Early Look

Thursday, February 27, 2020

Futures	Up/Down	%	Last
DJ Industrials	-225.00	0.84%	26,689
S&P 500	-24.50	0.79%	3,085
Nasdaq	-57.50	0.65%	8,793

 

 

Stock futures are sharply lower once again, adding to the week’s declined as new virus cases mount outside of China, including the first from an unknown source in the United States. U.S. stocks have fallen five consecutive sessions coming into today, posting its worst percentage decline over that time span in a year. The WHO aid there are now more new coronavirus cases outside of China for the first time. The U.S. Centers for Disease Control and Prevention also said a patient in California was infected who had not traveled outside the country, adding to the concern of the virus. In Asian markets, The Nikkei Index plunged another -477 points to 21,948, the Shanghai Index rose 3 points to 2,991 and the Hang Seng Index gained 82 points to close at 26,778. In Europe, the picture is bleak as the German DAX is down over -300 points (2.4%) to trade under 12,500, while the FTSE 100 is down over 2% or roughly -150 points to move just under the 6,900 level. Meanwhile, the 10-year Treasury yield touches another all-time low, dropping below 1.29%.

 

President Donald Trump last night declared that a widespread U.S. outbreak of the new respiratory virus sweeping the globe isn’t inevitable even as top health authorities at his side warned Americans that more infections are coming. Trump sought to minimize fears as he insisted the U.S. is “very, very ready” for whatever the COVID-19 outbreak brings. Trump also put Vice President Mike Pence in charge of coordinating the efforts. There are now 81,312 confirmed cases of COVID-19 and at least 2,770 deaths, according to latest reports late yesterday, but it has been the growing cases outside of the epicenter in China that has markets on edge with new cases in Iran (now at 139 cases and 19 deaths), Italy (401 cases and 12 deaths), Japan (178 cases and two deaths), and South Korea (1,261 cases and 12 deaths).

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -11.82 points, or 0.38%, to 3,116.39

·     The Dow Jones Industrial Average fell -123.77 points, or 0.46%, to 26,957.59

·     The Nasdaq Composite gained 15.16 points, or 0.17%, to 8,980.77

·     The Russell 2000 Index declined -19.14 points, or 1.22% to 1,552.76

 

Economic Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 212K

·     8:30 AM EST      Continuing Claims…est. 1.722M

·     8:30 AM EST      GDP Annualized QoQ for Q4-S…est. 2.1%

·     8:30 AM EST      Personal Consumption for Q4-S…est. 1.7%

·     8:30 AM EST      GDP Price Index for Q4-S…est. 1.4%

·     8:30 AM EST      Core PCE QoQ, for Q4-S…est. 1.3%

·     8:30 AM EST      Durable Goods Orders, Jan-P…est. (-1.5%)

·     10:00 AM EST    Pending Home Sales MoM for January…est. 3%

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

·     11:00 AM EST    Kansas City Fed Manufacturing Activity for February…est. (-1)

·     11:30 AM EST    Fed’s Evans speaks in Mexico City

 

Earnings Calendar:

·     Earnings Before the Open: ATRA, BBY, CCO, CHS, CNP, CRK, CROX, CWT, DELL, DISCA, EME, EQT, ETRN, FLIR, GCI, GOLF, KDP, LAUR, NLSN, NRG, NTLA, OGE, PWR, SAFM, SERV, SNR, SRCL, SRE, WLL, WPG

·     Earnings After the Close: AAOI, AAXN, ACHC, ADSK, AMC, AMH, BYND, CDNA, CLR, COLL, EIX, IHRT, ICAD, LYV, MBI, MNST, MTZ, MYL, NKTR, NPTN, OXY, PSTG, RP, RRC, RUN, SCOR, SWCH, TTD, VMW, WDAY, WES, WPX

 

Other Key Events:

·     Bank America Global Agriculture and Materials Conference, 2/26-2/27, in Ft Lauderdale, FL

·     Credit Suisse 21st Annual Financial Services Forum, 2/26-2/28 in Miami, FL

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

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

 

 

Macro	Up/Down	Last
WTI Crude	-1.06	46.67
Brent	-1.12	52.31
Gold	6.00	1,649.10
EUR/USD	0.0057	1.0938
JPY/USD	-0.34	110.09
10-Year Note	-0.048	1.288%

 

 

World News

·     Former Fed Gov. Kevin Warsh argued in an op-ed in the Wall Street Journal that the central bank should take “immediate action” and jointly cut interest rates with the People’s Bank of China, the European Central Bank, the Bank of England and the Bank of Japan. The Fed “should be in the business of responding to ‘tail risks’-unlikely events that would have highly damaging effects on output and inflation-not fine-tuning around the base economic outlook.”

