Morning Preview: April 26, 2019

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Early Look

Friday, April 26, 2019

Futures

Up/Down

%

Last

DJ Industrials

-17.00

0.06%

26,423

S&P 500

-0.50

0.02%

2,925

Nasdaq

12.50

0.16%

7,811

 

 

U.S. stock futures are mixed, with the Dow pointing to a modest decline, but the tech heavy Nasdaq looking to set another all-time high as markets continue to digest earnings. It was a busy night with shares of Amazon, Ford, Mattel, GRUB rising on quarterly results while semiconductor giant/Dow component Intel delivers a very weak outlook for the upcoming quarter. Regarding trade, Bloomberg reported Xi Jinping addressed Chinese domestic reforms in a speech to world leaders, covering state subsidies, intellectual property, foreign investment and a pledge to avoid competitive devaluation of the yuan. Markets may turn their attention from earnings this morning (upcoming results expected from Dow components and energy giants XOM/CVX) to economic data as U.S. GDP growth may have picked up to an annualized 2.3% pace in the first quarter from 2.2%, consensus showed (data at 8:30 AM EST). U.S. stocks closed mixed yesterday led by a rally in technology while industrial shares plunged behind weak earnings from MMM and ROK. The Nasdaq 100 reached a record on the back of strong results from Microsoft and Facebook. The dollar extended gains to reach the highest since May 2017. Oil prices slipped despite news of an outage for a major pipeline in Russia stopped flowing, as WTI crude pares its 8-week advance. In Asian markets, The Nikkei Index fell -48 points to 22,258, the Shanghai Index slipped -37 points to end at 3,086 and the Hang Seng Index rose 55 points to settle the week at 29,605. In Europe, the German DAX is up a few points to trade just below 12,300, while the FTSE 100 is down about -20 points to 7,415.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -1.08 points, or 0.04%, to 2,926.17

·     The Dow Jones Industrial Average fell -134.97 points, or 0.51%, to 26,462.08

·     The Nasdaq Composite gained 16.67 points, or 0.21%, to 8,118.68

·     The Russell 2000 Index declined -12.52 points, or 0.79% to 1,575.61

 

Events Calendar for Today

·     8:30 AM EST      GDP Annualized for Q1-Actual…est. 2.3%

·     8:30 AM EST      Personal Consumption for Q1-A…est. 1.0%

·     8:30 AM EST      GDP Price Index for Q1-A…est. 1.2%

·     8:30 AM EST      Core PCE QoQ for Q1-A…est. 1.3%

·     10:00 AM EST    University of Michigan Sentiment, Apr-F…est. 97.0

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: ADM, ALV, AN, CL, COG, CVX, DDAIF, DB, IPG, LEA, LYB, PSO, RBS, SNY, VTR, WBC, WETF, WY, XOM, ZBH

 

 

Macro

Up/Down

Last

WTI Crude

-1.00

64.22

Brent

-1.15

73.20

Gold

3.40

1,280.50

EUR/USD

0.0006

1.1138

JPY/USD

0.10

111.73

10-Year Note

-0.012

2.523%

 

 

World News

·     U.K. Prime Minister Theresa May has abandoned plans to try to secure parliamentary approval for her rejected EU withdrawal agreement before next week’s local elections, as cross-party talks fail to make headway. The prime minister wanted to ask MPs to vote on legislation to approve the U.K.’s departure from the EU, however the Brexit bill wasn’t included on next week’s agenda for the House of Commons, the Financial Times reported.

·     Swiss National Bank (SNB) Chairman Thomas Jordan on Friday defended negative interest rates, saying the policy is “absolutely crucial” to ensuring price stability and keeping the Swiss franc from being too strong.

 

Sector News Breakdown

Consumer

·     Amazon.com (AMZN) Q1 EPS $7.09/$59.7B vs. est. $4.72/$59.65B; sees Q2 revenue $59.5B-$63.5B vs. est. $62.37B – which anticipates an unfavorable impact of approximately 150 basis points from foreign exchange rates; sees Q2 operating income between $2.6B-$3.6B, compared with $3.0B YoY; 1Q operating income $4.42B vs. est. $3.10B; 1Q AWS net sales $7.70B

·     Amazon (AMZN) will invest $800 million this quarter to trim delivery time for Prime members to one day as companies like Walmart and Target ramp up competition.

·     Ford (F) shares rose 7%; Q1 adjusted EPS 44c/$37.2B vs. est. 26c/$36.99B; beat estimates as cost cuts and high-profit trucks offset losses in some overseas markets; 1Q Mobility Segment Ebit loss $288M, 1Q North America EBIT $2.2B vs. $1.9B YoY; said “expect first quarter EBIT to be the strongest of the year due to seasonal factors and major product launches ahead

·     Starbucks (SBUX) Q2 EPS 60c/$6.31B vs. est. 56c/$6.32B; 2Q Americas comparable sales +4% vs. est. +3.7%, 2Q China/Asia Pacific comp. sales +2% vs. est. +1.5% and 2Q EMEA comp. sales +2% vs. est. 0.1%; global comparable store sales increased 3%, driven by a 3% increase in average ticket; raises FY19 EPS outlook to $2.75-$2.79 from $2.68-$2.73; rewards loyalty program in U.S. up 13% to 16.8M users

