Morning Preview: May 07, 2019

Auto PostDaily Market Report

Early Look

Tuesday, May 7, 2019

Futures

Up/Down

%

Last

DJ Industrials

-120.00

0.45%

26,285

S&P 500

-14.00

0.48%

2,918

Nasdaq

-42.00

0.54%

7,761

 

 

Stocks are pointing to a lower open amid ongoing trade tensions between the U.S. and Beijing, as we inch closer to Friday where U.S. officials confirmed that China tariffs would be raised by the end of the week. U.S. Trade Representative Robert Lighthizer said Monday that the Trump administration will make good on a threat to lift tariffs on $200 billion in Chinese goods early Friday. U.S. officials said that tariffs on those Chinese goods will rise from 10% to 20% at 12:01 a.m. Eastern time Friday. On a positive note, Chinese delegates are expected to arrive for planned trade talks on Thursday, one day later than expected and that Chinese vice-premier Liu He will be attending. In Asian markets, The Nikkei Index fell after reopening from holiday, slipping -335 points to 21,923, the Shanghai Index gained 19 points to close at 2,926 and the Hang Seng Index gained 153 points to finish at 29,363. In Europe, the German DAX is down over 60 points to 12,215, while the FTSE 100 is down roughly 1% around the 7,300 level. As for Monday, U.S. stocks finished lower on Monday, but recouped deeper losses. Another busy day of earnings upcoming as well as a few economic data points, but trade headlines will likely continue to be the main focus all week as we head to a tariff deadline.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -13.17 points, or 0.45%, to 2,932.47

·     The Dow Jones Industrial Average fell -66.47 points, or 0.25%, to 26,438.48

·     The Nasdaq Composite slumped -40.71 points, or 0.50%, to 8,123.29

·     The Russell 2000 Index advanced 0.95 points, or 0.06% to 1,614.98

 

Events Calendar for Today

·     7:40 AM EST      Fed’s Kaplan speaks in China on moderated panel

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     10:00 AM EST    JOLTs Job openings for March

·     3:00 PM EST       Consumer Credit for March

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ADNT, AES, AGN, AMAG, ARMK, BGCP, BLD, CLVS, CNK, DF, DFRG, DPLO, EMR, ENR, EXPD, HAE, HSIC, IT, JEC, JLL, KEYW, LITE, MNK, MYL, OMI, PNM, REGN, SEAS, SRE, TA, TDG

·     Earnings After the Close: ACLS, ADT, AERI, BECN, BOLD, CRAY, CRZO, CSOD, DDD, DVA, EA, ESE, EVH, FANG, FLT, GHDX, HALO, INGN, JCOM, LC, LYFT, MTCH, MTSI, MYGN, NCR, PAA, PAGP, PEGA, PKD

 

Other Key Events:

·     Australia RBA rate decision, Tuesday morning

·     Deutsche Bank 44th Annual Healthcare Conference,5/7-5/8, in Boston, MA

·     China FX reserves for April

·     German factory orders for March

·     American Academy of Neurology (AANC) Annual Meeting, 5/4-5/10, in PA

 

 

Macro

Up/Down

Last

WTI Crude

-0.38

61.87

Brent

-0.65

70.59

Gold

0.40

1,281.50

EUR/USD

0.0001

1.12

JPY/USD

-0.16

110.60

10-Year Note

-0.003

2.473%

 

 

World News

·     German manufacturing orders picked up slightly in March, but not enough to compensate February’s steep fall as total orders for the key sector rose 0.6% month-on-month, but economists had expected a 1.2% rise. Compared with March 2018, order volumes dropped 6.0%, taking account of calendar effects.

·     Two Reuters journalists who were imprisoned for breaking Myanmar’s Official Secrets Act over reporting on security forces’ abuses of Rohingya Muslims were pardoned and released Tuesday. The reporters were arrested in December 2017 and sentenced last September after being accused of illegally possessing official documents

 

Sector News Breakdown

Consumer

·     Del Taco (TACO) Q1 EPS 4c/$114.2M vs. est. 6c/$114.22M; 1Q system-wide comparable sales -0.1%, vs. estimate -0.6% and 1Q Company-owned restaurant comp sales -0.6%, vs. est. -0.8%

·     Fiesta Restaurant (FRGI) Q1 adjusted EPS 15c vs. est. 15c; 1Q Pollo Tropical comparable sales -2.6% vs. estimate -1.7% and 1Q Taco Cabana comp. sales -0.5% vs. estimate +1.7%

·     Freshpet (FRPT) Q1 EPS loss (10c)/$54.79M vs. est. loss (9c)/$54.09M

·     Hertz (HTZ) Q1 adjusted EPS loss (99c)/$2.11B vs. est. loss ($1.40)/$2.12B; Total U.S. RAC revenues increased 7% compared to the first quarter of 2018; Transaction days grew 4% driven by expanding volume to transportation network company drivers. Pricing, as measured by Total Revenue Per Transaction Day, increased 2% in the quarter

