.05%, to 2,792.38

·     The Dow Jones Industrial Average fell -72.82 points, or 0.28%, to 25,985.16

·     The Nasdaq Composite gained 5.21 points, or 0.07%, to 7,554.51

·     The Russell 2000 Index advanced 3.57 points, or 0.23% to 1,581.05

 

Events Calendar for Today

·     8:00 AM EST      Fed’s Clarida remarks at Economic Policy Conference

·     8:30 AM EST      GDP Annualized QoQ for Q4-A

·     8:30 AM EST      Personal Consumption for Q4-A

·     8:30 AM EST      GDP Price Index, Q4-A

·     8:30 AM EST      Core PCE QoQ, Q4-A

·     8:30 AM EST      Weekly Jobless Claims

·     8:30 AM EST      Continuing Claims

·     8:50 AM EST      Fed’s Bostic speaks on the Economic and Housing Landscape

·     9:45 AM EST      Chicago PMI for February

·     9:45 AM EST      Bloomberg Consumer Comfort Index

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

·     11:00 AM EST    Kansas City Fed Manufacturing for February

·     11:00 AM EST    Fed’s Harker discusses Economic Outlook

·     1:00 PM EST       Fed’s Kaplan speaking in San Antonio

 

Earnings Calendar:

·     Earnings Before the Open: AKRX, CARS, CNP, CWEN, FOLD, FWONA, GTT, ICPT, JCP, KDP, LKQ, NLSN, NRG, PCG, SEAS, VST

·     Earnings After the Close: ADSK, AMC, DELL, EIX, GPS, JWN, LYV, MAR, MAKR, NKTR, NTNX, PSTG, RUN, SPLK, SRCL, SWN, TRHC, UNIT, VMW, WDAY, ZS

 

Other Key Events:

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

·     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

-0.32

56.62

Brent

-0.56

65.83

Gold

6.10

1,327.30

EUR/USD

0.0044

1.1414

JPY/USD

-0.25

110.75

10-Year Note

+0.017

2.666%

 

 

Sector News Breakdown

Consumer

·     Churchill Downs (CHDN) Q4 adj. EPS 21c/$219M vs. est. 14c/$218.67M

·     Extended Stay America (STAY) Q4 EPS 21c/$289.7M vs. est. 19c/$287.23M; sees FY19 EPS $1.02-$1.14 on revs $1.23B-$1.25B vs. est. $1.11/$1.24B

·     Fitbit (FIT) Q4 EPS 14c/$571.2M vs. est. 7c/$568.16M; Q4 adjusted EBITDA $49.6M vs. $22.5M last year; sees Q1 EPS (24c) to (22c) on revs $250M-$268M vs. est. loss (16c)/$268M; sees FY19 revenue $1.52B-$1.58B vs. est. $1.57B; sees FY19 adjusted EBITDA ($30M) to breakeven

·     Hilton Grand Vacations (HGV) Q4 EPS $1.24/$642M vs. est. $1.21/$589.49M; sees FY19 EPS $2.74-$2.89 vs. est. $2.84 and sees FY19 adjusted EBITDA $450M-$470M;

·     Hostess Brands (TWNK) Q4 adjusted EPS 17c/$214.8M vs. est. 15c/$210.95M; sees FY19 adjusted EPS 57c-62c vs. est. 64c and sees FY19 revenue growth well above SBG category, consensus $876.38M

·     L Brands (LB) Q4 adjusted EPS $2.14/$4.85B vs. est. $2.07/$4.88B; sees FY EPS $2.20-$2.60 vs. est. $2.75; sees 1Q EPS about 0c vs. est. 12c; 4Q L Brands stores & direct comp sales +3%, 4Q Victoria’s Secret comp sales -3% and 4Q Bath & Body Works comp sales +12%

·     Monster Beverage (MNST) Q4 EPS 43c/$924.2M vs. est. 40c/$898.73M; 4Q volume 97.5 million-unit cases, 4Q gross margin 59.7% and announces a $500M stock buyback program

