Early Look

Wednesday, March 4, 2020

Futures	Up/Down	%	Last
DJ Industrials	595.00	2.30%	26,475
S&P 500	61.50	2.05%	3,058
Nasdaq	183.50	2.14%	8,766

 

 

Stock futures are pointing to a sharply higher open, looking to erase some of yesterday’s market massacre that took place despite the Federal Reserve announcing a mid-meeting 50 bps rate cut to help offset the impact to the global economy from the coronavirus on businesses. After trading down 11 of the past 13 trading days due to fears of the coronavirus, stocks are on track for big gains early after for vice president Joe Biden scored a commanding nine-state victory in the Super Tuesday Democratic primary, a solid showing vs. Senator Bernie Sanders, as he now leads in the delegate count. Markets are taking well to the results as nominees Sanders, and Warren are perceived as bad for stock markets. While the news is a temporary win for badly beaten up markets, the impact globally from the coronavirus remains with several companies lowering forecasts, cutting production and stopping travel in an effort to curtail the spreading of the disease. The novel coronavirus that was first detected in December in Wuhan, a city in China’s Hubei Province has since sickened 92,817 people and caused at least 3,159 deaths and troubled markets. Ongoing outbreaks of COVID-19 continue to worsen in Iran, which has 2,336 cases and 77 deaths; Italy, which has 2,502 cases and 79 deaths; and South Korea, which has 5,186 cases and 28 deaths according to latest figures late yesterday. In Asian markets overnight, the Nikkei Index rose 17 points to 21,100, the Shanghai Index jumped 18 points to 3,011 and the Hang Seng Index fell -62 points to 26,222. In Europe, the German DAX is higher by 130 points to 12,120, while the FTSE 100 are up 90 points to move back above the 6,800 level. What remains interesting is that Treasury yields are still falling (10-year yield remains below 1%) after touching record lows yesterday despite stocks bouncing back globally.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -86.86 points, or 2.81%, to 3,003.37

·     The Dow Jones Industrial Average fell -785.91 points, or 2.94%, to 25,917.41

·     The Nasdaq Composite plunged -268.08 points, or 2.99%, to 8,684.09

·     The Russell 2000 Index declined -32.41 points, or 2.13% to 1,486.08

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:15 AM EST      ADP Employment Change for February…est. 170K

·     9:45 AM EST      Markit US Services PMI, Feb-F…est. 49.4

·     9:45 AM EST      Markit US Composite PMI, Feb-F…

·     10:00 AM EST    ISM Non-Manufacturing Index for Feb…est. 54.9

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       Fed Beige Book Released

 

Earnings Calendar:

·     Earnings Before the Open: ANF, BF/B, CECE, CPB, DLTR, FNJN, JILL, JW/A, NAV, OMI, PLAB, TWI

·     Earnings After the Close: ABM, AEO, AGS, CCAP, CCRN, EGLE, GWRE, KIDS, MRVL, NEWT, PING, PDD, SPLK, TPVG, VERI, WMC, ZM

 

Other Key Events:

·     Citigroup Global Property Conference, 3/2-3/4, in Hollywood, FL

·     Credit Suisse 25th Annual Energy Summit, 3/1-3/4, in Vasil, CO

·     Cowen 40th Annual Healthcare Conference, 3/1-3/4, in Boston, MA

·     KeyBanc 15th Annual Emerging Technology Summit, 3/3-3/4, in San Francisco, CA

·     Morgan Stanley Global Energy & Power Conference, 3/2-3/4, in New York

·     Morgan Stanley Tech, Media & Telecom Conference, 3/2-3/5, in San Francisco, CA

·     Raymond James Annual Institutional Investors Conference, 3/2-3/4, in Orlando, FL

·     UBS Global Consumer & Retail Conference, ¾-3/5, in Boston, MA

 

 

Macro	Up/Down	Last
WTI Crude	0.45	47.62
Brent	0.49	52.35
Gold	-2.60	1,642.80
EUR/USD	-0.0023	1.1150
JPY/USD	0.34	107.47
10-Year Note	-0.035	0.963%

 

 

World News

·     Former Vice President Joe Biden picked up wins across the South and dealt a blow to Sen. Elizabeth Warren after winning her home state of Mass. Sen. Bernie Sanders picked up California, the state with the most delegates. Biden scored a commanding nine-state victory in the Super Tuesday Democratic primary, a solid showing vs. Senator Bernie Sanders, as he now leads in the delegate count (Biden 453 to 382 for Sanders, with Warren at 50 and Bloomberg 44)

·     As COVID-19 reaches more than 60 countries, the World Bank Group is making available an initial package of up to $12B in immediate support to assist countries coping with the health and economic impacts of the global outbreak, the organization announced

·     The Caixin China services purchasing managers index (PMI) fell to 26.5 in February from 51.8 in January, Caixin Media Co. and research firm Markit said. Total new business posted the steepest drop on record in February

 

Sector News Breakdown

Consumer

·     Nordstrom (JWN) 4Q EPS $1.23 vs. est. $1.47, net sales +1.3%; guides FY adj EPS $3.25-3.50 vs. est. $3.49, sees net sales +1.5-2.5%; Digital sales rose 9% during the quarter to account for 35% of all sales; gross margin came in at 35% of sales vs. 35.4% consensus and 35.1% a year ago.

