Morning Preview: March 19, 2019

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Early Look

Tuesday, March 19, 2019

Futures

Up/Down

%

Last

DJ Industrials

81.00

0.31%

26,046

S&P 500

8.50

0.29%

2,848

Nasdaq

20.50

0.28%

7,381

 

 

U.S. stock futures are pointing to a stronger open, tracking European markets higher while Asia closed little changed as market attention turns to the FOMC two-day meeting results (starts today, results tomorrow) and await signals from the U.S./China trade talks. In Asian markets, The Nikkei Index fell -17 points to 21,566, the Shanghai Index dipped -5 points to close at 3,090 and the Hang Seng Index rose 57 points to settle at 29,466. In Europe, the German DAX is up about 70 points at 11,725, while the FTSE 100 is up around 20 points at 7,320. The UK minister responsible for sealing the U.K.’s departure from the EU said conflicting messages from Parliament will force the government to seek a longer extension. U.S. stocks gained on Monday, creeping ever so slightly higher throughout the session as investors prepare for the Federal Reserve policy meeting which begins today and results Wednesday, with no hikes expected, but possibly a lower assessment of the economy. The Dow Jones Industrial Average scored its fourth straight gain while the S&P and Nasdaq ended the day at their highest levels since early October. The major benchmark’s performances Monday were an extension of last week’s gains, when the Nasdaq advanced 3.8%, the S&P 500 2.9% and the Dow added 1.6%.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 10.46 points, or 0.37%, to 2,832.94

·     The Dow Jones Industrial Average rose 65.23 points, or 0.25%, to 25,914.10

·     The Nasdaq Composite spiked 25.95 points, or 0.34%, to 7,714.48

·     The Russell 2000 Index advanced 10.39 points, or 0.67% to 1,563.93

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     10:00 AM EST    Factory Orders for January…est. 0.3%

·     10:00 AM EST    Durable Goods Orders, Jan-F…est. 0.4%

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: DSW, HDS, MIK

·     Earnings After the Close: AIR, FDX, SMAR

 

Other Key Events:

·     Drug, Chemical, & Associated Tech (DCAT) week, 3/18-3/21, in New York

·     Game Developers Conference (GDC) runs 3/18-3/22, in San Francisco

·     Oppenheimer 29th Annual Healthcare Conference, 3/19-3/21, in New York

·     Roth Capital 31st Annual ROTH Conference, 3/17-3/19, in CA

 

 

Macro

Up/Down

Last

WTI Crude

0.28

59.37

Brent

0.38

67.92

Gold

5.10

1,306.60

EUR/USD

0.0013

1.1350

JPY/USD

-0.20

111.23

10-Year Note

-0.013

2.592%

 

 

World News

·     Late Monday, UK Parliament speaker of the house John Bercow announced that he would not allow the government to proceed with a third vote on Prime Minister Theresa May’s Brexit deal without significant changes.

·     February U.K. unemployment figures surprised to the upside, coming in slightly below consensus at 3.9% down from 4% in January

 

Sector News Breakdown

Consumer

·     Domino’s Pizza (DPZ) upgraded to Overweight from Neutral while Yum! Brands (YUM) was downgraded to Neutral from Overweight at JPMorgan saying believes Domino’s algorithm to achieve 8%-12% system-wide sales growth remains intact

·     Starbucks (SBUX) announced a suite of enhancements coming to its rapidly-growing Starbucks Rewards loyalty program, bringing more than 16M members flexibility and choice when redeeming Stars at Starbucks stores

·     The SEC told a judge that Tesla (TSLA) CEO Elon Musk never sought pre-approval for any tweets about the company since forming a court-approved deal that required him to have the automaker pre-approve any tweets that could materially impact it – CNBC

·     Del Taco (TACO) Q4 adjusted EPS 15c/$157.3M vs. est. 19c/$157.01M; Q4 system-wide comparable restaurant sales up 1.9%, company-operated comparable restaurant sales grew 1.0%, marking the 26th consecutive quarter of gain; sees FY19 adjusted EPS 47c-52c on revs $517M-$527M vs. est. 58c/ $518.24M

·     HD Supply (HDS) Q4 adjusted EPS 70c/$1.45B vs. est. 67c/$1.41B. Q4 organic sales growth, net of the change in selling days, was up 7.4% from last year; sees Q1 EPS 75c-84c on revs $1.47B-$1.52B vs. est. 85c/$1.52B; sees FY19 EPS $3.52-$3.81 on revs $6.30B-$6.45B vs. est. $3.64/$6.36B

·     Revlon (REV) Q4 adjusted EPS loss (86c)/$741.6M; expects to disclose material weakness in 2018 10-K

 

Energy, Industrials & Materials

·     Covenant Transportation (CVTI) guides Q1 EPS 18c-26c below the consensus 36c; attribute the softer demand to factors such as late 2018 inventory growth in advance of the perceived impact of tariffs, the effects of the partial government shutdown on spending, and extended periods of inclement weather

·     Forward Air (FWRD) agreed to acquire last-mile logistics provider FSA Logistix for $27 million in cash; will also pay additional contingent consideration, based upon future revenue generation

·     Roper Technologies, Inc. (ROP) announced that it has reached a definitive agreement to acquire Foundry in an all-cash transaction valued at £410 million (GBP).

