Early Look

Thursday, January 30, 2020

Futures	Up/Down	%	Last
DJ Industrials	-206.00	0.72%	28,503
S&P 500	-23.50	0.73%	3,248
Nasdaq	-62.50	0.68%	9,036

 

Global stocks are broadly lower, with U.S. futures currently sliding around -0.8% as the coronavirus death toll and infection totals climbed overnight, alongside concerns over how the outbreak could hurt the Chinese economy. The concerns overshadowed upbeat earnings news from TSLA and MSFT and come ahead another busy day of earnings results. The World Health Organization called a meeting of its Emergency Committee Thursday to consider issuing a global alarm as the death toll from the spreading coronavirus rose to 170 and the number of cases jumped, with China says coronavirus cases rise to 7,711. In Asian markets, The Nikkei Index dropped just over 400 points (1.72%) to move below the 23,000 level, the Shanghai Index remained closed for its week long holiday and the Hang Seng Index plunged -711 points (2.6%) to finish at 26,449. In Europe, the German DAX is lower by over -130 points to 13,200, while the FTSE 100 is down over -50 points to 7,425. China stocks will remain closed until Monday, but investors are apprehensive that the market will face substantial losses as investors there catch up to global concerns over the deadly virus. Stocks finished mixed on Wednesday after Fed Chairman Powell said the U.S. economy is in good shape, as the central bank left a key interest rate unchanged but notes the Fed is closely monitoring the severity of the deadly coronavirus and potential disruption to the global economy. Economists have started cutting growth forecasts as authorities tighten travel restrictions and lock down cities, while companies suspend their China operations.

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 215K

·     8:30 AM EST      Continuing Claims…est. 1.73M

·     8:30 AM EST      Gross Domestic Product (GDP), Q4-A…est. 2.0%

·     8:30 AM EST      Personal Consumption for Q4-A…est. 2.0%

·     8:30 AM EST      GDP Price Index, Q4-A…est. 1.8%

·     8:30 AM EST      Core PCE QoQ, Q4-A…est. 1.6%

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

Earnings Calendar:

·     Earnings Before the Open: ABC, ADS, ALXN, APO, AXTA, BC, BGG, BIIB, BX, CFR, CMS, CNX, CTVA, DD, DGX, DHR, DOV, GWW, HSY, IP, KEX, KIM, KO, LAZ, LEVI, LLY, MDC, MMC, MNRO, MO, MSCI, MTOR, MUR, NOC, NTCT, PH, ROP, RTN, SHW, TMO, TSCO, UPS, VLO, VZ, WCC, WEC, WRK

·     Earnings After the Close: ACBI, AVI, AMGN, AMZN, BZH, CE, CPT, CY, DECK, DGII, EA, EMN, EW, FICO, FII, FISI, FLEX, HA, LPLA, MATW, NATI, PFPT, POWI, RMD, SKYW, USKA, V, VRTX, WDC, X

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -2.84 points, or 0.09%, to 3,273.40

·     The Dow Jones Industrial Average rose 11.60 points, or 0.04%, to 28,734.45

·     The Nasdaq Composite gained 5.48 points, or 0.06%, to 9,275.16

·     The Russell 2000 Index declined -9.09 points, or 0.55% to 1,649.22

 

 

Macro	Up/Down	Last
WTI Crude	-1.21	52.12
Brent	-1.42	58.39
Gold	9.70	1,585.70
EUR/USD	0.0009	1.1019
JPY/USD	-0.16	108.86
10-Year Note	-0.029	1.554%

 

 

Sector News Breakdown

Consumer

·     Tesla (TSLA) shares rose over 13% topping $650 per share as Q4 EPS on revs $7.38B vs. est. $7.06B; 4Q cash and cash equivalents rose 18% QoQ to $6.27B vs. est. $5.06B; says it delivered 19,475 Model S/X vehicles in Q4 and 92,620 Model 3 units; sees 2020 deliveries above 500K units and sees model Y production in Shanghai to begin in 2021; sees positive quarter FCF going forward with possible exceptions; said production will likely outpace deliveries this year; Total GAAP gross margin for the quarter was 18.8% vs. 20.0% a year ago

