Morning Preview: August 09, 2019

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Early Look

Friday, August 9, 2019

Futures

Up/Down

%

Last

DJ Industrials

-144.00

0.55%

26,221

S&P 500

-18.50

0.63%

2,921

Nasdaq

-63.50

0.82%

7,672

 

 

Stock futures are lower, pulling back on reports the Trump administration is holding off on approving licenses for U.S. companies to resume doing business with China’s Huawei Technologies Co. in the wake of China’s suspension of U.S. agricultural purchases. Today’s market news coming overseas with signs China isn’t seeking a currency war an upbeat GDP report out of Japan, more political turmoil in Italy and evidence Brexit is already sending the UK economy backwards. In Asian markets, The Nikkei Index gained 91 points to end the week at 20,684, the Shanghai Index dropped -19 points to 2,774 and the Hang Seng Index fell -181 points to 25,939. In Europe, the German DAX is down over 100 points to 11,735, while the FTSE 100 is down about 20 points to 7,265. European stocks slid amid weakness in Italy amid political chaos with Deputy Prime Minister Matteo Salvini calling for a snap election. Salvini’s call for a general election sent Italian bond yields soaring. Meanwhile there was more weak data in Germany as exports dropped a disappointing 8% year-over-year in June. After surging yesterday to erase most if not all of this week’s declines, U.S. stocks are looking lower again after a rough round of earnings news overnight and the macro related concerns. Oil prices are higher despite the IEA cutting its oil demand forecast (again), citing weaker prospects for the global economy.

Market Closing Prices Yesterday

·     The S&P 500 Index spiked 54.11 points, or 1.88%, to 2,938.09

·     The Dow Jones Industrial Average rose 371.12 points, or 1.43%, to 26,378.19

·     The Nasdaq Composite surged 176.33 points, or 2.24%, to 8,039.16

·     The Russell 2000 Index advanced 31.45 points, or 2.10% to 1,532.13

 

Events Calendar for Today

·     8:30 AM EST      Producer Price Index (PPI) Final Demand MoM for July…est. 0.2%

·     8:30 AM EST      PPI Ex: Food & Energy MoM for July…est. 0.1%

·     8:30 AM EST      PPI Final Demand YoY for July…est. 1.7%

·     8:30 AM EST      PPI Ex: Food & Energy YoY for July…est. 2.3%

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: CLNY, CVGI, DPLO, HCAP, HPT, RMR, SCM, SMLP, SSP, TDW, TRCO, USCR, YRCW

 

 

Macro

Up/Down

Last

WTI Crude

0.71

53.25

Brent

0.83

58.216

Gold

5.40

1,514.90

EUR/USD

0.0017

1.1197

JPY/USD

-0.23

105.84

10-Year Note

-0.025

1.691%

 

 

World News

·     U.K. GDP shrank 0.2% in the second quarter – The U.K. economy contracted by 0.2% in the second quarter, after 0.5% growth in the first quarter, the Office for National Statistics said Friday, which was below market and the Bank of England forecasts. YoY, GDP grew by 1.2%

·     Japan’s GDP grew a consensus-beating 1.8% – expanded at an annualized rate of 1.8% during the quarter, in data released Friday. Economists had expected 0.4% growth. It followed a 2.8% expansion in the previous quarter–which is an upward revision from earlier result

·     German exports plunged the most in three years in June as the manufacturing sector was whacked by the trade war.

 

Sector News Breakdown

Consumer

·     Uber (UBER) shares fell -6% on bigger loss; Q2 EPS loss ($4.72)/$3.17B vs. est. loss ($3.19)/$3.36B; Q2 gross bookings $15.76B, up 31% YoY; said Trips up 35% and Gross Bookings up 37% in constant currency, compared to the second quarter of last year

·     Alarm.com (ALRM) shares rose 13%; Q2 EPS 40c/$121.7M vs. est. 32c/$109.48M; sees FY19 revenue $460.2M-$465M vs. est. $452.1M

·     Turtle Beach (HEAR) Q2 adjusted EPS loss (6c)/$41.3M vs. est. loss (20c)/$41.97M; backs FY revs $240M-$248M and sees FY adjusted Ebitda $27M-$31M

·     Callaway Golf (ELY) Q2 EPS 37c,/$446.7M vs. est. 25c/$430.12M; Q2 gross margin decreased 230 basis points to 46.3% compared to 48.6% last year; raises 2019 EPS outlook to $1.03-$1.09 from 96c-$1.06 and ups sales to $1.685B-$1.700B from prior $1.67B-$1.700B

·     Funko (FNKO) Q2 adjusted EPS 25c/$191.2M vs. est. 13c/$170.69M; sees FY19 adjusted EPS $1.15-$1.22 on revs $840M-$850M above est. $1.16/$825.28M

