Morning Preview: November 8, 2017

Scott GreenDaily Market Insights

Early Look
Wednesday, November 8, 17
  
Stock futures are lower, trading just off record closing levels for the Dow Industrials which eked out another all-time best close late yesterday, while the S&P and NASDAQ posted small declines. The SmallCap Russell 2000 fell over 1% ahead of the Senate tax reform proposal which is expected tomorrow. Weakness in financials and technology weighed on markets yesterday, as investors awaited further details on the tax bill and gauged the likelihood of its passage. There are no top-tier U.S. economic releases or Federal Reserve speeches expected on Wednesday. There are several stocks with sharp declines overnight after earnings/guidance including SNAP, FOSL, LC…though SNAP shares have rebounded amid reports this morning that Tencent took a 10% stake in the company. In Asian markets, The Nikkei Index slipped -23 points to end at 22,913, the Shanghai Index inched higher 1 point to settle at 3,415, and the Hang Seng Index dropped -86 points to end at 28,907. In Europe, the German DAX is down over -10 points at 13,360, while the FTSE 100 is little changed around 7,510. Markets continue to grind higher, holding near record levels after a strong quarter of corporate earnings, as well as an expanding U.S. economy, and bets that the Trump administration will deliver tax cuts and other business-friendly measures. Oil prices slip, but trading around $57 per barrel.
 
Market Closing Prices Yesterday
·      The S&P 500 Index slipped -0.49 points, or 0.02%, to 2,590.64
·      The Dow Jones Industrial Average rose 8.81 points, or 0.04%, to 23,557.23
·      The Nasdaq Composite dropped -18.65 points, or 0.27%, to 6,767.78
·      The Russell 2000 Index declined -18.87 points, or 1.26% to 1,479.09
 
Events Calendar for Today
·      7:00 AM EST       MBA Mortgage Applications Data
·      10:30 AM EST     Weekly DOE Inventory Data
 
Earnings Calendar:
·      Earnings Before the Open: BR, CABO, CARS, ECA, GPN, HUM, JKHY, MGM, REGN, ROK, SEE, VRTU, WEN
·      Earnings After the Close: ALB, ALRM, ANDV, CSOD, CTL, DOX, FIVN, FOXA, HOLX, IAC, IMPV, INFN, MIME, SQ, SRCL, SREV, TROX, TWLO
   
World News
·      Investor Intelligence Poll shows newsletter writers classified as bulls rise for 7 of the last 8 weeks to 64.4% from 63.5% last week. Investors Intelligence says bulls peaked in 1987 near 65%. Bears unchanged at 14.4%; remain at lowest since May 2015, while those expecting a correction tumbles to 21.2% from 22.1% last week, remains at lowest since March 1
·      Senate Republican leaders are mulling a one-year delay in implementing a corporate tax cut, Washington Post reports citing four people familiar with the draft of the Senate legislation. The report states the delay could produce budget savings of about $100B, but may encounter opposition from President Trump
 