·     Las Vegas Sands (LVS) Q4 revs rise 1% YoY to $3.51B vs. est. $3.36B; A4 Sands adj property Ebitda rises 3.2% YoY to $811M; Q4 EPS 88c vs. est. 79c with Macau revs $2.24B

·     Mondelez (MDLZ) Q4 adjusted EPS 61c/$6.91B vs. est. 60c/$$6.85B; sees 2020 free cash flow about $3 billion; said Q4 organic revenue +4.1% vs. +2.50% YoY and adjusted operating margin 15.9% vs. 16.2% YoY; for 2020, the company expects performance in line with its long-term growth algorithm of 3+ percent Organic Net Revenue growth, high-single-digit percent Adjusted EPS growth on a constant-currency basis

·     Meritage Homes (MTH) Q4 EPS $2.65 vs. est. $1.94; 4Q home closing revenue $1.10 billion, +11% YoY; projecting 9,700-10,200 total home closings and ASP’s between $360-370,000 for the year, with home closing gross margin in the mid-19’s percent and a tax rate of approximately 22%

·     Archer-Daniels-Midland Co. (ADM) reported better-than-expected quarterly earnings as the crop giant benefited from retroactive biodiesel tax credits, compensating for lower results in crop trading; posted Q4 adj EPS $1.42 vs. est. $0.70 on revs $16.33B vs. est. $16.82B

·     Grocery Outlet (GO) 16M share Secondary priced at $33.00

·     Norwegian Cruise Line Holdings (NCLH) is checking all passengers’ body temperatures before they board in Hong Kong, denying entry to those with a temperature of 100.4 degrees or higher as the coronavirus outbreak continues, according to a company spokesperson – DJ reports

Energy

·     Core Laboratories (CLB) Q4 EPS 38c/$157M vs. est. 37c/$156.04M; sees Q1 revenue of approximately $159M to $164M and operating income of approximately $25M to $27M

·     Sunrun (RUN) to replace Darling Ingredients (DAR) in S&P 600 at open on 2/4

·     Murphy Oil (MUR) Q4 adjusted EPS 16c/$637.48M below est. 17c/$771.25M; Q4 production averaged 194 MBOEPD with 59% oil and 67% liquids; said that production was impacted by total unplanned downtime of 8 MBOEPD for the quarter

·     Valero (VLO) Q4 adjusted EPS $2.13/$27.88B vs. est. $1.62/$25.91B; sees 2020 CapEx approximately $2.5B

Financials

·     Wells Fargo (WFC) files $66B mixed securities shelf

·     Legg Mason (LM) Q3 adjusted EPS $1.03/$753.9M vs. est. 95c/$728.3M; said assets under management $803.5 billion, +10% YoY and Q3 adjusted operating margin 26.5% vs. 21.1% YoY

·     PayPal (PYPL) Q4 adjusted EPS 86c/$4.96B vs. est. 83c/$4.94B; sees Q1 adjusted EPS 76c-78c on revs $4.78B-$4.84B vs. est. 82c/$4.85B; sees FY20 adjusted EPS $3.39-$3.46 on revs $20.8B-$21B vs. est. $3.49/$20.79B; Q4 payments volume growth +12% vs. +16% YoY, 4Q active customer accounts added 9.3M vs. est. 8.71M, 4Q active customer accounts 305 million, +14% YoY and 4Q payment transactions 3.46B, +21% YoY

·     AGNC Investment (AGNC) Q4 EPS 57c vs. est. 55c; reports Q4 NII $287M. $17.66 tangible net book value per common share as of December 31, 2019 increased $1.11 per common share, or 6.7%, from $16.55 per common share as of September 30, 2019

