Morning Preview: April 25, 2019

Auto PostDaily Market Report

Early Look

Thursday, April 25, 2019

Futures

Up/Down

%

Last

DJ Industrials

-113.00

0.43%

26,428

S&P 500

-1.50

0.06%

2,929

Nasdaq

9.50

0.11%

7,856

 

 

U.S. stock futures are now lower, as Dow futures tumble after Dow component MMM reported a miss on the top and bottom line and drastically cut its outlook for the year (sending shares down over 7%). Overnight however, tech stocks had rallied behind better earnings from market leaders Facebook and Microsoft along with a handful of other names. U.S. stocks and bonds have been mostly climbing in tandem over the last 2-weeks, with stock touching their best levels of all-time (S&P 500 and Nasdaq Comp new highs this week), while the yield on the benchmark 10-year Treasury note was last at 2.52% Wednesday, its lowest in about two weeks, and back down near 2019 lows. Stocks have been buoyed since the start of the year after Federal Reserve, led by Chairman Jerome Powell said it was holding off on further rate hikes after delivering four increases in 2019.

 

In Asian markets, The Nikkei Index gained 107points to settle at 22,307, the Shanghai Index dropped over -77 points (2.4%) to settle at 3,123 and the Hang Seng Index declined -256 points to finish at 29,549. In Europe, the German DAX is little changed at 12,310, while the FTSE 100is down around -20 points at7,450. Germany’s 10-year government bond yields turned negative following a string of weak economic data in the country. European banks active after BCS and UBS report quarterly results and Deutsche Bank and Commerzbank officially cancel all merger plans.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -6.43 points, or 0.22%, to 2,927.25

·     The Dow Jones Industrial Average fell -59.34 points, or 0.22%, to 26,597.05

·     The Nasdaq Composite slipped -18.81 points, or 0.23%, to 8,102.01

·     The Russell 2000 Index advanced 3.04 points, or 0.19% to 1,588.13

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 200K

·     8:30 AM EST      Continuing Claims…est. 1.682M

·     8:30 AM EST      Durable Gods Orders, Mar-P…est. 0.8%

·     8:30 AM EST      Durable Goods Ex: transportation, Mar-P…est. 0.2%

·     9:45 AM EST      Bloomberg Consumer Comfort Index…prior 60.3

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

·     11:00 AM EST    Kansas City Fed Manufacturing Activity, for April…est. 8

 

Earnings Calendar:

·     Earnings Before the Open: ABBV, ADS, ALLE, BCS, BAX, BAYRY, BC, BMY, BWA, CLF, CMCSA, DHI, FCX, HBAN, HES, HP, HSY, IP, ITW, IVZ, LAZ, MAS, MMM, NEM, ROK, ROP, RTN, UBS, UPS, VC, VLO, VLY, WWE

·     Earnings After the Close: AFL, ALK, ASB, ATEN, COF, DFS, EMN, F, FTI, FTV, ILMN, INTC, JNPR, MAT, MHK, PFG, PFPT, PRO, RSG, SBUX, SGEN, SIVB, VRSN

 

 

Macro

Up/Down

Last

WTI Crude

0.30

66.19

Brent

0.82

75.39

Gold

1.75

1,277.50

EUR/USD

-0.0019

1.1136

JPY/USD

-0.34

111.85

10-Year Note

-0.004

2.523%

 

 

World News

·     The Bank of Japan (BoJ) decided to keep rates unchanged and changed its forward guidance to indicate rates will remain very low through next spring. The bank’s guidance indicated modest economic weakness to come

·     U.K. Prime Minister Theresa May once again avoided a personal defeat when a committee of backbench Conservative Party MPs decided not to pursue rule changes that would allow a leadership challenge before December

 

Sector News Breakdown

Consumer

·     Chipotle (CMG) Q1 adjusted EPS $3.40/$1.3B vs. est. $3.01/$1.26B; 1Q comparable sales +9.9% vs. estimate +7.3%; sees FY new restaurants 140 to 155; Q1 restaurant level operating margin 21% vs. 19.5% Yoy; sees 2019 mid to high single digit comp sales growth

·     Tesla (TSLA) Q1 EPS loss ($2.90)/$4.54B vs. est. loss ($1.30)/$4.84B; 1Q adj. automotive gross margin +20.3% vs. Bloomberg est. +17%; Q1 capital ex $279.9M; Reaffirms Guidance of 360k to 400k Deliveries in 2019; says may produce 500k vehicles globally in 2019

·     Supermarket chains Sainsbury’s and the Walmart Inc.-(WMT) owned ASDA decided to drop their merger plans after the U.K.’s Competition and Markets Authority decided to block the deal.