Sector News Breakdown
Consumer
·      Amplify Snack (BETR) Q3 EPS 7c/$94.9M vs. est. 9c/$97.7M; sees FY adjusted EPS 25c-27c on sales $375M-$379M vs. est. 36c/$388.4M; 3Q gross margin 37.9% vs. estimate 41.1%
·      Blue Buffalo Pet Products (BUFF) Q3 EPS 27c/$341M vs. est. 25c/$322.55M; sees FY17 EPS 91c-93c and revs $1.25B-$1.265B vs. est. 92c/$1.25B
·      Carvana (CVNA) Q3 EPS loss (29c)/$225.4M vs. est. loss (30c)/$244.59M; trimmed the top end of its full-year revenue and unit sales outlook; sees full-year revenue $850M-$880M from prior $850M-$910M and est. $888.2M; sees full-year retail unit sales of 44,300-45,700 from prior 44,000-46,000
·      Container Store (TCS) Q2 EPS 12c/$218.4M vs. est. 5c/$216.95M; Q2 comp sales up 1.9%; raises FY17 adj. EPS view to 30c-41c from 27c-40c (est. 33c) and raises FY17 revenue view to $845M-$865M from $830M-$850M, consensus $849.17M; sees FY17 comp sales growth (1%)-1%
·      Fossil (FOSL) Q3 EPS loss (11c)/$688.7M vs. est. loss (28c)/$649.9M; sees Q4 EPS (8c) to 47c, below consensus $1.31 and sees Q4 net sales to decline in the range of 11.0% to 3.5%; sees FY17 EPS ($2.20) to (65c) ex-charges vs. est. (11c) and sees F17 net sales to decline in the range of 10.5% to 8.5%
·      Hawaiian Holdings (HA) reports October passengers up 3.8% year-over-year
·      ILG Corp. (ILG) Q3 EPS 28c/$446M vs. est. 28c/$447.95M; lowers FY17 revenue view to $1.71B-$1.835B from $1.73B-$1.855B; FY17 adjusted EBITDA guidance was lowered to $340M-$350M, down from $345M-$365M
·      Marriott (MAR) Q3 EPS $1.10/$5.66B vs. est. 99c/$5.57B; narrows FY adjusted Ebitda $3.18B-$3.19B form prior $3.13B-$3.2B and est. $3.17B;
·      Jack Henry (JKHY) Q1 EPS 82c/$359.9M vs. est. 79c/$361.7M
·      Model N (MODN) Q4 EPS loss (6c)/$35.6M vs. est. loss (9c)/$34.74M
·      Nissan Motor Co. (NSANY) cut its annual profit forecast by almost 6% after announcing a recall of vehicles in Japan that went through an inspection process deemed faulty by the government.
·      Four Seasons Education (FEDU) 10.1M share IPO priced at $10.00
 
Energy
·      The American Petroleum Institute (API) reported U.S. crude supplies dropped by 1.562 million barrels for the week ended Nov. 3, and also showed a rise of 520,000 barrels in gasoline stockpiles, while inventories of distillates lost 3.13 million barrels
·      Abraxas Petroleum (AXAS) Q3 EPS 0c/$24.7M vs. est. 4c/$24.77M; reports Q3 production of 805 MBoe, or 8,745 Mboepd; Narrows FY18 production rate to 10,000-12,000 Boepd from 11,500-12,750 Boepd
·      Carrizo Oil & Gas (CRZO) Q3 EPS 33c/$181.3M vs. est. 24c/$177.51M; Q3 production volumes during Q3 were 5,080 MBoe, or 55,224 Boe/d, an increase of 35% versus last year
·      Continental Resources (CLR) Q3 adjusted EPS 9c/$726.7M vs. est. 4c/$704; sees Q4 daily oil production up 14%-18% sequentially Q4 production is expected to be in a range of 275,000 to 285,000 Boe per day, and the 2017 exit rate production is now expected to be in a range of 280,000 to 290,000 Boe per day; boosted its production forecast for the full year
·      Energen (EGN) raises 2017 production view 4% to 73.2 MBOE/d as production guidance reflects a 5% increase in its estimated 4Q17 production; now expects Q4 volumes to reach 85.7 MBOE/d for an increase of 60% from the same period a year ago
·      Energy Transfer Partners (ETP) Q3 EPS 33c/$6.97B vs. est. 22c/$7.64B; Distributable Cash Flow attributable to partners, totaled $1.05 billion, an increase of $226M YoY
·      Enphase Energy (ENPH) Q3 EPS loss (1c)/$77M vs. est. loss (5c)/$77.13M
·      EXCO Resources (XCO) Q3 EPS loss (81)/$66.7M vs. est. loss (33c); produced 237 Mmcfe per day, or 22 Bcfe, for Q3, a decrease of 4% compared to second quarter 2017, primarily due to natural production declines; seeking alternatives which may include bankruptcy
·      Parsley Energy (PE) Q3 EPS 12c/$241.02M vs. est. 10c/$238.3M; sees FY18 CapEx $1.35B-$1.55B which would translate to oil production of 67.5-72.5 MBoe per day
 