·     Axis Capital (AXS) Q4 EPS 5c on revs $1.34B vs. est. 5c/$1.28B; reports book value per diluted common share of $55.79, a decrease of 47c, or 0.8%, compared to September 30, 2019

Healthcare

·     Align Technology (ALGN) shares fell -4%; Q4 net revs $649.8Mm vs. est. $646.7Mm; guides 1Q net revs $615-630Mm below est. $657.4Mm, sees 1Q EPS $1.19-1.28 vs. est. $1.44; said reduced outlook on Q1 related to coronavirus as sees $30M-$35M less revs for Invisalign in China

·     AmerisourceBergen (ABC) Q1 adjusted EPS $1.76/$47.9B vs. est. $1.67/$47.96B; raises FY20 adj. EPS view to 7.55-$7.80 from $7.30-$7.60 (est. $7.53) and sees FY20 adjusted operating income growth in the mid-single digit percent range, up from the low-to mid-single percent range

·     Lilly (LLY) and Incyte (INCY) said baricitinib met the primary endpoint in BREEZE-AD5, a Phase 3 study evaluating the safety and efficacy of baricitinib for the treatment of adult patients with moderate to severe atopic dermatitis.

·     Eli Lilly (LLY) Q4 EPS $1.73/$6.11B vs. est. $1.52/$5.91B; backs FY20 EPS view $6.70-$6.80 (est. $6.76) while raises FY20 revenue view to $23.7B-$24.2B from $23.6B-$24.1B

·     DBV Technologies (DBVT) 9.071M share Secondary priced at $10.25

·     Illumina (ILMN) Q4 adjusted EPS $1.70/$953M vs. est. $1.58/$942.89M; sees FY20 adjusted EPS $6.80-$7.00 on rev growth 9%-11% vs. est. of $6.91 and $3.93B

·     Black Diamond Therapeutics (BDTX) 10.59M share IPO priced at $19.00

·     Hologic (HOLX) Q1 adjusted EPS 61c/$850.5M vs. est. 61c/$839.82M; raises FY20 EPS view to $2.63-$2.67 from $2.60-$2.65 (est. $2.61) while cuts FY20 revenue view to $3.24B-$3.27B from $3.45B-$3.50B (est. $3.32B); said expect revenue to decrease in 2020 based on the Cynosure divestiture. However, excluding acquisitions and divestitures, our updated guidance incorporates a faster organic revenue growth rate of between 4.0% and 5.0%

·     Varian Medical (VAR) Q1 adj eps $1.16, vs. est. $1.20 Q1 revs $828.9m, vs. est. $826.8m

Industrials & Materials

·     Delta Air Lines Inc. (DAL) is temporarily reducing operations between the U.S. and China to about 21 flights per week due to significantly reduced demand amid global health concerns related to coronavirus.

·     Northrop Grumman (NOC) Q4 adjusted EPS $5.61/$8.7B vs. est. $4.77/$8.85B; sees FY20 adjusted EPS $22.75-$23.15 on revs $35.3B-$35.8B vs. est. $23.10/$35.95B and sees FY20 free cash flow $3.15B-$3.45B; 4Q backlog $64.8 billion, -0.3% QoQ

·     IDEX Corporation (IEX) has entered an agreement to buy Flow Management Devices for cash consideration of $125M; Q4 EPS $1.33 vs. est. $1.35 on net sales $606Mm vs. est. $6.14.5Mm; guides 1Q adj EPS $1.30-1.34 vs. est. $1.43, guides 2020 EPS $5.55-5.85 vs. est. $5.98

·     Landstar System (LSTR) reports Q4 EPS $1.27/$994.9M vs. est. $1.42/$995.05M; saying the shortfall in diluted EPS to its guidance was entirely attributable to insurance and claims costs in the quarter, well above the insurance and claims costs anticipated as part of the October 23, 2019 earnings guidance; guides Q1 EPS $1.10-$1.20 vs. est. $1.33

