Early Look

Thursday, February 20, 2020

Futures	Up/Down	%	Last
DJ Industrials	-38.00	0.13%	29,299
S&P 500	-4.50	0.13%	3,383
Nasdaq	-13.50	0.14%	9,719

 

 

Stocks are pointing to a modestly lower open, with European markets down slightly and Asian markets mixed ahead of another busy day of corporate earnings as the season is slowly coming to a close. Stocks are pulling back after the S&P 500 and Nasdaq Composite each touched new all-time record highs on Wednesday. In Asian markets, The Nikkei Index rose 78 points to 23,479, the Shanghai Index jumped 54 points to settle at 3,030 and the Hang Seng Index fell -46 points to 27,609. In Europe, the German DAX is down only a few points to 13,775, while the FTSE 100 is little changed at 7,450. New virus cases in China rose by just 394 from the previous day (down from the prior day figure of 1,749), with a rise in the death toll of 114, the government said. Mainland China has now reported 2,118 deaths and 74,576 total cases. While the overall spread of the virus has been slowing, the situation remains severe in Hubei province and its capital, Wuhan (more than 80% of the country’s cases are in Hubei and 95% of the deaths, according to China’s National Health Commission. More companies overnight reported earnings with softer guidance due to the impact of the virus (including Maersk, Smith & Nephew and others). Also of note the dollar extends its gains on counterparts, nearing a 52-week high against the yen.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 15.86 points, or 0.47%, to 3,386.15

·     The Dow Jones Industrial Average rose 115.84 points, or 0.40%, to 29,348.03

·     The Nasdaq Composite spiked 84.44 points, or 0.87%, to 9,817.18

·     The Russell 2000 Index advanced 9.05 points, or 0.54% to 1,692.57

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 210K

·     8:30 AM EST      Continuing Claims…est. 1.717M

·     8:30 AM EST      Philly Fed Survey for February…est. 11.0

·     10:00 AM EST    Leading Index for January…est. 0.4%

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

 

Earnings Calendar:

·     Earnings Before the Open: AAN, AEP, AKS, CLF, COMM, DPZ, EHTH, EPAM, HFC, HRL, HSIC, IDCC, KBR, LAMR, LXP, MD, MFA, NCLH, NEM OIS, PBYI, RCM, SFM, SIX, SO, STOR, SYNH, TCP, TEN, TFX, TNC, TRGP, TXMD, VC, VIAC, VTR

·     Earnings After the Close: ADSW, AERI, APPN, BAND, BLDR, BOOM, BYD, CENX, CNDT, COG, COLD, CUBE, CVA, DBX, DRH, ENV, FIT, FND, FSLR, FSLY, LTHM, NBR, NUVA, OLED, PEB, PRAH, SBAC, SEM, TRUE, TXRH, VICI, WK, ZS

 

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

 

 

Macro	Up/Down	Last
WTI Crude	0.16	53.45
Brent	-0.11	59.01
Gold	2.80	1,614.60
EUR/USD	-0.0013	1.0792
JPY/USD	0.71	112.08
10-Year Note	-0.022	1.544%

 

 

World News

·     Germany’s GfK’s forward-looking consumer sentiment index is set to fall to 9.8 points in March from 9.9 points for February, GfK said (estimates forecast 9.8 points in March)

 

Sector News Breakdown

Consumer

·     L Brands Inc. (LB) is near a deal to sell control of Victoria’s Secret to a private-equity firm in a transaction that values the lingerie brand at about $1.1 billion, the WSJ reported according to people familiar with the matter. Sycamore Partners is expected to buy 55% of Victoria’s Secret and take the struggling business private, the people said. L Brands is expected to keep a 45% stake in the separate company, which will include the Pink chain https://on.wsj.com/32cFLFd

·     Boston Beer (SAM) 4Q EPS $1.12 vs. est. $1.54 on revs $301.3Mm vs. est. $283.8Mm; guides 2020 gross margin 49-51%; sees 2020 adj EPS $10.70-11.70 below the est. $11.72

·     Cheesecake Factory (CAKE) 4Q adj EPS $0.58 vs. est. $0.62, co-owned comps +0.6%, maintains dividend; sees Q1 adjusted EPS 69c-74c on revs $715M-$720M vs. est. 62c/$728.15M

·     Harley-Davidson Inc. (HOG) boosted its dividend and also authorized a stock buyback program of up to 10 million shares of the company