·     Mattel Inc. (MAT) shares dropped after the toy company canceled a planned debt sale and disclosed an anonymous whistleblower letter. In a filing with the SEC, the company said it was launching an investigation into matters brought up in the letter, without details

·     Tutor Perini (TPC) shares fell -23%; Q2 adjusted EPS 18c/$1.1B vs. est. 47c/$1.18B; said Q2 results were impacted by a pre-tax non-cash goodwill impairment charge of $379.9 million; sees FY19 adjusted EPS $1.60-$1.80 below consensus $2.12

·     Waitr Holdings (WTRH) Q2 EPS loss (32c)/$51.3M vs. est. loss (25c)/$53.76M; active Diners for Q2 increased 248% to 2.4M; lowers 2019 sales outlook to $210M-$220M (below est. $249.88M)

 

Energy

·     The International Energy Agency (IEA) cut its oil demand forecast (again), citing weaker prospects for the global economy. Its new forecast lowers 2019 demand growth by 100,000 barrels a day to 1.1 million barrels a day, and its 2020 forecast was lowered by 50,000 barrels a day to 1.3 million barrels a day. The IEA said new data show downward revisions to oil demand figures from India, Saudi Arabia, Korea and several European countries, and preliminary U.S. data show lower demand for motor fuels at the start of peak driving season. On the upside, Chinese oil demand was revised upwards.

·     ProPetro (PUMP) Q2 EPS 35c/$529.5M vs. est. $526.2M; says delay in 10-Q due to review by audit committee of board which initially focused on disclosure of agreements with AFGlobal for purchase of DuraStim fleets; Q2 Ebitda $126.6M missed the $137.8M est.; 2Q pressure pumping capex $156.5M vs. $68.1M YoY and pressure pumping revenue $515.9M up 16% YoY

·     Vivint Solar (VSLR) shares fell -10%; after a larger than expected Q2 loss and cash flows dipped deeper into the red; says Q2 installations totaled 8,163, up 22% from the year-earlier quarter, with 56 MW installed, 19% more than a year ago; Q2 cost per watt was $3.56, an increase from $3.46 in Q1 and $3.23 in Q2 2018; Q2 total revenues rose 12% Y/Y to $90.8M

 

Financials

·     Franklin Resources, Inc. (BEN) today reported preliminary month-end assets under management of $709.5 billion at July 31, 2019, compared to $715.2 billion at June 30, 2019. The decrease in assets under management was attributable to net outflows and net market change.

·     Cohen & Steers, Inc. (CNS) reported preliminary assets under management of $63.1 billion as of July 31, 2019, an increase of $749 million from June 30, 2019. The increase was due to market appreciation of $794 million and net inflows of $255 million

·     Uniti Group (UNIT) Q2 EPS 20c/$264.4M vs. est. 9c/$266.16M; guides year revs $1.07B-$1.08B vs. est. $1.08B; guides Ebitda $815M-$824M from prior $810M-$819M

·     E-Trade (ETFC) and TD Ameritrade (AMTD) both downgraded to hold from buy at Deutsche Bank saying at this stage of the market cycle and upon market expectations of more substantial Federal Reserve easing, macro risks of lower interest rates and possible eventual equity market declines will restrain any sustainable upside in the stocks

·     PennyMac Mortgage (PMT) 8M share Spot Secondary priced at $21.75

 

Healthcare

·     Amarin (AMRN) shares fell -20%; announced that it received notice from the FDA that the agency plans to hold an advisory committee meeting, tentatively scheduled for November 14, in connection with its review of the pending supplemental new drug application for expansion of Vascepa labeling based on the REDUCE-IT cardiovascular outcomes study

·     Nektar (NKTR) shares dropped -30%; Q2 EPS loss (63c)/$23.3M (down 98% YoY) vs. est. loss (80c)/$26.65M; large decrease due to recognition of $1.06B in license revenue last year from Bristol-Myers Squibb collaboration

·     Novo Nordisk (NVO) raised its full-year forecast amid optimism for its next-generation diabetes drug. Second-quarter sales beat and net income matched estimates.

·     Puma Biotechnology (PBYI) shares rose 19%; Q2 Nerlynx sales rose 6% to $53.8M; cash flow ops: $44.2M (+351%); Q2 adjusted EPS loss (57c)/$53.9M vs. est. loss (94c)/$52.98M;

·     ViewRay (VRAY) shares fell 40%; Q2 EPS loss (32c)/$30.2M vs. est. loss (24c)/$25.89M; lowers FY19 revenue view to $80M-$95M from $111M-$124M (vs. est. $118.52M); Cash $122.1M at quarter-end vs $145.8M QoQ

·     Lexicon Pharma (LXRX) said data from two late-stage studies testing its treatment Zynquista show the drug may reduce cardiovascular risk and progression of chronic kidney disease in adults with type 1 diabetes

·     Silk Road Medical (SILK) 4.2M share Secondary priced at $39.50

·     Stemline (STML) 5M share Secondary priced at $15.25

 

Industrials & Materials

·     Manitowoc Co (MTW) Q2 EPS 94c/$504.7M vs. est. 49c/$509.4M; boosted its adjusted Ebitda forecast for the full year to $140M-$160M from $130M-$150M prior (est. $137.5M)but lowers year revs to $1.88B-$1.92B from $1.9B-$1.98B (est. $1.92B); still sees FY capital expenditure about $35M

·     Bayer (BAYRY) proposed to pay $8 billion to settle more than 18,000 lawsuits because of claims that its Roundup weed killer causes cancer. Investors welcomed a potential settlement as the number of plaintiffs continues to mount.

