Morning Preview: August 08, 2019

Auto PostDaily Market Report

Early Look

Thursday, August 8, 2019

Futures

Up/Down

%

Last

DJ Industrials

72.00

0.29%

26,014

S&P 500

11.50

0.40%

2,892

Nasdaq

45.50

0.60%

7,598

 

 

U.S. equity futures are higher, rising alongside gains in both Asia and Europe and looking to build on yesterday’s momentum despite more volatility in the currency market as the People’s Bank of China set the yuan’s reference point at 7.0039 against one U.S. dollar the weakest midpoint since April 21, 2008 (according to Reuters), and also the first time since 2008 that the midpoint has been weaker than 7 per dollar. The yuan’s midpoint had been set at 6.9996 per dollar on Wednesday. China letting its currency fall caused the mass sell-off on Wednesday as it was seen as retaliation against the U.S. after Trump announced additional tariffs on $300B in good starting September 1st after failed trade negotiations the week prior. Helping markets overnight was a round of positive data in China as unexpected rebound in Chinese exports in July, driven by the EU, boosted Asian markets overnight after U.S. stock markets closed higher. In Asian markets, The Nikkei Index rose 76 points to 20,593, the Shanghai Index rose 25 points to 2,794 and the Hang Seng Index gained 123 points to 26,120. In Europe, the German DAX is higher by nearly 100-points to 11,750, while the FTSE 100 is higher by 20 points to 7,220.

 

Major stock indexes were all over the place on Wednesday, plunging sharply on the open to lows around 2% for the S&P and 600 points down for the Dow Industrials before clawing back nearly all their losses late afternoon with investors looking to buy the dip. Treasury yields plunged initially with the 2-year falling to 1.5% lows and the 10-year 1.6% lows but selling pressure abated following a weak Treasury auction of 10-year notes. In the end, the two-year yield finished 3 bps lower at 1.58% and the 10-year yield settled 6 bps down at 1.68%. Market gains were led by materials, staples and REITs while financials and energy paced the declines. Low rates and growth concerns continued to boost gold, which settled +2.2% higher, closing above the $1,520 level.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 2.21 points, or 0.08%, to 2,883.98

·     The Dow Jones Industrial Average fell -22.45 points, or 0.09%, to 26,007.07

·     The Nasdaq Composite surged 29.56 points, or 0.38%, to 7,862.83

·     The Russell 2000 Index declined -1.40 points, or 0.09% to 1,500.69

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 215K

·     8:30 AM EST      Continuing Claims…est. 1.69M

·     10:00 AM EST    Wholesale Inventories MoM, June-F…est. 0.2%

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AMC, CAH, COMM, ECOM, ELY, GOGO, HZN, KDP, KHC, LITE, LSXMA, MUR, NCI, NWSA, OGE, ONVO, PBYI, PNW, PRTY, RLGY, SNH, SUP, TW, VIAB, VIRT, VRAY, VSI

·     Earnings After the Close: AAXN, ADMS, ALRM, ALTR, AMBC, APPN, AVT, BDSI, CBS, CHUY, CNDT, DBX, DGII, DXC, EQH, ESE, HEAR, IIIV, JAG, KEG, LGF.A, MDRX, MTW, NKTR, NVRO, OSTK, PUMP, SYMC, SYNA, TRUE, TTD, UNIT, VRTU, VSLR, YELP

 

Other Key Events:

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

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

·     Canaccord 39th Annual Growth Conference, 8/7-8/8, in Boston, MA

 

 

Macro

Up/Down

Last

WTI Crude

1.14

52.23

Brent

0.88

57.11

Gold

-11.20

1,508.40

EUR/USD

0.0011

1.1210

JPY/USD

-0.16

106.11

10-Year Note

-0.005

1.729%

 

 

World News

·     China’s exports rose unexpectedly in July from a year earlier, up 3.3% on year last month, reversing a 1.3% decline in June, and much better that the forecast for a drop of 2% on year.

·     China Imports continued to slump, sliding 5.6% on year in July, but less steeply than the 7.3% decrease recorded in June, and vs. a forecast for a decline of 9.0% in imports.

