Mid-Morning Look: March 05, 2019

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Mid-Morning Look

Tuesday, March 05, 2019

Index

Up/Down

%

Last

 

DJ Industrials

-61.72

0.24%

25,757

S&P 500

-7.63

0.27%

2,785

Nasdaq

-13.27

0.18%

7,564

Russell 2000

-4.40

0.28%

1,571

 

 

U.S. equities slide on the open, with the S&P 500 and Dow Industrials on track for their fifth down day in the last six trading sessions after touching their best levels since October over a week ago on optimism for a trade deal between the US and China. Better earnings out of the retail sector (TGT, KSS) failed to boost markets, while weakness in the healthcare sector weighed on markets again. China lowered its annual growth target to 6%-6.5% which is slightly down from last year’s 6.6% growth (weakest in three decades), which pressured materials and commodities early on….though shares in Shanghai closed at their highest level since June. The dollar spikes to highs following better than expected December New Home Sales data and ISM manufacturing which both topped consensus estimates. Oil prices are little changed while gold prices are on track for a 7th straight day of losses.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.19

56.78

Brent

0.10

65.77

Gold

-3.70

1,283.80

EUR/USD

-0.0037

1.1303

JPY/USD

0.20

111.95

10-Year Note

0.008

2.733%

 

 

Sector Movers Today

·     Retailers; TGT rises as Q4 EPS/comps top consensus with a stronger outlook as sees Q1 EPS $1.32-$1.52 vs. est. $1.43 and sees year EPS $5.75-$6.05 vs. est. $5.64; LB shares rise as shareholder Barington Capital Group, in a letter to L Brands CEO calls for changes at the company including either a spinoff of Victoria’s Secret or an IPO of Bath & Body Works; KSS guided 2019 sales above estimates while its profit view of $5.80-$6.15 topped the $5.76 estimate; GME announces a new $300M share repurchase authorization

·     Energy stocks; CVX said it expects 3%-4% compound annual production growth through 2023 and annual capital spending of $19B-$22B during 2021-23/says its outlook is supported by strong performance in the Permian Basin, where the company expects production to reach 600K boe/day by year-end 2020 and 900K boe/day by the end of 2023, a nearly 40% increase from its previous forecast; XOM raises output target for top U.S. shale field to 1M barrels per day by 2024

·     Industrial & Machinery; CMI, PCAR, NAV shares active after February preliminary heavy-duty net orders (16.9k units) were slightly higher than Mizuho expectations (10k-15k units), but generally in line with the feedback received in their dealer survey/class 8 orders contracted by 58% y/y marking a fourth straight month of declines in orders; IR was added to the Buy-rated Americas Conviction List at Goldman Sachs and increased 12-month price target to $122 (from $115), representing 15% upside from current levels

·     Airlines; ALK cut its 1Q unit revenue forecast as sees 1Q revenue per ASM 11.97c-12.07c; saw 12.15c-12.35c/says about half of 200 basis-point cut from midpoint of prior view to midpoint of current forecast due to close-in pricing below initial expectations, mostly in trans-continental flights from California; JBLU lowers its 1Q RASM view down 1.5% to down 3.5% from previous view of down 2% to up 1% citing off-peak pressure from competitive capacity/cuts 2019 capacity growth view by 0.5 points to range of up 4.5% and 6.5% year over year; DAL says it’s on track to deliver on its Q1 margin and EPS guidance

 

Stock GAINERS

·     CTRP +14%; upgraded at JPMorgan after reported better-than-expected revenues and operating income while revenue and operating income guidance also above expectations

·     DAL +2%; after CEO confirms earnings guidance and says in ‘very preliminary’ talks with Boeing on mid-size aircraft

·     LB +3%; as shareholder Barington Capital Group, in a letter to L Brands CEO calls for changes at the company including either a spinoff of Victoria’s Secret or an IPO of Bath & Body Works

·     TGT +3%; as Q4 EPS/comps top consensus with a stronger outlook as sees Q1 EPS $1.32-$1.52 vs. est. $1.43 and sees year EPS $5.75-$6.05 vs. est. $5.64

·     WLTW +5%; on a Bloomberg report that AON is preparing to submit a bid to buy insurance brokerage rival WLTW in upcoming weeks https://bloom.bg/2UoypJS

 

Stock LAGGARDS

·     ADMS -31%; downgraded by several analysts (Cowen, Mizuho) and tgts slashed after the company withdrew its prior top-line guide for the year, prompting Mizuho to lower their Parkinson’s peak sales estimates to $176M from $282M

·     ALGN -7%; said it expects to book a charge in the first quarter for the closure of all of its Invisalign stores, following an arbitration decision of claims made by SDC Financial LLC, SmileDirectClub LLC and related parties

·     BNED -30%; after reporting weaker Q3 results as comp sales fell (-7%)

·     CIEN -5%; reports beat on top and bottom line sending shares higher initially before reversing and moving lower – Q1 margins of 42.2% missed the Bloomberg est. 42.6%

·     HTZ -10%; after top shareholder Carl Icahn reduced his stake in the company; overnight 5M share Spot Secondary priced at $19.60

·     TSLA -3%; after Barclay’s cut its tgt to $192 from $210 saying the sooner-than-expected price cuts to Model 3s and retail store closures undermines the bull thesis

·     UPS -1%; guides Q1 EPS to around $1.41, below the $1.46 estimate while reaffirms year EPS

·     WBA -3%; on track for its 5th straight day of losses as healthcare/MCO/service sector under pressure again ($CI, CVS as well)

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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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