·     Wingstop (WING) Q4 EPS 15c/$40.5M vs. est. 17c/$40.39M; Q4 system-wide sales increased 15.0% to $328M; 4Q total domestic stores comp sales growth +6%; reiterating its long-term targets of 10%+ system-wide unit growth and low single digit domestic same store sales growth

·     Skyline (SKY) 10.8M share secondary priced at $20.46

·     Daimler AG (DDAIF) and BMW Group (BMWYY) are to join forces on automated driving. Initially, the focus will be on advancing the development of next-generation technologies for driver assistance systems, automated driving on highways and parking features

 

Energy

·     Apache (APA) Q4 adjusted EPS 31c vs. est. 24c; reports Q4 production of 482,000 BOE per day; says total Q4 output rose 10% Y/Y 482.3K boe/day, including a 33% Y/Y jump in Permian production to 235.9K boe/day; raises the lower end of the range for its 2019 production guidance to 425K-440K boe/day from 410K-440K previously

·     Ensco (ESV) Q4 EPS loss (39c)/$399M vs. est. loss (36c)/$405.6M

·     Gulfport Energy (GPOR) Q4 EPS 46c vs. est. 50c; sees 2019 production 1,360 to 1,400 mmcfe/d, sees 2019 Lease Operating Expense Per Mcfe 15c to 17c and sees 2019 capital expenditure $565M-$600M; 4Q production 1,393 mmcfe/d vs. 1,263 y/y

 

Financials

·     Square (SQ) Q4 adjusted EPS 14c/$464M vs. est. 14c/$454.1M; said processed $23.0B in GPV, up 28% year over year in Q4; transaction-based revenue was $668M, up 27% year over year; sees Q1 adjusted EPS 6c-8c on revs $472M-$482M vs. est. 11c/$473.8M; sees 2019 adjusted revenue $2.22B-$2.25B vs. est. $2.26B

·     Western Union Company (WU) said it will sell its Speedpay unit for $750 million in an all-cash deal to ACI Worldwide, with net proceeds of about $575 million

 

Healthcare

·     Bristol Myers (BMY) shares rose and Celgene (CELG) shares fell after ours as Wellington Management said that it is not supportive of Bristol-Myers Squibb’s proposed $74 billion acquisition of Celgene Corporation saying BMY shareholders to accept too much risk (Wellington is top shareholder at 136M shares as per last filing)

·     Alder Biopharmaceuticals (ALDR) 11.3M share Secondary priced at $11.50

·     Kaleido Biosciences (KLDO) 5M share IPO priced at $15.00

·     Glaukos (GKOS) Q4 EPS 4c/$54.1M vs. est. loss (13c)/$49.69M; sees FY19 revenue $220M-$230M vs. est. $224.8

·     Global Blood Therapeutics (GBT) said the FDA agreed to a proposal to use a rolling submission for its new drug application of voxelotor as a potential treatment of sickle cell disease.

·     Perrigo (PRGO) Q4 adjusted EPS 97c/$1.195B vs. est. $1.00/$1.18B; to announce plans for portfolio reconfiguration, investments and 2019 guidance at Investor Day presentation on May 9

·     Sarepta (SRPT) Q4 EPS loss ($2.05)/$84.4M vs. est. loss ($1.04)/$85.5M; 4Q cash and other $1.17B; filed NDA for golodirsen with priority review; PDUFA Aug. 19th

·     Teladoc (TDOC) Q4 EPS loss (35c)/$122.74M vs. est. loss (36c)/$120M; sees Q1 EPS loss (44c)-(46c) on revs $126M-$129M vs. est. loss (31c)/$131M; sees 2019 adjusted Ebitda $25M-$35M vs. est. $42.3M and revs $535M-$545M vs. est. $548.1M

·     T2 Biosystems (TTOO) +25%; after announcing the FDA granted Breakthrough Device designation for its diagnostic panel T2Resistance Panel; the designation allows T2 Biosystems to work closely with the FDA during the premarket review phase

·     Universal Health (UHS) Q4 adjusted EPS $2.37/$2.754B vs. est. $2.34/$2.74B; sees FY19 adjusted EPS $9.70-$10.40 on revs $11.213B-$11.361B vs. est. $10.02/$11.25B

