Morning Preview: February 12, 2019

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Early Look

Tuesday, February 12, 2019

Futures

Up/Down

%

Last

DJ Industrials

198.00

0.79%

25,215

S&P 500

18.50

0.68%

2,726

Nasdaq

56.50

0.82%

6,970

 

 

Stock futures are surging, getting a boost overnight after lawmakers reached a tentative deal to prevent a government shutdown. GOP negotiators agreed to a border-security deal that will involve far less money for President Donald Trump’s border wall than the White House wanted, but involves 55 miles of new border fencing that still requires approval from Trump. According to reports, the bipartisan plan includes $1.38 billion for fencing instead of the $5.7 billion Trump asked for. In addition to the bull news, optimism grows over a potential trade deal between the U.S. and China as Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer are due to arrive in Beijing Thursday for more high-level discussions. Yesterday, the Nasdaq closed with a 0.1% gain to start the week; U.S. stocks end mixed, with Dow logging a 0.2% decline and S&P 500 finishing little changed. In Asian markets, The Nikkei Index jumped 531 points or 2.6% to settle at 20,864, the Shanghai Index rose 18 points to 2,671 and the Hang Seng Index gained 27 points to 28,171. In Europe, the German DAX is higher by 130 points topping the 11,150 level, while the FTSE 100 is up around 25 points above 7,150. The US dollar looks to make it a ninth straight day of gains while oil rebounds.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 1.92 points, or 0.07%, to 2,709.80

·     The Dow Jones Industrial Average fell -53.22 points, or 0.21%, to 25,053.11

·     The Nasdaq Composite climbed 9.71 points, or 0.13%, to 7,307.90

·     The Russell 2000 Index advanced 12.59 points, or 0.84% to 1,518.98

 

Events Calendar for Today

·     6:00 AM EST      NFIB Small Business Optimism for January

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      PPI monthly data point revisions

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     4:30 PM EST       API Weekly Inventory Data

·     6:30 PM EST       Fed’s Mester speaks on Economic Outlook and Monetary Policy

·     7:30 PM EST       Fed’s George speaks on the US Economy

 

Earnings Calendar:

·     Earnings Before the Open: ARCC, AYR, FIS, HUN, IPGP, JLL, MDSO, MLM, NP, NRZ, ONDK, SABR, TAP, TOWR, UAA, USFD, WEC, WELL

·     Earnings After the Close: AAT, AIZ, AKAM, ATVI, BFAM, BXMT, CNO, CSOD, DEI, DENN, EXEL, GIGA, GRPN, HUBS, IRTC, JCOM, LCSS, MPWR, OXY, QLYS, QUOT, RM, RRR, SHO, TRIP, TWLO, UDR, UIS

 

Other Key Events:

·     Credit Suisse 20th annual Financial Services Forum, 2/11-2/13, in Miami, FL

·     Credit Suisse 24th annual Energy Summit, 2/11-2/13, in Vail, CO

·     Goldman Sachs Technology & Internet Conference, 2/12-2/14, in San Francisco, CA

·     Healthcare Information Info & Management Systems Conference, 2/11-2/15, in Orlando, FL

 

 

Macro

Up/Down

Last

WTI Crude

0.89

53.30

Brent

1.19

62.70

Gold

4.50

1,316.40

EUR/USD

0.0001

1.1277

JPY/USD

0.15

110.53

10-Year Note

+0.024

2.677%

 

 

World News

·     The January small-business optimism index of the National Federation of Independent Business fell 3.2 points to a seasonally adjusted reading of 101.2, the worst reading since the election of President Donald Trump in Nov. 2016. The expectations components fell particularly sharply, with a 10%-point decline in those expecting the economy to improve.

·     The Bank of Japan moved to stop a decline in yields, trimming its purchases of 10- to 25-year maturities for the first time since July. – Bloomberg

 

Sector News Breakdown

Consumer

·     Chegg (CHGG) Q4 adjusted EPS 25c/$95.7M vs. est. 21c/$91.65M; sees Q1 revenue $93.5M-$95.5M vs. est. $93.31M and sees Q1 Adjusted EBITDA in the range of $22M-$23M; sees FY19 revenue $390M-$395M above consensus $388.37M

·     Nissan (NSANY) cut its operating income forecast for the full year as sees FY operating income 450 billion yen, below prior view of 540.0 billion yen, and sees FY net income 410 billion yen, below prior view 500 billion yen; 3Q operating income 103.34 billion yen missed the estimate 117.59 billion

