Early Look

Tuesday, February 25, 2020

Futures	Up/Down	%	Last
DJ Industrials	96.00	0.34%	28,064
S&P 500	10.50	0.33%	3,236
Nasdaq	44.50	0.49%	9,135

 

 

U.S. futures were higher overnight, with S&P futures rising as high as 3,259 a day after markets plunged for their biggest one-day loss in about 2-years, but have slightly pared those gains. U.S. equities tumbled on Monday amid news that the coronavirus is spreading more widely outside of China, with rising cases in Italy, South Korea and Iran as all three main U.S. stock benchmarks fell in excess of 3%, with the S&P 500 Index posting its worst one-day decline since February 2018. The Dow Jones Industrial Average erased all of its gains for the year after posting its 3^rd biggest point loss in its history. The past 10 times that the S&P 500 index fell by as much as 3%, for example, it declined just 0.27%, on average, in the next trading session, according to Dow Jones Market Data. In Asian markets overnight, The Nikkei Index dropped -781 points (3.34%) to settle at 22,605, the Shanghai Index lost -18 points to 3,013 and the Hang Seng Index rose 72-points to 26,893. In Europe, the German DAX is down about -130 points to 12,900, while the FTSE 100 is down over -50 points to around 7,100. There were several companies issuing lower outlooks overnight due to the impact of the coronavirus, including credit card giant MasterCard, while Home Depot shares rise this morning on a better earnings recap. Gold prices pullback form 7-year highs, while Treasury markets remain strong, with the 10-year yield at 1.35%

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -111.86 points, or 3.35%, to 3,225.89

·     The Dow Jones Industrial Average fell -1,031.61 points, or 3.56%, to 27,960.80

·     The Nasdaq Composite plunged -355.31 points, or 3.71%, to 9,221.28

·     The Russell 2000 Index declined -50.51 points, or 3.01% to 1,628.10

 

Economic Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      House Price Purchase Index for Q4

·     9:00 AM EST      FHFA House Price Index MoM for December…est. 0.4%

·     9:00 AM EST      S&P CoreLogic Case Shiller reading for December

·     10:00 AM EST    Consumer Confidence for February…est. 132.1

·     10:00 AM EST    Richmond Fed Index for February…est. 10

·     3:15 PM EST       Fed’s Clarida speaks at NABE Conference in Washington

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AMT, BCC, BLD, CMRX, COOP, CTG, DNR, EOLS, ETM, FCN, HD, ICPT, IRDM, LGIH, LL, LNG, MNK, MNKD, RLGY, SLCA, STWD, TA, TREE, TUP, USCR, WBT, WWW

·     Earnings After the Close: AGR, ALRM, BGFV, BGS, CRM, CSGP, CZR, DEA, DK, ENLC, EVH, EXEL, INFN, INGN, IOVA, MATX, MGI, MGNX, MTDR, NVOR, OUT, PEI, PEN, PLNT, PODD, PSA, REAL, RYAM, SDC, SPCE, SUPN, TOL, UIS, WRI, WW

 

Other Key Events:

·     BMO Capital 29th Annual Global Metals & Mining Conference, 2/23-2/26, in Florida

·     JMP Securities Technology Conference, 2/24-2/25, in San Francisco, CA

·     Leerink Annual Global Healthcare Conference, 2/25-2/27, in New York

·     RSA Conference 2020, 2/24-2/28, in San Francisco, CA

·     Stephens West Coast Bank Trip, 2/24-2/26, starting in Denver, CO

·     Wedbush West Coast Bank Forum, 2/25-2/26, in San Francisco, CA

·     Wolfe Auto, Auto Tech and Mobility Conference, 2/24-2/26, in New York

 

 

Macro	Up/Down	Last
WTI Crude	-0.17	51.26
Brent	-0.07	56.23
Gold	-21.90	1,654.70
EUR/USD	-0.002	1.0834
JPY/USD	-0.26	110.46
10-Year Note	-0.016	1.353%

 

 

Sector News Breakdown

Consumer

·     Home Depot (HD) Q4 EPS $2.28 on sales $25.78B vs. est. $2.11 and $25.75B; Q4 comp sales up 5.2% vs. est. 4.7%; Q4 US comp sales 5.3% vs. est. 4.8%; still sees FY comp sales up 3.5%-4% and revs about 3.5%-4%; sees 2020 share repurchases of at least $5B

·     Expedia Group Inc. (EXPE) will cut about 3,000 jobs, including around 500 at its Seattle headquarters, to reduce costs, Geekwire reported Monday. Geekwire obtained an internal email from Expedia announcing the layoffs, which add up to about 12% of its workforce.

·     Nautilus (NLS) 4Q EPS cont ops $0.12 vs. est. loss $0.14, net sales $104.2Mm vs. est. $100Mm; guides FY EBITDA cont ops ($4Mm)-($1Mm)

·     Nio Inc (NIO) shares rise 25% as Reuters reported it had signed framework agreements with Hefei’s city government on a fundraising of more than 10 billion yuan ($1.42 billion) and new manufacturing facilities

·     Rent-A-Center (RCII) shares rise 8%; reports Q4 adjusted EPS 58c on revs $667.86M vs. est. 57c and $658.14M; reports Q4 comp sales up 1.6%

·     Shake Shack (SHAK) Q4 adj EPS $0.06 vs. est. loss (1c); 4Q revs $151.4Mm vs. est. $153.1Mm, comps -3.6% vs est. -2.8%; sees FY20 revenue $712M-$720M, vs. consensus $737.1M; sees FY20 same-shack sales down low single digits and effective tax rate of 26%-27%