 

Technology, Media & Telecom

·     Activision Blizzard (ATVI) Q2 EPS 38c/$1.21B vs. est. 26c/$1.19B; Q2 bookings fell by double digits Y/Y to $1.21B but beat consensus; operating margin was 32%; monthly active users were 327M: 258M from King Digital, 37M for Activision, 32M for Blizzard; sees Q3 EPS 20c on revs $1.1B below est. 40c/$1.37B

·     Altair (ALTR) Q2 EPS 6c/$106.77M vs. est. 7c/$109.06M; cuts FY19 revenue view to $460M-$464M from $470M-$474M (est. $479.2M)

·     Appian (APPN) Q2 EPS loss (10c)/$66.91M vs. est. loss (17c)/$63.57M; sees Q3 EPS loss (16c)-(15c) on revs $65M-$65.5M vs. est. loss (11c)/$64.44M

·     Avnet (AVT) Q4 adjusted EPS 95c/$4.7B vs. est. $1.01/$4.61B; sees Q1 adjusted EPS 60c-70c on revs $4.4B-$4.7B vs. est. 97c/$4.59B

·     Broadcom (AVGO) to acquire Symantec (SYMC) enterprise security business for $10.7B in cash (as reported yesterday)

·     CBS (CBS) Q2 adjusted EPS $1.16/$3.8B vs. est. $1.12/$3.71B

·     Conduent (CNDT) Q2 adjusted EPS 13c/$1.11B vs. est. 17c/$1.11B; lowers FY19 revenue growth view to (5%)-(4%) from (4%)-(3%)

·     Diodes (DIOD) agreed to acquire Lite-On Semiconductor in a cash-based share swap transaction; each share of LSC stock will be converted into right to receive TWD42.50 in cash or $1.37

·     Dropbox (DBX) Q2 adjusted EPS 10c/$401.5M vs. est. 8c/$400.91M; said Q2 paying users totaled 13.6 million, as compared to 11.9 million for the same period last year; average revenue per paying user was $120.48, as compared to $116.66 for the same period last year; raises FY19 revenue view to $1.648B-$1.654B from $1.63B-$1.65B (est. $1.64B) and sees FY19 operating margin 11.0%-12.0%, free cash flow of $375M-$385M

·     DXC Technology (DXC) shares fell -17%; Q1 adjusted EPS $1.74/$4.89B vs. est. $1.70/$4.86B; said continued to build momentum in our Digital business with Digital revenue growth of 35% and Digital pipeline growth of 80%; reduced its annual guidance, for EPS to $7.00-$7.75 on revs of $20.2B-$20.7B after previously forecasting $7.75-$8.50 on sales $20.7B-$21.2B

·     Facebook (FB) is offering news providers millions of dollars for the rights to place their content in a news section that the social media giants is seeking to launch later this year – WSJ reports

·     Farfetch (FTCH) shares plunged -40%; Q2 adjusted EPS loss (15c)/$209.26M vs. est. loss (12c)/$199.07M; sees Q3 platform GMV growth 30%-35% YoY and adjusted EBITDA loss margin roughly 18%-20% of adjusted revenue

·     Synaptics (SYNA) shares fell -5%; Q4 EPS 38c/$295.1M vs. est. 30c/$307.27M; sees Q1 revenue $300M -$330M vs. est. $346.78M

·     Trade Desk (TTD) Q2 adjusted EPS 95c/$159.9M vs. est. 69c/$155.64M; sees Q3 revenue $163M vs. est. $162.36M and Q3 adjusted EBITDA $45M

·     WPP Group (WPP) shares rose 7% after beating first-half sales estimates. Revenue, less pass-through costs at the ad giant, fell 2%, compared with the 2.9% consensus. Sales fell 6.9% in North America

·     Yelp (YELP) Q2 EPS 16c/$247M vs. est. 12c/$247.4M; announced the appointment of Lanny Baker as Chief Financial Officer, effective September 3, 2019; continue to expect full-year 2019 Net revenue to grow by 8% to 10% compared with 2018, and we expect Adjusted EBITDA margins to expand by 2%-3% compared to 2018; Q2 EBITDA rose 17% to $55M

_________________________________________________________________

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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