·     Ross Stores (ROST) 4Q EPS $1.28 vs. est. $1.26 on comps +4% vs. est. +2.6%; guides 1Q EPS $1.16-1.21 vs. est. $1.24, sees 1Q comps +1-2%; guides FY EPS $4.67-4.88 vs. est. $5.01, sees FY comps +1-2%; raises quarterly dividend to 28.5c from 25.5c

·     Urban outfitters (URBN) 4Q adjusted EPS 50c vs. est. 63c; 4Q gross margin 28.5% vs. 33% YoY and estimate 30.4%; 4Q comparable store inventory 0% vs. +3% YoY and 4Q inventory $409.5 million, +11% YoY

·     Fox Factory (FOXF) Q4 adj EPS 65c vs. est. 62c; sees Q1 EPS 55c-60c on sales $182M-$190M vs. est. 58c and $180.4M; sees 2020 EPS $3.00-$3.10 vs. est. $2.97 and year sales $881M-$906M vs. est. $843M

·     Hilton Hotels (HLT) increases stock repurchase plan by $2B

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported that U.S. crude supplies rose by 1.7M barrels for the week ended Feb. 28, showed gasoline stockpiles fell by -3.9M barrels, while distillate inventories declined by -1.7M barrels

·     General Electric (GE) sees impact of up to $300M to Q1 operating profit due to the coronavirus as sees Q1 EPS 10c vs. est. 13c

·     AeroVironment (AVAV) 3Q adj EPS loss (1c) vs. est. 17c; guides FY adj EPS $1.67-1.87 vs. prior $1.47-1.67, still sees FY revs $350-370Mm vs. est. $359.1Mm

·     Neenah (NP) announced the signing of a definitive agreement to acquire Vectorply, a portfolio company of MSouth Equity Partners, for $155M in cash

·     Waste stocks US Ecology (ECOL), Republic Services (RSG) and Waste Management (WM) upgraded to Buy from Neutral at UBS as part of a broader research note in North American Environmental Services, citing attractive valuation during a period of near-term market volatility

·     Navistar (NAV) Q1 EPS loss (36c) on revs $1.84B vs. est. loss (19c) and $1.81B; Q1 adjusted Ebitda $59M, -66% YoY vs. est. $72.4M; sees FY Class 8 retail deliveries 210,000 to 240,000; reiterates full-year industry and financial guidance, pending any change to operations from the coronavirus

 

Healthcare

·     Centene (CNC) guides 2020 revs $104.8-105.6B, sees 2020 adj EPS $4.56-4.76 (including WellCare deal closure); sees FY20 health benefits ratio of approximately 85.9%-86.3%

·     VIVUS (VVUS) Q4 EPS loss (61c) on revs $17.25M vs. est. $19.14M; said Q4 cash and cash equivalents were $32.6M at December 31, 2019; said for 2019 increased adjusted EBITDA 7% compared to 2018 and reduced our net loss by $5.5 million, a 15% decrease

·     Zogenix (ZGNX) 8.52M share secondary priced at $23.50 per share

 

Technology, Media & Telecom

·     Ambarella (AMBA) 4Q adj EPS $0.14 vs. est. $0.11 on revs $57.2Mm vs. est. $57.2Mm; guides 1Q revs $52-57Mm vs. est. $49.5Mm, sees 1Q adj gr margin 57.5-59.5% vs. est. 58.4% after 4Q adjusted gross margin 58.7% vs. 60.6% YoY

·     HP Enterprises (HPE) Q1 adj EPS 44c on revs $6.95B vs. est. 44c and $7.21B; still sees FY adj EPS $1.78-$1.94 vs. est. $1.84; cuts FY free cash flow $1.6 billion to $1.8 billion, down from prior view $1.9 billion to $2.1 billion

·     Veeva (VEEV) Q4 EPS 54c/$311.5M vs. est. 52c/$298.3M; reports Q4 Subscription Services Revenues $254.1M, up 33% from last year; sees FY21 EPS $2.50, vs. est. $2.51 and sees FY21 revenue $1.40B-$1.405B vs. consensus $1.38B

·     Yext Inc. (YEXT) Q4 EPS loss (12c) on revs $81.4M vs. est. loss (14c) and $80.2M; sees Q1 EPS loss (11c-14c) on revs $85M-$87M vs. est. $87M; sees FY21 non-GAAP EPS (50c)-(45c) vs. est. loss (43c) and sees FY21 revenue $378.0M-$382.0M vs. est. $380.67M

·     Cardlytics (CDLX) Q4 EPS 18c/$69.3M vs. est. 4c/$63.89M; Q4 billings was $100.9M, an increase of 43.7% YoY from $70.2M; guides Q1 revs $43.5M-$46.5M vs. est. $52.7M; announces leadership changes including CEO

·     Photronics (PLAB) Q1 EPS 16c/$159.7M vs. est. 16c/$150.5M; sees Q2 diluted EPS 11c-17c on revs $145M-$155M vs. est. 17c/$151.9M