Morning Preview: November 7, 2017

Scott GreenDaily Market Insights

Early Look
Tuesday, November 7, 17
  
Stock futures are mixed to slightly higher, coming off another record setting performance for major averages as investors brace for another busy day of corporate earnings results. Markets also watching President Trump amid his trip to Asia, warning North Korea overnight that he was prepared to use the full range of U.S. military power to stop any attack. Political tensions, rising rate expectations and high valuations have failed to dent the optimism in this market as the three main averages are up between 16% and 26% for the year, boosted by factors such as an expanding U.S. economy, growing corporate profits and bets that the Trump administration will deliver tax cuts and other business-friendly measures. In Asian markets, The Nikkei Index jumped 389 points to settle at 22,937, the Shanghai Index gained 25 points to 3,413 and the Hang Seng Index also surged 397 points to finish at 28,994. In Europe, the German DAX is up around 10 points at 13,480, while the FTSE 100 is down about -10 points at 7,550.
 
U.S. stocks advanced on Monday as all three main equity benchmarks finished at all-time highs on the same day for the 26th time in 2017, marking a fresh record for simultaneous closing highs in a calendar year for the trio. The previous record was 26 closing records hit in 1995 for all three benchmarks and matched last Friday. Stocks were buoyed by a jump in oil prices (lifting energy stocks) and M&A activity. Treasury yields slipped on Monday with the 10-yr down 2.5 bps to 2.318%.
 
Market Closing Prices Yesterday
·      The S&P 500 Index gained 3.29 points, or 0.13%, to 2,591.13
·      The Dow Jones Industrial Average rose 9.23 points, or 0.04%, to 23,548.42
·      The Nasdaq Composite jumped 22.00 points, or 0.33%, to 6,786.44
·      The Russell 2000 Index advanced 3.05 points, or 0.20% to 1,497.96
 
Events Calendar for Today
·      7:45 AM EST       ICSC Weekly Retail Sales
·      8:55 AM EST       Johnson/Redbook Weekly Sales
·      10:00 AM EST     JOLTs Job Openings for September…est. 6050
·      3:00 PM EST        Consumer Credit for September…est. $17.5B
·      4:30 PM EST        API Weekly Inventory Data
 
Earnings Calendar
·      Earnings Before the Open: BMW, CBOE, COH, CROX, DF, EMR, EXPD, HAIN, MNK, SEAS, SMG, Toyota, USFD, VIRT, VPG, VRX, ZBRA
·      Earnings After the Close: AAOI, BETR, BUFF, CALX, COHR, CSRA, CVG, DIOD, DVA, EVTC, EXTR, G, LC, LSCC, MAR, MBI, MODN, MTCH, MXL, NEWR, NSIT, PMTS, PRI, PXLW, RPD, SNAP, SYNA, TTWO, WEB, WK, ZNGA
   
World News
·      President Trump: North Korea represents a grave threat; cannot allow N K to undo all we’ve built; US is prepared to defend itself & its allies with full range of military capabilities if needed; wants to use all available tools short of military force but US will defend itself ; thinks N K understands US has unparalleled military strength
·      German industrial output decreased by 1.6% in September from August, adjusted to seasonal swings and calendar effects vs. a forecast for a month-on-month fall of 0.8%
·      Eurozone retail sales rise 3.7% in September year-over-year vs. 2.9% FactSet estimate
·      Eurozone retail sales up 0.7% in September from August vs. 0.6% FactSet estimate
 
