Morning Preview: January 31, 2020

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Early Look

Friday, January 31, 2020





DJ Industrials




S&P 500










Stocks futures are sliding as yesterday’s late rally comes to an abrupt halt on reports of the first two virus cases in the UK, killing a modest, and tentative rebound. It was a volatile ride late yesterday that saw major averages in the U.S. rally from early losses to close in positive territory and near the highs of the day after the World Health Organization (WHO) called the coronavirus a global health emergency, but did not recommend restrictions on international trade and travel helping ease concerns. Earnings remains a focus today as Amazon (AMZN) shares surge 10% after its stellar quarterly results. In Asian markets, The Nikkei Index gained 227 points to 23,205, the Shanghai Index remained closed for holiday and the Hang Seng Index fell -136 points to 26,312. In Europe, the German DAX is lower by -60 points to move just below 13,100, while the FTSE 100 is down over 60 points to 7,315. Markets are closely watching any additional headlines related to the further outbreak of the virus which has now claimed over 200 lives overseas, while trying to balance earnings results heading into another busy week.

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 10.26 points, or 0.31%, to 3,283.66

·     The Dow Jones Industrial Average rose 124.99 points, or 0.43%, to 28,859.44

·     The Nasdaq Composite gained 23.77 points, or 0.26%, to 9,298.93

·     The Russell 2000 Index dipped -1.00 points, or 0.06% to 1,648.22


Events Calendar for Today

·     8:30 AM EST      Personal Spending for December…est. 0.3%

·     8:30 AM EST      Personal Income for December…est. 0.3%

·     8:30 AM EST      PCE Core Deflator MoM for December…est. 0.1%

·     8:30 AM EST      Employment Cost Index for Q4…est. 0.7%

·     8:30 AM EST      PCE Deflator MoM for December…est. 0.2%

·     9:45 AM EST      Chicago PMI for January…est. 49.0

·     10:00 AM EST    University of Michigan Sentiment, Jan-F…est. 99.1

·     1:00 PM EST       Baker Hughes Weekly Rig Count


Earnings Calendar:







WTI Crude















10-Year Note





World News

·     The eurozone economy recorded its worst year of growth since the height of the single currency bloc’s debt crisis in 2013. In its first estimate for the quarter, Eurostat said the eurozone grew by only 0.1% from the previous three-month period, its lowest rate since the first quarter of 2013.

·     The U.K. Department of Health and Social Care on Friday confirmed the UKs first two cases of coronavirus, both from the same family.


Sector News Breakdown


· (AMZN) Q4 EPS $6.47/$87.4B vs. est. $4.03/$86.02B; Q4 AWS net sales $9.95B vs. $7.43B a year ago and Q4 AWS operating income of $2.6B vs. $2.2B a year ago; Q1 net sales are expected to be between $69.0B-$73.0B, or to grow between 16%-22% YoY as anticipates a favorable impact of approximately 5 bps from for-ex; operating income is expected to be between $3.0B and $4.2B, compared with $4.4B YoY

·     Decker’s Brands (DECK) Q3 EPS $7.14/$938.7M vs. est. $6.55/$900.43M; guides Q4 EPS 35c-45c below the 67c estimate but raises year EPS view to $9.40-$9.50 from prior $8.40-$8.60; narrows FY20 revenue view to $2.15B- $2.16B from $2.115B-$2.14B and raises year gm view to 51.5% from 50.8%; HOKA delivered again for Decker’s, with brand sales up 64% YoY

·     Beazer Homes (BZH) Q1 EPS 9c on sales $417.8M vs. est. $409.5M; 1Q new home deliveries 1,112, +2.7% YoY with backlog $732.1M, up +23% YoY and Q1 cash and cash equivalents $41.3M, -51% YoY

·     Levi Strauss (LEVI) 4Q adj EPS $0.26 on revs $1.57B vs. est. $0.21 and $1.58B; guides 2020 $1.18-1.22 vs. est. $1.17; announces $100M share buyback plan while sees FY20 revenue growth of around 7% and cap-ex $200M-$210M

·     SkyWest (SKYW) reports operating revenue fell 7.5% in Q4 to $744M, while net income during the quarter was $73M vs. $67M a year ago and the carrier’s load factor improved 80 bps to 82.2%

·     Aston Martin shares soared as the troubled British luxury car maker struck a £500 million rescue deal led by Formula One billionaire Lawrence Stroll.



