Morning Preview: November 9, 2017

Scott GreenDaily Market Insights

Early Look
Thursday, November 9, 17
  
Stock futures are pulling lower, dropping from record highs by all three major averages late yesterday, as markets remain concerned over possible delays to passing Republican tax reform in Washington and as markets await the Senate version of the bill (which is tentatively expected today). Out of Asia, President Donald Trump said China is taking advantage of American workers and American companies with unfair trade practices, but he blamed his predecessors in the White House rather than China for allowing the massive U.S. trade deficit to grow. Speaking alongside President Xi Jinping, Trump’s words were in contrast to what he said was a “very good chemistry” between the two leaders as they announced $250 billion in investment deals, many of which came in the form of tentative agreements. In corporate news, markets digest another busy round of earnings last night, with high profile retailers Macy’s and Kohls expected this morning and Dow component and media giant Disney after the bell.
 
All three equity benchmarks (Dow, S&P and Nasdaq) finished at all-time highs on the same day for the 27th time in 2017 on Wednesday. For the Dow it was the 59th closing high in 2017, the 53rd for the S&P 500, and the 64th for the Nasdaq. Overall, U.S. stocks edged higher, advancing for the sixth time in seven days for the S&P and a 7th straight day for the Dow, as a rally in consumer staples firms outweighed a slump in financials companies.
 
In Asian markets, The Nikkei Index fell -45 points to settle at 22,868, the Shanghai Index added 12 points to end at 3,427 and the Hang Seng Index jumped228 points to finish at 29,136. In Europe, the German DAX is down around -40 points at 13,340, while the FTSE 100 is flat, trading at 7,525.
 
Market Closing Prices Yesterday
·      The S&P 500 Index gained 3.74 points, or 0.14%, to 2,594.38
·      The Dow Jones Industrial Average rose 6.13 points, or 0.03%, to 23,563.36
·      The Nasdaq Composite climbed 21.34 points, or 0.32%, to 6,789.12
·      The Russell 2000 Index advanced 2.64 points, or 0.18% to 1,481.73
 
Events Calendar for Today
·      8:30 AM EST       Weekly Jobless Claims…est. 232K
·      8:30 AM EST       Continuing Claims…est. 1.885M
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 51.7
·      10:00 AM EST     Wholesale Inventories MoM for September…est. 0.9%
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
 
Earnings Calendar:
·      Earnings Before the Open: ADDYY, AZN, CITY, DT, DHI, DIN, EPC, HIMX, IPXL, JCI, JHG, KSS, M, PRGO, QVCA, TIME
·      Earnings After the Close: AVID, DIS, HTZ, JWN, LGFA, NVDA, NWSA, TLND, VREX
   
World News
·      China’s consumer inflation accelerated in October, rising to a nine-month high, as the consumer price index increased 1.9% from a year earlier, compared with a 1.6% gain in September. Food prices fell 0.4% from a year earlier, declining for the ninth straight month, after dropping 1.4% in September. Nonfood prices grew 2.4% from a year earlier, the same as September.
·      China’s producer price index climbed 6.9%, holding steady from September. The reading for factory-gate prices came in faster than a forecast for a 6.6% increase forecast. PPI increased 0.7% in October from a month earlier. In September, it rose 1.0% from the preceding month.
·      The Federal Reserve is not factoring the tax bill into its monetary policy forecasts because it is unclear still what will and won’t be included, Cleveland Federal Reserve President Loretta Mester said on CNBC Thursday morning. “I need to see more of the details,” she said
 