·     China’s trade surplus with all trading partners stood at $45.06 billion in July, narrowed from the $50.98 billion surplus recorded in June, but wider than the $38.7 billion economist estimate

 

Sector News Breakdown

Consumer

·     Lyft (LYFT) Q2 adjusted EPS loss (68c)/$867.3M vs. est. loss ($1.58)/$809.27M; Q2 active riders 21.81M vs. 15.45M a year ago; guides Q3 revenue $900M-$915M above consensus $840.92M and sees Q3 adjusted EBITDA ($190M)-($210M); raises 2019 revenue view to $3.47B-$3.5B from prior view $3.275B-$3.3B (est. $3.32B); share fell after 8-k showed 257M shares available for sale on August 19th now

·     Fossil (FOSL) Q2 EPS loss (4c)/$501M vs. est. loss (5c)/$499.05M; said it expects Q3 sales to fall by 12% to 8% and for gross margin to land in a range of 52.0% to 53.0%; sees full-year revenue dropping 12% to 8% vs. prior guidance for a 12% to 7% drop; sees FY operating margin 2.5% to 3.5%, from prior view 1.50% to 3%

·     Gaming and Leisure Properties (GLPI) Q2 EPS 43c/$289M vs. est. 50c/$289.72M

·     Hawaiian Airlines (HA) reports July traffic up 2.2% (vs. 5.1% YoY), capacity up 0.1% and said load factor up 1.9 pts to 89.3%

·     Jack in the Box (JACK) reports company comparable sales increased 2.8% in FQ3 vs. +1.9% est. and franchise comparable sales were up 0.5% during the quarter; adjusted EBITDA was reported at $57.8M vs. $64.4M a year ago and $62M consensus; restaurant-level margin fell 50 bps

·     Monster Beverage (MNST) shares fell -5%; Q2 EPS 53c/$1.1B vs. est. 56c/$1.13B; 2Q volume 119.6 million-unit cases, +8.7% YoY and gross margin 59.9% vs. 61.1% YoY

·     Zillow (ZG) shares fell -13%; Q2 EPS loss (14c)/$599.6M vs. est. loss (16c); sees 3Q revenue $694M-$727M vs. est. $661.6M; said 2Q homes sold 786 and 2Q homes purchased 1,535; shares slide as company’s net loss widened to $71.98M from a year-ago loss of $3.09M; also announcing four new Offers markets for early to mid-2020

 

Energy

·     Carrizo Oil (CRZO) Q2 adjusted EPS 71c vs. est. 67c; 2Q avg production 65,643 boe/d, +15% YoY and 2Q avg oil production 44,413 b/d; said Q2 adjusted Ebitda $188.4M

·     Energy Transfer (ET) raises FY19 adjusted EBITDA view to $10.8B-$11B from $10.7B and cuts FY19 CapEx view to $4.6B-$4.8B from about $5B

·     Marathon Oil (MRO) Q2 adjusted EPS 23c/$1.43B vs. est. 13c/$1.41B; Production in the U.S. averaged 332,000 barrels of oil equivalent a day in Q2; oil production rose 17% YoY; forecasts Q3 total U.S. oil production of 190,000-200,000 net boed

·     Ring Energy (REI) Q2 EPS 17c/$51.33M vs. est. 14c/$50.4M; said for Q2, oil sales volume increased to 893,304 barrels, compared to 469,446 barrels for the same period in 2018, a 90.3% increase

·     Sunrun (RUN) Q2 EPS loss (1c)/$204.6M vs. est. 12c/$200.19M; said Q2 MW deployed increased to 103 MW from 91 MW in Q2 of 2018, a 13% year-over-year increase

·     Talos Energy (TALO) Q2 adjusted EPS $1.25/$286.8M vs. est. $1.12/$264.91M; Q2 production was 59.0 MBoe/d, or 5.4 MMBoe in total, of which 75% was oil and 81% was liquids

 

Financials

·     AIG (AIG) Q2 EPS $1.43, consensus $1.15; Q2 adjusted return on equity of 10.4% vs. 7.6% a year ago; adjusted book value per common share of $56.89 at June 30, 2019 vs. $57.34 at June 30, 2018; Q2 General Insurance adjusted pretax income of $980M rose 73% YoY; reaffirms Life and Retirement expects full-year adjusted return on common equity in the low- to mid-teens range