·     Marathon Petroleum (MPC) is exploring sale of its gas station and convenience store business, Speedway, alongside an IPO according to a Bloomberg report late Thursday



·     Arthur J. Gallagher (AJG) Q4 adjusted EPS 58c/$1.68B vs. est. 52c/$1.4B; said brokerage and risk management segments combined in fourth quarter 2019 to post total revenue growth of 17%, of which 5.8% was organic revenue growth and net earnings growth of 31%, EBITDAC growth of 24% and adjusted EBITDAC growth of 23%

·     Kearny Financial (KRNY) Q2 EPS 13c/$39.39M vs. est. 13c/$36.55M; Q2 deposits decreased by $8.4M to $4.19B at December 31, 2019 from $4.2B at September 30, 2019. Loans receivable decreased by $112M to $4.49B, or 68.0% of total assets, at December 31, 2019 from $4.6B

·     Fair Isaac (FICO) Q1 EPS $1.80/$298.5M vs. est. $1.86/$287.81M; backs 2020 non-GAAP EPS view $8.30 vs. est. $8.42 and also backs 2020 revenue view $1.25B (in-line with consensus)

·     Visa (V) Q1 adj EPS $1.46 vs. est. $1.46, cross-border volumes at constant Fx 9% vs. est. 8.55%, nets revs $6.1B vs. est. $6.07B; authorizes new $9.5B share buyback plan; 1Q payments volume at constant currency 8% vs. estimate 8.83%; said the incentives it hands out to banks and retailers will continue to climb faster than revenue

·     PayPal (PYPL) upgraded to Buy from Neutral at Guggenheim



·     Amgen (AMGN) Q4 adj EPS $3.64 vs. est. $3.40 on revs $6.2B vs. est. $6.02B; guides 2020 non GAAP adj EPS $14.85-15.60 (above prior views but below consensus of $16.06); sales breakdown: Enbrel up 2.4% to $1,346B, Neulasta down 43% to $665M, Prolia up over 14% to $752M, Xgeva up 7% to $489M and Repatha up 25% to $200M (+25.9%); Aimovig: $98M (+3.2%)

·     Edwards Life (EW) Q4 EPS $1.46/$1.17B vs. est. $1.49/$1.15B; boosted its adjusted year EPS view to $6.15-$6.40 from $6.05-$6.30 (est. $6.17) on better Q1 EPS view of $1.49-$1.59 (est. $1.50); raises low end of year sales view to $4.6B-$5B from $4.5B-$5B; 4Q gross margin 75.6%

·     Vertex (VRTX) 4Q adj EPS $1.70 vs. est. $1.21 on adj revs $1.26B vs. est. $1.02B; guides 2020 product revs $5.1-$5.3B above views and sees FY20 tax rate 21%-22%; Key product sales: Kalydeco: $236M (-8.9%); Orkambi: $270 (-14.3%); Symdeko: $332M (+12.9%); Trikafta: $420M

·     Envista (NVST) Q4 adjusted EPS 52c/$721M vs. est. 49c/$729.35M; guides year EPS $1.63-$1.73 vs. est. $1.72

·     Itamar Medical (ITMR) 2.545M share Secondary priced at $13.75

·     ResMed (RMD) Q2 adjusted EPS $1.21 on revs $736.2M vs. est. $1.00 and $730.6M; Q2 gross margin 58.0%, vs. estimate 59.4%; announced that it agreed in January to acquire SnapWorx, a privately held software company providing patient contact management and workflow optimization for the sleep apnea resupply market


Industrials & Materials

·     Volkswagen’s Traton offered to acquire the rest of Navistar International (NAV) it doesn’t already own at a price of about $2.9B or $35 per share, in cash