·     BJ’s Restaurants (BJRI) Q1 EPS 60c/$290.6M vs. est. 51c/$289.72M; Q1 comparable restaurant sales increase of 2%

·     Boyd Gaming (BYD) Q1 EPS 43c/$827.3M vs. est. 42c/$812.72M; 1Q Las Vegas Locals segment adj. EBITDAR $74.2M and 1Q Downtown Las Vegas segment adj. EBITDAR $15.0M; sees full-year adj. EBITDAR $885M-$910M

·     Columbia Sportswear (COLM) shares rose 4%; Q1 EPS $1.07/$654.6M vs. est. 83c/$646.7M; raises FY19 EPS view to $4.40-$4.55 from $4.30-$4.45 (est. $4.41) and raises FY19 revenue view to $2.98B-$3.04B from $2.97B-$3.03B

·     Mattel (MAT) shares rose 10%; Q1 adjusted EPS loss (44c)/$689.2M vs. est. loss (56c)/$645M; 1Q reported gross margin 34.8% and adjusted margin 38% which excludes expenses related to the voluntary Fisher-Price Rock ‘n Play Sleeper recall; Worldwide Power Brands sales fell 2% as reported, with Barbie up 7% and Hot Wheels up 4%; Fisher-Price and Thomas & Friends fell 8%

·     Mohawk (MHK) Q1 EPS $2.13/$2.44B vs. est. $2.08/$2.5B

 

Energy

·     Bonanza Creek Energy Inc. (BCEI) 1Q estimated sales volumes rose 17% sequentially to 20.7m barrels of oil equivalent per day, co. says in preliminary 1Q results; 1Q estimated lease operating expenses fell 11% to $2.91/boe, compared to $3.27/boe for Wattenberg in 4Q

·     Southwestern Energy (SWN) Q1 adjusted EPS 27c vs. est. 21c; 1Q production 182 bcfe vs. 226 y/y; 1Q adjusted Ebitda $319M vs. Bloomberg est. $274.5M; Q1 net cash flow $309 million vs. $358 million YoY; 1Q oil production 854 MMbbl vs. 613

·     TechnipFMC (FTI) Q1 adjusted EPS 6c/$2.91B vs. est. 29c/$3.14B; said quarterly orders of $6.2 billion were our highest since Q4’14; raises FY19 Onshore/Offshore revenue view to $6B-$6.3B from $5.7B-$6B

 

Financials

·     Aflac (AFL) Q1 EPS $1.12/$5.66B vs. est. $1.06/$5.50B; backs FY19 adjusted EPS view $4.10-$4.30 vs. est. $4.26; continue to expect Aflac U.S. to deliver solid results in 2019 with earned premium growth of 2% to 3% and stable sales growth

·     Capital One (COF) Q1 adjusted EPS $2.90/$7.1B vs. est. $2.70/$7.03B; reports Q1 net interest margin 6.86%, down 10 bps; reports efficiency ratio of 51.83%; Efficiency ratio excluding adjusting items of 51.48%

·     Discover Financial (DFS) Q1 EPS $2.15/$2.76B vs. est. $2.02/$2.76B; 1Q net interest margin 10.5%, 1Q provision for loan losses $809M, Q1 net interest income $2.31 billion; 1Q loans $88.74 billion vs. $90.5 billion q/q

·     Enova International (ENVA) Q1 adjusted EPS $1.16/$293M vs. est. 94c/$292.57M; sees Q2 adjusted EPS 48c-70c on revs $265M-$285M vs. est. 85c/$297.33M

·     Federated Investors (FII) Q1 EPS 54c/$307.05M vs. est. 56c/$308.02M

·     Principal Financial (PFG) Q1 adjusted operating EPS $1.43 vs. est. $1.31; Reports AUM of $675.4B for the quarter vs. $626.8B in Q4; Q1 book value per share $45.63 and 1Q net cash flow $5.5B

·     SVB Financial (SIVB) Q1 EPS $5.44 vs. est. $4.78; 1Q net interest margin 3.81% vs. 3.38% y/y; 1Q net interest income $515.8 million vs. $419.9M YoY

 

Healthcare

·     BioMarin (BMRN) Q1 EPS loss (32c)/$400.7M vs. est. loss (19c)/$389.69M; sees 2019 revenue $1.68B-$1.75B vs. est. $1.69B and sees 2019 non-GAAP income $130M-$170M

·     Cerner (CERN) Q1 EPS 61c/$1.39B vs. est. 61c/$1.39B; Q1 bookings in-line with the Company’s expectations at $1.242B; sees Q2 EPS 63c-65c on revs $1.410B-$1.460B vs. est. 65c/$1.45B

·     eHealth (EHTH) shares rose 12%; Q1 adjusted EPS 33c/$68.2M vs. est. loss (11c)/$51.1M; 1Q total estimated membership 952,239 vs. 893,319 YoY; raises FY19 adj. EPS view to $1.54-$1.73 from $1.11-$1.25 and ups FY19 revenue view to $315M-$335M from $290M-$310M

