Mid-Morning Look: May 08, 2019

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Mid-Morning Look

Wednesday, May 08, 2019

Index

Up/Down

%

Last

 

DJ Industrials

-35.19

0.14%

25,929

S&P 500

-5.32

0.18%

2,878

Nasdaq

-25.51

0.32%

7,939

Russell 2000

0.65

0.03%

1,582

 

 

Following the worst day for U.S. equities since January, major averages are holding steady to start the day as investors deal with several macro news stories expected to keep them on their toes later this week. Trade talk remains the key market driver after U.S. officials vowed to increase China tariffs this Friday if no deal can be reached with China’s trade delegates expected to arrive in Washington. Trump said via Twitter that China intends to make a deal, but that he’s happy to raise tariffs if the negotiations fail to produce an agreement. Also, Iran threatened to abandon limits on uranium enrichment unless Europe throws it an economic lifeline within 60 days, setting an ultimatum for the 2015 accord meant to prevent the country from developing a nuclear bomb. The top stories have overshadowed a very busy week of earnings (some top moving results below), while economic data in the U.S. has been very quiet. Stocks not the only thing trading sideways, as the dollar is also little changed along with gold. Oil prices look to rebound from yesterday’s pullback as inventory data comes in slightly bullish. Treasury prices extend gains with the yield on the 10-year falling to 2.44%.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.17

61.57

Brent

0.07

69.95

Spot Gold

-0.25

1,284.25

EUR/USD

0.0009

1.12

JPY/USD

-0.10

110.16

10-Year Note

-0.014

2.444%

 

 

Sector Movers Today

·     Metals & Materials; in steel, STLD was upgraded to buy and US Steel (X) downgraded to sell with $10 tgt at UBS saying electric arc furnace operators (STLD, NUE) are positioned to continuously capture market share from integrated blast oxygen furnace operators (AKS, X) as US capacity expands by 11%; VALE said nickel sales of the world’s largest producer of the metal fell to 50,300 metric tons in Q1, from 57,900 tons a yr earlier

·     Telecom & Media movers; ZAYO agreed to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund for $35 per share in cash, in total deal valued at $14.3B which includes the assumption of $5.9B in debt https://on.mktw.net/2LxtYwj ; PSN 18.52M share IPO priced at $27.00; while Sprint (S) reported CY1Q19 wireless revenue and EBITDA ahead of Street estimates, postpaid phones and ARPU missed; Dow component DIS to report earnings tonight after the close; MTCH shares rise helped as Tinder massively accelerated sub additions with 384k net adds vs. 233k in 4Q and revs up 38% despite a tough comp

·     E&P sector; FANG announced a $2B stock repurchase program, the sale of its Central Basin assets for $322M, significant well cost reductions, and lower than expected cap-ex, sending shares higher (Q1 production was in line with consensus, and 1Q19 oil production was 1.2% below consensus but capex was 15% below); CRZO posted 6% beat 1Q19 CFPS, as this was offset by 1Q19 CapEx that was 20% above a stale Consensus estimate; HCLP weak as EPS of ($0.06) missed consensus of ($0.01) while tons sold of 2,41MM tons were at the low end of guidance

·     Pharma movers; it was announced drug makers will have to include prices in TV ads as soon as this summer; PFE to acquire privately held Therachon for $340M upfront, and up to $470M in added payments based on TA-46 development milestones; AZN and Daiichi Sankyo announce positive results from an open-label Phase 2 clinical trial, DESTINY-Breast01, evaluating trastuzumab deruxtecan; AGN tgt cut to Street low $140 at RBC after the drugmaker’s management failed to inspire confidence yesterday

·     Semiconductors; QRVO gains early as reported Q4 results that beat expectations and gave a Q1 revenue outlook that was well ahead of consensus expectations; MCHP Q1 results beat but lowered its Q2 guidance; MTSI jumps after earnings and upgraded to buy at Craig Hallum and raised tgt to a Street-high-matching $25 citing the potential of the company’s GaN/Si technology

 

Stock GAINERS

·     AVLR +17%; after posting a narrower quarterly loss and raised its guidance for the year

·     EA +1%; leads video game makers higher after delivered a clean top and bottom line beat driven by the contribution from Apex Legends and strong recovery in FUT

·     FANG +7%; announced a $2B stock repurchase program, the sale of its Central Basin assets for $322M, significant well cost reductions, and lower than expected cap-ex

·     FLT +7%; Q1 organic revenue growth of 10.5% to $622M topped estimates (Opco at $610M) while fuel card growth accelerated to 9.5% better than we expected and raised guidance

·     MOS +4%; after falling to 52-week lows yesterday, upgraded at JPMorgan and CSFB to outperform citing favorable risk/reward

·     MTCH +7%; after earnings, helped as Tinder massively accelerated sub additions with 384k net adds vs. 233k in 4Q and revs up 38% despite a tough comp

·     MTSI +26%; after earnings and upgraded to buy at Craig Hallum and raised tgt to a Street-high-matching $25 citing the potential of the company’s GaN/Si technology

·     QRVO +4%; gains early as reported Q4 results that beat expectations and gave a Q1 revenue outlook that was well ahead of consensus expectations

·     ZAYO +8%; agreed to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund for $35 per share in cash, in total deal valued at $14.3B which includes the assumption of $5.9B in debt https://on.mktw.net/2LxtYwj

 

Stock LAGGARDS

·     COTY -6%; reported slightly better Q3 EPS but sales of $1.99B missed the $2.06B estimate as revenue declined 6% on a constant currency basis in Q3

·     DDD -15%; after Q1 EPS loss wider than expected as well as a technical problem in the company’s material handling system for its metal 3D printers

·     DVA -6%; posted Q1 revenue that was short of consensus $2.74B vs. est. $2.82B while RBC Capital said soft volumes and lack of clarity weigh

·     INGN -24%; reported in-line 1Q results that were overshadowed by a $25M reduction to guidance, from $430-440M to $405-415M +13.1-15.9%)

·     NVTA -16%; as reported 1Q results missed consensus by a wide margin while Opco said test volumes of 94K missed est. by 11K

·     PBPB -20%; downgraded to hold at Maxim following disappointing 1Q19 (March) results and reduction in 2019 guidance and reported a Q1 comp decline of (-4.7%)

·     TRIP -13%; after posting a disappointing Q1 earnings report, highlighted by weakness in the hotels and auction business/revenue in the hotel/media/platform part of the business was down 1% Y/Y

·     TWOU -25%; downgraded at CSFB to neutral after the company reported 1Q19 and lowered its FY revenue guidance, primarily accounting for schools tightening their admissions.

·     X -5%; downgraded to sell with $10 tgt at UBS saying electric arc furnace operators (STLD, NUE) are positioned to continuously capture market share from integrated blast oxygen furnace operators such as X, AKS

_________________________________________________________________

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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