Morning Preview: May 08, 2019

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Early Look

Wednesday, May 8, 2019

Futures

Up/Down

%

Last

DJ Industrials

-97.00

0.38%

25,875

S&P 500

-12.50

0.43%

2,878

Nasdaq

-40.50

0.53%

7,633

 

 

U.S. stock futures are pointing to another weak open, dragged down by macro and geopolitical headlines that have weighed on investor sentiment the last few days, pulling U.S. stock down from recent all-time highs. The big story this week remains the upcoming talks between U.S. and China delegates to iron out a trade deal. If the deal cannot come to fruition, the U.S. has warned this week they would ratchet up tariffs on China goods by Friday. Also raising concerns, Iran said Wednesday it would stop complying with some of its commitments under the 2015 nuclear deal, as President Hassan Rouhani warned of a step-by-step withdrawal from further commitments if European countries didn’t live up to their obligations. In Asian markets, The Nikkei Index dropped -321 points to 21,602, the Shanghai Index declined -32 points to 2,893 and the Hang Seng Index fell -359 points to 29,003. In Europe, the German DAX is off about -15 points to 12,075, while the FTSE 100 is down around -30 points at 7,230. Defensive assets extend recent gains as gold rises and Treasury prices move to their best levels in about 5-weeks, sending the 10-year yield down to 2.43%.

 

As for Tuesday, stock market declines deepened as the Dow Jones Industrial Average dropped more than 450 points, as markets braced for the increased likelihood the U.S. will raise tariffs on Chinese goods later this week. The Cboe Volatility Index (VIX) surged 25% to settle at 19.32, pulling back slightly from its highest levels since January (above the 20 level). However, despite yesterday’s rout and Monday’s decline it is important to point out that the Dow is up 11% over the first five months of 2019, the S&P 500 boasts a 14.6% gain, while the Nasdaq is up 19.6%.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -48.42 points, or 1.65%, to 2,884.05

·     The Dow Jones Industrial Average fell -473.39 points, or 1.79%, to 25,965.09

·     The Nasdaq Composite plunged -159.53 points, or 1.96%, to 7,963.76

·     The Russell 2000 Index declined -32.66 points, or 2.02% to 1,582.31

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     10:30 AM EST    Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BG, CHK, FTDR, ICPT, MCK, MPC, MPLX, MRNA, MSG, NYT, SBGI

·     Earnings After the Close: ALB, ANGI, CTL, CVNA, CWH, DIS, ETSY, FOXA, IAC, NKTR, PETQ, ROKU, RUN, STMP, SWAV, TPIC, TVTY, WTRH, XEC

 

Other Key Events:

·     China imports/exports for April

·     Bank of Japan minutes from the March policy meeting

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

·     German industrial production for March

·     Brazil rate decision

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

 

 

Macro

Up/Down

Last

WTI Crude

-0.22

61.18

Brent

-0.42

69.46

Gold

4.00

1,288.50

EUR/USD

0.0004

1.1195

JPY/USD

-0.23

110.03

10-Year Note

-0.027

2.431%

 

 

World News

·     China’s exports logged a surprise drop in April, as they declined -2.7% from a year earlier in April, reversing a 14.2% gain in March (estimates were for a 1.8% increase in exports). Imports rose 4.0% from a year earlier in April, after declining 7.6% in March

·     Iran said it would stop complying with some of its commitments under the 2015 nuclear deal, escalating tensions with the U.S. President Hassan Rouhani said the move didn’t mean Iran was withdrawing from the nuclear deal, and the steps don’t immediately breach the agreement. But Rouhani warned of a step-by-step withdrawal from further commitments if European countries didn’t live up to their obligations

·     German industry beat production forecasts in March, as output in the sector rose for the second consecutive month. The Federal Statistical Office said total industrial output increased 0.5% in March from the month before

·     Donald Trump reported massive financial losses to the IRS totaling more than $1 billion over a 10-year span when his reputation as a dealmaker was peaking, the New York Times reported late Tuesday. Citing figures acquired from IRS tax transcripts, though not the actual tax returns, between 1985 and 1994, the Times found Trump appeared to have lost the most money over that span than any other single American taxpayer

 

Sector News Breakdown

Consumer

·     Beacon Roofing (BECN) Q2 adjusted EPS loss (45c)/$1.43B vs. est. loss (51c)/$1.38B; cuts FY19 EPS view to $2.90-$3.35 from $2.90-$3.50 (est. $2.90); sees FY19 revenue $7B-$7.35B vs. est. $7.12B

