Morning Preview: March 05, 2019

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Early Look

Tuesday, March 5, 2019

Futures

Up/Down

%

Last

DJ Industrials

32.00

0.13%

25,847

S&P 500

5.50

0.13%

2,795

Nasdaq

9.50

0.14%

7,155

 

 

U.S. futures are slightly higher a day after stocks dropped across the board led by weakness in healthcare and financials, while shares in Asia finish mixed following a lower GDP outlook for China and as markets continue to monitor the potential U.S.-China trade deal that may be struck by the month’s end according to reports yesterday. Treasury prices are inching higher after taking a breather yesterday while the dollar is mixed and oil prices little changed. In Asian markets, The Nikkei Index fell -95 points to 21,726, the Shanghai Index gained 26 points to settle at 3,054 and the Hang Seng Index was little changed, rising 2 points to 28,961. In Europe, the German DAX is down slightly just under the 11,600 level, while the FTSE 100 is up around 25 points at 7,160. Salesforce.com (CRM) shares slip after its revenue forecast missed estimates while retail giant Target (TGT) rises following its results. Markets await trade news and several central bank monetary policy meetings this week.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -10.88 points, or 0.39%, to 2,792.81

·     The Dow Jones Industrial Average fell -206.67 points, or 0.79%, to 25,819.65

·     The Nasdaq Composite slipped -17.79 points, or 0.23%, to 7,577.57

·     The Russell 2000 Index declined -14.20 points, or 0.89% to 1,575.44

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:45 AM EST      Markit US Services PMI, Feb-F…est. 56.2

·     9:45 AM EST      Markit US Composite PMI, Feb-F

·     10:00 AM EST    New Home Sales MoM for December…est. (-8.7%) to 600K

·     2:00 PM EST       Monthly Budget Statement, for January…est. $12.0B

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AFI, BNED, CIEN, DOVA, GMS, GNK, JW/A, KSS, TGT

·     Earnings After the Close: AMBA, AVAV, CCO, COO, EGLE, HRZN, NX, OOMA, ROSY, RY, UNFI, URBN, VSLR, WMC

 

Other Key Events:

·     Morgan Stanley Global Energy & Power Conference, 3/4-3/6, in New York

·     Raymond James 40th Annual Institutional Investors Conference, 3/3-3/6, in Orlando, FL

·     RSA Conference 2019, 3/4-3/8, in San Francisco

·     Sandler O’Neill 2019 West Financial Services Conference, 3/4-3/6, in San Diego, CA

·     Shoptalk 2019, 3/3-3/6, in Las Vegas, NV

·     China Caixin services PMI for February

·     Eurozone services PMI for February

·     Eurozone retail sales for January

 

 

Macro

Up/Down

Last

WTI Crude

0.04

56.62

Brent

-0.11

65.56

Gold

-1.70

1,285.80

EUR/USD

-0.0011

1.1329

JPY/USD

0.19

111.94

10-Year Note

+0.012

2.737%

 

 

World News

·     China’s top economic official Li announced a robust annual growth target at 6% to 6.5% which is slightly down from last year’s 6.6% growth, a three-decade low, but would be among the world’s strongest if achieved.

·     Eurozone retail sales rebounded in January, as the volume of sales in stores and online was 1.3% higher than in December, and up 2.2% from the first month of last year. Eurostat also said sales fell less sharply in December than previously estimated.

·     The National Security Agency is considering ending a once-secret surveillance program that annually collects hundreds of millions of telephone call records, including those belonging to Americans, because it lacks operational value according to reports

 

Sector News Breakdown

Consumer

·     Target Corp. (TGT) A4 EPS $1.53/$22.7B vs. est. $1.53/$22.9B; Q4 comp sales 5.3% vs. est. 5.1%; sees Q1 EPS $1.32-$1.52 vs. est. $1.43 and sees year EPS $5.75-$6.05 vs. est. $5.64

·     Alaska Air (ALK) -2% after cutting its 1Q unit revenue forecast; sees 1Q revenue per ASM 11.97c-12.07c; saw 12.15c-12.35c; sees 1Q unit revenue up 1%-2% y/y; 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

·     JetBlue (JBLU) now sees 1Q RASM down 1.5% to down 3.5% from previous view of down 2% to up 1% citing off-peak pressure from competitive capacity in Florida to Caribbean markets and low tactical walk-up fares; cuts 2019 capacity growth view by 0.5 points to range of up 4.5% and 6.5% year over year

·     GameStop (GME) announces a new $300M share repurchase authorization to replace the previous share repurchase authorization which had $170M remaining