·     Illumina (ILMN) Q1 EPS $1.60/$846M vs. est. $1.34/$834.36M; raises FY19 adj. EPS view to $6.63-$6.73 from $6.50-$6.60 and backs FY19 revenue view up 13%-14% saying EPS view reflects the favorable impact of the Helix deconsolidation

·     PerkinElmer (PKI) Q1 adjusted EPS 69c/$648.7M vs. est. 66c/$645.08M; raises FY19 adjusted EPS view to $4.02-$4.07 from $4.00-$4.05 (est. $4.03)

·     Universal Health (UHS) Q1 adjusted EPS $2.45/$2.8B vs. est. $2.62B/$2.82B; 1Q acute care adjusted admissions +4.9% and 1Q behavioral health adjusted admissions +2.9%

 

Industrials & Materials

·     Briggs & Stratton (BGG) Q3 adjusted EPS 34c/$580.2M vs. est. 65c/$571.35M; cuts FY19 EPS view to 45c-55c from $1.10-$1.30 (est. $1.04) and cuts FY19 revenue view to $1.86B-$1.91B from $1.90B-$1.96B citing weather-related market softness and the impact of temporary inefficiencies

·     Fortive (FTV) Q1 adjusted EPS 69c/$1.6B vs. est. 69c/$1.62B; sees Q2 adjusted EPS 86c-90c vs. est. 96c; raises FY19 adjusted EPS view to $3.55-$3.65 from $3.40-$3.50

·     Eastman Chemical (EMN) 1Q adjusted EPS $1.77/$2.38B vs. est. $1.87/$2.58B; said “see signs that the macro economic challenges are lessening with an improvement in orders in March and April, which gives us confidence that the global economy will continue to strengthen in the back half of this year”

·     Republic Services (RSG) Q1 adjusted EPS 73c/$2.47B vs. est. 72c/$2.50B; reaffirms year adjusted EPS forecast

·     Alaska Air (ALK) Q1 EPS 17c/$1.88B vs. est. 12c/$1.87B

·     SkyWest (SKYW) Q1 adjusted EPS $1.33/$724M vs. est. $1.15/$692.33M; excluding ExpressJet revenue in both periods, revenue increased to $700M in Q1 2019 from $622M in Q1 2018

·     Werner Enterprises (WERN) Q1 EPS 52c/$596.1M vs. est. 48c/$620.6M

 

Technology, Media & Telecom

·     Intel (INTC) shares fell -7%; Q1 adjusted EPS 89c/$16.1B vs. est. 87c/$16.02B; lowers FY19 EPS view to $4.35 below est. $4.51 and lowers FY19 revenue view to about $69.0B from roughly $71.5B – said taking a more cautious view of the year, although we expect market conditions to improve in the second half

·     Cypress (CY) Q1 adjusted EPS 27c/$539M vs. est. 24c/$535.16M; sees Q1 adjusted EPS 22c-26c on revs $515M-$545M vs. est. 24c/$528.12M

·     GrubHub (GRUB) Q1 adjusted EPS 30c/$323.8M vs. est. 25c/$322.5M; sees 2Q revenue $305-$325M vs. est. $326.2M; sees 2Q adjusted Ebitda $49M-$59M vs. est. $58.3M; 1Q active diners 19.3 million and 1Q daily average grubs 521,000

·     Juniper (JNPR) Q1 adjusted EPS 26c/$1.0B vs. est. 21c/$983.1M; says due to the acquisition of Mist Systems and a higher than anticipated tax rate, they expect non-GAAP EPS of $1.75 +/- $0.05 for 2019; sees Q2 revs about $1.1Bplus or minus $30M

·     Proofpoint (PFPT) shares fell -6%; Q1 EPS 40c/$202.9M vs. est. 33c/$199.32M; sees FY19 EPS $1.43-$1.49 on revs $874M-$878M vs. est. $1.65/$873.33M

·     Shutterfly (SFLY) Q1 EPS loss ($2.47)/$325M vs. est. loss ($2.54)/$323.14M; raises 2019 EPS outlook to 61c-$1.11 from 55c-$1.06 (est. 74c) and affirms 2019 revenue outlook $2.13B-$2.21B, $2.15B

·     VeriSign (VRSN) Q1 EPS $1.31/$306.4M vs. est. $1.25/$302.6M; ends Q1 with 154.8M domain registrations, up 4.4% from last year; narrows FY19 revenue view to $1.220B-$1.235B from $1.215B-$1.235B and sees FY19 capital expenditures $45M-$55M

·     T-Mobile (TMUS) Q1 EPS $1.06/$11.1B vs. est. 91c/$11B; reports 1.7 million total net additions in Q1 2019, up 15% YoY; 1.0 million branded postpaid net additions in Q1 2019; 656,000 branded postpaid phone net additions in Q1 2019; 69,000 branded prepaid net additions in Q1 2019; Record-low branded postpaid phone churn of 0.88% in Q1 2019, down 19 bps YoY; backs FY19 adjusted EBITDA view $12.7B-$13.2B

_________________________________________________________________

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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