·     Invitation Homes (INVH) Q1 core FFO 33c/$436M vs. est. 30c/$435.13M; raises FY19 core FFO view to $1.21-$1.29 from $1.20-$1.28 (est. $1.24) and still sees FY19 Same Store Core revenue growth 3.8%-4.4%

·     Nautilus (NLS) Q1 EPS loss (29c)/$84.4M vs. est. loss (3c)/$92.4M

·     Rent-A-Center (RCII) Q1 adjusted EPS 59c/$696.7M vs. est. 32c/$681.6M; sees FY adjusted EPS $1.85-$2.25 vs. est. $1.88

·     SeaWorld (SEAS) Q1 EPS loss (44c)/$220.58M vs. est. loss (63c)/$215.91M; attendance increased by 100,000 or 3.6%, to 3.3M guests from the Q1 of 2018. Reports Q1 revenue per capita $66.04

 

Energy

·     Pioneer Natural (PXD) Q1 adjusted EPS $1.83/$2.41B vs. est. $1.57; 1Q avg production 333,430 boe/d vs. 311,845 y/y, estimate 324,367; 1Q avg oil production 206,256 b/d vs. 182,519 y/y and 1Q avg NGL production 67,070 B/D vs. 66,181 y/y

·     Advanced Energy (AEIS) Q1 EPS 58c/$140.7M vs. est. 48c/$143.22M; sees Q2 EPS 25c-40c vs. est. 55c

·     Centennial Resource Development (CDEV) Q1 EPS loss (3c)/$214.6M vs. est. 6c/$211.67M; average daily crude oil production increased 28% to 40,508 barrels of oil per day compared to the prior year period and average daily total equivalent production increased 33% YoY or 3.5% QoQ

·     Callon Petroleum (CPE) Q1 EPS 16c/$152.8M vs. est. 20c/$119M; 1Q avg production 40,311 boe/d vs. 26,567 y/y, estimate 39,196

·     Keane Group (FRAC) Q1 EPS loss (21c)/$421.7M vs. est. loss (14c)/$413.86M; reports Q1 adjusted EBTIDA $64.1M vs. $88.4M last year; sees Q2 revenue $400M-$420M vs. est. $447.98M

·     SolarEdge (SEDG) shares rose 18%; Q1 adjusted EPS 64c/$271.9M vs. est. 59c/$266.38M; sees Q2 revenue $310M-$320M above consensus $282.1M; sees 2Q gross margin 32% to 34%

 

Financials

·     AIG (AIG) Q1 adjusted EPS $1.58 vs. est. $1.05; Q1 adjusted ROE 11.6% vs 7.7% year-ago, Q1 net premiums written $6.03B vs. estimate $7.01B; Q1 net investment income $3.9B vs $3.3B y/y and Q1 adjusted book value per share $55.47 vs $56.10 YoY

·     Assurant (AIZ) Q1 net operating EPS $2.21/$2.44B vs. est. $2.15/$2.32B; 1Q net premiums earned $1.90 billion vs. $1.12 billion y/y

·     Brighthouse Financial (BHF) Q1 adjusted EPS $1.98/$691M vs. est. $2.08; 1Q net investment income $811M; boosts stock buyback plan by $400M; company ended Q1 with book value of $129.10 on a per share basis

·     Everest Re (RE) Q1 EPS $6.91/$1.96B vs. est. $5.91/$1.86B; gross written premiums for the quarter were $2.1B, an increase of 10% compared to last year

·     Mueller Water (MWA) cuts FY19 revenue view to up 7%-9% from up 8%-10% and lowers FY19 adjusted EBITDA growth view to 12%-15% from 14%-17%; raises FY19 capital expenditures outlook to $60M-$65M from $58M-$62M prior forecast

·     PennyMac Mortgage (PMT) files to sell 8M shares of common stock

·     Realty Income (O) files to sell 11M shares of common stock

·     Sunstone Hotel (SHO) narrows FY19 adj FFO view to $1.04-$1.11 from $1.01-$1.11 (est. $1.07)

·     Tesla (TSLA) has been working with a unit of Markel Corp. (MKL) and another company to develop its own branded insurance program in an effort to offer a lower-cost product to drivers – WSJ reports

 

Healthcare

·     Catalyst Pharmaceuticals Inc. (CPRX) shared fell -41% after the FDA approved a competitive drug to its Firdapse which helps those who suffer from a rare disease called Lambert-Eaton myasthenic syndrome, and Catalyst charges a list price of $375,000 for it. Before Catalyst received exclusive rights to the drug, it was given away for free by Jacobus Pharmaceutical Co., a private company in New Jersey. The FDA approved a version of the drug from Jacobus that is meant to be marketed for pediatric use, while Firdapse is recommended only for use in adults

·     GW Pharmaceuticals (GWPH) shares rose 7%; Q1 EPS loss (14c) on revs $39.25M; cash and cash equivalents at March 31 were $521.7M compared to $591.5M as of December 31, 2018; announced top-line results of a Phase 3 clinical trial of Epidiolex that met its primary endpoint, which was the reduction in seizure frequency compared to baseline of the Epidiolex 25 mg/kg/day dose group vs placebo

