Early Look

Wednesday, February 19, 2020

Futures	Up/Down	%	Last
DJ Industrials	58.00	0.20%	29,269
S&P 500	6.50	0.19%	3,375
Nasdaq	28.00	0.29%	9,664

 

 

U.S. stock futures are edging higher, looking to bounce after mixed results yesterday in the U.S. while tracking both European and Asian markets higher as the coronavirus infections are slowing and markets are focusing on strong economic data, accommodative central banks and ignoring the profit warnings (such as Apple yesterday) due to the potential economic impact of the virus that has shut stories, closed facilities for many companies. Overnight, sentiment improved amid renewed investor optimism as China considers measures to bail out its airline industry, hurt by the coronavirus outbreak. In Asian markets, The Nikkei Index rose 206 points to 23,400, the Shanghai Index lost -9 points to settle at 2,975 and the Hang Seng Index rose 125 points to 27,655. In Europe, the German DAX is higher by about 70 points to 13,750, while the FTSE 100 is up around 60 points to 7,440.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -9.87 points, or 0.29%, to 3,370.29

·     The Dow Jones Industrial Average fell -165.89 points, or 0.56%, to 29,232.19

·     The Nasdaq Composite rose 1.57 points, or 0.02%, to 9,732.74

·     The Russell 2000 Index declined -4.06 points, or 0.24% to 1,683.52

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Housing Starts MoM for Jan…est. 1.425M down 11.4%

·     8:30 AM EST      Building Permits MoM for Jan…est. 1.45M up 2.1%

·     8:30 AM EST      Producer Price Index (PPI) MoM for Jan…est. 0.1%

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

·     8:30 AM EST      Producer Price Index (PPI) YoY for Jan…est. 1.6%

·     8:30 AM EST      PPI Ex: Food & Energy YoY for Jan…est. 1.3%

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       FOMC Meeting Minutes

 

Earnings Calendar:

·     Earnings Before the Open: ADI, APRN, BCOR, BHC, DISH, DNOW, ELAN, ENBL, ETR, FDP, FUN, GEL, GPC, HSTM, IART, JAKK, NHI, OC, SAH, THRM, WING, WSTG

·     Earnings After the Close: CAKE, CAR, CDE, CONE, CRMT, CYH, ELGX, ES, ET, FIVN, GDOT, H, HCC, HCR, HST, JACK, LASR, LOPE, LSI, MANT, MASI, MOS, NDSN, O, OSUR, PE, PXD, RGR, SAM, SHO, SNBR, SNPS, STMP, SUI, SUN, TRN, TVTY, UCTT, WMB, XEC, Y, ZG

 

Other Key Events:

·     Consumer Analyst Group of New York (CAGNY) Conference, 2/17-2/21, in Boca Raton, FL

·     Barclay’s Industrial Select Conference, 2/19-2/20, in Miami, FL

·     Citigroup Global Industrial Conference, 2/19-2/20, in Miami, FL

·     Fed’s Bostic speaks on economic outlook in Atlanta, 8:10 AM

·     Fed’s Kaplan speaks in Dallas at 1:30 PM

·     Fed’s Barkin discusses monetary policy framework

 

 

Macro	Up/Down	Last
WTI Crude	0.64	52.69
Brent	0.67	58.42
Gold	9.70	1,613.30
EUR/USD	0.0001	1.0793
JPY/USD	0.54	110.41
10-Year Note	-0.011	1.549%

 

 

World News

·     U.S. Treasury reported foreign accounts bought $78.2B in net U.S. assets in December, following purchases of $77.3B in November (revised from $73.1B). That brought the 2019 total to $384.8B, compared to $531.1B in 2018. Also, overseas players bought $85.6B in net long term assets in December, after $27.1B in November

·     China’s Hubei region reports 132 new coronavirus deaths for Feb. 18, Hubei’s health commission says in a statement, taking the nationwide total to at least 2,000; total confirmed cases in Hubei rise by 1,693 to 61,682

·     Japan’s exports fell in January from a year earlier for the 14th consecutive month, sliding -2.6% on year in January, the Ministry of Finance said Wednesday, compared with a 6.3% drop in December and 7.0% contraction forecast

·     Consumer prices in the U.K. rose in January at their fastest annual rate in six months, as consumer prices rose 1.8% on the year in January, faster than the 1.3% increase recorded in December. However, it remains slightly below the Bank of England’s 2% annual target.

