Morning Preview: August 28, 2019

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Early Look

Wednesday, August 28, 2019

Futures

Up/Down

%

Last

DJ Industrials

19.00

0.07%

25,763

S&P 500

3.50

0.12%

2,869

Nasdaq

5.50

0.07%

7,568

 

 

Stock futures in the U.S. are pointing to a modestly higher open as a combination of rising recession fears (given the inverted yield curve between the 2- and 10-year yield) and persistent trade tensions between the U.S. and China have pushed major averages lower for the month of August. Major averages are looking for a small rebound in the final days of trading for the month on trade hopes. In Asian markets, The Nikkei Index gained 23 points to 20,479, the Shanghai Index dropped -8 points to 2,893 and the Hang Seng Index fell -48 points to 25,615. In Europe, the German DAX is down about -60 points to 11,665, while the FTSE 100 is up around 25 points to 7,115. The Italian 10-year yield slid to a record low this morning. The Pound drops sharply on reports U.K. Parliament to be put on leave for five weeks. In stock news, a handful of retailers out with earnings tonight while software company Autodesk falls overnight on weaker results and guidance. In a report of Japan, Google (GOOGL) is moving production of its Pixel smartphone to Vietnam from China, the Nikkei reported in apparent response to the recent call from President Trump for American companies to move production out of China.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -9.22 points, or 0.32%, to 2,869.16

·     The Dow Jones Industrial Average fell -120.93 points, or 0.47%, to 25,777.90

·     The Nasdaq Composite slid -26.79 points, or 0.34%, to 7,826.95

·     The Russell 2000 Index declined -19.96 points, or 1.35% to 1,456.04

 

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: A LOT, BF/B, CHS, COTY, DAKT, DXLG, DY, EXPR, MOV, SPWH, TIF

·     Earnings After the Close: AMSWA, BOX, ESTC, FIVE, GEF, GES, HRB, NTNX, OKTA, OLI, PVH, SCVL, SMTC, TLYS, WSM, ZUO

 

Other Key Events:

·     Jefferies Healthcare Services Back-to-School Bus Tour, 8/28-8/29, in Nashville, TN

·     Piper Jaffray Southwest Regional Bank Forum, 8/26-8/28, in Dallas, TX

·     Seaport Global Annual Energy & Industrials Conference, 8/27-8/28, in Chicago

·     Simmons European Energy Conference, 8/27-8/29, in Scotland

·     William Blair 12th Annual West Coast MedTech Field Trip, 8/26-8/30, in San Diego, CA

 

 

Macro

Up/Down

Last

WTI Crude

0.81

55.74

Brent

0.71

60.22

Gold

-0.30

1,551.40

EUR/USD

0.0004

1.1094

JPY/USD

0.01

105.76

10-Year Note

-0.001

1.469%

 

 

World News

·     Investor Intelligence Poll showed equity newsletter writers considered bullish tumbles to 43.9%, the lowest since June 5, versus 49.1% last week, while bearish sentiment increase to 18.7%, highest since April 17, from 17.9% last week and those expecting a correction rises to 37.4%, highest since June 5, from 33.0% last week

·     Sterling slumped as much as 1% before paring losses (overnight low 1.2157) after Boris Johnson said he would ask the Queen to suspend parliament days after MPs return from their summer recess in September

 

Sector News Breakdown

Consumer

·     Tiffany (TIF) Q2 EPS $1.12/$1.0B vs. est. $1.05/$1.06B; Q2 total comp sales ex-FX fell (-3%) vs. est. (-1.5%) and gross margins 62.7% vs. est. above 63%; maintains full-year sales and earnings outlook

·     Coty (COTY) Q4 adjusted EPS 16c/$2.12B vs. est. 17c/$2.12B; Q4 gross margin 62.1%; COTY and Younique announced a mutual decision to terminate their partnership/Coty will sell its controlling stake to Younique’s original founders upon regulatory clearance

·     Keurig Dr Pepper (KDP) files automatic mixed securities shelf

 

Energy

·     The American Petroleum Institute (API) reported that U.S. crude supplies dropped by -11.1M barrels for the week ended Aug. 23, while also showed a stockpile decline of -349,000 barrels in gasoline, while distillate supplies fell by -2.5M barrels

·     Abraxas Petroleum (AXAS) revises guidance for 2019, switching to barrels oil from barrels of oil equivalent format; sees FY oil production, BOPD to 6,700-7,100, from 7,245-7,935

·     Nabors (NBR), Quintana Energy Services (QES), and Nine Energy Services (NINE) downgraded to Neutral from Buy at Bank America

 

Financials

·     Deutsche Bank (DB) said in court papers it has tax returns responsive to a subpoena sent this year, in which Congress asked the bank for a host of documents related to Trump and his family.