Sector News Breakdown
Consumer
·      Red Robin (RRGB) fell -22%; Q3 EPS 21c/$304.2M vs. est. 29c/$309.34M; Q3 comparable restaurant revenue decreased (-0.1%); cuts FY17 EPS view to $2.16-$2.31 from $2.80-$3.10 (est. $2.81) and sees FY17 comparable restaurant revenue to range from flat to up 0.5%
·      Avis Budget (CAR) shares fell -10%; Q3 EPS $3.10/$2.75B vs. est. $3.04/$2.78B; sees FY adjusted EPS $2.45-$2.65, vs. prior $2.40-$2.85 on revs $8.80B-$8.90B vs. est. $2.69/$8.82B
·      Etsy (ETSY) Q3 EPS 21c/$106.38M vs. est. 6c/$104.95M; backs FY17 revenue growth 18%-20%, vs. est. $435.71M and backs FY17 GMS growth 12%-14%, adjusted EBITDA margin 16%-18%; 3Q gross merchandise sales $766.4 million
·      Fiesta Restaurant (FRGI) Q3 EPS 6c/$158.7M vs. est. 23c/$162.24M; comparable restaurant sales at Pollo Tropical decreased (-10.9%)
·      Freshpet (FRPT) backs view of FY17 revenue to exceed $156M (est. $156.7M) and continues to expect FY17 net sales to exceed $156M, an increase of at least 17% from the prior year, consistent with prior guidance, and Adjusted EBITDA to exceed $16M
·      International Flavors (IFF) Q3 EPS $1.47/$872.9M vs. est. $1.42/$845.72M; sees year adjusted EPS growth 4.5-5.5% and sees year currency neutral eps growth 6.5-7.5%; raises FY17 revenue growth view to 7.5%-8.5% from 6.5%-7.5%
·      Weight Watchers (WTW) gained 11%; Q3 EPS 65c/$323.7Mvs. est. 51c/$319.4M; Q3 total paid weeks up 20% year-over-year and reports end of Q3 subscribers up 18% YoY to 3.4M; raises FY17 EPS view to $1.77-$1.83 from $1.57-$1.67 (est. $1.47)
·      Andersons (ANDE) Q3 EPS 9c/$836.6M vs. est. 14c/$900.2M; says current margins are disappointing
 
Energy
·      Callon Petroleum (CPE) Q3 EPS 9c/$83.4M vs. est. 10c/$83.9M; sees 4Q production 24,000 to 25,500 boe/d after 3Q production 22,543 boe/d; sees FY17 total production 24,000BOE/d-25,500BOE/d
·      Diamondback (FANG) Q3 EPS $1.33 vs. est. $1.21; sees FY production 77.5 to 78.5 mboe/d; sees FY capital expenditure $850M-$900M; 3Q production 85.0 mboe/d up 89% YoY; raises FY17 production view to 77.5-78.5MBOE/d from 74-78MBOE/d
·      Plains All American (PAA) Q3 EPS 21c/$5.87B vs. est. 22c/$6.06B; Q3 adjusted Ebitda $489M; still sees FY adjusted Ebitda $2.08B; says Willie Chiang to become CEO at end of 2018
·      Matador Resources (MTDR) Q3 EPS 18c/$126.28M vs. est. 10c/$123.07M; average daily oil production increased 21% sequentially from approximately 19,400 barrels QoQ; Sees FY17 adjusted EBITDA $300M-310M and sees FY17 drilling and completions CapEx $440M-$465M
·      U.S. Silica (SLCA) Q3 EPS 53c/$345.0M vs. est. 48c/$330.8M; says sees 4Q sand volumes up in oil & gas segment, but “perhaps restrained by some frac crews extending their holiday time off, plant down time due to planned maintenance and brief outages for capacity expansion work at a few mines; sees FY17 CapEx view at the high end of prior forecast or $375M
 
Financials
·      Athene Holding (ATH) Q3 EPS $1.39/$1.47B vs. est. $1.17/$845.32M
·      Brookdale (BKD) cut its adjusted Ebitda forecast for the full year to $650M-$670M from prior $670M-$710M; Q3 EPS revs $1.18B vs. est. $1.16B
·      FXCM (LUK) reports average customer trading volume per day of $8.7B in October 2017, 6% lower than September 2017 and 33% lower than October 2016; active accounts 121,319 as of October 31, 2017, a decrease of 1,487, or 1%, from September 30, 2017
·      Invesco Mortgage (IVZ) Q3 core EPS 44c vs. est. 40c; Q3 book value per diluted common share of $18.34 compared to $18.27 at Q2 and $17.48 at Q4 of FY16
·      ProAssurance (PRA) Q3 EPS 45c/$228.45M vs. est. 38c/$236.84M; 3Q net premiums earned $192.3 million and 3Q net premiums written $216.7 million
 