Financials
·      Green Dot (GDOT) Q3 EPS 34c/$201.6M vs. est. 27c/$191.3M; raises FY17 adjusted EPS view to $2.10-$2.12 from $1.99-$2.03 (est. $2.05) and raises FY17 revenue view to $878M-$882M from $855M-$865M (est. $867.06M); announces a new partnership with Intuit (INTU) to create a branded prepaid card for its TurboTax
·      LendingClub (LC) Q3 EPS 3c/$154.0M vs. est. 3c/$157.5M; sees Q4 revenue $158M-$163M, below consensus $174.07M and sees Q4 net Income in the range of ($7M)-($3M); and adjusted EBITDA $19M-$23M
·      Primerica (PRI) Q3 EPS $1.46/$427.3M vs. est. $1.37/$425.83M
·      CPI Card Group (PMTS) Q3 EPS 2c/$68M vs. est. 5c/$74.73M; sees Q4 volumes 9,500-10,000 Mboepd; initiates business review, stops providing guidance
·      CBTX (CBTX) 2.4M share IPO priced at $26.00
·      Metropolitan Bank (MCB) 3.1M share IPO priced at $35.00
 
Healthcare
·      Acadia (ACAD) Q3 EPS loss (53c)/$35.6M vs. est. loss (62c)/$32.03M; boosts FY net sales view to $124M-$127M vs. est. $113.2M
·      Alnylam (ALNY) Q3 EPS loss ($1.06)/$17.1M vs. est. loss ($1.27)/$26.7M
·      DaVita (DVA) Q3 EPS 97c/$3.92B vs. est. 94c/$3.9B
·      Depomed (DEPO) Q3 EPS 14c/$95M vs. est. 11c/$99.57M; lowers FY17 revenue outlook to $380M-$385M from $400M-$415M due to impact of hurricanes; entered into a strategic agreement with Slan Medicinal Holdings Limited
·      Editas Medicine (EDIT) Q3 EPS loss (64c) vs. est. loss (60c); initiated our clinical natural history study for our lead program to treat LCA10, and we remain on track to file our IND for EDIT-101, our clinical candidate, in mid-2018
·      Fireman B.V. (IFRX) 6.667M share IPO priced at $15.00
·      Glaukos (GKOS) Q3 EPS 4c/$40.4M vs. est. loss (2c)/$38.9M; backs FY17 revenue view $155M-$160M vs. est. $158.33M
·      Inogen (INGN) raises FY17 revenue view to $244M-$248M from $239M-$243M (est. $241.76M); expects direct-to-consumer sales and domestic business-to-business sales to be the strongest growing channels and to have similar growth rates, and 
·      Jazz Pharmaceuticals (JAZZ) Q3 EPS $3.22/$411.85M vs. est. $2.89/$421M; sees FY17 adjusted EPS $10.70-$11.20 and revs $1.600B-$1,650B vs. est. $10.89/$1.64B
·      Myriad Genetics (MYGN) Q1 EPS 26c/$190.2M vs. est. 21c/$183.38M; sees Q2 adjusted EPS 22c-24c on revs $187M-$189M vs. est. 25c/$189.9M
·      Novavax (NVAX) Q3 EPS loss (15c)/$8.35M vs/. est. loss (16c)/$6.42M; said very pleased to initiate and fully enroll the Phase 1/2 clinical trial of our NanoFlu vaccine candidate in older adults, following impressive results in preclinical challenge models
·      Sarepta (SRPT) files to sell $375M in convertible senior notes due 2024
·      Tesaro (TSRO) Q3 EPS loss (47c)/$142.8M vs. est. loss (93c)/$132.78M; 3Q cash and cash equivalents $521.3 million
·      Xencor (XNCR) Q3 EPS loss (33c)/$7.09M vs. est. loss (33c)/$6.32M; cash, cash equivalents and marketable securities totaled $373.0M vs. $403.5M on December 31, 2016
 
Industrials & Materials
·      Allegheny Technologies (ATI) 17M share Spot Secondary priced at $24.00
·      Agrium (AGU) cuts forecast as guides year EPS $4.65-$4.80 vs. est. $4.91 and below prior view $4.75-$5.25
·      Huntington Ingalls (HII) boosts share repurchase program to $2.2B from $1.2B
·      Orion Engineered (OEC) 10M share Spot Secondary priced at $23.25
·      Darling Ingredients (DAR) and Valero (VLO) to initiate an engineering and construction cost review to analyze an additional project growing annual production capacity to 550 million gallons at the Diamond Green
 