·     Papa John’s (PZZA) and John Schnatter are in a settlement agreement pursuant to which Schnatter will help the company identify a mutually acceptable independent director, after which Schnatter will resign as a member of the board

·     Famous Dave’s (DAVE) Q4 adjusted EPS 13c on revs $13.43M; Q4 company-owned comparable restaurant sales increased 2.2%, with traffic up 6.3%

·     Rocky Brands (RCKY) board approves up to $7.5M share repurchase program

·     Clarus (CLAR) Q4 EPS 19c/$57.31M vs. est. 19c/$56.54M; sees FY19 revenue $230M vs. est. $228.28M and sees FY19 EBITDA $25M

 

Energy, Industrials & Materials

·     North American Class 8 orders came in at 16,900 in February versus the ACT seasonally implied forecast of 14,700, marking the first sequential beat versus seasonality since July 2018, Bloomberg reported. Class 8 orders contracted by 58% y/y marking a fourth straight month of declines in orders (watch shares of CMI, PCAR, NAV)

·     Park-Ohio (PKOH) Q4 EPS $1.20/$406M vs. est. 89c/$410.75M; sees 2019 adjusted EPS $4.30-$4.60 vs. est. $4.35; sees 2019 effective income tax rate of 26-28%

·     Goodrich Petroleum (GDP) Q4 EPS 58c/$33.9M vs. est. 46c/$33.23M; Q4 production grew 17% sequentially to an average of 99,200 Mcfe per day, versus an average of 84,700 Mcfe per day in Q3 2018

·     GMS Inc. (GMS) Q3 EPS 41c/$723.9M vs. est. 52c/$741.73

·     Patterson-UTI (PTEN) reported that for the month of February 2019, the Company had an average of 175 drilling rigs operating. For the two months ended February 28, 2019, the Company had an average of 178 drilling rigs operating.

 

Financials

·     MarketAxess (MKTX) February Total Trading Volume $167B; overall average daily trading volume of $8.7 billion, Open Trading average daily trading volume of $2.3 billion, U.S. high-grade average daily trading volume of $4.6 billion, Emerging markets average daily trading volume of $1.9 billion and Eurobond average daily trading volume of $1.0 billion and overall trading volume of $20.3 billion

·     Wex (WEX) said it is unable, without unreasonable effort or expense, to file its annual report for the year ended December 31, 2018 within the prescribed time period because management requires additional time to complete its previously disclosed ongoing internal review of a discrepancy related to the balance sheet of the company’s Brazilian subsidiary

 

Healthcare

·     Adamas Pharmaceuticals (ADMS) downgraded to Underperform from Neutral at Mizuho and lowered price target for the shares to $5 from $11 after management last night withdrew the company’s prior sales guide for the year

·     Ascendis Pharma (ASND) files to sell $400M in ADSs

·     Horizon Pharma (HZNP) files to sell $300M in common stock

·     Invitae (NVTA) files to sell $125M in common stock

·     Addus HomeCare (ADUS) Q4 EPS 55c/$12.3M Ebitda vs. est. 49c/$12.1M; Q4 comparable sales +2.4%

·     La Jolla (LJPC) Q4 EPS loss ($1.73)/$4.18M vs. est. loss ($1.74)/$4.16M; sees FY19 revenue $24M-$28M vs. est. $40.28M

 

Technology, Media & Telecom

·     Salesforce (CRM) Q4 adjusted EPS 70c/$3.6B vs. est. 55c/$3.56B; sees Q1 adjusted EPS 60c-61c on revs $3.67B-$3.68B vs. est. 63c/$3.7B; sees FY20 adjusted EPS $2.74-$2.76 on revs $15.95B-$16.05B vs. est. $2.75/$15.99B; 4Q subscription and support revenue $3.38 billion

·     Sina (SINA) Q4 EPS 80c/$573M vs. est. 74c/$569.02M; sees FY19 revenue $2.44B-$2.59B, vs. consensus $2.45B; such revenue forecast includes the recognition of $10.4M in deferred license revenues related to the license granted to Leju

·     Weibo (WB) Q4 EPS 80c/$481.9M vs. est. 75c/$481.51M; sees Q1 revenue $395M-$405M vs. est. $398.97M

·     BlackLine (BL) 4.88M share Block Trade priced at $48.50

·     Yelp (YELP) will offer a paid product, Yelp Verified License, designed for service providers with valid trade licenses. Product to help businesses with visibility with blue “Verified” badge, available for $1 per day for providers

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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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