·     The WHO said there were 411 new confirmed cases of COVID-19 in China as of Tuesday and 427 in other countries. The sudden increases of cases in Italy, the Islamic Republic of Iran and the Republic of Korea are deeply concerning,” he said, according to a prepared statement of his speech.

 

Sector News Breakdown

Consumer

·     Anheuser-Busch InBev (BUD) shares fell -8% after warning its operating profit was hit by $170 million and its revenue was dented by $285 million over two months from the impact of the COVID-19 disease outbreak.

·     Etsy (ETSY) 4Q EPS $0.25 vs. est. $0.16, 4Q revs $270Mm vs. est. $264.8Mm; guides 2020 revs +27-30%, sees 2020 gr merch sales +25-30%; 4Q gross merchandise sales $1.66 billion, 4Q active sellers 2.70 million, 4Q active buyers 46.4 million

·     Extended Stay (STAY) 4Q adj EPS $0.14 vs. est. $0.14, revs $284.2Mm vs. est. $276.1Mm, comp hotel RevPAR -0.8%; guides 2020 revs $1.23-1.25B vs. est. $1.21B, sees FY adj EBITDA $505-525Mm vs. est. $526.8Mm, sees FY net income $133-154Mm

·     Fiesta Restaurant (FRGI) 4Q adj loss/share 4c vs. est. $0.05, Taco Cabana comps -8.1% vs. est. -1.7%, Pollo Tropical comps +0.6% vs. est. +1%

·     Limited Brands (LB) 4Q adj EPS $1.88 vs. est. $1.85, stores and direct comps -1% vs. est. -2.9%; guides 1Q adj loss/share about 5c

·     Marriott International (MAR) 4Q adj EPS $1.57 vs. est. $1.46 on revs $5.37B vs. est. $5.51B; guides 1Q fee revs $940-950Mm, sees 2020 fee revs 43.96-4.04B; guides 2020 EPS $6.30-6.54 vs. est. $6.46

·     Marriott Vacations (VAC) 4Q adj EPS $2.43 vs. est. $2.57 on revs $1.15B vs. est. $1.14B; guides 2020 adj EPS $9.01-9.72 vs. est. $9.10, sees 2020 adj EBITDA $820-860Mm vs. est. $840.7Mm, sees 2020 adj cash flow $425-500Mm

 

Energy, Industrials and Materials

·     Apache Corp. (APA) said losses widened in Q4 as operating expenses ballooned, due primarily to higher impairment charges; posted a net loss of $2.98B, but ex-items earned 8c a share vs. est. loss (7c) and revs of $1.7B beat the $1.62B est.; said expenses more than doubled to $4.73B from $2.1B in the year-ago quarter and recorded impairments of $2.7B in the quarter

·     Continental Resources (CLR) Q4 adjusted EPS 55c on revs $1.195B vs. est. 52c/$1.14B; reports Q4 365,341 Boepd Average Daily Production; up 13% YoY; 206,249 Boepd Average Daily Oil Production; up 10% over 4Q18; sees FY20 cap-ex $2.65B

·     TechnipFMC (FTI) Q4 adjusted EPS 3c/$3.73B vs. est. 43c/$3.84B; sees FY20 subsea revenue $6.2B-$6.5B, sees FY20 Onshore/Offshore revenue $7.5B-$7.8B and sees FY20 surface technologies revenue $1.4B-$1.6B

 

Financials

·     Square (SQ) 4Q adj EPS $0.23 vs. est. $0.21, 4Q gross payment vol $28.64B vs. est. $28.05B; guides 1Q total net revs $1340-1360Mm, sees adj EBITDA $95-100Mm; guides 2020 adj EPS $0.90-0.94 vs est. $0.94, sees 2020 ne4t revs $5.9-5.96B, sees 2020 adj EBITDA $500-520Mm

 

