Morning Preview: August 10, 2018

Terrie AmengualDaily Market Insights

Early Look

Friday, August 10, 2018

Stock futures in the U.S. are pointing to a lower open, tracking weakness in Europe and Asia on mounting concerns that Turkey’s currency crisis will hurt eurozone bank as the Turkish Lira makes another record low (fell as much as 13%). The euro fell to a 13-month low on Friday, dropping below the 1.15 level after the Financial Times reported that the Eurozone’s chief financial watchdog had become concerned over exposure of the zone’s major lenders to Turkey, especially when related to banks in Spain, Italy and France. Also, a growing U.S./China trade spat could hurt oil demand growth this year and next if the global economy takes a hit, the International Energy Agency warned on Friday. In Asian markets, The Nikkei Index dropped -300 points to settle at 22,298, the Shanghai Index was flat at 2,795 and the Hang Seng Index fell -240 points to end at 28,366. In Europe, the German DAX is sharply lower, falling over -200 points (or 1.6%) trading at 12,460, while the FTSE 100 is down around -50 points at 7,685. There were a few standout movers last night following earnings, but the bulk of the quarter results are now behind us, as we head into the “dog days of summer” with low volumes, but possibly increased volatility given trade issues have yet to be ironed out between the U.S. and its trading partners.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -4.12 points, or 0.14%, to 2,853.58

· The Dow Jones Industrial Average fell -74.52 points, or 0.29%, to 25,509.23

· The Nasdaq Composite gained 3.46 points, or 0.04%, to 7,897.78

· The Russell 2000 Index edged higher 4.01 points, or 0.24% to 1,690.89

Events Calendar for Today

· 8:30 AM EST Consumer Producer Price (CPI) Index MoM for July…est. 0.2%

· 8:30 AM EST CPI Ex: Food & Energy (core) MoM for July…est. 0.2%

· 8:30 AM EST CPI Ex: Food & Energy (core) YoY for July…est. 2.3%

· 1:00 PM EST Baker Hughes Weekly Rig Count

· 2:00 PM EST Monthly Budget Statement for July…est. (-$76.0B)

World News

· Japan’s economy expanded in Q2 by 1.9% after a mild contraction in the previous three months, led by improvements in private consumption, brisk capital spending and stable overseas demand, and was above the 1.3% economist view rise.

· The UK economy expanded by 0.4% in the second quarter of the year, as it bounced back after a difficult start to 2018

Sector News Breakdown

Consumer

· Tesla’s (TSLA) board of directors intends to meet with financial advisors next week to formalize a process to explore CEO Elon Musk’s proposal to take the car maker private, CNBC reported last night. The board will likely tell the chairman and CEO to recuse himself as the car maker prepares to review his proposal

· Campbell Soup (CPB) responded to 13D filings and reaffirms its strategic review process: “As previously announced on May 18, the company is currently undertaking a Board-led comprehensive strategy and portfolio review to examine all potential paths forward to maximize shareholder value

· Overstock.com (OSTK) shares rose over 20% as it and t0.com announced that the companies have both signed term sheets with GSR Capital, a Hong Kong based private equity firm, to invest up to $374.55M in exchange for common equity in blockchain subsidiary tZERO and common equity in Overstock.com; OSK also files automatic mixed securities shelf

· Chuy’s (CHUY) Q2 EPS 38c/$106.3M vs. est. 37c/$106.03M; on both a fiscal and calendar basis, comparable restaurant sales increased 1.0% and three restaurants opened during Q2; lowers 2018 EPS outlook to $1.09-$1.13 from $1.12-$1.16

· Funko (FNKO) Q2 EPS 7c/$138.7M vs. est. 2c/$122.53M

· Invitation Homes (INVH) Q2 core FFO 29c/$432M vs. est. 29c/$430.33M

· Party City (PRTY) announces offering of 10M shares of common stock for holder

· Planet Fitness (PLNT) Q2 EPS 34c/$140.6M vs. est. 31c/$131.03M; system-wide SSS increased 10.2%; sees 2018 adjusted EPS growth 33% and sees 2018 revenue growth of 26%

· Tyson Foods (TSN) has reached an agreement to sell its pizza crust business to an affiliate of private equity firm Peak Rock Capital. Terms were not disclosed

Energy

· Cenovus Energy (CVE) agrees to sell Pipestone business for $625M

· EP Energy (EPE) Q2 adjusted EPS loss (1c)/$265M vs. est. 1c/$322.08M; Q2 equivalent production of 82.5 MBoe/d, oil production of 47.2 MMbbl/d

· Jagged Peak Energy (JAG) Q2 adjusted EPS 20c/$158.7M vs. est. 13c/$137.75M. Q2 production volumes grew 25% sequentially from Q1 and averaged 34.6 MBoe per day – 26.9 MMbbl/d oil; sees 2018 average daily equivalent production 32-24 MBoe/d

· PBF Energy (PBF) announces offering of 6M shares of Class A common stock

· Sunrun (RUN) Q2 EPS 6c/$170.54M vs. est. 28c/$167.7M; expects FY18 deployments to grow 15% year-over-year

Financials

· AllianceBernstein (AB) reports preliminary AUM $546B as of July 31, up from $540B at the end of June, with the 1.1% increase was due to market appreciation, partially offset by total firm-wide net outflows

· Artisan Partners Asset Management Inc. (APAM) reported that its assets under management as of July 31, 2018 totaled $117.1 billion

· Invesco Ltd. (IVZ) reported preliminary month-end assets under management (AUM) of $987.8 billion, an increase of 2.5% month over month.