·     Hyatt (H) Q4 adj. EPS 47c/$1.28B vs. est. 24c/$1.19B; Q4 comparable system-wide RevPAR down 1.3%; reports Q4 adjusted EBITDA up 5.3% or 5.7% in constant currency at $191M; Q4 Comparable owned and leased hotels operating margin flat at 24.6% and adjusted EBITDA margin up 100bps to 29.7% in constant currency; sees FY20 adj. EBITDA $760M-$780M, RevPAR growth down 0.5% to up 1.5%

·     Jack in the Box (JACK) Q1 operating EPS $1.17 on revs $307.7M vs. est. $1.38 and $296.6M; said Q1 Jack in the Box system same-store sales increased 1.7%, company same-store sales increased 2.9% driven by average check growth of 2.6% and transaction growth of 0.3%

·     Imax (IMAX) 4Q adj EPS $0.35 vs. est. $0.30 on revs $124.3Mm vs. est. $118Mm

·     Six Flags (SIX) shares fall -14%; Q4 EPS loss (13c) below the consensus 15c while Q4 revenue $261M was in-line with the $260.11M est.; lowers quarterly dividend to 25c per share from 83c; said year guidance assumes the following: significantly lower revenue contribution from the company’s international development agreements, organic revenue growth trends consistent with 2019, and operating cost headwinds

·     Sleep Number (SNBR) Q4 EPS $0.82 vs. est. $0.75 on comps +2%; guides 2020 EPS $3.10 vs. est. $2.97 and sees FY20 revenue growth high single digits vs. est.$1.8B and FY20 capex roughly $60M

·     Zillow (ZG) shares rise 9%; Q4 revenue $943.9M above consensus $810.94M and guides Q1 revenue $1.02B-$1.06B vs. est. $912.38M; sees Q1 adjusted EBITDA ($37M)-($19M); Revenues rose 158% to $944M for the quarter, wrapping up full-year revenues that rose 106%, powered by rapid expansion in Homes and growth in the Premier Agent business

·     Grand Canyon (LOPE) shares fell -8%; Q4 adjusted EPS $1.63/$213.25M vs. est. $1.54/$213.97M; sees Q1 revs $222.5M vs. est. $219M; guides year revs $856M vs. est. $858.3M

 

Energy

·     The American Petroleum Institute (API) reported that U.S. crude supplies rose by 4.2 million barrels for the week ended Feb. 14, showed stockpile declines of 2.7 million barrels for gasoline and 2.6 million for distillates.

·     Eversource Energy (ES) Q4 EPS 76c/$2.05B vs. est. 77c/$2.01B; sees FY20 EPS $3.60-$3.70 vs. est. $3.64 as well as long-term EPS growth through 2024 from its core regulated utility segments of between 5%-7%, using 2019 non-GAAP earnings of $3.45 per share as the base

·     Noble Corporation (NE) implements a leadership transition plan, and names Robert W. Eifler as its next president and CEO.

·     Pioneer Natural Resources (PXD) Q4 adj EPS $2.36 vs. est. $2.09; cash from ops down -9.5% YoY to $828M; raises quarterly dividend to 55c from 44c per share; Q1 oil production is forecasted to average between 217 to 227 MBOPD and total production to average between 361 to 376 MBOEPD. Production costs are expected to average $8.25 per BOE to $10.25 per BOE

·     SolarEdge (SEDG) Q4 adjusted EPS $1.65/$418.2M vs. est. $1.25/$413.78M; said year with revenues growth of over 50% in 2019 most of which was generated by our solar business and announce a non-GAAP net profit growth of over 48%; sees Q1 revenue $425M-$440M vs. est. $389.26M and guides Q1 gross margin 32%-34% after Q4 gross margin was 35.5%, up from 30.9% in last year’s quarter

·     SM Energy (SM) Q4 non-GAAP EPS loss (4c) on revs $451.69M vs. est. loss (4c)/$417.13M; Q4 production was 12.8 MMBoe – 138.8 MBoe/d – at 48% oil, which exceeded the midpoint of fourth quarter guidance by 5% and was driven by 13% sequential growth in Midland Basin production

·     Sunoco (SUN) Q4 EPS 75c on revs $4.09B vs. est. 57c and $4.03B; Q4 adj Ebitda $168M vs. est. $158.9M; announces multi basin strategic alignment