Healthcare

·     Acadia (ACAD) Q4 EPS loss (34c)/$98.3M vs. est. loss (36c)/$96.76M; said it expects to announce top-line results from its Phase 3 CLARITY-2 study of pimavanserin as an adjunctive treatment for major depressive disorder in Q4 of 2020

·     BioMarin (BMRN) Q4 EPS 8c/$454.4M vs. est. loss (9c)/$459.33M; sees 2020 revenue $1.95B-$2.05B vs. est. $1.95B; sees 2020 net income $20 million to $80 million vs. est. $39.9M

·     Gilead Sciences Inc. (GILD) said it had started two clinical studies to gauge the safety and efficacy of its remdesivir drug in adults diagnosed with COVID-19. Beginning in March, the studies will enroll about 1,000 patients at medical centers primarily in Asian countries

·     Ironwood Pharmaceuticals Inc. (IRWD) says the American Gastroenterological Association has published data from its Phase IIb clinical trial evaluating IW-3718 in adults with refractory gastroesophageal reflux disease, or GERD

·     QIAGEN (QGEN) announced it has shipped its newly developed QIAstat-Dx Respiratory Panel 2019-nCoV test kit to four hospitals in China for evaluation

·     Sarepta (SRPT) Q4 EPS loss ($3.16) vs. est. loss ($1.87); 4Q Exondys 51 revenue $100M vs. est. $99M and overall revs just a bit better at $100.1M; 4Q cash and other $1.1 billion, -6.3% YoY

·     Teladoc (TDOC) guides 1Q adj EBITDA $9-11Mm vs. est. $9.48Mm, sees 1Q revs 169-172Mm vs. est. $164.3Mm; guides 2020 adj EBITDA $60-70Mm vs. est. $63.1Mm, sees 2020 revs $695-710Mm vs. est. $688.9Mm

 

Technology, Media & Telecom

·     Microsoft (MSFT) says it does not expect to meet Q3 More Personal Computing guidance; stated ” Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated at the time of our Q2 earnings call. As a result, for the third quarter of fiscal year 2020, we do not expect to meet our More Personal Computing segment guidance as Windows OEM and Surface are more negatively impacted than previously anticipated.”

·     Booking Holdings (BKNG) Q4 EPS $23.30/$3.3B vs. est. $22.04/$3.28B; Q4 gross travel bookings for Booking Holdings, net of cancellations, were $20.7B, an increase of 6% over a year ago, or approximately 7% on a constant-currency basis. Room nights booked increased 12% over a year ago; guides 1Q EPS $9.05-9.65 vs. est. $11.86

·     3D systems (DDD) 4Q adjusted EPS 5c vs. est. 1c; 4Q revenue $164.6M vs. estimate $163.9M

·     Box (BOX) Q4 adjusted EPS 7c/$183.6M vs. est. 4c/$181.63M; sees Q1 adjusted EPS 4c-6c on sales $183M-$184M vs. est. 3c/$181.8M; sees FY21 adjusted EPS 38c-44c on revs $771M-$777M vs. est. 29c/$773.07M

·     Carvana (CVNA) 4Q adj loss/share 79c vs. est. loss/share 63c on revs $1.1B vs. est. $1.1B; guides 2020 revs $5.6-5.8B vs. est. $6.06B

·     Crown Castle (CCI) Q4 adj Ebitda $818M vs. est. $863.5M; sees 2020 adjusted Ebitda $3.48B-$3.52B vs. est. $3.59B; sees 2020 AFFO $2.57 billion to $2.62 billion; 4Q net revenue $1.43B vs. est. $1.49B

·     Elastic (ESTC) Q3 adjusted EPS loss (28c)/$113.2M vs. est. loss (35c)/$107.33M; sees FY20 adjusted EPS ($1.13)-($1.12) vs. est. loss ($1.22) and sees FY20 revenue $423M-$424M vs. est. $416.58M

·     Nutanix (NTNX) shares fell -23%; Q2 adjusted EPS loss (60c) on revs $346.8M vs. est. loss (69c) and $341.09M; said increased the attach rate of our new products to 31%, up from 21% as of Q2 fiscal 2019; sees Q3 adjusted EPS loss (89c) vs. est. loss (74c) and sees Q3 adjusted gross margin roughly 80%

·     Advertising agency WPP Group (WPP) shares slumped 15% after forecasting flat comparable sales in 2020 and reporting a sharper-than-forecast drop in profit in Q4