Morning Preview: August 06, 2019

Auto PostDaily Market Report

Early Look

Tuesday, August 6, 2019

Futures

Up/Down

%

Last

DJ Industrials

224.00

0.88%

25,774

S&P 500

26.50

0.95%

2,856

Nasdaq

81.50

1.10%

7,466

 

 

Stocks in the U.S. are pointing to a solid rebound, looking to snap the week-long losing streak for the S&P 500 index, as China took steps to limit the yuan’s decline, putting a stop to the global selloff. Asian stock markets opened sharply lower on Tuesday and the offshore renminbi hit a new trough in early trading after the Trump administration labelled China a currency manipulator. After futures dropped another 1% overnight on the headlines (after yesterday’s 3% slide), markets pared their declines after the People’s Bank of China sets the CNY (yuan) at 6.9683, stronger than the prior day when it topped 7. After the selling pressure eased overnight for global markets, Treasury prices pulled back from 3-year highs and gold held steady after touching 6-year highs. In Asian markets, The Nikkei Index fell -134 points to 20,585. the Shanghai Index dropped -43 points to 2,777, and the Hang Seng Index dropped -175 points to 25,976. In Europe, the German DAX is higher by 60 points to 11,725, while the FTSE 100 is little changed at 7,225. Yesterday’s market action saw U.S. stocks post their biggest one-day loss on 2019, as the S&P and Nasdaq fell for their 6th straight loss as fears of an escalating U.S.-China trade spooked investors as a move by China to let its currency weaken followed President Trump’s vow to impose 10% tariffs on the remaining $300 billion of Chinese imports from September 1. Not a busy day of economic data, but another heavy dose of corporate earnings results.

 

Market Closing Prices Yesterday

·     The S&P 500 Index plummeted -87.31 points, or 2.98%, to 2,844.74

·     The Dow Jones Industrial Average fell -767.27 points, or 2.90%, to 25,717.74

·     The Nasdaq Composite plunged -278.03 points, or 3.47%, to 7,726.04

·     The Russell 2000 Index declined -46.25 points, or 3.02% to 1,487.41

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     10:00 AM EST    JOLTs Job Openings for June…est. 7326

·     12:00 PM EST    Fed’s Bullard speaks on U.S. economy in Washington

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ACLS, ADNT, AES, ALNY, APRN, ATRS, BCRX, BDX, BHC, CFX, CHFS, CHH, CHK, CJ, DF, DF, DISCA, DUK, EMR, ENR, EPC, FIS, FLOW, GEL, HAE, HSIC, IPI, JLL, KPTI, LPX, MNK, MOS, PAYS, PBI, PPL, REGN, SAGE, SEAS, TDG, TECH, TEN, VG, WLK, ZTS

·     Earnings After the Close: ADT, AINV, AIZ, BECN, BKI, BNFT, CARG, CMP, CPE, DIS, DVN, EDIT, EVH, FANG, FATE, FLT, GCI, HST, HTZ, LC, LOPE, MBI, MCHP, MTCH, NUS, NVTA, OAS, PAA, PXD, PZZA, RRR, SAIL, STAY, SWN, VOYA, WMC, WYNN, ZAGG, ZGNX

 

Other Key Events:

·     Jefferies Global Industrials Conference, 8/6-8/8 in New York

·     Oppenheimer Technology, Internet Conference, 8/6-8/7 in Boston, MA

·     UBS Financial Services Conference, 8/6-8/7, in Chicago, IL

·     Flash Memory Summit 2019, 8/6-8/8, in Santa Clara, CA

 

 

Macro

Up/Down

Last

WTI Crude

0.28

54.97

Brent

0.17

59.98

Gold

-1.00

1,475.60

EUR/USD

-0.0006

1.1197

JPY/USD

0.43

106.38

10-Year Note

+0.038

1.746%

 

 

World News

·     The Trump administration is moving to impose a total economic embargo against the government of Venezuela, a significant escalation of pressure against the regime of President Nicolás Maduro and countries including Russia and China that continue to support him, a senior administration official said.

·     German manufacturing orders rose by 2.5% in June on the month, in adjusted terms, data from the Federal Statistical Office showed Tuesday, well above the 0.3% increase forecasted on the month. Compared with June 2018, order volumes dropped 3.6%, taking account of calendar and price effects.