·     Green Dot (GDOT) shares fell over 35%; Q2 EPS 90c/$265.0M vs. est. 63c/$267.79M; lowers FY19 EPS view to $2.71-$2.77 from $2.82-$2.91 (est. $2.87) and cuts FY19 operating revenues view to $1.06B-$1.08B versus its previous guidance of $1.114B-$1.134B (est. $1.14B)

·     Invesco Mortgage (IVR) Q2 core EPS 46c vs. est. 45c; book value per common share for the second quarter was $16.21 compared to $16.29 in the first quarter reflecting interest rate spread widening in Agency RMBS and GSE CRT assets

·     Sabra Health Care REIT (SBRA) Q2 normalized FFO of 46c missed the 48c estimate; closed a number of transactions to lower cost of permanent debt by 19 bps to 4.09% at June 30, 2019 and reduce net debt-to-adjusted EBITDA ratio to 5.76x at June 30, 2019 from 6.08x at March 31; sees 2019 normalized FFO per share near low end of the $2.00-$2.08 range

 

Healthcare

·     Glaukos (GKOS) said it will acquire Avedro (AVDR) in an all-stock transaction, with Avedro shareholders will receive an exchange ratio equivalent of 0.365 shares of Glaukos share valuing AVDR at about $26.68 per share in $456.5M deal https://yhoo.it/2OJHDls

·     Clovis Oncology (CLVS) to offer $225M of convertible senior notes

·     ICU Medical (ICUI) shares fell -20%; Q2 EPS 1.99/$312.3M vs. est. $2.06/$309M; company said Q2 revs, adjusted EBITDA and adjusted EPS were below expectations while Infusion Consumables and Infusion Systems were generally in line with our expectations but the current market environment in IV Solutions has forced us to lower our expectations for fiscal year 2019; cuts year EPS to $7.55-$8.15 from $9.00-$9.90

·     Miragen (MGEN) announced it will implement a cost restructuring plan focused on reducing costs and directing its resources to advance cobomarsen and microRNA-29 mimics, including remlarsen, while reducing investments in new discovery research

 

Industrials & Materials

·     Huntsman Corp. (HUN) agreed to sell two units to an Asian rival for roughly $2.1 billion. HUN will sell its chemical intermediates and its surfactants units to Thailand-based Indorama Ventures IVL, as the purchase price includes $2 billion of cash

·     Gerdau (GGB) cuts its full-year capex estimate by 18%, due to reduced demand for long steel products, weak construction demand and a fast pace of divestitures; the Brazilian steelmaker says Q2 profit fell 46.5% Y/Y to 373M reais ($94.2M), citing its aggressive asset sales program in which it sold assets in the U.S., China and India.

·     Matson (MATX) Q2 EPS 43c/$557.9M vs. est. 63c/$570.94M; expects full year 2019 Ocean Transportation operating income to be approximately 20% lower than the $131.1M achieved in 2018 after taking into account a full year net operating expense impact

·     Thyssenkrupp trimmed its full-year outlook and reporting a third-quarter loss. The weak results had already been priced in following a recent profit warning

 

Media & Telecom

·     Fox Corp. (FOXA) posted higher revenue in its latest quarter, boosted by stronger performances in its cable network and broadcast TV segments; said Q4 revenue rose 5% from a year earlier to $2.51 billion, above analysts’ expectations of $2.45 billion in revenue; said its revenue growth was driven by a 7% jump in affiliate revenue.

·     IAC (IAC) mulls giving up control of MTCH and ANGI – Q2 revenue $1.19B vs. est. $1.18B; notes Match Group revenue increased 18% to $498M and Average Subscribers increased 18% to 9.1M; ANGI HomeServices (ANGI) revenue increased 17% to $343.9M and Pro Forma Revenue increased 20%; Vimeo Platform Revenue increased 26% to $45.7M

 

Technology

·     Symantec Corp. (SYMC) shares jumped more than 12% in after-hours trading after a report that acquisition talks with Broadcom Inc. (AVGO) had resumed with eyes just on one part of the company. The Wall Street Journal reported that Broadcom was nearing a deal to buy Symantec’s enterprise-security unit, mostly made up of the former Blue Coat Systems Inc., and the deal could value the unit close to $10 billion https://on.mktw.net/2YOtGT3