Healthcare
·      AnaptysBio (ANAB) reports positive results from interim analysis of an ongoing single and multiple ascending dose Phase 1 trial of ANBO19, its investigational anti-interleukin-36 receptor therapeutic antibody, in healthy volunteers
·      Coherus Bio (CHRS) Q3 EPS loss ($1.09) vs. est. (83c); sees resubmitting CHS-1701 BLA in US mid-1Q 2018
·      Diplomat Pharmacy (DPLO) Q3 EPS 25c/$1.125B vs. est. 15c/$1.16B; sees FY EPS 82c-87c on revs $4.4B-$4.6B vs. est. 75c/$4.52B; narrows FY17 EBITDA view to $99M-$102M from $97M-$103M
·      Keryx Biopharmaceuticals (KERX) fell after rescheduling its 3Q earnings call because it hasn’t yet received a response from the FDA on its supplemental new drug application for Auryxia
·      Supernus (SUPN) raises FY17 net product sales $290M-$295M from $280M-$290M and raises FY17 operating income view to $85M-$90M from $82M-$87M. Sees FY17 research and development expense of approximately $55M
·      Lannett (LCI) Q1 EPS 60c/$155M vs. est. 52c/$153.63M; sees FY net sales $710M-$720M
·      Ionis Pharmaceuticals (IONS) announced that the company submitted a new drug application, or NDA, to the FDA for inotersen, an investigational medicine for the treatment of patients with hereditary TTR amyloidosis
·      Invitae (NVTA) Q3 EPS loss (57c)/$18.15M vs. es.t loss (51c)/$26.71M
·      Mallinckrodt (MNK) Q3 EPS $1.97/$793.9M vs. est. $1.81/$808.8M; 3Q HP Acthar Gel revenue $308.7M vs. Bloomberg estimates $325.6M
·      McKesson (MCK) announced that it has signed a definitive agreement to purchase RxCrossroads, a provider of tailored services to pharmaceutical and biotechnology manufacturers, from CVS Health Corporation (CVS) for $735M
·      Premier (PINC) Q1 adjusted EPS 44c/$390.6M vs. est. 49c/$389.73M; backs FY18 adjusted EPS view $1.98-$2.09 (est. $2.04) and backs FY18 revenue view $1.564B-$1.648B, consensus $1.61B
·      Tenet (THC) Q3 EPS loss (17c)/$4.59B vs. est. loss (40c)/$4.68B; Q3 same-hospital patient revenue decreased 2.3% and reflects a 2.2% decrease in adjusted admissions and a 0.2% decrease in revenue per adjusted admission; lowers 2017 adjusted EPS outlook to 59c-74c from 69c-99c, below consensus 76c to reflect a net loss from continuing operations
·      Teligent (TLGT) lowers FY17 revenue to $65M-$67M from $75M-$85M and below est. $79.3M after missing top and bottom line for Q3
·      Voyager Therapeutics (VYGR) files to sell $75M in common stock
·      Xoma (XOMA) Q3 revs $36.2M vs. est. $12.1M; cash and cash equivalents $47.7M
 
Industrials & Materials
·      Douglas Dynamics (PLOW) Q3 EPS 40c/$125.3M vs. est. 45c/$133.53M; cuts FY17 EPS view to $1.20-$1.60 from $1.30-$1.75 (est. $1.50) and cuts FY17 revenue view to $450M-$500M from $470M-$520M (est. $489.33M); FY17 Adjusted EBITDA is predicted to range from $80M-$100M
·      AlarmForce Industries announced that it has entered into a definitive agreement to be acquired by BCE Corp. (BCE) for $16 per share or about $184M
·      Manitowoc (MTW) Q3 EPS 9c/$399.4M vs. est. loss (2c)/$385.0M; backs FY17 revenue view of down 5%-7% and backs FY17 adjusted EBITDA view of $59M-$69M
·      BWX Technologies (BWXT) Q3 EPS 46c/$419M vs. est. 46c/$423.01M
·      FMC Corp (FMC) Q3 EPS 70c/$646.2M vs. est. 63c/$686.2M; sees FY adjusted EPS $2.59-$2.69 vs. est. $2.43
·      Mistras Group (MG) Q3 EPS 13c/$179.6M vs. est. 15c/$171.8M; sees FY adjusted Ebitda low end of $66M-$70M; North American inspection services market conditions have been in line with the company’s expectations throughout 2017, and this is expected to continue for Q4
·      Knight-Swift (KNX) Q3 EPS 25c/$521.61M vs. est. 28c/$536.67M
·      Scorpio Bulkers (SALT) announced that it has entered into two separate agreements with unaffiliated third parties to acquire three Ultramax dry bulk vessels and one Kamsarmax dry bulk vessel for an aggregate of $90M
 