·     Collegium Pharmaceutical (COLL) Q4 EPS 27c/$73.4M vs. est. loss (35c)/$73.86M; net income (loss) included stock-based compensation expense of $3.6 million and $2.1 million for the 2018 Quarter and 2017 Quarter, respectively

 

Industrials & Materials

·     Greif (GEF) Q1 adjusted EPS 65c/$897.0M vs. est. 64c/$917.21M; raises FY19 EPS view to $3.60-$4.00 from $3.55-$3.95 vs. est. $3.69

·     Kraton (KRA) Q4 adjusted EPS 67c/$447.78M vs. est. 68c/$476.29M

·     Itron (ITRI) Q4 adjusted EPS 88c/$587.0M vs. est. 68c/$593.16M; said “while we did experience some challenges during 2018, we have made significant progress on our strategic initiatives, restructuring programs and integration efforts to deliver long-term value for our customers and investors”; sees FY19 EPS $2.35-$2.75 on revs $2.35B-$2.75B vs. est. $3.31/$2.49B; total backlog was $3.2B and 12-month backlog was $1.3B at the end of Q4

·     Tutor Perini (TPC) Q4 adjusted EPS 98c/$1.18B vs. est. 79c/$1.37B; sees 2019 EPS $2.00-$2.30 vs. est. $2.23; sees double-digit revenue growth and higher operating margins across all segments in 2019

 

Technology, Media & Telecom

·     Booking Holdings (BKNG) shares fell -9%; Q4 adjusted EPS $22.49/$3.21B vs. est. $19.42/$3.22B. Q4 gross travel bookings were $19.6B, an increase of 9% over a year ago, or approximately 13% on a constant-currency basis; sees Q1 adjusted EPS $10.90-$11.20 below consensus $12.78 and sees Q1 revenue down 2% to flat compared to prior year, and Q1 total gross travel bookings down (1)% to up 1%

·     Box (BOX) shares fell -23%; Q4 adjusted EPS 6c/$163.7M vs. est. 2c/$164.16M; sees FY20 adjusted EPS (3c)-1c on revs $700M-$704M below est. 3c/$733.5M; sees 1Q revenue $161M-$162M vs. est. $169.7M

·     Carvana (CVNA) Q4 adjusted EPS loss (55c)/$584.8M vs. est. loss (49c)/$603.96M; retail units sold totaled 27,750, an increase of 105%; sees FY19 revenue $3.4B-$3.5B vs. est. $3.55B; sees FY19 retail unit sales of 160,000-165,000, an increase of 70%-75%

·     HP Inc. (HPQ) Q1 EPS 52c/$14.7B vs. est. 52c/$14.88B; sees 2Q adjusted EPS 50c-53c vs. est. 52c and reaffirms 2019 adjusted EPS forecast of $2.12-$2.22 and free cash flow view of at least $3.7 billion; 1Q Personal Systems net revenue up 2% y/y, Commercial net revenue up 3% y/y and Consumer net revenue up 1% y/y; 1Q Printing net revenue unchanged y/y

·     Ansys (ANSS) Q4 EPS $2.13/$418.0M vs. est. $1.49/$364.82M; Q4 ACV growth of 28% and 17% in constant currency for Q4 and FY18 respectively; sees Q1 EPS 98c-$1.11 on revs $290M-$310M vs. est. $1.31/$315.29M

·     Cable One (CABO) Q4 EPS $7.34/$269.9M vs. est. $8.06/$270.56M; Q4 Adjusted EBITDA was $69.0M, up 3.4% from last year

·     Liberty Global (LBTYA) to sell UPC Switzerland to Sunrise in $6.3B deal; announced that it has reached a binding agreement to sell its Swiss operation, UPC Switzerland, to Sunrise Communications Group AG

·     Boingo Wireless (WIFI) Q4 EPS 1c/$67.8M vs. est. loss (9c)/$66.49M; sees FY19 EPS (45c)-(34c) on revs $270M-$280M vs. est. loss (15c)/$293.08M

·     Blackberry (BB) submitted a lawsuit against Twitter (TWTR) alleging the company’s patent infringement of its mobile messaging application technology, Reuters’ reported

_________________________________________________________________

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