·     Williams (WMB) Q4 adjusted EPS 24c, in line with estimates with Q4 adjusted EBITDA of $1.284B, up $87M, or 7% YoY noting they achieved yet another year of record results in 2019, once again delivering impressive year-over-year growth and exceeding guidance midpoints in our key financial metrics while dramatically reducing capital expenditures

 

Financials

·     Green Dot (GDOT) 4Q adj EPS $0.14 vs. est. $0.11 on op revs $249.3Mm vs. est. $240.1Mm; guides 2020 adj EPS $1.60-1.74 vs. est. $1.69

·     Life Storage (LSI) Q4 adjusted FFO $1.44 vs. est. $1.43 and reports Q4 revenue $147.55M vs. est. $146.23M; sees FY20 FFO $5.94-$6.08 vs. est. $5.99

 

Healthcare

·     Community Health (CYH) reports Q4 adjusted EPS 40c on revs $3.29B vs. est. $3.18B; said consolidated operating results for the three months ended December 31, 2019, reflect a 9.9% decrease in admissions and an 8.6% decrease in adjusted admissions, compared with the same period in 2018

·     Elanco Animal Health Incorporated (ELAN) signed an agreement with Merck Animal Health to divest worldwide rights for Vecoxan® for $55 million in an all-cash deal.

·     Heron Therapeutics (HRTX) announces FDA extension of review period for NDA for HTX-011 for the management of postoperative pain- updated prescription drug user fee act (Pdufa) goal date is June 26, 2020 — contract manufacturing site for htx-011 reinspected by FDA with no observations issued and a recommendation for approval received

·     Invitae (NVTA) Q4 EPS loss (79c) on revs $66.29M vs. est. loss (65c) and $68.14M

·     Smith & Nephew (SNN) lowered its revenue growth prediction lower, even as its full-year group sales surpassed $5B for the first time.

·     Teva Pharmaceutical Industries (TEVA) announced the Phase 2/3 ARTISTS 1 and Phase 3 ARTISTS 2 trials designed to evaluate deutetrabenazine compared to placebo for the treatment of tics in pediatric patients with moderate to severe Tourette Syndrome failed to meet the primary endpoint

·     Tivity Health (TVTY) Q4 adjusted EPS 40c/$272.8M missing the 55c and $275.15M estimate; guides Q1 revs $335M-$350M below the $363.4M est. and guides year revs $1.243B-$1.285B vs. est. $1.34B

·     Twist Bioscience (TWST) 4.64M share Secondary priced at $28.00

 

Industrials & Materials

·     Albemarle (ALB) Q4 adjusted EPS $1.73/$993M vs. est. $1.74/$1B; sees FY20 adjusted EPS $4.80-$5.10 vs. est. $4.88; sees FY20 revenue $3.48B-$3.53B vs. consensus $3.52B

·     Avis Car Rental (CAR) shares rise 12%; 4Q adj EPS $0.73 vs. est. $0.48 on net revs $2.16B vs. est. $2.08B; guides 2020 adj EPS $3.75-4.75 vs. est. $3.89, sees 2020 revs $9.4-9.6B vs. est. $9.33B

·     Nordson (NDSN) Q1 EPS 89c/$495M vs. est. $1.05/$501.3M; said Q1 performance for both sales and operating margin was in line with expectations and reflects our normal seasonality

 

Technology, Media & Telecom

·     Five9 (FIVN) 4Q adj EPS $0.27 vs est $0.22 on revs $92.3Mm vs est $86.5Mm; guides 1Q adj EPS $0.15-0.16 vs est $0.15, sees 1Q revs $89-90Mm vs est $86.4Mm; 2020 adj EPS $0.83-0.87 vs est $0.86, sees 2020 revs $380.5-383.5Mm vs est $370.8Mm

·     Synopsys (SNPS) 1Q adj EPS $1.01 vs. est. $0.92 on revs $834.4Mm vs. est. $822.1Mm; guides 2Q adj EPS $0.96-1.01 vs. est. $0.98; still sees FY adj EPS $5.18-5.25 vs. est. $5.24, still sees FY revs $3.6-3.65B vs. est. $3.63B

·     Stanps.com (STMP) Q4 adj EPS $2.12 on revs $160.9M vs. est. 98c and $142.3M; Q4 adj Ebitda $51.4M vs. est. $32.6M; sees 2020 adjusted EPS $4.00 to $5.00 above estimate $3.31 and sees 2020 revenue $570M-$600M vs. est. $544.7M