· Redfin (RDFN) Q2 EPS 6c/$142.6M vs. est. 2c/$138.8M; sees Q3 revenue $137.1M-$141.3M vs. est. $141.2M; sees Q3 net income between $1.2M-$2.8M, vs. Q3 net income of $10.6M YoY; said it has deepened its investment in Redfin Now, where the company buys homes directly, expanding the program to a third market

· Waddell & Reed Financial (WDR) reported preliminary assets under management of $79.2 billion for the month ended July 31, 2018, compared to $78.7 billion on June 30, 2018.

· New York Mortgage (NYMT) 12.5M share Spot Secondary priced at $6.16

· Pacific City Financial (PCB) 2.385M share IPO priced at $20.00

Healthcare

· Corcept (CORT) cut its 2018 revenue forecast to $250M-$270M from prior $275M-$300M and vs. est. $291.6M; Q2 revenue was $62.3M vs. est. $68.5M; announced $100M buyback program

· ICU Medical (ICUI) Q2 EPS $2.66/$360.5M vs. est. $1.82/$337.6M; raises FY18 EPS view to $8.30-$8.70 vs. consensus $7.58

· Spectrum (SPPI) Q2 EPS (21c)/$24.2M vs. est. loss (21c)/$27.58M; backs FY18 revenue view $95M-$115M vs. est. $109.45M

· Pfenex (PFNX) files $120M mixed securities shelf

· Pieris Pharmaceuticals (PIRS) files $200M mixed securities shelf

· Synlogic (SYBX) files $200M mixed securities shelf

· NeoGenomics (NEO) 9.8M share Secondary priced at $12.75

· Restoration Robotics (HAIR) 10M share Secondary priced at $1.50

Technology, Media & Telecom

· Dropbox (DBX) Q2 EPS 11c/$339.2M vs. est. 7c/$330.9M; Q2 non-GAAP gross margin was 74.5%, as compared to 66.7% in the same period last year. Average revenue per paying user was $116.66, as compared to $111.19 for the same period last year; sees Q3 revenue $350M-$353M vs. est. $345.9M and sees FY18 revenue $1.366B-$1.372B vs. est. $1.36B and sees FY18 non-GAAP operating margin 9.5%-10.5%; free cash flow $340M-$350M

· Lionsgate (LGF/A) Q1 adjusted EPS 18/$932.7M vs. est. loss (7c)/$885.14M; reported a sequential increase of 300,000 subscribers in Q1

· Microchip (MCHP) Q1 EPS $1.61/$1.21B vs. est. $1.48/$1.21B; sees Q2 EPS $1.65 -$1.83 on revs $1.474B-$1.55B vs. est. $1.69/$1.58B; Q1 gross margin 62.2%

· News Corp. (NWSA) Q4 EPS 8c/$2.69B vs. est. 6c/$2.68B; 4Q news and information services revenue $1.29B, 4Q book publishing revenue $490.0M, 4Q digital real estate services revenue $299M

· Synaptics (SYNA) Q4 EPS $1.00/$388.5M vs. est. 91c/$391.75M; Sees 1Q revenue $390M-$430M vs. est. $428.1M; for fiscal 2019 anticipate a low single-digit revenue increase

· Trade Desk (TTD) Q2 EPS 60c/$112.3M vs. est. 44c/$104.02M; sees Q3 revenue $116M vs. est. $109.14M and sees Q3 adjusted EBITDA of $33M; sees FY18 revenue at least $456M vs. est. $436.54M and sees FY18 adjusted EBITDA of $140M, revised from $133M

· Acxiom (ACXM) Q1 adjusted EPS 24c/$227.0M vs. est. 18c/$220.42M; backs both its year EPS and revenue outlooks

· Altair (ALTR) Q2 EPS 5c/$95.6M vs. est. 4c/$91.61M; sees Q3 revenue $95M-96M vs. est. $92.36M; sees FY18 revenue $380M-$382M vs. est. $372.77M

· ForeScout (FSCT) Q2 EPS loss (18c)/$67.6M vs. est. loss (37c)/$63.57M; sees Q3 EPS (12c)-(10c) on revs $77M-$80M vs. es. (11c)/$78.8M

· Kodak (KODK) announced it has begun a process to sell its Flexographic Packaging division. The company has engaged UBS Investment Bank as its financial adviser for the transaction

· Mimecast (MIME) Q1 EPS 4c/$78.4M vs. est. 11c/$88.8M; sees FY19 revenue $329M-$335.9M, vs. consensus $322.4M

· Paylocity (PCTY) Q4 EPS 11c/$96.6M vs. est. 12c/$93.3M; approves $35M stock repurchase plan; sees FY19 revenue of $451M-$453M vs. est. $455M

· Synchronoss (SNCR) announced David Clark as Chief Financial Officer, effective immediately. Clark, who recently joined Synchronoss as Executive Vice President of Finance, will replace Lawrence Irving, who has served as Synchronoss’ CFO since rejoining the company in April 2017

· Uniti Group (UNIT) Q2 EPS loss (3c)/$247.3M vs. est. 2c/$250.07M;

· Universal Display (OLED) Q2 EPS 23c/$56.1M vs. est. 15c/$49.58M; said revenue from material sales decreased 21% to $36.8M in the second quarter of 2018, compared with $46.8M YoY; backs FY18 revenue view $280M-$310M vs. est. $295.34M

 

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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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