·     Mike Bloomberg would sell the financial data and media company he created in the 1980s — which bears his name and made him a multibillionaire — if he is elected U.S. president, a top adviser said Tuesday.

·     China has revoked the press credentials of three journalists of the Wall Street Journal after the newspaper declined to apologize for a column with a headline calling China the “real sick man of Asia”, the foreign ministry said on Wednesday.

 

Sector News Breakdown

Consumer

·     Aptiv Plc (APTV) said it sees $150-200Mm rev hit from coronavirus vs. prior view of $50Mm; sees 460-80Mm op income hit vs. prior view $20Mm; impact to 1Q and FY results remain highly uncertain (may weigh on other auto parts names)

·     Blue Apron (APRN) says evaluating range of options including sale; 4Q loss ($1.66) vs. est. loss ($1.52) on net revs $94.3Mm vs. est. $97.7Mm; says evaluating strategic alternatives, evaluating range of options including sale; Q4 adj. EBITDA down 7% from last year at ($8.3M); reports Q4 orders 1.6M vs. 2.4M last year and reports Q4 customers 351K vs. 557K last year

·     Bunge (BG) has agreed to acquire two soy processing plants in Brazil from bankrupt local crusher Imcopa for 50M reais ($12M) and assume more than 1B reais of debt, Reuters reports

·     Herbalife (HLF) Q4 EPS 74c tops the 63c estimate on sales $1.22B, up +2.8% YoY while says no FY20 guidance due to Coronavirus uncertainty; says it could materially impact consolidated results for the first quarter and full year 2020

·     Knoll (KNL) Q4 EPS 52c/$371.4M vs. est. 63c/$391.82M

·     La-Z-Boy (LZB) Q3 EPS 72c on sales $475.9M vs. est. 64c and $480.3M; Q3 operating income rose 28% YoY to $52.3M; 3Q written same-store sales for furniture galleries network rose 10.5%

·     Masonite (DOOR) Q4 adjusted EPS 69c/$531M vs. est. 57c/$533.51M; guides 2020 adj EPS $4.25-5.25, sees adj EBITDA $310-345Mm vs. est. $314.6Mm, sees net sales +2-7%

·     Scientific Games (SGMS) shares fall -15%; 4Q revs $863Mm below est. $897Mm, 4Q loss (46c) vs. est. $2.21; 4Q adjusted Ebitda fell -4.5% YoY to $328M (est. $354M) which was down from last year’s $343M due to lower lottery and gaming AEBITDA

·     ShotSpotter (SSTI) soars after reporting Q4 adjusted EBITDA of $3.2M vs. $2.5M to go along with a revenue and EPS beat; said in Q4 added 34 net new live miles, 16 of which were in three new cities in Puerto Rico; sees full-year revenue of $48M to $50M vs. $49M consensus

 

Energy

·     Concho Resources (CXO) Q4 adj EPS $1.03 beats the 80c estimate; Q4 production rose 9.8% YoY to 227 Mboe/d; delivered oil production volumes of 215 mboepd in qtr; raises dividend by 6% and said is planning $2.6B-$2.8B capital program for year, representing 10% reduction YoY at midpoint of guidance

·     Devon Energy (DVN) Q4 core EPS 33c vs. est. 31c; 4Q production 340 mboe/d, -36% YoY; lowers 2020 capital expenditure to $1.7B-$1.85B; raises quarterly dividend by 22% to 11c

·     Diamondback Energy (FANG) Q4 EPS $1.93 vs. est. $1.81 and reports Q4 revenue $1.1B vs. est. $1.09B; said ended 2019 in a position of strength, achieving 5% sequential oil production growth along with our highest oil realizations of the year which resulted in 18% quarter over quarter Adjusted EBITDA growth and 31% Adjusted EPS growth in the quarter

·     Enphase (ENPH) 4Q adj revs $210Mm vs. est. $205.4Mm, 4Q adj gr margin 37.3% vs. est. $35.4%; guides 1Q gr margin 36-39%

 

Financials

·     Ally Financial (ALLY) announced that it has entered into a definitive agreement to acquire CardWorks in a transaction valued at approximately $2.65B. CardWorks is a privately held company with $4.7B in assets and $2.9B in deposits