·     Health Insurance Innovations (HIIQ) Q1 EPS 43c/$87.3M vs. est. 51c/$84.84M; sees FY19 EPS $3.50-$3.75 on revs $430M-$440M vs. est. $3.28/$437.05M

·     Intersect ENT (XENT) shares fall -17%; cuts FY19 revenue view to $113M-$117M from $123M-$127M (est. $125.25M) while the company’s outlook for 2019 gross margin remains in the range of 80% to 81%; announced that Lisa Earnhardt will be stepping down from her role as Chief Executive Officer on June 5, 2019 to accept another opportunity

·     Lannett (LCI) Q3 adjusted EPS 68c/$172.8M vs. est. 64c/$156.4M; raises FY19 adj. revenue view to $640M-$645M from $615M-$635M; sees FY adjusted gross margin about 44%

·     Masimo (MASI) Q1 EPS 79c/$231.7M vs. est. 75c/$223.7M; shipments of noninvasive technology boards and monitors increased 18.8% to 63,700; raises FY19 non-GAAP EPS view to $3.12 from $3.08 (est. $3.08) and raises FY19 GAAP revenue view to $919.1M from $912M (est. $912.7M)

·     Regeneron (REGN) Q1 EPS $4.45/$1.71B vs. est. $5.71/$1.79B

 

Industrials & Materials

·     FMC Corporation (FMC) Q1 adjusted EPS $1.72/$1.2B vs. est. $1.62/$1.19B; raises FY19 adjusted EPS view to $5.62 -$5.82 from $5.55-$5.75 and raises FY19 revenue view to $4.5B-$4.6B from $4.45B-$4.55B

·     Douglas Dynamics (PLOW) Q1 adjusted EPS 1c/$93.2M vs. est. loss (9c)/$84.37M; backs FY19 adjusted EPS view $1.60-$2.40 (est. $2.13) and backs FY19 revenue view $510M-$570M (est. $542.53M)

·     Itron (ITRI) Q1 adjusted EPS 70c/$614.6M vs. est. 44c/$591.0M; Q1 adjusted EBITDA $66M vs. $40M last year, backlog $3.0B vs. $3.1B last year, Q1 gross margin 30.5% vs. 29.6% last year

·     Jacobs Engineering (JEC) Q2 EPS $1.19/$3.09B vs. est. $1.20/$3.1B; raises FY19 adj. EPS view to $4.45-$4.85 from $4.40-$4.80 (est. $5.23)

·     Kennametal (KMT) Q3 adjusted EPS 77c/$597.2M vs. est. 80c; reports next phase of restructuring actions associated with simplification/modernization; narrows FY19 adjusted EPS view to $3.00-$3.10 from $2.90-$3.20 and sees FY19 organic sales growth of approximately 5%

·     Mosaic (MOS) Q1 EPS 25c/$1.90B vs. est. 24c/$1.87B; sees year EOS $1.50-$2.00 below the $2.20 est.; sees FY adjusted Ebitda $2.0B-$2.3B vs. est. $2.19B

·     Regal Beloit (RBC) Q1 adjusted EPS $1.43/$853.8M vs. est. $1.42/$879.9M; backs 2019 adjusted EPS view $6.15-$6.55 vs. est. $6.42

 

Technology, Media & Telecom

·     Fabrinet (FN) Q3 adjusted EPS 92c/$399M vs. est. 89c/$389.6M; sees Q4 adjusted EPS 92c-96c on revs $396M-$404M vs. est. 93c/$399.26M

·     Glu Mobile (GLUU) Q1 EPS 0c/$95.9M vs. est. 5c/$89.75M; reports Q1 bookings up 7% year-over-year to $92.6M; sees Q2 bookings of $100M-$102M and raises FY19 bookings guidance to $445M-$455M

·     KLA-Tencor (KLAC) Q3 adjusted EPS $1.80/$1.1B vs. est. $1.65/$1.06B; 3Q product revenue $793.2M and 3Q service revs $304.1M

·     RealPage (RP) Q1 EPS 40c/$234.3M vs. est. 40c/$234.03M; reports Q1 adjusted EBITDA $65.2M, up 20% from last year; sees FY19 EPS $1.71-$1.79 on revs $982M-$1.0B vs. est. $1.75/$992.04M

·     RingCentral (RNG) Q1 adjusted EPS 17c/$201M vs. est. 15c/$193.54M; said enterprise delivered solid growth, with continued contributions from channel and international, including a 45,000 seat win with a major UK retailer; raises FY19 adj. EPS view to 71c-75c from 69c-73c (est. 71c) and raises FY19 revenue view to $862M-$866M from $847M-$859M (est. $854.86M)

·     RingCentral, Inc. (RNG) and Zoom Video Communications, Inc. (ZM) announced a multi-year extension of their partnership

·     Upland Software (UPLD) files to sell 2.75M shares of common stock

·     Veeco (VECO) Q1 EPS loss (14c)/$99.37M vs. est. loss (21c)/$96.75M; sees Q2 EPS (18c)-2c on revs $90M-$110M vs. est. loss (11c)/$101.03M

_________________________________________________________________

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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