·     Trex Company (TREX) Q4 adj. EPS 61c/$164.8M vs. est. 51c/$159.37M; said Q4 Trex Residential net sales were up 25% and consolidated gross margin of 43.2% was up 40bps; guides Q1 revs $200M vs. est. $210.4M

·     Tupperware Brands (TUP) shares plunge -27%; sees FY19 adj. EPS $1.35-$1.70 well below consensus $2.78 and sees FY19 revenue in line with previously provided outlook ranges of down 12% to 14% as reported and down 8% to 10% in local currency; guides FY20 revenue $1.58B-$1.62B vs. est. $1.67B

 

Energy, Industrials and Materials

·     Apache (APA) upgraded to Overweight from Sector Weight at KeyBanc

·     Boise Cascade (BCC) Q4 EPS 37c/$1.1B vs. est. 20c/$1.1B; expect our capital spending, excluding acquisitions, to be $85-$95 million in 2020, including spending to improve the efficiency of veneer production at our Florien, Louisiana, facility

·     Hertz (HTZ) Q4 adjusted EPS loss (24c) on revs $2.3B vs. est. loss 927c) and $2.34B; reports record global revenue, up 1% for the fourth quarter, 3% for the full year; global revenue, ex: Donlen adjustments and FX, increased 5% for Q4 and full year; adjusted Corporate EBITDA up 11% for the fourth quarter, 50% for the full year.

·     Kratos Defense (KTOS) 4Q EPS $0.09 vs. est. $0.10 on revs $185.1Mm vs. est. $197.3Mm; guides 1Q adj EBITDA $12-15Mm vs. est. $18.8Mm, sees 1Q revs $160-170Mm below est. $190Mm

 

Financials

·     MasterCard (MA) cuts Q1 revenue growth to high end of high single digits, down from prior forecast of low double digits saying fundamentals of our business remain strong, as our switched volume and switched transaction growth remain in-line with our expectations….but cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted by the Coronavirus

·     LPL Financial (LPLA) reported total brokerage and advisory assets for Jan. of +0.3% and said January brokerage, advisory assets $767 billion

 

Healthcare

·     Clovis Oncology (CLVS) Q4 EPS loss ($1.81) vs. est. loss ($1.71); said 4Q Rubraca revenue $39.3M, +29% YoY vs. estimate $40.9M

·     Guardant Health (GH) Q4 EPS loss (27c) on revs $62.9M vs. prior year loss (30c) and vs. est. (32c) and $14.63B; said operating expenses rose 45% YoY to $67M and cash equivalents down -71% YoY to $143.2M

·     Moderna Inc. (MRNA) has shipped the first batch of a coronavirus vaccine it developed to U.S. government researchers so they can start the first human tests to see if it can help suppress the coronavirus epidemic, DJ reported

·     Orthofix (OFIX) 4Q adj EPS $0.51 vs. est. $0.58; guides 2020 adj EPS $1.00-1.10 vs. est. $1.68

·     Tenet (THC) Q4 adjusted EPS 99c on revs $4.8B vs. est. 97c and $4.76B; said Q4 consolidated adjusted EBITDA up 18%; hospital segment Adjusted EBITDA up 16%; ambulatory segment EBITDA less NCI up 26%; sees 2020 adj Ebitda $2.79B-%2.89B vs. est. $2.8B; sees Q1 EPS 42c-75c vs. est. 51c

 

Technology, Media & Telecom

·     HP Inc. (HPQ) 1Q adj EPS $0.65 vs. est. $0.54; raises FY adj EPS to $2.33-2.43 vs. prior $2.24-2.32; plans buyback $15B; targets to return capital of about $16 billion to holders during fiscal 2020 to fiscal 2022; said “HP is reaching out to Xerox to explore if there is a combination that creates value for HP shareholders that is additive to HP’s strategic and financial plan”

·     Palo Alto networks (PANW) shares fall -14%; 2Q adj EPS $1.19 vs. est. $1.12 on revs $816.7Mm vs. est. $843.5Mm; guides 3Q revs $835-805Mm vs. est. $872.7Mm, sees 3Q adj EPS $0.96-0.08 vs. est. $1.25; sees FJ adj EPS $4.55-4.65 vs. prior $4.90-5.00

·     Cornerstone OnDemand (CSOD) Q4 EPS 43c/$149.6M vs. est. 34c/$146.24M; sees Q1 revenue $147M-$150M vs. est. $157.69M and sees Q1 subscription revenue between $143.0M and $145.0M, representing year-over-year growth at the mid-point of 9.7%2, or 10.5%3,4 on a constant currency basis

·     EverQuote (EVER) Q4 EPS loss (4c) on revs $73.8M vs. est. loss (6c) and $68.13M; sees Q1 revs $77M-$79M vs. est. $75.4M

·     EXFO Inc. (EXFO) cuts Q2 revenue view to approximately $55M from $66M-$71M (est. $68.74M) due to the coronavirus impact on its supply chain and manufacturing operations in China

·     Keysight Technologies (KEYS) Q4 EPS $1.26/$1.10B vs. est. $1.07/$1.06B; said revenue growth in Q4 driven by ongoing strength in 5G-related investments and increased spending in aerospace defense and semiconductor measurement; sees Q2 revs $1.138B-$1.17B vs. est. $1.15B

·     Benchmark Electronics, Inc. (BHE) said its Board of Directors has authorized a $150 million increase to its existing stock repurchase program

·     SailPoint (SAIL) Q4 EPS 15c/$89.0M vs. est. 8c/$85.67M; said finished 2019 with a strong fourth quarter, exceeding our revenue expectations, driven by customers’ growing recognition that they need a modern identity governance solution, like the SailPoint Predictive Identity platform, that simplifies governance of on-premise and cloud applications.”