·     Kilroy Realty (KRC) 5M share Spot Secondary priced at $86.00

·     Extra Space (EXR) 4Q core FFO per share $1.27 vs. est. $1.25; guides FY20 core FFO $4.99-5.08 vs. est. $5.06; Q4 same-store revenue increased by 2.5% and same-store NOI by 1.0% Y/Y; Q4 revenue of $335.8M exceeds estimate of $291.1M and improved from $307.4M YoY

·     Lending Club (LC) Q4 adj EPS 8c on revs $188.5M vs. est. 6c and $199.3M; LendingClub announces acquisition of Radius Bank in deal valued at $185M; sees Q1 revs $170M-$180M below the $202.9M est. and sees 2020 revs $790M-$820M vs. est. $868.1M

·     QTS Realty (QTS) 4Q op FFO $0.69 vs. est. $0.70; guides FY20 op FFO $2.69-2.83 vs. est. $2.82, sees FY20 adj EBITDA $275-285Mm vs. est. $276.8Mm

·     Verisk Analytics (VRSK) 4Q adj EPS $1.13 vs. est. $1.12 on revs $677Mm vs. est. $668.9Mm, 4Q adj EBITDA $318.8Mm vs. est. $313.9Mm; boosts dividend to $0.27 from $0.25

·     Vornado Realty (VNO) Q4 FFO $1.63 on revs $461M vs. est. $1.57 and $451.4M

 

Healthcare

·     Agilent (A) 1Q adj EPS $0.81 vs. est. $0.81 on revs $1.36B vs. est. $1.35B; guides 2Q adj EPS $0.72-0.76 vs. est. $0.79, sees 2Q revs $1.28-1.32B vs. est. $1.34B; still sees FY adj EPS $3.38-3.43 vs. est. $3.43, still sees FY revs $5.5-5.55B vs. est. $5.55B

·     Amedisys (AMED) Q4 adj EPS 94c vs. est. 93c; sees 2020 EPS $4/90-$5.13 vs. est. $4.92; sees 2020 adj Ebitda $250M-4260M vs. est. $250.4M

·     Bluebird Bio (BLUE) said it has initiated its rolling Biologics License Application submission of LentiGlobin for beta thalassemia for approval in the U.S. and is engaged with the FDA in discussions regarding the requirements and timing of certain information to be provided in the BLA; reports larger Q4 EPS loss of ($4.04) vs. est. ($3.79)

·     Elanco (ELAN) Q4 adj EPS 23c/$787M vs. est. 23c/$791.2M; still sees 2020 eps $1.09-$1.16 v.s est. $1.12 and revs $3.05B-$3.11B

·     HealthEquity (HQY) raises FY20 EPS view to $1.71-$1.73 from $1.46-$1.52 (est. $1.51) and also boosts FY20 revenue view to $530M-$532M from $520M-$526M (est. $522.79M)

·     HealthStream (HSTM) Q4 cont ops EPS 11c/$62.7M vs. est. 6c/$62.55M; sees FY20 revenue $247.5M-$255.5M vs. est. $250.07M and sees FY20 CapEx $24M-$26MM

·     Merck (MRK) said FDA issued a Complete Response Letter regarding the company’s supplemental Biologics License Applications seeking to update the dosing frequency for Keytruda to include a 400 mg dose infused over 30 minutes every-six-weeks option in multiple indications.

 

Technology, Media & Telecom

·     Groupon (GRPN) shares fell over 20%; missed low estimates with its Q4 profits, and revenues fell well short of expectations; said revenues tumbled nearly 24% from the prior year to $612.3M, vs. expectations for $705M; company said it plans to exit the Goods category and focus on local experiences; reported Q4 GAAP EPS at $0.13, while non-GAAP EPS was $0.07

·     Analog Devices (ADI) boosts quarterly dividend to 62c from 54c

·     Acacia Communications (ACIA) Q4 EPS 48c/$128.67M vs. est. 56c/$127.45M; 4Q adjusted gross margin 47.3%, estimate 47.7%

·     Dynatrace (DT) files to sell 25M shares of common stock

·     Taiwan Semiconductor (TSM) is reducing its chip capacity support for Huawei – DigiTimes reports saying industry sources tell DigiTimes that the company is nonetheless continuing to work closely with Huawei on advanced 5nm and 3nm chip solutions