·     United Rentals (URI) Q4 adjusted EPS $5.60/$2.46B vs. est. $5.21/$2.41B; said results were driven by growth in our core construction end-markets, while challenges in our industrial verticals impacted both revenue and margins in the quarter; Sees 2020 adjusted Ebitda $4.35B-$4.55B vs. est. $4.47B and sees 2020 revenue $9.4B-$9.8B vs. est. $9.58B

Technology, Media & Telecom

·     Microsoft (MSFT) Q2 EPS $1.51 on revs $36.91B vs. est. $1.32/$35.67B; Q2 capital expenditure $3.55B, -4.4% YoY; said Q2 beats driven by cloud strength and broad segment outperformance; revenue breakdown: Productivity and Business Processes, $11.83B, Intelligent Cloud, $11.87B and More Personal Computing, $13.21B; Intelligent Cloud featured a 62% Y/Y Azure revenue growth (64% in constant currency) compared to the 63% growth in Q1.

·     Facebook (FB) shares fell -6%; Q4 EPS $2.56/$21.08B vs. est. $2.53/$20.89B; DAUs rise 9% YoY to 1.66B vs est. 1.65B, and MAUs rise 8% to 2.50B vs est. 2.49B, revs $21.08B vs. est. $20.89B; said its cash and cash equivalents and marketable securities were $54.86B as of December 31, 2019; announces $10B increase to stock buyback

·     Cirrus Logic (CRUS) 3Q adj EPS $1.41 vs. est. $1.14 on revs $374.7Mm vs. est. $345.4Mm; guides 4Q revs $250-290Mm vs. est. $244.8Mm, gross margin 51-53% vs est. 51.5%

·     Lam Research (LRCX) 2Q adj EPS $4.01 vs. est. $3.85 on revs $2.58B vs. est. $2.51B; sees 3Q revenue $2.6B-$3.0B vs. est. $2.57B; and sees 3Q adjusted EPS $4.15-$4.95 vs. est. $3.98; sees 3Q adjusted gross margin 45.5% to 47.5% after Q2 adjusted gross margin 45.7% vs. 46.3% YoY

·     Qorvo Inc. (QRVO) 3Q adj EPS $1.86/$869M vs. est. $1.67/$852M; guides 4Q revs $800-840Mm vs. est. $727.8M, adj gr margin 48.5%

·     Celestica (CLS) Q4 adj. EPS 18c/$1.49B vs. est. 15c/$1.47B; sees Q1 adj. EPS 13c-19c on revs $1.33B-$1.43B vs. est. 17c/$1.36B; expects $30 million of restructuring charges in 2020, associated primarily with disengagement from Cisco

·     Cree (CREE) Q2 adjusted EPS loss (10c) on revs $239.9M vs. est. loss (9c)/$236.38M; sees Q3 adjusted EPS loss (15c)-(9c) on revs $221M-$229M vs. est. loss (7c)/$237.9M

·     ServiceNow (NOW) Q4 adjusted EPS 96c on revs $951.77M vs. est. 87c/$941.17M; said beat the high end of guidance for Q4, ending the year very strong; 4Q billings growth +34% vs. +38% YoY with 4Q free cash flow $342.2M, +40% YoY and sees Q1 subscription revenue $978M-$983M

·     Benchmark Electronics (BHE) lowers Q4 non-GAAP EPS view to 24c-28c from 34c-42c and also lowers Q4 revenue view to $505M-$510M from $520M-$570M (below consensus $547.67M)

·     A California jury ruled Apple (AAPL) must pay $837.8 million in damages for infringing on Wi-Fi patents held by the California Institute of Technology, while the jury also ruled against Apple supplier of Wi-Fi chips, Broadcom (AVGO), saying it owes damages of $270 million for infringing on the same patents