Mid-Morning Look: March 01, 2019

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Mid-Morning Look

Friday, March 01, 2019

Index

Up/Down

%

Last

 

DJ Industrials

86.46

0.33%

26,002

S&P 500

12.43

0.44%

2,796

Nasdaq

36.24

0.48%

7,568

Russell 2000

4.69

0.30%

1,580

 

 

U.S. equities opened the day significantly higher as a combination surrounding trade headlines with China (as per Bloomberg overnight) and improved Chinese economic data is helping sentiment early, but a blip in economic data (ISM falls to lowest in over 2 years and confidence slipping from the prior month) pared some of the early market gains. U.S. stocks are coming off another month as all indexes rose for a second month in a row, with the Dow rallying 3.7% in February, the S&P 500 up 3% and the Nasdaq Comp gaining 3.4%. Treasuries extend a decline and the dollar pushed higher for a third day, but have since pared gains after the economic data. The Stoxx Europe 600 Index rose to the highest in almost five months, while Asian markets were broadly higher. U.S. futures jumped after Bloomberg said officials in the U.S. are preparing a final trade deal that President Donald Trump and China’s President Xi Jinping could sign in weeks citing people familiar with the matter, while the U.S. is eyeing a summit between the two presidents as soon as mid-March. Oil prices little changed while gold on track for its 5th straight day of losses. Several stocks active today, especially in the retail (JWN, FL, GPS), tech (ADSK, NTNX, PSTG, VMW, WDAY) after earnings and autos after monthly sales released.

 

Economic Data

·     ISM Manufacturing for February falls to 54.2 (lowest since Nov 2016) from 56.5 last month and below the 55.8 estimate as new orders fell to 55.5 vs 58.2 MoM, employment fell to 52.3 vs 55.5, inventories rose to 53.4 vs 52.8 and prices paid fell to 49.4 vs 49.6

·     Feb. Final Michigan Sentiment rose to 93.8 from 91.2 last month, but was below the est. of 95.9 and the 95.5 preliminary reading; the expectations index rose to 84.4 vs. 79.9 last month and the current economic conditions index fell to 108.5 vs. 108.8 last month.

·     Personal Income for January fell (-0.1%) below the expected rise of 0.3% while the income for December rose 1% vs. est. 0.4%; Personal spending for December fell (-0.5%) vs. est. (-0.3%); Dec. PCE prices rose 0.1% vs. est. 0.0% and rose 1.7% y/y while December core PCE prices rose 0.2% m/m and rose 1.9% y/7 and the savings rate at 7.6% in Dec. vs 6.1% prior month

·     Markit Manufacturing PMI 53 vs Flash Reading 53.7 as index falls to 53 from 54.9 in January; was its lowest reading since Aug. 2017 and new orders fall to 52.7 vs 55.6 in Jan.

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.58

56.64

Brent

-0.84

65.47

Gold

-4.40

1,311.70

EUR/USD

0.0023

1.1394

JPY/USD

0.48

111.86

10-Year Note

0.013

2.733%

 

 

Sector Movers Today

·     Retailers; GPS shares surged after news it plans to create two independent publicly traded companies while posting mixed Q4 results (EPS beat/sales miss); JWN higher following its beat on Q4 profits, and sales in-line with mid-January holiday sales update, and high-side guidance for the coming year’s earnings/comp sales dropped -1.6% in Full-Price due to softer traffic in full-line stores; FNKO shares jump after posting strong sales in Q4. U.S. sales up 30% during the quarter and international sales were 58% higher and guides year revs $810M-$825M vs. est. $740M/Q4 sales growth of 38% vs. ests. in the high-teens range; CPRI added to Jefferies franchise picks list while removes shares of UAA; LB was upgraded at Barclay’s after earnings while Bernstein downgraded the shares following results – mixed results as overall performance has been hurt by persistent weakness at Victoria’s Secret and co plans to close 53 Victoria’s Secret stores this year; footwear and apparel names rise in sympathy with FL results after EPS handily beat and comp sales of 9.7% surpassed the 4.6% estimate

·     Auto’s; TSLA shares slipped as the company introduced its $35,000 Model 3, but Elon Musk said he is closing physical stores and warned the company won’t make a profit in the first quarter; February monthly auto sales today: 1) HMC Feb auto sales down (-0.4%) vs. est. up 0.7%; 2) TM Feb auto sales fall (-5.2%) vs. est. (-2.5%); 3) FCAU US auto sales for February fall (-2.05) vs. est. down –(0.3%) as many Jeep sales fell MoM (Wrangler, Compass, Patriot)