·     San Francisco Fed President Mary Daly says she is focused on the impact of U.S.-China trade tensions as she weighs the central bank’s next move on interest rates. “In thinking about what to do going forward, where I’m really focusing my attention is these headwinds,” Daly told the Wall Street Journal. “

·     Australia’s central bank held its key policy rate at its current record low 1% on Tuesday following two consecutive cuts, but suggested more easing measures could be needed amid a slowing economy

 

Sector News Breakdown

Consumer

·     Caesars (CZR) Q2 EPS loss (47c)/$2.22B vs. est. loss (3c)/$2.2B; Q2 non-GAAP adjusted EBITDAR increased 1.3% to $631M (est. $619M) and adjusted EBITDAR increased 4.1% to $633M;

·     Marriott (MAR) shares fell -2%; Q2 adjusted EPS $1.56/$5.3B vs. est. $1.56/$5.5B; sees Q3 EPS $1.47-$1.51 vs. est. $1.59; cut its adjusted Ebitda forecast for the full year to $3.59B-$3.63B from prior $3,62B-$3.72B; sees 3Q North America REVPAR change in constant currency +1%-to +2% and sees 3Q Worldwide REVPAR change in constant currency +1% to +2%; lowers year revs to $3.82B-$3.85B from prior $3.85B-$3.93B

·     IFF (IFF) Q2 adjusted EPS $1.61/$1.3B vs. est. $1.62/$1.31B; raises quarterly dividend 3% to 75c per share; cuts FY19 EPS to $6.15-$6.35 from $6.30-$6.50 and cuts FY19 revenue view to $5.15B-$5.25B from $5.2B-$5.3B (below est. $6.33/$5.21B)

·     Masonite (DOOR) Q2 adjusted EPS $1.09/$562.9M vs. est. $1.17/$580.56M; lowers FY19 EPS view to $3.30-$3.90 from $3.60-$3.40 (below est. $3.95) while cuts FY19 revenue growth view to 0%-2%

·     SeaWorld (SEAS) Q2 EPS 64c/$405.99M vs. est. 53c/$411.09M; attendance increased by 0.8% to 6.5M guests in Q2

·     Shake Shack (SHAK) Q2 EPS 29c/$152.7M vs. est. 23c/$149.78M; Q2 same-Shack sales increased 3.6% vs. est. 2.2%; said licensed revenue increased 42.9% to $4.8M; system-wide sales increased 33.2% to $225.9M, total revenue grew by 31.3% and adjusted EBITDA increased 18.5%, driven by positive same-Shack sales of 3.6% with traffic growth of 1.3%; sees year revs $585M-$590M up from prior $576M-$582M (est. $591.7M) and raises year comp sales to up 2% from up 1%-2%

 

Energy

·     Centennial Resource (CDEV) Q2 EPS 7c/$244.24M vs. est. 11c/$237.77M; boosted its net average production forecast for the full year to 68,000-75,000 boe/d, up from prior view 61,500-70,500; guides FY capital expenditure $765M-$925M from prior $845M; sees FY avg oil production 39,500 to 42,500 b/d

·     Cimarex Energy (XEC) Q2 adjusted EPS 82c/$546.46M vs. est. $1.27/$604.08M; said realized product prices were down in the Q2 as compared to the same quarter a year ago as realized oil prices averaged $54.24 per barrel, down 11% from the $60.99 per barrel received YoY; daily production averaged 274.8 MBOE; oil production averaged 83,430 barrels per day; 2019 capital guidance unchanged

·     Continental Resources (CLR) Q2 EPS 59c/$1.21B vs. est. 62c/$1.18B; cut its Production Expense per BOE forecast to $3.50-$4.00 from $3.75-$4.25 for the year; 2Q avg production 331,414 boe/d, +17% YoY; sees 2019 annual oil production guidance 195,000-200,000 b/d from 190,000-200,000 b/d prior

