Early Look

Friday, February 28, 2020

Futures	Up/Down	%	Last
DJ Industrials	-270.00	1.06%	25,282
S&P 500	-29.50	1.00%	2,927
Nasdaq	-81.50	0.97%	8,301

 

 

U.S. stocks futures are falling again, with global stock markets a sea of red as Asian and Europe markets catch up to the massive slide in U.S. markets yesterday as fears of an outbreak of the coronavirus is weighing heavily on market sentiment. All three U.S. benchmarks closed in correction territory, defined as a decline of at least 10%, but no more than 20%, from a recent peak. For the S&P 500 and Nasdaq, it marked the worst daily percentage drop since Aug. 18, 2011, but the steepest since Feb. 5, 2018 for the Dow. The Dow is now down 9.71% for the year, while the S&P 500 is off 7.80% year-to-date, and the Nasdaq has lost 4.53%. U.S. stocks plunged on Thursday, with major averages falling for a 6^th consecutive session, while the Dow Jones Industrial Average declined nearly 1,200 points for its largest one day point total decline ad major averages fell over 4% across the board as the threat of the coronavirus weighed heavily once again on market sentiment. The last six days saw the S&P 500 drop by 10% from its all-time high at rate faster than it ever has before. U.S. markets swooned amid the first coronavirus case in the U.S. involving a person who didn’t travel to an infected country (in California) and didn’t knowingly interact with someone who did. Meanwhile, California’s governor said the state is monitoring more than 8,400 people who could possibly have the virus – that headline took markets lower late afternoon. The virus continues to spread globally, with more than 82,000 cases and more than 2,800 deaths, with cases breaking out outside of China include Italy, South Korea, and Iran, where the death rate is higher than other hard-hit areas. In Asian markets, The Nikkei Index plunged -805 points (3.67%) to settle the week at 21,142, the Shanghai Index dropped -111 points (3.7%) to end the week at 2,880 and the Hang Seng Index dropped -648 points to 26,129. In Europe, the German DAX is lower by about -400 points to around drop below the 12,000 level, while the FTSE 100 is down nearly -200 points of 2.8% to 6,600.

Market Closing Prices Yesterday

·     The S&P 500 Index plunged -137.63 points, or 4.42%, to 2,978.76

·     The Dow Jones Industrial Average fell -1,190.95 points, or 4.42%, to 25,766.64

·     The Nasdaq Composite dropped -414.29 points, or 4.61%, to 8,566.48

·     The Russell 2000 Index declined -54.89 points, or 3.54% to 1,497.87

 

Events Calendar for Today

·     8:30 AM EST      Advance Goods Trade Balance for January

·     8:30 AM EST      Personal Income for January

·     8:30 AM EST      Personal Spending for January

·     8:30 AM EST      PCE Deflator MoM for January

·     8:30 AM EST      PCE Core MoM for January

·     8:30 AM EST      PCE Deflator YoY for January

·     8:30 AM EST      PCE Core Deflator YoY for January

·     9:15 AM EST      Fed’s Bullard speaks about the Economy and Monetary Policy

·     9:45 AM EST      Chicago PMI for February

·     10:00 AM EST    University of Michigan Confidence, Feb-F

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: AES, CLNY, EOG, FL, IEP, PNM, ROCK, SMLP, SSP, SUP, VST, W

 

Other Key Events:

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

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

 

 

Macro	Up/Down	Last
WTI Crude	-1.62	45.47
Brent	-1.41	50.77
Gold	-10.50	1,632.00
EUR/USD	0.0022	1.1023
JPY/USD	-0.94	108.65
10-Year Note	-0.067	1.192%

 

 

World News

·     Coronavirus update: The Japanese island of Hokkaido declared a state of emergency because of 12 new cases. New Zealand and Lithuania joined the list and Nigeria confirmed the first case in sub-Saharan Africa. The total in South Korea crossed 2,300 and a German town near Cologne was quarantined. Switzerland banned events with more than 1,000 people. Tokyo Disney Resort will close for two weeks

 

Sector News Breakdown

Consumer

·     Bed Bath & Beyond Inc. (BBBY) announced a strategic restructuring program as part of the next phase of its work to rebuild the foundation of the business and create a sustainable, durable business model; restructuring program includes a reorganization and simplification of its field operations, significant reduction in management positions across the business, and outsourcing of several functions

·     Beyond Meat (BYND) Q4 EPS loss (1c) on revs $98.5M vs. est. $79.8M; Q4 adj Ebitda $9.5M vs. est. $5.76M; sees 2020 net revenue $490M-$510M vs. est. $485.7M; sees 2020 adjusted Ebitda as a percentage of net revenues about equivalent to 2019 levels; sees accelerated investments in marketing, R&D and international expansion initiatives in 2020; sees 2020 gross margin 33% to 35% after Q4 GMs 34%

·     Big Lots (BIG) shares fell over -20% overnight; 4Q adj EPS $2.39 vs. est. $2.52 on comps -0.9% vs. est. +3.1%; sees 1Q adj EPS $0.30-0.45 well below est. $0.9

 

Energy, Industrials and Materials

·     Edison International (EIX) 4Q EPS $0.99 vs. est. $1.00 on operating revs $2.97B vs. est. 43.33B; guides 2020 core EPS $4.32-4.62 vs. est. $4.56; now sees $4.9B in liabilities from 2017-18 fires (had seen $4.7B in fire liabilities)

·     Gardner Denver Holdings Inc. (GDI) will replace Cimarex Energy Co. (XEC) in the S&P 500 index and Cimarex will replace Chesapeake Energy Corp. (CHK) in the S&P MidCap 400.

