Early Look

Tuesday, January 28, 2020

Futures	Up/Down	%	Last
DJ Industrials	69.00	0.24%	28,550
S&P 500	9.50	0.28%	3,248
Nasdaq	44.50	0.50%	9,000

 

 

U.S. stocks futures are pointing to a slightly higher open, looking to erase the 2-day losing streak that has seen some stocks erase YTD gains as concern over the impact of the deadly coronavirus that originated in China rattled investors. The S&P 500 fell the most in nearly four months as the death toll in China from the respiratory virus stood over 100 people in China and there have been more than 4,500 outbreaks in the country, taking a toll on several industries (casinos, retail, restaurants) during their week-long Lunar holiday. In Asian markets, The Nikkei Index fell -127 points to 23,215, the Shanghai Index remained closed for its week-long holiday and the Hang Seng Index was closed. In Europe, the German DAX is down around -20 points to 13,180, while the FTSE 100 is up a few points to 7,425. Earnings in the U.S. picking up with Dow components UTX, MMM announcing mixed results this morning while tech companies AAPL, AMD, EBAY, MXIM, XLNX and coffee giant SBUX expected to report tonight. Also, one big deal in the auto space as supplier BWA acquires DLPH in a $3B deal.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -51.84 points, or 1.57%, to 3,243.63

·     The Dow Jones Industrial Average fell -459.93 points, or 1.57%, to 28,535.80

·     The Nasdaq Composite slid -175.60 points, or 1.89%, to 9,139.31

·     The Russell 2000 Index declined -18.09 points, or 1.09% to 1,644.14

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Durable Goods Orders, Dec-P…est. 0.4%

·     8:30 AM EST      Durable Goods Ex: Transportation, Dec-P…est. 0.3%

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      S&P CoreLogic Case-Shiller for November

·     10:00 AM EST    Consumer Confidence for January…est. 128.0

·     10:00 AM EST    Richmond Fed Index for January…est. (-3)

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ALK, AOS, CALX, CIT, FBC, GPK, GWB, HCA, HOG, LEA, LMT, MKC, MMM, NUE, OSIS, PCAR, PFE, PHM, PII, POL, UTX, XRX

·     Earnings After the Close: AAPL, AGYS, AMD, ARAY, BXP, CHRW, EBAY, EQR, MKSI, MMLP, MRCY, MSTR, MTSI, MXIM, NVR, PFG, PUB, RGA, SBUX, SLGN, SYK, TRMK, VBTX, WRB, XLNX

 

 

Macro	Up/Down	Last
WTI Crude	-0.28	52.86
Brent	-0.59	58.73
Gold	1.70	1,585.40
EUR/USD	-0.0003	1.1016
JPY/USD	-0.08	108.82
10-Year Note	-0.022	1.585%

 

 

Sector News Breakdown

Consumer

·     BorgWarner (BWA) to acquire Delphi Technologies (DLPH) in all-stock deal for $3.3B. Under the terms of the agreement, which has been approved by the boards of directors of both companies, Delphi Technologies stockholders would receive a fixed exchange ratio of 0.4534 shares of BorgWarner common stock per Delphi Technologies share

·     PulteGroup (PHM) Q4 EPS $1.14/$3.02B vs. est. $1.09/$2.98B; Unit backlog is up 20% over last year to 10,507 homes, while the backlog dollar value increased 18% to $4.5B

·     Polaris Industries (PII) Q4 adjusted EPS $1.83/$1.74B vs. est. $1.79/$1.76B; sees FY20 adjusted EPS $6.80-$7.05 vs. est. $6.84 and sees FY20 sales growth 2%-4% over FY19 vs. consensus $7.08B

·     Lear (LEA) Q4 adj. EPS $2.64/$4.82B vs. est. $2.24/$4.51B; said financial results were affected by a 6% decline in industry production, an extended labor strike at our largest customer; sees FY20 revenue $19.4B-$20.2B vs. est. $14.97B

·     Beyond Meat (BYND) downgraded to Neutral from Overweight at JPMorgan

·     Grocery Outlet (GO) sees prelim Q4 sales $655.5M vs. est. $651.1M; sees 4Q Ebitda $40.5M-$41M; says increase in net sales is primarily due to non-comparable store sales growth attributable to the net 31 stores opened over the last 12 months as well as an increase in comparable store sales; expects to report 4Q comp store sales increase of 5.1%; announces offering of 14M shares of common stock for holders

·     Laureate Education, Inc. (LAUR) announced that its Board of Directors has authorized the Company to explore strategic alternatives for each of its businesses to unlock shareholder value.