·     Caterpillar (CAT) Q4 adjusted EPS $2,63 on sales $13.14B vs. est. $2.37 and $13.14B; guides 2020 EPS $8.50-$10.00 vs. est. $10.55 as sees global economic uncertainty pressuring sales; expects dealers to further cut inventories; said dealers cut machine, engine inventories by about $700m during 4q

·     Honeywell (HON) Q4 adjusted EPS $2.06/$9.73B vs. est. $2.04/$9.61B; sees Q1 EPS $2.02-$2.07 vs. est. $2.03 and organic sales -2% to up 2%; sees FY20 adj. EPS $8.60-$9.00 on revs $36.7B-$37.8B vs. est. $8.79/$38.11B

·     PolyOne (POL) 13.33M share Secondary priced at $33.75

·     U.S. Steel (X) Q4 EPS loss (64c)/$2.82B vs. est. loss ($1.11)/$2.78B; cuts dividend to 1c per share from 5c per share; expects their FY20 depreciation and amortization expense and net interest costs to be approximately $150M and approximately $95M, respectively; says currently expects Q1 to be the trough for the year due to the normal seasonality of its mining operations and lower Q1 shipments in Flat-rolled as the company prepares for the blast furnace outage at Gary Works.

·     Celanese (CE) Q4 adjusted EPS $1.99 on sales $1.43B vs. est. $2.15/$1.53B and reaffirms 2020 outlook

·     Eastman Chemical (EMN) Q4 adjusted EPS $1.43 on sales $2.21B vs. est. $1.33


Technology, Media & Telecom

·     Electronic Arts (EA) Q3 sales $1.978B in-line with consensus $1.97B; said expect live services to continue to drive growth in FY21 and for growth to accelerate in FY22, led by a new Battlefield; sees Q4 EPS roughly $1.05 vs. est. 97c and sees Q4 net bookings $1.152B s. est. $1.2B; raises FY20 EPS view to $9.90 from $9.57 and raises FY20 net bookings view to $5.15B from $5.125B

·     IBM Corp. (IBM) says Virginia Rometty will continue as Executive Chairman of the board and serve through the end of the year, when she will retire after almost 40 years with the company as Arvind Krishna will become CEO

·     Cypress Semiconductor (CY) Q4 adjusted EPS 28c/$559.6M vs. est. 29c/$563.81M; said they “continue to see strong adoption of our connect and compute products across the automotive and IoT end-markets, which drove record MCD revenue in fiscal year 2019 in a challenging environment”

·     Proofpoint (PFPT) Q4 EPS $0.52 vs. est. $0.48 on revs $243.4Mm vs. est. $239.2Mm; guides 1Q adj EPS $0.25-0.29 vs. est. $0.36; sees FY20 EPS $1.42-$1.48 on revs $1.06B-$1.067B vs. est. $1.80/$1.06B

·     Western Digital (WDC) Q2 EPS 62c/$4.2B vs. est. 58c/$4.22B; sees Q3 EPS 85c-$1.05 on revs $4.1B-$4.3B vs. est. 73c/$4.06B

·     National Instruments (NATI) 4Q adj EPS $0.56 vs. est. $0.50 on net sales $367Mm vs. est. $358Mm; guides 1Q adj EPS $0.24-0.38 vs. est. $0.26, sees 1Q revs $308-338Mm vs. est. $312.5Mm

·     Flex (FLEX) rises 12%; Q3 adjusted EPS 38c/$6.46B above est. 34c/$6.19B; sees Q4 adjusted EPS 30c-34c on revs $5.8B-$6.2B vs. est. 32c/$5.92B; said the outlook excludes any potential impacts from the coronavirus outbreak given the rapidly evolving situation.

·     Bottomline Technologies (EPAY) Q2 core EPS 33c/$111.69M vs. est. 32c/$109.29M; cuts FY20 core EPS view to $1.30-$1.37 from $1.35-$1.42 (est. $1.40), narrows FY20 revenue view to $450M-$452M from $442M-$452M and raises FY20 subscription revenue view to $342M-$345M from $334M-$339M

·     World Wrestling Entertainment Inc. (WWE) shares fell 8% after announcing co-Presidents George Barrios and Michelle Wilson will leave the company and no longer serve on its board


Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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