·     Churchill Downs (CHDN) Q1 adjusted EPS 63c/$265.4M vs. est. 38c/$248.91M

·     Fortune Brands (FBHS) shares rose 8%; Q1 EPS 63c/$1.33B vs. est. 59c/$1.31B; backs FY19 EPS ex-items view of $3.53-$3.77 (est. $3.63) as outlook continues to be based on a U.S. home products market growth assumption of 2%-4% and an assumption of 2%-4% growth for the total global market

·     O’Reilly Automotive (ORLY) Q1 EPS $4.05/$2.41B vs. est. $4.05/$2.44B; 1Q gross profit margin 53.1%; Q1 comparable sales +3.2%, estimate +4.1%; reaffirms year comp sales view; sees 2Q EPS $4.55-$4.65 vs. estimate $4.69

·     Boston Beer (SAM) Q1 EPS $2.02/$251.7M vs. est. $1.01/$234.96M; sees FY EPS $8.00 to $9.00 vs. est. $8.64; sees FY gross margin 50% to 52%

·     Spirit Airlines (SAVE) Q1 EPS 84c/$855.8M vs. est. 84c/$865.13M; Q1 total revenue per available seat mile +4.1%

 

Energy

·     CVR Energy (CVI) Q1 EPS $1.00/$1.49B vs. est. 51c/$1.52B

·     Helmerich & Payne (HPQ) Q2 EPS 55c/$720.87M vs. est. 38c/$711.49M; 2Q offshore rig expense per day $25,941 vs. $24,079 y/y, 2Q offshore rig utilization 75% vs. 63% y/y, 2Q U.S. rig utilization 67% vs. 59% y/y

·     Oil States (OIS) Q1 EPS loss (24c)/$2506M vs. est. loss (28c)/$245.2M

·     QEP Resources (QEP) Q1 adjusted EPS 15c vs. est. loss (1c); boosted its production forecast for the full year to 28.5 to 30.3 mmboe, saw 28 to 29.9; 1Q lease operating expenses $51.5M

 

Financials

·     Visa (V) reports Q2 EPS $1.31/$5.5B vs. est. $1.24/$5.46B; Q2 payments volume up 8% and reports Q2 processed transactions up 11%; backs FY19 net revenue growth view low double digits (est. $22.78B) and sees FY19 effective tax rate roughly 20%; sees FY19 class A EPS growth high-end of mid-teens range on an adjusted, non-GAAP nominal dollar basis

·     PayPal (PYPL) Q1 EPS 78c/$4.13B vs. est. 68c/$4.13B; now have 277 million customer accounts, including 22 million merchant accounts and over 40 million active Venmo accounts; reports 9.3M net new active accounts in Q1, versus an increase of 8.1M n Q1 2018, up 15%. Reports 2.8B payment transactions, up 28%; sees 2019 EPS $2.94-$3.01 vs. est. $2.88

·     Merger talks between German banks Deutsche Bank AG (DB) and Commerzbank AG officially ended, with the latter saying the combination would not be in the interests of stakeholders. “We have concluded that this transaction would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements”

·     Ameriprise (AMP) Q1 operating EPS $3.75/$3.12B vs. est. $3.63/$3.03B; assets under management $459 billion; 1Q adjusted ROE +36.4%

·     AGNC Investment (AGNC) Q1 adjusted EPS 52c vs. est. 56c; reports Q1 NII $164M; $17.23 tangible net book value per common share as of March 31

·     Cincinnati Financial (CINF) Q1 operating EPS $1.05 vs. est. 88c; 1Q net premiums written $1.38 billion and 1Q book value per share $52.88

·     Essex (ESS) reports Q1 core FFO $3.23 vs. consensus $3.19; raises FY19 core FFO view to $12.90-$13.25 from $12.83-$13.23

 

Healthcare

·     Align Technology (ALGN) Q1 EPS 89c/$548.97M vs. est. 83c/$530.4M; Q1 revenues and Invisalign volumes were up 25.6% and 28.3% year-over-year, respectively, reflecting continued strong growth across all geographies and customer channels

·     Varian Medical (VAR) Q2 adjusted EPS $1.05/$779M vs. est. $1.15/$776.28M; backs FY19 adjusted EPS view $4.60 -$4.75 vs. est. $4.74; raises FY19 revenue view to $3.09B-$3.18B from $3.06B-$3.15B (est. $3.13B)

 