Sector News Breakdown
Consumer
·      CalAtlantic (CAA) Q3 EPS 75c/$1.52B vs. est. 81c/$1.59B; Q3 revenue includes the impact of Hurricane Harvey, Hurricane Irma, and the Weyerhaeuser I-joist issue, which reduced home sale revenues by approximately $100M; 3Q net orders -3%; 3Q backlog $3.71 billion
·      Camping World (CWH) Q3 EPS 77c/$1.24B vs. est. 69c/$1.20B; Q3 Ebitda $122.1M
·      Chefs’ Warehouse (CHEF) Q3 EPS 11c/$325.1M vs. est. 11c/$322.32M
·      D.R. Horton (DHI) Q4 EPS 82c on revs $4.16B (in-line with consensus); raises quarterly dividend to 12.5c from 10c; sees year revs $15.5B-$16.3B vs. est. $15.97B
·      e.l.f. Beauty (ELF) Q3 EPS 17c/$71.9M vs. est. 6c/$68.68M; sees 2017 EPS 55c on revs $270M vs. est. 45c/$287.73M; reaffirmed its Adjusted EBITDA outlook
·      Hostess Brands (TWNK) Q3 EPS 14c/$192.3M vs. est. 12c/$199.02M; for the full year expect 6.5%-7.3% of revenue growth, market share growth and 7.0%-8.4% of adjusted EBITDA growth
·      Inter Parfums (IPAR) Q3 EPS 55c/$169.5M vs. est. 50c/$167.44M; backs FY17 EPS view of $1.25-$1.27 (est. $1.29) and backs FY17 revenue view of $575-$580M (est. $579.23M)
·      Laureate Education (LAUR) Q3 EPS loss ($1.02)/$983.4M vs. es.t loss (61c)/$971.8M; new enrollments through year-to-date September 2017, excluding asset dispositions, up 3% YoY
·      Monster Beverage (MNST) Q3 EPS 38c/$909.5M vs. est. 40c/$903.6M
·      SpartanNash (SPTN) Q3 EPS 54c/$1.91B vs. est. 56c/$1.9B; cuts FY17 adjusted EPS view to $2.06-$2.12 from $2.18-$2.28 (est. $2.23); expects 2017 cap-ex $71M-$73M
·      United Airlines (UAL) Oct consolidated traffic, or revenue passenger miles, increased 1.7%. Consolidated capacity, or available seat miles, increased 3.4% YOY and consolidated load factor decreased 1.3 points compared to October 2016; backs view of Q4 passenger unit revenue down 1%-3%
 
Energy
·      Babcock & Wilcox (BW) Q3 EPS loss (49c)/$408.7M vs. est. loss (14c)/$415.46M; backs FY17 power revenue view $825M-$875M and backs FY17 Renewable revenue view roughly $350M
·      EnerSys (ENS) Q2 EPS $1.05/$617.3M vs. est. $1.04/$604.3M
·      Noble Energy (NBL) signed a definitive agreement with SRC Energy Inc. to divest approximately 30,200 net acres from the company’s non-core DJ Basin position in Weld County, Colorado in a deal value of the transaction is $608M
·      Ring Energy (REI) Q3 EPS 7c/$16.64M vs. est. 4c/$16.21M
·      Silver Spring (SSNI) Q3 EPS loss (47c) on revs $47.6M vs. $74.19M last year; billings were $82.8M, up 8.7% year-over-year
·      SolarEdge (SEDG) Q3 EPS 66c/$166.6M vs. est. 55c/$159.18M; sees Q4 revenue $175M-$185M, vs. consensus $146.94M; sees Q4 gross margins within the range of 33%-35%
·      SRC Energy (SRCI) files to sell 35M shares of common stock
·      Sunrun (RUN) Q3 EPS 25c/$141.3M vs. est. 32c/$146.7M; Q3 Total deployments of 90 MW, an increase of 12% YoY and exceeding the company’s guidance of 88 MWs
·      TPI Composites (TPIC) announced that it has entered into a new, five-year supply agreement with Proterra to be the supplier of composite bus bodies for Proterra’s Catalyst zero-emission electric buses from its existing Rhode Island manufacturing facility; narrows FY17 billings view to $945M-$950M
·      WildHorse Resource (WRD) Q3 EPS 12c/$122.49M vs. est. 9c/$116.44M; says increased average daily production by 161% to 36.6 Mboe/d for Q3 compared to 14.0 Mboe/d YoY
 