Media & Telecom
·      AMC Entertainment (AMC) shares fell -5%; Q3 EPS loss (33c)/$$1.18B vs. est. (36c)/$1.16B; 3Q consolidated attendance 79.5 million, 3Q admissions revenue $753.5M; and 3Q food and beverage revenue $361.4M; sees FY’17 EPS loss ($1.20-$1.35) from prior (97c-$1.17)
·      National CineMedia (NCMI) Q3 EPS  12c/$116.4M vs. est. 10c/$107.1M; reaffirms full year 2017 outlook of total revenue to be down 6% to 1% and Adjusted OIBDA to be down 12% to 6%
·      Outfront Media (OUT) Q3 EPS 36c/$392.4M vs. est. 27c/$391.01M
·      Presidio (PSDO) Q1 EPS 31c/$737.7M vs. est. 32c/$753.1M
·      Zayo Group (ZAYO) Q1 EPS 9c/$643.5M vs. est. 14c/$645M
Technology
·      Priceline (PCLN) shares fell -9%; Q3 EPS $35.22/$4.43B vs. est. $34.25/$4.34B; Q3 gross travel bookings for The Priceline Group were $21.8B, an increase of 18% YoY, or approximately 16% on a constant-currency basis; sees Q4 EPS $13.40-$14.00 vs. est. $15.57 and sees Q4 room nights booked to be up 8%-13%, total gross travel bookings up 9.5%-14.5%
·      Microchip (MCHP) Q2 EPS $1.41/$1.01B vs. est. $1.35/$1.0B; sees 3Q adjusted EPS $1.30-$1.40 on revs $971.7M-$1.01B vs. est. $1.30/$984.2M
·      Skyworks (SWKS) Q4 EPS $1.82/$984.6M vs. est. $1.75/$980.29M; sees 1Q adjusted EPS $1.91 on revs $1.05 billion (both in-line w/ests)
·      TripAdvisor (TRIP) shares fell -9%; Q3 EPS 36c/$439M vs. est. 35c/$451.7M; expects Q4 adjusted EBITDA performance up from Q3; maintain our 2017 adjusted EBITDA outlook of flat to down compared to 2016, and we expect that the year-over-year adjusted EBITDA performance in Q4 will improve relative to Q3
·      TrueCar (TRUE) Q3 EPS 2c/$82.4M vs. est. 1c/$86.9M; sees 4Q revenue $81.0M-$83M vs. est. $84.1M and year revs $321.0M-$323M (down from $325M-$329M) vs. est. $328.6M; expects 4q units to be in the range of 240,000 to 245,000
·      Salesforce (CRM) and Google (GOOGL), both cloud-native industry leaders, today announced a new strategic partnership to enable smarter, more collaborative experiences for customers
·      AppFolio (APPF) Q3 EPS 10c/$37.9M vs. est. 7c/$36.26M; sees FY17 revenue $140M-$141M, vs. consensus $139.37M
·      Fabrinet (FN) Q1 EPS 75c/$357.3M vs. est. 80c/$358.62M; sees Q2 adjusted EPS 69c-71c, on revs $328M-$332M vs. est. 85c/$373.93M
·      GoDaddy (GDDY) Q3 EPS 4c/$582.2M vs. est. 4c/$579.46M; sees 4Q revenue $591M-$596M vs. est. $594M; sees FY revenue $2.22B-$2.23B vs. est. $2.22B; reports Q3 ARPU $134, up 5.1% YoY
·      NeoPhotonics (NPTN) shares rose 15%; Q3 EPS loss (25c)/$71.1M vs. est. loss (31c)/$69.94M; sees Q4 adjusted EPS (23c)-(13c) vs. revs $69M-$74M vs. es.t loss (21c)/$71.48M.
·      ScanSource (SCSC) Q1 EPS 76c/$924.6M vs. est. 78c/$966.28M; sees Q2 EPS 76c-82c on revs $950M-$1.01B vs. est. 79c/$951.3M
·      Sina (SINA) Q3 EPS 77c/$440.5M vs. est. 75c/$403.0M
·      Symantec (SYMC) announced that it has acquired SurfEasy, Inc., a leading virtual private network, or VPN, provider that delivers easy-to-use solutions for online privacy and security on smartphones, tablets and computers
·      Veritone (VERI) shares fell -10%; Q3 EPS loss ($1.31)/$3.7M vs. est. loss (59c)/$4.96M
 

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Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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