·     Antofagasta Plc said full-year earnings showed a $543.7 million net profit (down 26% year over year) and planned cost savings in the coming year of $100 million.

·     Williams (WMB) will establish a new platform to optimize its midstream operations in the western Marcellus and Utica basins through a $3.8 billion joint venture with Canada Pension Plan Investment Board

 

Financials

·     First Financial Bankshares (FFIN) will replace MB Financial (MBFI) in the S&P MidCap 400, and Ferro (FOE) will replace First Financial Bankshares in the S&P SmallCap 600 effective prior to the open of trading on Friday, March 22

·     RE/MAX Holdings (RMAX) announced a strategic alliance with Redfin (RDFN), which formalizes and expands a long-standing relationship between agents from both via the Redfin Partner Program. In areas where Redfin does not have capacity to serve customers, Redfin refers customers to approved Partner Agents at other brokerages, including participating RE/MAX agents

·     Two Harbors (TWO) files to sell 18M shares of common stock

 

Healthcare

·     Akebia (AKBA) Q4 revenue $59.9M vs. est. $73.67M; reports Q4 net loss ($88.4M) vs. profit $15.5M last year; ended 2018 with cash, cash equivalents and available-for-sale securities of $321.6M

·     Amyris, Inc. (AMRS) said that it has signed a final definitive agreement for cannabinoid development, licensing and commercialization containing $300 million of R&D and milestone payments plus long-term royalties

·     Dermira (DERM) files to sell $110M of common stock

·     Evolus (EOLS) Q4 EPS loss (46c) vs. est. loss (55c); said Q4 total cash was $93.2M as of December 31, 2018, compared to $105.2M as of September 30, 2018; said In addition to our U.S. launch, we expect to receive an opinion from the CHMP in the coming weeks, and if positive, would result in European approval during second quarter 2019

·     HealthEquity (HQY) Q4 EPS 27c/$75.78M vs. est. 22c/$74.09M; sees FY20 EPS 1.23-$1.29 on revs $333M-$339M vs. est. $1.31/$336.33M

·     NanoString (NSTG) files to sell 4.5M shares of common stock

·     Novavax (NVAX) Q4 EPS loss (13c)/$6.1M vs. est. loss (12c)/$7.09M

·     Perrigo Company (PRGO) announced it has received tentative approval from the U.S. FDA for the generic version of Finacea Foam 15%

·     Syneos Health (SYNH) Q4 EPS 95c/$1.15B vs. est. 81c/$1.15B; adjusted EBITDA Q4 under ASC 605 increased to $186.1M and $636.3M, or 22.3% and 20.0%, of adjusted service revenue, respectively; sees FY19 revenue $4.62B-$4.73B vs. est. $4.68B; working with its lenders to refinance its existing Term Loan A/revolving credit facilities

·     Tilray (TLRY) Q4 EPS (33c)/$15.5M vs. est. loss (12c)/$14.15M

 

Technology, Media & Telecom

·     Nvidia Corp. (NVDA) presented progress for its newest chips Monday as the keynote address of the 2019 GTC Conference in San Jose, Calif., Nvidia’s announced that Amazon.com Inc. (AMZN) will now be using its T4 data-center chips, the biggest name that had not yet publicly signed on with Nvidia. NVDA said its T4 Tensor Core graphics processing units, or GPUs, would be deployed to Amazon Web Services through Elastic Compute Cloud G4 in the coming weeks.

·     Netflix Inc. (NFLX) will not be part of Apple Inc.’s (AAPL) new streaming service, Chief Executive Reed Hastings said late Monday, Variety reported

·     Atlassian Corporation Plc (TEAM) said it entered into a definitive agreement to acquire AgileCraft, a leading provider of enterprise agile planning software in a deal valued at $166M

·     PFSweb (PFSB) reports Q4 EPS 17c/$93M vs. est. 24c/$91.03M; Q4 net income included $1.0M of stock-based compensation expense, $0.8M of acquisition-related, restructuring and other costs, $0.4M in amortization of acquisition-related intangible assets, and $0.1M deferred tax expense related to goodwill amortization; sees FY19 SFE revenue increase in low-single digits

·     WageWorks (WAGE) sees FY19 revenue growth 0%-3% impacted by remnants of integration activities and phased approach with partner migration from 2018; sees FY19 adjusted EBITDA margin, normalized, 26%-30%

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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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