·     Roku (ROKU) Q2 EPS loss (8c)/$250.1M vs. est. loss (22c)/$224.2M; reports active accounts of 30.5M, a net addition of 1.4M from last quarter; said active accounts passed 30 million; Gross profit rose 47% to $114.2M; operating loss widened Y/Y (to $10.4M from a year-ago loss of $0.1M) on significantly higher expenses

·     Booking Holdings (BKNG) Q2 adjusted EPS $23.59/$3.9B vs. est. $22.71/$3.75B; said Q2 gross travel bookings were $25.0B, an increase of 5% YoY or about 10% on a constant-currency basis; room nights booked in the 2nd quarter increased 12% YoY; sees Q3 adjusted EPS $43.60-$44.60 vs. est. $43.97 and sees Q3 YoY growth in room nights booked of 6%-8% and YoY growth in total gross travel bookings of 1.5%-3.5%

·     Applied Optoelectronics (AAOI) Q2 EPS loss (26c)/$43.4M vs. est. loss (37c)/$42.49M; company said pleased with our execution in the quarter as we delivered revenue within our guidance range and achieved better than expected bottom-line results

·     3D Systems (DDD) Q2 EPS beat and a revenue miss; Q2 product revenue was $93.7M versus the $94.4M consensus and Services was $63.5M compared to $61.1M; attributes the 11% YoY revenue drop to ordering patterns of a large enterprise customer, the delay in shipping Factory metals systems and weaker macro-economic conditions in some areas of our market.

·     Carvana (CVNA) shares rose 16%; Q2 EPS loss (40c)/$986.2M vs. est. loss (41c)/$919.1M; Q2 retail units sold of 44,000, up 95% from last year; Vehicles purchased from customers up 188% from last year; guides FY19 revenue $3.6B-$3.7B vs. est. $3.67B and sees FY19 Retail unit sales of 167,500 – 172,500, up 78% – 83%

·     Eventbrite (EB) shares fell -8%; Q2 EPS loss (18c)/$80.8M vs. est. loss (19c)/$76.45M; said Q2 paid tickets grew by 14.9% to 26.5M YoY; sees Q3 revenue $74M-$78M, vs. consensus $77.51M and sees Q3 adjusted EBITDA ($9M)-($5M)

·     Infinera (INFN) Q2 EPS loss (24c)/$296.25M vs. est. loss (28c)/$300.4M; said they expect to return to non-GAAP profitability and positive cash flow in the fourth quarter of 2019; sees Q3 EPS (17c) plus/minus 2c vs. est. loss (15c) and revs $328M plus/minus $10M vs. est. $327.96M

·     Juniper Networks (JNPR) files mixed securities shelf

·     MercadoLibre (MELI) Q2 revenue $545.2M vs. est. $504.6M; said total payment volume was up 47% to $6.52B during the quarter. Total payment transactions jumped 112.5% to 181.6M transactions for the quarter; gross merchandise volume was up 8.4% to $3.40B (+33% constant currency).

·     Salesforce (CRM) said it acquired ClickSoftware Technologies Ltd., for an amount expected to be approximately $1.35B, net of the value of shares currently owned by the company, after taking into consideration estimated purchase price adjustments https://on.mktw.net/31ncZQl

·     Skyworks (SWKS) Q3 EPS $1.35/$767M vs. est. $1.34/$$765.6M; sees 4Q revenue $815M-$835M below the $842.2M; 3Q adjusted gross margin 50.4% vs. 50.9% YoY; raises dividend

·     Stamps.com (STMP) shares rose 18%; Q2 adjusted EPS $1.25/$138.8M vs. est. 96c/$128.35M; raises FY19 EPS view to $3.60-$4.85 from $3.35-$4.85 (est. $3.96) and narrows FY19 revenue view to $520M-$560M, from $510M-$560M (est. $526.9M)

·     Switch (SWCH) Q2 EPS 4c/$111.6M vs. est. 5c/$109.46M; sees 2019 revenue $442M-$448M vs. est. $442.82M and guides 2019 adjusted EBITDA $223M-$229M above prior view $217M-$223M

·     Talend (TLND) Q2 EPS loss (60c)/$60.59M vs. est. loss (32c)/$58.85M; raises FY19 EPS view to (98c)-(92c) from ($1.01)-(95c) while cuts FY19 revenue view to $245M-$248M from $248M-$250M (est. $248.45M)

_________________________________________________________________

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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