Financials
·      Square (SQ) Q3 EPS 7c/$257M vs. est. 5c/$244.6M; processed $17.4B of GPV in Q3, up 31% YoY; sees Q4 adjusted EPS 5c-6c on revs $262M-$265M vs. est. 6c/$254.1M; raises FY17 adjusted revenue view to $963M-$966M from $925M-$935M, consensus $942.4M
·      AmTrust Financial Services (AFSI) Q3 EPS loss (4c)/$1.46B vs. est. 9c/$1.49B; 3Q net premiums earned $1.19 billion and 3Q gross written premiums $1.99 billion
·      Envestnet (ENV) Q3 EPS 37c/$175.6M vs. est. 35c/$171.58M; sees Q4 adjusted EPS 39c and revenue $178M-$180M vs. est. 40c/$177.24M; raises FY17 revenue view to $679M-$681M from $667M-$673M
·      Cadence Bancorporations (CADE) 9.5M share Secondary priced at $22.00
 
Healthcare
·      Otonomy (OTIC) shares jumped over 100%; announced that the AVERTS-2 Phase 3 clinical trial of Otividex in patients with Meniere’s disease achieved its primary efficacy endpoint; OTIC shares plummeted 82% in late August after Otividex missed its primary and all key vertigo secondary endpoints in “Averts-1” study
·      BioCryst Pharmaceuticals (BCRX) files $200M mixed securities shelf
·      Cidara Therapeutics (CDTX) Q3 EPS loss (73c) vs. est. loss (94c); is completing enrollment of the 90-patient Phase 2 clinical trial of rezafungin called the STRIVE trial
·      Crispr Therapeutics (CRSP) Q3 EPS loss (62c)/$2.39M vs. est. loss (60c)/$3.06M
·      Genomic Health (GHDX) Q3 EPS loss (6c)/$83.8M vs. est. loss (2c)/$87M; sees FY17 revenue at least $354M vs. consensus $348.13M
·      Globus Medical (GMED) Q3 EPS 30c/$151.7M vs. est. 30c/$150.8M; sees FY sales $625M and EPS $1.27, in-line with estimates
·      Hologic (HOLX) Q4 EPS 50c/$802.9M vs. est. 49c/$792.54M; sees FY18 non-GAAP EPS $2.10-$2.15 on revs $3.2B-$3.28B vs. est. $2.15/$3.3B
·      Apellis (APLS) 10.714M share IPO priced at $14.00
·      Sage Therapeutics (SAGE) said that brexanolone achieves primary endpoints in both Phase 3 clinical trials in postpartum depression
 
Industrials & Materials
·      General Electric (GE) signed three aviation and engine deals in China on the sidelines of a state visit to Beijing by U.S. President Donald Trump, Reuters reports. The deals, worth $3.5B in total, include an engine and repair deal for GEnx-1B engines from Juneyao Airlines worth $1.4B and a $1.1B order for 80 Leap-1B engines to power 40 Boeing (BA) 737 MAX Aircraft from ICBC Leasing
·      Allison Transmission Holdings (ALSN) said the new authorization raises its stock buyback program to $1.5B (up by $500M)
·      Kronos (KRO) Q3 EPS 64c vs. est. 43c; 3Q net sales $464.5M and 3Q TiO2 Product pricing change +23%
·      Stericycle (SRCL) Q3 EPS $1.10/$882.8M vs. est. $1.14/$895.99M
·      Tetra Tech (TTEK) Q4 EPS 63c/$534M vs. est. 61c/$517.85M; reports backlog of $2.54B, up 7% year-over-year; sees FY18 EPS $2.20-$2.40 on revs $2.05B-$2.15B vs. est. $2.36/$2.11B; sees Q1 EPS 50c-55c on revs $500M-$525M vs. est. 53c/$506.8M
·      Woodward (WWD) Q4 EPS 98c/$606.8M vs. est. 92c/$598.2M; sees FY18 EPS $3.20-$3.50 on revs $2.2B-$2.3B vs. est. $3.47/$2.21B
 