·     Lyft (LYFT) Q1 EPS loss ($9.02)/$776M vs. est. loss ($10.53)/$739.48M; reports Active Riders 20.5M vs. 14.0M last year and Revenue per Active Rider $37.86 vs. $28.27 last year; sees Q2 revenue $800M-$810M vs. est. $782.32M and sees 2019 revenue $3.275B-$3.30B vs. est. $3.26B

·     Papa John’s (PZZA) Q1 adjusted EPS 31c/$398.4M vs. est. 24c/$384.6M; Q1 U.S. company-owned comp sales -9%, vs. est. -8.9%; Q Systemwide North America comparable sales -6.9% vs. est. -7.3%; Q1 systemwide international comparable sales -0.1% vs. est. +0.5%

·     Potbelly (PBPB) Q1 EPS loss (12c)/$98.1M vs. est. loss (4c)/$101.1M; Q1 comparable sales -4.7% vs. estimate -2.3%

·     Scientific Games (SGMS) Q1 EPS loss (26c)/$837M vs. est. loss (4c), consensus $832.27M

·     Wingstop (WING) Q1 EPS 22c/$48.1M vs. est. 19c/$45.82; Q1 total domestic stores comp sales growth +7.1% vs. est. +3.7%; Q1 restaurant count +10%; Q1 adjusted Ebitda $13.9M; sees mid-single digit domestic same store sales growth for FY19

 

Energy

·     The American Petroleum Institute (API) reported that U.S. crude supplies rose by 2.8M barrels for the week, showed a stockpile decline of -2.8M barrels for gasoline, while distillate stockpiles fell by -834K barrels

·     Diamondback Energy (FANG) Q1 EPS $1.39/$864M vs. est. $1.38/$914.8M; Q1 production of 262.6 Mboe/d was up 44% over Q4 2018 and 156% year over year; cut its production forecast for the full year as sees FY production 272.0 to 287.0 mboe/d, down from prior view 275 to 290.0; expands capital return program, with up to $2b in buybacks through end of 2020; sees FY lease operating expense per boe $4.25-$4.75, vs. prior $4.50 -$5.00

·     Hi-Crush Partners (HCLP) Q1 EPS loss (6c)/$159.9M vs. es.t loss (1c)/$180.1M; 1Q adjusted Ebitda $16.2M vs. est. $19.4M

·     Plains All American (PAA) Q1 adjusted EPS 69c/$8.38B vs. est. 58c/$8.78B; said Q1 results and increased 2019 guidance reflect continued solid execution of our business plan; sees FY adjusted Ebitda $2.85B vs. est. $2.76B

·     ProPetro (PUMP) Q1 revenue $546.2M vs. est. $525.2M; 1Q cash flow from operations $36.1M, 1Q pressure pumping capex $82.0M; Q1 adjusted Ebitda margin 27.5%

 

Financials

·     Cushman & Wakefield (CWK) Q1 adjusted EPS 10c/$1.90B vs. est. 10c/$1.30B; Q1 adjusted Ebitda $88.4M

·     LendingClub (LC) Q1 EPS loss (3c)/$174.4M vs. est. loss (3c)/$170.44M; sees FY19 revenue $765M-$795M vs. est. $780.38M; sees FY19 adjusted EBITDA in the range of $115M-$135M; targeting Adjusted Net Income profitability over 2H’19

·     FleetCor Technologies (FLT) Q1 adjusted EPS $2.67/$621.8M vs. est. $2.64/$608.4M; raises FY19 adj. EPS view to $11.47-$11.77 from $11.40-$11.70 and raises FY19 revenue view to $2.6B-$2.66B from $2.57B-$2.63B

·     RenaissanceRe (RNR) Q1 operating EPS $3.60 vs. est. $3.17; reported an annualized return on average common equity of 23.5% and an annualized operating return on average common equity of 13.3% in Q1, compared to 5.7% and 12.2%, respectively YoY

·     Voya Financial (VOYA) Q1 adjusted operating EPS $1.07 vs. est. $1.12; Q1 assets under management $209.68 billion and 1Q adjusted book value per share $45.84

·     Western Union (WU) Q1 EPS 39c/$1.3B vs. est. 43c/$1.36B; raises FY19 EPS view to $2.66-$2.76 from $1.83-$1.95 (est. $1.87) and sees FY19 revenue up mid-single digits; said sale of Speedpay business for approximately $750 million expected to be completed in May

 

Healthcare

·     DaVita (DVA) Q1 adjusted EPS 91c/$2.743B vs. est. 93c/$2.82B; sees FY19 Adjusted consolidated operating income $1.540B-$1.640B and sees FY19 operating cash flow from continuing operations $1.375B-$1.575B