Industrials & Materials

·     3M (MMM) Q1 adjusted EPS $2.23/$7.86B fell short of the $2.48/$8.06B estimates; cuts FY EPS $9.25-$9.75 down from prior view of $10.45-$10.90 and announced a realignment from five to four business groups; expects a reduction of 2,000 jobs worldwide

·     Echo Global (ECHO) Q1 EPS 38c/$538.1M vs. est. 36c/$550.49M; sees Q2 revenue $560M-$600M below consensus $625.31M

·     Forward Air (FWRD) Q1 EPS 64c/$321.47M vs. est. 62c/$323.58M; sees Q2 EPS 81c-85c on rev growth 4%-8% vs. est. 88c/$1.43B

·     Graco (GGG) Q1 adjusted EPS 47c/$404.9M vs. est. 49c/$415.59M; backs FY19 organic sales growth view of mid-single-digits

·     Landstar System (LSTR) Q1 EPS $1.58/$1.03B vs. est. $1.52/$1.05B; sees Q2 EPS $1.56-$1.62 on revs $1.075B-$1.125B vs. est. $1.61/$1.18B

·     Trinity Industries (TRN) Q1 EPS 24c/$604.8M vs. est. 20c/$674.92M; backs FY19 EPS view of $1.15-$1.35 vs. est. $1.31; also backs its “Leasing Group expects a net lease fleet investment of between $1.2B and $1.4B in 2019

·     Packaging Corp. (PKG) Q1 adjusted EPS $1.98/$1.73B vs. est. $1.96/$1.77B

 

Technology, Media & Telecom

·     Facebook (FB) shares rose 9%; Q1 EPS $1.89/$15.08B vs. est. $1.63/$14.97B; reports Q1 daily active users of 1.56B on average for March 2019, an increase of 8% year-over-year; reports monthly active users of 2.38B as of March 31, 2019, an increase of 8% YoY; estimates loss from FTC inquiry at $3.0B-$5.0B; cuts FY19 CapEx view to $17B-$19B from $18B-$20B

·     Microsoft (MSFT) Q3 EPS $1.14/$30.6B vs. est. $1.00/$29.84B; 3Q Intelligent Cloud revenue $9.65B, Q3 More Personal Computing revenue $10.68B, 3Q Productivity and Business Processes revenue $10.24B

·     Citrix (CTXS) Q1 EPS $1.27/$719.1M vs. est. $1.17/$708.32M; sees Q2 EPS $1.30-$1.35 on revs $765M-$775M vs. est. $1.42/$766.45M

·     Lam Research (LRCX) shares rose 4%; Q3 EPS $3.70/$2.44B vs. est. $3.38/$2.4B; sees Q4 EPS $3.31 +/- 20c and revs $2.35B +/- $150M vs. est. $3.33/$2.34B; sees 4Q adjusted gross margin 44.5% to 46.5% after Q3 GM 45.1%

·     F5 Networks (FFIV) Q2 EPS 2.57/$544.9M vs. est. $2.54/$547.15M;

·     Knowles (KN) Q1 EPS 13c/$179.8M vs. est. 12c/$175M; sees Q2 EPS 17c-21c on revs $185M-$205M vs. est. 18c/$190.6M

·     Netgear (NTGR) shares fell -9%; Q1 EPS 39c/$249.1M vs. est. 49c/$244.3M; said due to reduced service provider shipments, sees Q2 revs $215M-$230M, below est. $256.1M; sees Q2 GAAP operating margin is expected to be in the range of 0.0% to 1.0%

·     PTC (PTC) shares fell -9%; Q2 adjusted EPS 38c/$315.7M vs. est. 35c/$314.01M; sees 3Q revenue EPS 20c-30c on revs $288M-$303M vs. est. 40c/$331.5M; sees FY revenue $1.25B-$1.28B vs. est. $1.33B and sees FY adjusted EPS $1.45-$1.70 vs. est. $1.79

·     ServiceNow (NOW) Q1 EPS 67c/$788.9M vs. est. 54c/$766.22M; 1Q billings growth +24% and 1Q free cash flow $313.7M; sees yr adj. Subscription revenues $3.28B-$3.3B; sees Q2 subscription revenue $793M-$798M, up 35%-36% from last year

·     Xilinx (XLNX) shared fell -10%; Q4 adjusted EPS 94c/$828M vs. est. 93c/$824.55M; sees Q1 revenue $835M-$865M vs. est. $832.02M; sees Q1 adjusted gross margin ~ 66%; announced that it has entered into a definitive agreement to acquire privately held Solarflare Communications

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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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