·     Lonestar (LONE) Q2 adjusted EPS loss (2c)/$52.22M vs. est. loss (4c)/$30.68M; reported a 22% increase in net oil and gas production to 13,630 BOE/d during the three months ended June 30, 2019; issued production guidance of 17,000 to 17,500 BOE/d for Q3, a 27% increase over 2Q19 results at the midpoint; sees FY19 production 13.7K-14.7K BOE/d

·     WPX Energy (WPX) Q2 adjusted EPS 9c/$695M vs. est. 8c/$577.53M; Q2 total production averaged 159.6 MBoe/d, which was 28% higher vs. a year ago; now expects full-year total production of 160-165 Mboe/d in 2019, up from prior estimates of 149-161 Mboe/d; also now expects to produce 101-103 MMbbl/d of oil for full-year 2019, up from prior estimates of 96-100 MMbbl/d; reaffirms capex

 

Financials

·     Brookdale (BKD) Q2 EPS loss (30c)/$1.02B vs. est. loss (21c)/$1.01B; still sees FY negative adjusted free cash flow $80M-$100M

·     Cboe (CBOE) said options average daily volume for July of +5%, while July futures average daily volume +7%, U.S. equities average daily volume +3% and July European equities average daily notional volume -30.4%

 

Healthcare

·     Alnylam Pharmaceuticals, Inc. (ALNY) said the FDA accepted the Company’s New Drug Application (NDA) for givosiran, an investigational RNAi therapeutic targeting aminolevulinic acid synthase 1 (ALAS1) in development for the treatment of acute hepatic porphyria (AHP), and granted Priority Review for the NDA

·     Community Health (CYH) Q2 adjusted EPS loss (47c)/$3.3B vs. est. loss (51c)/$3.2B; said for Q2, an a same-store basis, admissions increased 2.3% and adjusted admissions increased 1.8%, compared with the same period in 2018; guides year Ebitda $1.63B-$1.73B vs. est. $1.63B; raises year revs view to $12.9B-$13.2B from $12.8B-$13.1B

·     Endo Pharma (ENDP) Q2 adjusted EPS 52c/$700M vs. est. 48c/$694.6M; reaffirms year EPS $2.00-$2.25 on revs $2.76B-$2.96B (est. $2.86B) and still sees year Ebitda $1.24B-$1.34B

·     Health Insurance Innovations (HIIQ) Q2 EPS 71c/$58.4M vs. est. 40c/$78.37M; guides 2019 guidance for revs $450M-460M from $430M-440M and raises non-GAAP EPS: $4.00-4.25 from $3.80- 4.05 and non-GAAP EBITDA: $82M-87M from $72M-77M

·     Insulet (PODD) Q2 EPS 2c/$177.1M vs. est. 2c/$163.66M; sees Q3 revenue $174M-$181M vs. est. $172.7M and raises FY19 revenue view to $700M-$715M above consensus $684.56M

·     Tenet (THC) Q2 adjusted EPS 56c/$4.56B vs. est. 44c/$4.48B; Q2 hospital segment same-hospital net patient service revenues grew 5.7 %, admissions increased 3.3%, adjusted admissions increased 2.2% and net revenue per adjusted admission increased 3.4%; backs FY19 EPS view $2.08-$2.59 and backs FY19 revenue view $18B-$18.4B (est. $2.36/$18.19B)

 

Industrials & Materials

·     Avis Budget (CAR) Q2 adjusted EPS 79c/$2.34B vs. est. 73c/$2.35B; backs FY19 EPS view $3.35-$4.20 vs. est. $4.01; backs FY19 revenue $9.2B-$9.5B vs. est. $9.24B; backs FY19 adjusted EBITDA $750M-$850M; boosts buyback program by $100M

·     Douglas Dynamics (BOOM) Q1 adjusted EPS $1.14/$176.4M vs. est. 90c/$161.77M; sees FY19 adjusted EPS $2.00-$2.40 vs. est. $2.16; narrows FY19 net sales view to $520M-$560M; and adjusted EBITDA view to $95M-$115M

·     Mueller Water (MWA) Q3 adjusted EPS 24c/$274.3M vs. est. 20c/$274.96M; sees growth in all end markets during the Q4 with municipal spending growth in the mid-single digit range, residential construction growth in the low-single digit range and natural gas distribution growth in the mid-single digit range; sees FY19 consolidated net sales growth towards the lower end of the 7%-9% range previously provided