·     Software movers; ADSK Q4 beats with revenue up 33% Y/Y and billings top estimates with $1.04B versus the $952.2M consensus and ADSK added 418K subscription customers while shedding 166K from maintenance/offers mixed Q1 guidance; ZS Q2 beats with upside outlook and billings were strong at $115M (up 74% Y/Y) versus the $90.4M consensus; SPLK 4Q beat driven by license upside and large deals as revenue of $622M was up 35%, beating consensus by 10%, with license up 38%, beating consensus by 19%. Software revenue grew 41% and bookings were up 48% and raised guidance; VMW posts Q4 beat and raise as revs, license and billings all accelerated over F3Q despite a tough y/y comparison; WDAY Q3 EPS and revs topped estimates leading at least five analysts to raise tgts (KeyBanc $235, Baird $220)

·     Hardware & Component news; Storage and hardware names dropped after weaker results and guidance from NTNX and PSTG shares fell over 25% overnight after guiding 3Q adjusted loss per share (60c) on revs $290M-$300M well below the est. loss (28c)/$347.6M; PSTG shares slipped as Q4 EPS missed by 4c on light revs ($422.2M vs. est. $442.2M) with in-line guidance/Q4 product revenue missed estimates with $340.1M versus the $362.9M; MAXR plunges as quarterly revs miss estimates and trimmed its dividend to a penny per quarter with no guidance

 

Stock GAINERS

·     EBAY +1%; as announces a series of new initiatives aimed at improving performance including an operating review and the commencement of a strategic review of a portfolio of assets such as StubHub and eBay Classifieds Group.

·     FL +6%; after EPS handily beat and comp sales of 9.7% surpassed the 4.6% estimate and sees double-digit earnings growth in 2019

·     FNKO +6%; strong sales in Q4. U.S. sales up 30% during the quarter and international sales were 58% higher and guides year revs $810M-$825M vs. est. $740M/Q4 sales growth of 38% vs. ests. in the high-teens range

·     GPS +17%; as plans to create two independent publicly traded companies: Old Navy and a yet-to-be-named company

·     PBYI +30%; reported an unexpected better Q4 with +16% q/q growth vs a tepid +4% in Q3 while Nerlynx Q4 sales of $61M in sales topped the Street at $54M and issued FY19 guidance of $255-$280M in US Nerlynx sales vs. est. $250M

·     TGNA +14%; after topping estimates with record revenues both in political and subscription areas

·     XRAY +16%; Q4 EPS and sales topped consensus with upbeat guidance for 2019 profit as sees $2.25-$2/40 above the $2.17 estimate

·     ZS +14%; as Q2 beats with upside outlook and billings were strong at $115M (up 74% Y/Y) versus the $90.4M consensus; guides Q3 revs ($74M-$75M) and year ($289M-$291M) above estimates respectively $68M/$272M

 

Stock LAGGARDS

·     IMGN -47%; as trial of its mirvetuximab soravtansine compared to chemotherapy didn’t meet the primary endpoint of progression-free survival

·     KIRK -12% as lowered its full-year profit guidance well below estimates as sees FY19 EPS of 38c below the 56c analyst estimate

·     MAXR -22%; as quarterly revs missed estimates and trimmed its dividend to a penny per quarter with no guidance

·     NTNX 30%; after weaker Q3 outlook prompting several analyst downgrades and price-target cuts on the cloud-storage company; guides Q3 revs $290M-$300M below consensus $349.17M

·     PSTG -1%; slipped as Q4 EPS missed by 4c on light revs ($422.2M vs. est. $442.2M) with in-line guidance/Q4 product revenue missed estimates with $340.1M versus the $362.9M

·     TSLA -8%; after the company introduced its $35,000 Model 3, but Elon Musk said he is closing physical stores and warned the company won’t make a profit in the first quarter

·     VALE -2%; as Brazil’s mining authorities have started a probe into the company over a possible cover-up regarding safety procedures that could lead to hefty fines

 

Syndicate

·     Altice USA (ATUS) 34M share Block Trade priced at $21.50

·     Americold Realty Trust (COLD) 40.42M share Secondary priced at $27.75

·     Benefitfocus (BNFT) 5.7M share Secondary priced at $48.25

·     Lexington Realty (LXP) 18.5M share Block Trade priced at $9.13

·     Mersana Therapeutics (MRSN) 21.25M share Spot Secondary priced at $4.00

·     TG Therapeutics (TGTX) 4.1M share Spot Secondary priced at $6.15

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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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