·     National Bank of Canada (NA.CN) Q3 adjusted EPS C$1.66 vs. estimate C$1.59; 3Q common equity Tier 1 ratio 11.7% and ROE 18.7%

 

Healthcare

·     Lannett (LCI) shares rise 35%; Q4 adjusted EPS 37c/$133.8M vs. est. 21c/$121.68M; sees FY20 revenue $525M-$545M vs. est. $505.95M; sees FY20 adjusted gross margin approximately 40%-42%

·     Phibro Animal Health (PAHC) shares dropped -25%; Q4 adjusted EPS 33c/$204M vs. est. 36c/$206M; guides FY20 adjusted EPS $1.08-$1.15 below consensus $1.54 while sees FY20 revenue $833M-$863M vs. est. $829.91M

·     Curaleaf Holdings (CURLF) the U.S. biggest marijuana chain, reported positive adjusted Ebitda in its fiscal second-quarter, though its net loss widened; said Q2 Ebitda was $3.36M, compared with an Ebitda loss of $3.69M in Q2 and total revenue hit $48.5M up 38% QoQ

·     Bristol-Myers Squibb (BMY) said the European Commission approved Empliciti (elotuzumab) plus pomalidomide and low-dose dexamethasone for the treatment of adult patients with relapsed and refractory multiple myeloma.

 

Industrials & Materials

·     Dycom (DY) reports adjusted EPS $1.09/$884.2M vs. est. 83c/$858.8M; sees Q3 adjusted EPS 60c-80c on revs $820M-$870M vs. est. 89c/$881.38M

·     Boeing (BA) said that a plane order from China could result from any agreement to end a yearlong trade dispute between the U.S. and Beijing – Reuters

·     Heico (HEI) Q3 EPS 59c/$532.3M vs. est. 54c/$511.08M; raises FY net sales view to 14%-15% from prior 12%-13% view and FY net income growth to 23%-24% from 17%-18% prior

 

Technology, Media & Telecom

·     Google (GOOGL) is moving production of its Pixel smartphone to Vietnam from China, the Nikkei reported overnight; said Google, working with an unidentified partner, has begun to convert an old Nokia factory in Northern Vietnam, to manage the production of Pixel phones

·     Autodesk (ADSK) shares fell -12%; Q2 adjusted EPS 65c/$796.8M vs. est. 61c/$786.98M; sees Q3 adjusted EPS 70c-74c on revs $820M-$830M vs. est. 77c/$838.78M; cuts FY20 total ARR view to up 25%-27% from up 27%-29% while cuts FY20 adjusted EPS view to $2.69-$2.81 from $2.71-$2.90 (est. $2.82) and cuts FY20 revenue view to $3.24B-$3.27B from $3.25B-$3.3B (est. $3.28B)

·     HP Enterprise (HPE) Q3 adjusted EPS 45c/$7.22B vs. est. 40c/$7.26B; raises FY19 EPS view to $1.72-$1.76 from $1.62-$1.72 (est. $1.67); reiterates its year free cash flow guidance of $1.4B-$1.6B; sees Q4 EPS 43c-47c vs. est. 43c

·     Veeva Systems (VEEV) Q2 EPS 55c/$266.9M vs. est. 49c/$259.4M; sees Q3 EPS 54c-55c on revs $274M-$275M vs. est. 51c/$268.4M and raises year rev outlook; raises FY20 adj. EPS view to $2.11-$2.13 from $2.01-$2.03 and ups FY20 revenue view to $1.062B-$1.065B from $1.045B-$1.05B

·     Ooma Inc. (OOMA) Q2 EPS loss (4c)/$37.3M vs. est. loss (6c)/$35.6M; sees Q3 adjusted EPS loss (6c)-(4c) on revs $38M-$39M vs. est. loss (5c)/$37.19M; raises FY20 EPS view to (22c)-(18c) from (24c)-(19c) and ups FY20 revenue view to $148M-$149.5M from $145M-$148M

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Content is provided by Hammerstone Inc., which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the Hammerstone content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.

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