Technology, Media & Telecom
·      21st Century Fox (FOXA) Q1 EPS 49c/$7B vs. est. 49c/$6.86B; Q1 Cable Network programming revenue $4.2B, Q1 Television revenue $1.07B and Q1 Filmed Entertainment revenue $1.96B; said sees Sky deal closing by June 30, 2018
·      Amdocs (DOX) says additional $800M share repurchase program authorized; dividend to be raised to 25c from 22c; Q4 EPS 94c/$979.7M vs. est. 95c/$977.4M; sees FY18 non-GAAP EPS growth of 4%-8%
·      CenturyLink (CTL) Q3 EPS 42c/$4.03B vs. est. 45c/$4.06B and reiterates year Ebitda and FCF outlook
·      Cornerstone OnDemand (CSOD) Q3 EPS 12c/$121.8M vs. est.10c/$118.97M; sees Q4 revenue $129M-$137M vs. est. $134.02M; raises FY17 revenue view to $479M-$487M from $477M-$487M (est. $481.37M); announced that Silver Lake, the global leader in technology investing, together with LinkedIn, will make a $300M strategic investment in Cornerstone
·      Dish (DISH) Q3 EPS 57c/$3.58B vs. est. 59c/$3.6B; activated approximately 638,000 gross new Pay-TV subscribers, compared to approximately 736,000 gross new Pay-TV subscriber’s YoY
·      Himax Technology (HIMX) Q3 ADS 5c/$197.1M vs. est. 3c/$192.4M; sees Q4 EPS 13c-15c on revs down (4%-10%) sequentially
·      Sogou (SOGO) 45M share IPO priced at $13.00
·      Snapchat (SNAP) is planning to unveil its biggest redesign yet on December 4 in an effort to make the platform “easier to use” and to accelerate slowing user growth, Business Insider reports
·      Five9 (FIVN) Q3 EPS 4c/$50.1M vs. est. loss (1c)/$48.17M; raises 2017 EPS outlook to 7c-9c from 0c-3c and raises 2017 revenue outlook to $196.5M-$197.5M vs. est. $194.74M; CEO Mike Burkland to step down for health reasons
·      IAC Corp. (IAC) Q3 EPS 55c/$828.4M vs. est. 85c/$810.2M; now sees FY17 adjusted EBITDA $591M-$621M and now sees FY17 operating income $201M-$256M; Q3 adjusted Ebitda $137.6M vs. est. $152.7M
·      Imperva (IMPV) Q3 EPS 33c/$83.9M vs. est. 28c/$83.13M; sees Q4 EPS 24c-29c on revs $89.2M-$92.2M vs. est. 24c/$92.54M
·      Infinera (INFN) Q3 EPS loss (11c)/$192.6M vs. est. loss (16c)/$191.1M; to restructure its worldwide operations in order to reduce its expenses and establish more cost-efficient structure that better aligns its operations with its long-term strategies; cuts workforce by 10%
·      Meet Group (MEET) Q3 EPS 11c/$32.2M vs. est. 10c/$32.34M; sees Q4 revenue $36.5M-$38M, vs. consensus $38.29M; sees Q4 adjusted EBITDA $7.5M-$9.5M; cuts FY17 revenue view to $120.1M-$121.6M from $121M-$126M
·      Pegasystems (PEGA) Q3 EPS 5c/$179.82M vs. est. 15c/$199.3M
·      RingCentral (RNG) Q3 EPS 6c/$129.8M vs. est. 4c/$125.9M
·      Roku (ROKU) shares rose 21%; Q3 EPS 10c/$124.7M vs. est. ($1.40)/$110.47M; Q3 active Accounts increased 48% to $16.7M at quarter end; streaming hours grew 58% to 3.8B hours; average Revenue Per User, or ARPU, grew 37% to $12.68; now expect full year revenues to reach or exceed $500 million in 2017, up from nearly $400 million last year
·      Tribune Media (TRCO) Q3 EPS 31c/$450.5M vs. est. 37c/$459.8M; Q3 adjusted Ebitda $119.9M
·      Twilio (TWLO) Q3 EPS loss (8c)/$100.5M vs. est. loss (8c)/$92.55M; for Q3, 46,489 active customer accounts vs. 34,457 YoY; sees Q4 adjusted EPS (6c)-(5c) on revs $102.5M-$104.5M vs. est. loss (6c)/$98.67M; narrows year EPS view and raises year revenue outlook
·      ViaSat (VSAT) Q2 EPS 9c/$393.1M vs. est. loss (3c)/$405.42M; expanded its relationship with JetBlue (JBLU), and will serve as the direct in-flight internet service provider to the airline
 

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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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