·     Itron (ITRI) Q2 adjusted EPS 87c/$635M vs. est. 47c/$598.68M; said Q2 results were driven by strong customer demand, particularly in our Networked Solutions segment; raises revenue and non-GAAP EPS guidance for full year 2019 – raises FY19 adjusted EPS view to $2.80-$3.00 from $2.35-$2.75 and revenue view to $2.45B-$2.5B from $2.35B-$2.45B

·     Westlake Chemical (WLK) Q2 EPS 92c/$2.14B sales vs. est. 84c/$2.16B; Q2 Ebitda $372M vs. est. $352.5M

 

Technology, Media & Telecom

·     Global chip sales dropped for a third straight quarter and for a sixth straight month year-over-year, as worldwide, sales of chips fell 16.8% to $98.2 billion in Q2, and 16.8% to $32.7 billion for the month of June, according to the Semiconductor Industry Association late Monday.

·     KLA-Tencor (KLAC) Q4 EPS $1.78/$1258B vs. est. $1.74/$1.26B; semi process control revenue was $1B compared to the $1.04B in last year’s quarter. Specialty semi process totaled $66.8M and PCB, display, and component inspection were $184.6M versus last year’s $26.2M; R&D expenses were up 36% Y/Y to $206.7M

·     Amazon (AMZN) founder Jeff Bezos, according to SEC filings Monday, sold more than 517,000 shares Friday, worth about $1 billion. And earlier last week, he sold more than 968,000 shares worth about $1.84 billion.

·     Take-Two (TTWO) Q1 GAAP EPS 41c/$422.2M vs. est. 2c/$363.79M; GAAP Net revenue grew 39% to $540.5 million; said recurrent consumer spending increased 31% and accounted for 58% of total GAAP net revenue; sees Q2 GAAP EPS $1.04-$1.14 vs. est. $1.70; sees Q2 net bookings $860M-$910M; sees FY20 EPS $3.71-$3.96 vs. est. $4.43 and sees FY20 net bookings $2.6B-$2.7B vs. est. $2.65B

·     Cornerstone OnDemand (CSOD) Q2 adjusted EPS 21c/$141.9M vs. est. 21c/$138.91M; Q2 subscription revenue up 15% YoY to $132.6M vs. guided range of $131M-$133M; guides Q3 revenue $141M-$143M vs. est. $141.06M and sees Q3 subscription revenue between $135M-$137M, representing YoY at the mid-point of 14.4%, or 16.2% on a constant currency basis

·     Diodes (DIOD) Q2 adjusted EPS 77c/$322.0M vs. est. 74c/$320.65M; sees Q3 revenue $324M, plus or minus 2% vs. est. $328.15M

·     Everbridge (EVBG) Q2 EPS loss (7c)/$48.4M vs. est. loss (8c)/$47.99M; guides 3Q adj EBITDA $1.2-1.5Mm vs. est. $2.35Mm, still sees FY adj EBITDA $4.2-5.2M vs est. $4.54M

·     nLight (LASR) Q2 EPS 5c/$48.05M vs. est. 6c/$47.78M; said during qtr saw growing customer interest in Corona, our programmable fiber laser solution, which contributed to the continued growth of our industrial end market outside of China

·     Mimecast (MIME) Q1 EPS 8c/$99.2M vs. est. 7c/$97.34M; guide FY revs $414-422.6Mm vs. prior $413-427Mm, sees adj EBITDA $71.6-73.6Mm vs prior $70.7-72.7Mm

·     NeoPhotonics (NPTN) Q2 EPS loss (3c)/$81.7M vs. est. loss (9c)/$75.51M; Q2 adjusted EBITDA $6.8M and Q2 gross margin 25.6%, up from 22.4% in Q1; sees Q3 EPS (3c) to 7c on revs $87M-$93M vs. est. loss (14c)/$65.93M

·     Vivendi (VIVHY) rose over 7% after the French media company revealed it was in talks to sell a 10% stake in its record label Universal Music to Chinese tech giant Tencent (TCEHY). The deal would value Universal Music at €30 billion ($33.6 billion).

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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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