·     Editas (EDIT) Q1 EPS loss (60c)/$2.07M vs. est. loss (62c)/$7.33M; 1Q cash and other securities $342.1M

·     Inogen (INGN) shares fell -24%; Q1 adjusted EPS 24c/$90.2M vs. est. 30c/$89.6M; Q1 total units sold 50.4K, up 11% from last year, gross margin 49.2% vs. 47.7% last year; cuts FY19 revenue view to $405M-$415M from $430M-$440M (est. $433.73M) and cuts FY19 adjusted EBITDA view to $66M-$68M from $67M-$71M

·     iRhythm (IRTC) Q1 EPS loss (33c)/$47.2M vs. est. loss (48c)/$43.9M; sees FY revenue $206M-$211M vs. est. $204.9M and sees FY gross margin 75% to 76% after 1Q gross margin 75.2%

·     Jazz Pharma (JAZZ) Q1 adjusted EPS $3.67/$508.2M vs. est. $3.14/$466M; sees FY19 adjusted EPS $14.30-$15.00 on revs $2.05B-$2.13B vs. est. $14.60/$2.07B

·     Invitae (NVTA) Q1 EPS loss (47c)/$40.6M vs. est. loss (47c)/$223.5M; sees FY revenue above $220M vs. est. $223.5M; Q1 cash and cash equivalents $252.5M

 

Media & Telecom

·     Match Group (MTCH) Q1 EPS 42c/$464.63M vs. est. 32c/$463.74M; Q1 average subscribers increased 16% to 8.6M, up from 7.4M in the prior year quarter; Tinder average subscribers were 4.7M in Q1 2019, increasing 384,000 sequentially and 1.3M YoY; Q1 ARPU was flat over the prior year quarter; however, excluding foreign exchange effects, ARPU was 60c, an increase of 4% over the prior year quarter

·     Sprint (S) Q4 revenue $8.44B vs est. $8.21B; reports Q4 postpaid net additions of 169,000 vs. Bloomberg est. -71K driven by data device net additions of 358,000 and phone net losses of 189,000; 4Q wireless adjusted Ebitda margin 57.9%; 4Q postpaid churn 1.81% and 4Q postpaid ARPU $43.25

·     Zoom Video Communications Inc. (ZM) said its authorization under the U.S. Federal Risk and Authorization Management Program, or FedRAMP, had been approved, which means federal government agencies and contractors can use Zoom’s videoconferencing service

 

Technology

·     Electronic Arts (EA) Q4 EPS $1.31c/$1.36B vs. est. 98c/$1.2B; sees 1Q adjusted EPS loss (5c) on revs $690M vs. est. loss (23c)/$823.1M; sees year adjusted EPS $5.37/$5.1B vs. est. $4.51/$5.15B

·     Cornerstone OnDemand (CSOD) Q1 EPS 25c/$140.1M vs. est. 19c/$135.57M; sees Q2 revenue $137M-$140M vs. est. $137.36M and sees Q2 Subscription revenue between $131M-$133M; sees 2019 revenue $562M-$570M vs. est. $563.72M

·     HubSpot (HUBS) Q1 non-GAAP EPS 40c/$151.8M vs. est. 25c/$147.46M; sees FY19 EPS $1.26-$1.30 on revs $655.5M-$658.5M vs. est. $1.14/$650.9M; sees FY19 non-GAAP operating income $50.0M-$52.0M

·     TripAdvisor (TRIP) Q1 EPS 36c/$376M vs. est. 31c/$387.23M

·     3D Systems (DDD) Q1 EPS loss (9c)/$152M vs. est. loss (1c)/$164.7M; Q1 gross margin 43.2% vs. Bloomberg est. 46.2%

·     Diodes (DIOD) Q1 adjusted EPS 69c/$302.3M vs. est. 60c/$301.6M; reports Q1 EBITDA $69.9M vs. $54.2M last year

·     Microchip (MCHP) Q4 EPS $1.48/$1.33B vs. est. $1.40/$1.33B; Q4 gross margin 62.2%; sees Q1 revenue $1.26B-$1.4B vs. est. $1.39B

·     Qorvo (QRVO) Q4 EPS $1.22/$680.9M vs. est. $1.05/$670.54M and reports gross margin 48.2%; sees Q1 EPS $1.30 at midpoint vs. est. $1.05

·     Parsons (PSN) 18.52M share IPO priced at $27.00

·     Pareteum (TEUM) Q1 revs $23M vs. est. $19.2M; boosting its full-year revenue guidance to $115M-$125M, from prior $105M-$115M (est. $109.5M); expects adj. Ebitda and cash flow – net of restructuring and acquisition costs…to be positive for the year

_________________________________________________________________

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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