·     Landec Corporation (LNDC) announced that management and the board have launched a process to explore strategic alternatives for its legacy vegetable bag and tray business, which includes the potential divestiture of that business

·     MasTec (MTZ) Q4 adj EPS $1.30 on revs $1.7B vs. est. $1.26 and $1.75B; sees Q1 revs about $1.3B vs. est. $1.58B and EPS 48c below the 74c estimate

 

Financials

·     Mack-Cali Realty (CLI) files $2.5B mixed securities shelf

 

Healthcare

·     Sangamo Biosciences (SGMO) rises 34%; after entered a partnership with Biogen (BIIB) to develop gene therapies for diseases attacking the brain and central nervous system, including Alzheimer’s disease and Parkinson’s disease; Sangamo will get $125 million in cash and a $225 million equity investment, plus up to $2.37 billion in development

·     Gilead (GILD) has approached cancer therapy company Forty-Seven Inc. (FTSV) with a takeover offer, Bloomberg reported according to people; said the both are discussing a number of options, including a partnership https://on.mktw.net/2vr0uJl

·     Mylan (MYL) Q4 EPS $1.40/$3.19B vs. est. $1.28/$3.23B; reports Q4 adjusted free cash flow of $810.5 million, up 18% compared to $689.7 million in the prior year period; providing guidance for 2020 excluding any impact of the proposed combination with the Upjohn business as expects 2020 total revenues in the range of $11.5B-$12.5B, the midpoint of which represents an increase of 4% versus 2019

·     Nektar (NKTR) Q4 EPS loss (64c) vs. est. loss (66c) on revs $33.9M vs. est. $26.7M; Q4 cash equivalents dow3n -51% YoY to $96.4M

 

Technology, Media & Telecom

·     Applied Opto (AAOI) Q4 adj EPS loss (18c) on revs $48.7M vs. est. loss (24c) and 447.8M; sees 1Q revenue $43M-$47M vs. est. $50.1M; sees 1Q adjusted loss per share (34c-41c) vs. est. loss (21c)

·     AMC Entertainment (AMC) Q4 EPS loss (13c) on revs $1.45B vs. est. $1.44B, announces $200Mm share repurchase; cuts qtr. dividend to 3c from 20c

·     Autodesk (ADSK) Q4 EPS 92c/$899M vs. est. 89c/$890.19M; sees FY20 EPS $4.21-$4.44 vs. est. $4.41 and sees FY20 revenue up 20%-22% consensus $3.98B; Q4 ARR grew 25% Y/Y to $3.43B, billings increased 43% to $1.49B, Non-GAAP operating margin increased 10% points to 29%

·     Baidu (BIDU) Q4 revs 28.9B yuan up 6% YoY and 3% QoQ; sees Q1 revs 21.0B yuan to 22.9B yuan vs. est. 23.42B yuan; qtrly online marketing revenues were RMB 20.8B ($2.98B), decreasing 2% year over year and increasing 2% quarter over quarter

·     Dell Technologies (DELL) A4 adj EPS $2.00 on revs $24B vs. est. $2.00 and $23.9B; authorizes up to $1B buyback; also said it expects Q1 to be sequentially below Q4 (guidance for fiscal 2021 did not include any impact of the coronavirus on its business. Dell said it expects its full-year GAAP revenue to range from $91.8B-$94.8B, for a growth rate ranging from flat to up 2.82%

·     DocuSign (DOCU) will acquire AI technology provider Seal Software for $188 million in cash, with approval from its board and Seal’s stockholders.

·     Eventbrite (EB) Q4 net revs $82.7M vs. est. $78.7M; Q4 adj Ebitda loss $2.2M vs. profit $7.3M YoY; sees FY19 revenue $319M-$323M vs. est. $322.5M and sees FY19 adjusted EBITDA ($5M)-($1M)

·     iHeartMedia (IHRT) Q4 revenue $1.026B vs. est. $999.47M; reports Q4 $306.1M, down 0.6% year-over-year

·     NeoPhotonics (NPTN) Q4 revs $103.4M vs. est. $97.4M; Ad EPS 10c vs. est. 10c; sees Q1 EPS 0c-10c on revs $83M-$90M vs. est. loss (2c) and $86.6M

·     Pure Storage (PSTG) 4Q revs $492Mm vs. est. $488.2Mm; guides 1Q revs $365Mm vs. est. $380.9Mm, sees 1Q adj gross margin about 69.5% vs. est. 68.4

·     Trade Desk (TTD) 4Q adj EPS $1.49 vs. est. $1.15 on revs $215.9Mm vs. est. $213.2Mm; guides 1Q adj EBITDA $35Mm, sees 1Q revs $169Mm vs. est. $161.3Mm

·     Workday (WDAY) 4Q adj EPS $0.50 vs. est. $0.39 on revs $976.3Mm vs. est. $965.1Mm; guides 2021 subscription revs $3.76-3.77B vs. est. $3.76B; raising our fiscal 2021 subscription revenue outlook to a range of $3.755B-$3.77B; expect first quarter subscription revenue to be $873M-$875M