Technology, Media & Telecom:
·      Snap Inc. (SNAP) shares fell -14%; Q3 EPS loss (14c)/$207.94M vs. est. loss (15c)/$235.5M; said in a statement Snap’s currently redesigning the application to make it easier to use, which has a “strong likelihood” of disrupting business in the short term; Daily active users grew from 153M in Q3 2016 to 178M in Q3 2017, an increase of 25.2M or 17% year-over-year. DAUs increased 4.5M or 3% quarter-over-quarter, from 173M in Q2 2017. Average revenue per user was $1.17 in Q3 2017, an increase of 39% over Q3 2016 when ARPU was $0.84
·      Snap shares rebounded this morning following a report that Tencent Holdings takes a 10% stake in Snapchat parent Snap Inc.  https://goo.gl/SDxXCW
·      Zillow (ZG) Q3 EPS 19c/$281.8M vs. est. 17c/$276.9M; more than 175M average monthly unique users visited Zillow Group brands’ mobile apps and websites during the quarter, reaching an all-time high of more than 187M unique users in July 2017; sees Q4 revenue $274M-$279M vs. consensus $274.5M; raises FY17 revenue view to $1.068B-$1.073B from $1.055B-$1.07B
·      Applied Optoelectronics (AAOI) Q3 EPS $1.08/$88.9M vs. est. $1.02/$88.53M; said while Q3 results were negatively impacted by lower demand from a large customer, we continued to experience solid demand from our other large datacenter customers, especially for our 100G CWDM transceivers, and revenue for our CATV products reached a new record; sees Q4 EPS 82c-96c on revs $81M-$90M vs. est. 96c/$93.6M
·      Convergys (CVG) Q3 EPS 42c/$688.3M vs. est. 44c/$692.4M; said now expects slight improvement in Q4 results compared with Q3 results; sees 2017 sales, earnings at lower end of guidance
·      CSRA (CSRA) Q2 EPS 46c/$1.27B vs. est. 48c/$1.27B; sees FY18 adjusted EPS $1.88-$2.00 on revs $5B-$5.2B vs. est. $1.96/$5.11B; 2Q bookings $4.2 billion
·      Diodes (DIOD) Q3 EPS 45c/$285.2M vs. est. 45c/$280.82M; sees Q4 revenue $260M-$280M, vs. consensus $269.02M; expect GAAP gross margin to be 34.9%, plus or minus 1%
·      DXC Technology (DXC) Q2 EPS $1.93/$6.16B vs. est. $1.53/$5.99B
·      Extreme Networks (EXTR) Q1 EPS 16c/$211.7M vs. est. 14c/$204.69M; GAAP gross margin for the first fiscal quarter was 53.1% and non-GAAP gross margin was 56.7%; sees Q2 adjusted EPS 10c-14c on revs $236M-$246M vs. est. 17c/$216.56M
·      Lattice Semiconductor (LSCC) Q3 EPS 4c/$92M vs. est. 1c/$92.05M; backs Q4 revenue view $92M-$97M vs. consensus $94.4M
·      Match Group (MTCH) Q3 EPS 19c/$343.4M vs. est. 22c/$329.3M; Q3 paid member count (PMC) +18% YoY to 6.6M; avg PMC at Tinder exceeded 2.5M
·      MaxLinear (MXL) Q3 EPS 39c/$113.6Mvs. est. 33c/$115.8M; sees Q4 revs $112M-$116M vs. est. $118.4M
·      Pixelworks (PXLW) Q3 EPS loss (3c)/$18.8M vs. est. loss (2c)/$18.53M; sees Q4 revenue $17.5M-$18.5M vs. consensus $17.63M
·      Synaptics (SYNA) Q1 EPS $1.03/$417.4M vs. est. 97c/$398.9M
·      Workiva (WK) Q3 EPS loss (23c)/$52.1M vs. est. loss (29c)/$50.64M; narrows FY17 EPS view to (64c)-(63c) from (64c)-(62c) and raises FY17 revenue view to $206.4M-$206.8M from $205M-$206M
·      Zynga (ZNGA) Q3 EPS 2c/$224.6M vs. est. 2c/$207.5M; reports bookings of $213.5M, up 9% YoY
 

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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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