·     K12 Inc. (LRN) 2Q EPS 52c on revenue $257.6M vs. est. 52c/$257.3M; guides Q3 revs $252M-$255M vs. est. $255.8M and raises low end of year rev view to $1.03B-$1.04B from prior $1.02B-$10.4B

·     Inter Parfums (IPAR) prelim 4Q net sales $177.8 M vs. est. $176.3M; still sees 2020 EPS $2.00 on sales $742M vs. est. $2.04/$744.7M

·     Whirlpool (WHR) 4Q ongoing EPS $4.91 vs. est. $4.27; guides 2020 ongoing EPS $16-17 vs. est. $16.28

 

Energy, Industrials & Materials

·     3M (MMM) reports Q4 adjusted EPS $1.95/$8.1B vs. est. $2.10/$8.12B; initiated a restructuring that will reduce approximately 1,500 positions, spanning all business groups, functions and geographies; on a pre-tax basis, 3M took a restructuring charge of $134M in the fourth quarter of 2019. The company expects annual pre-tax savings of $110M-$120M, with $40M-$50M in 2020; sees FY20 EPS $9.30-$9.75 vs. est. $9.61 and expects its full-year organic local-currency growth in the range of flat to 2%

·     United Technologies (UTX) Q4 EPS $1.94/$19.6B vs. est. $1.84/$19.38B; said given the upcoming portfolio actions, the outlook for sales, adjusted EPS and free cash flow for Raytheon Technologies will be provided after the merger closes

·     Arconic (ARNC) is expecting to lose $400M in sales and could cut jobs this year as a result of Boeing’s (BA) halted production of the 737 MAX, The Wall Street Journal reported

·     Ashland (ASH) Q1 EPS 13c/$533M vs. est. 7c/$535.6M

·     Graco Inc. (GGG) Q4 adjusted EPS 48c/$412.3M vs. est. 39c/$392.9M; sees FY20 revenue growth in low single-digits vs. consensus $1.65B; outlook for 2020 is low single-digit revenue growth on an organic, constant currency basis; expect challenging end market conditions to remain in place for at least first half of 2020 in industrial and process segments

·     Airbus SE (EADSY) said that it has reached an agreement in principle with French, U.K. and U.S. authorities in regard to investigations into allegations of bribery and corruption.

 

Financials

·     Berkshire Hills (BHLB) Q4 core EPS 70c (in-line with ests); 4Q NIM on taxable-equivalent basis 3.11% vs. 3.41% YoY and Q4 provision for loan losses $5.35M, down -20% YoY

·     Heartland Financial (HTLF) Q4 EPS $1.03 vs. est. 98c; 4Q net interest margin 3.86% vs. 4.28% YoY and 4Q return on average assets 1.17% vs. 1.12% YoY

·     Intuit (INTU) said it has been notified of an unsolicited mini-tender offer by TRC Capital Investment Corporation to purchase up to 400,000 shares of Intuit common stock at a price of $270.00 per share in cash; Intuit urges holders to reject mini-tender offer by TRC Capital

·     NBT Bancorp (NBTB) Q4 EPS 66c vs. est. 65c; 4Q non-interest income $36.2M up 40% YoY and 4Q allowance for loan losses $73.0M up 0.6% YoY

·     Six EuroZone banks have fallen below the European Central Bank’s capital requirements and been told to take action to fix the shortfalls

·     WesBanco (WSBC) Q4 adjusted EPS 75c vs. est. 70c; Q4 net interest margin of 3.55% decreased 17 bps YoY and 1 bps QoQ

 

Healthcare

·     Acceleron Pharma (XLRN) shares jumped over 70%; announced that the PULSAR Phase 2 trial of sotatercept met its primary and key secondary endpoints in patients with pulmonary arterial hypertension. In patients on stable background PAH-specific therapies, sotatercept demonstrated a statistically significant reduction in pulmonary vascular resistance, the trial’s primary endpoint, at week 24 versus placebo

·     AbbVie (ABBV) and Johnson & Johnson (JNJ) are among the companies that have started shipping drugs approved to treat HIV, responding to Chinese authorities’ requests for antiviral drugs to test effectiveness against the deadly coronavirus – WSJ reported

·     Concert Pharmaceuticals (CNCE) announces common stock offering after wins reset on review of CTP-543 patent

·     Denali Therapeutics (DNLI) announces $150M common stock offering

·     PerkinElmer (PKI) Q4 adjusted EPS $1.35/$805.7M vs. est. $1.33/$801.2M; guides initial FY20 EPS $4.50-$4.60 on revs $3.05B-$3.09B vs. est. $4.63/$3.08B; sees Q1 EPS 70c, below the 82c estimate

·     Koninklijke Philips NV (PHG) said it will launch a review of options for its domestic-appliances business, as it posted a 17% fall in Q4 net profit; said it will start the process of creating a separate legal structure as it evaluates options for future ownership of its domestic-appliances business

 

Technology, Media & Telecom

·     F5 Networks (FFIV) 1Q adj EPS $2.55 vs. est. $2.43; sees 2Q adj EPS $2.14-2.17 vs. est. $2.44 on revs $580-590Mm vs. est. $572.7Mm; 1Q net product revenues $234.5M, 1Q net service revenue $334.8M and 1Q R&D expenses $96.0M

·     Juniper Networks (JNPR) Q4 adj EPS $0.58 vs. est. $0.57 on net revs $1.21B vs. est. $1.19B; guides 1Q revs $1.0-1.06B vs. est. $1.03B, sees 1Q EPS $0.24-0.30 vs. est. $0.31; expects FY gross margin to be flat to slightly up vs. 2019 levels

·     Sanmina (SANM) Q1 adjusted EPS 79c/$1.84B vs. est. 69c/$1.77B; sees Q2 EPS 65c-75c on revs $1.7B-$1.8B vs. est. 71c/$1.79B

·     Rambus (RMBS) shares fell -3% on miss; Q4 EPS unexpected EPS loss of (9c)/$59.9M below est. 25c/$98.02M; Q4 product revs $18-24M

·     Garmin (GRMN) upgraded to Neutral from Underperform at Credit Suisse