·     Kering (KER.FR) said its net profit more than doubled in 2018 compared with 2017 and raised its dividend for the year; the French luxury-goods company said its net profit rose to 3.71 billion euros ($4.19 billion) from EUR1.79 billion in 2017, beating analysts’ expectations of EUR2.79 billion net profit for the year

·     Wolverine Worldwide (WWW) raises quarterly dividend to 10c from 8c; sets new $400 mln stock repurchase program

 

Energy

·     PDC Energy (PDCE) reports Q4 production 11.8 MMBoe with a December exit rate of approximately 130,000 Boe per day. Reports FY18 oil production increased 32% year-over-year to approximately 17M barrels. Year-end 2018 proved reserves of 545 MMBoe, an approximate 20% increase over year-end 2017 levels with an estimated all-sources reserve replacement of 330%

 

Financials

·     Brighthouse Financial (BHF) Q4 EPS $1.56 vs. est. $1.56; 4Q net investment income $862M

·     Argo Group (ARGO) Q4-adjusted operating EPS 55c vs. est. 3c; 4Q combined ratio reported 99.5%; 4Q net premiums written $424.5M; 4Q gross written premiums $702.0M

·     Artisan Partners (APAM) reported that its assets under management, or AUM, as of January 31 totaled $105.4B

·     Farmer Bros (FARM) Q2 sales $159.8M vs. est. $164.7M; 2Q adjusted Ebitda $12.4M

·     Franklin Resources, Inc. (BEN) preliminary month-end assets under management of $678.3 billion at January 31, 2019, compared to $649.9 billion at December 31, 2018.

·     Invesco (IVZ) reported preliminary month-end assets under management of $930.6B, an increase of 4.8%. The increase was driven by favorable market returns, foreign exchange, higher money market AUM and reinvested distributions, partially offset by net long-term outflows and non-management fee earning AUM outflows.

·     Everest Re (RE) Q4 operating loss per share ($5.89) vs. est. ($5.62); 4Q net investment income $140.2M, 4Q combined ratio reported 134.1%, 4Q catastrophe losses $875M and 4Q gross written premiums $2.3B

·     MoneyGram (MGI) Q4 adjusted EPS 1c/$345.8M vs. est. 13c/$348.5M; sees FY adjusted Ebitda change in constant currency -8% to -12%; sees FY revenue growth in constant currency -2% to 4%

 

Healthcare

·     Bruker (BRKR) Q4 adjusted EPS 54c/$553.6M vs. est. 54c/$544.6M; sees FY19 adjusted EPS $1.54-$1.58 vs. est. $1.55 and expects 6%-7% year-over-year revenue growth, including the following estimates: organic revenue growth of 4%-5%, revenue growth from acquisitions of 4%

·     Gilead Sciences Inc. (GILD) said a late-stage, placebo-controlled study designed to evaluate a type of chronic liver disease drug, Selonsertib, did not meet its desired outcome without worsening the patients’ condition.

·     Molina Healthcare (MOH) Q4 EPS $3.07/$4.66B vs. est. $1.52/$4.55B; sees FY19 EPS $9.25-$9.75, vs. consensus $9.29 and FY19 revenue roughly $16.3B vs. est. $17.21B; 4Q medical care ratio 85.1%; recorded a loss of $32M on sale of Pathways behavioral health unit in October

 

Industrials & Materials

·     Compass Minerals (CMP) Q1 adjusted EPS $1.41/$486.5M vs. est. $1.73/$504.8M; said “we currently expect to deliver significant EBITDA growth in 2019, as well as in 2020 as we realize more benefits from our stabilized Salt operations:” interim CEO

·     FMC Corporation (FMC) Q4 adjusted EPS $1.69/$1.22B vs. est. $1.39/$1.17B; backs FY19 adj. EPS view $5.55-$5.75vs. est. $5.93 and sees FY19 revenue $4.45B-$4.55B vs. est. $4.54B; expects to buy back up to $500M in shares in 2019; set to spin remaining Livent stake on March 1

·     G&W’s (GWR) total traffic in January 2019 was 267,794 carloads, a decrease of 9,337 carloads, or 3.4%, compared with January 2018. G&W’s same railroad traffic in January 2019 increased 3,179 carloads, or 1.2%, compared with G&W’s traffic in January 2018

·     Huntsman (HUN) Q4 adjusted EPS 52c/$2.24B vs. est. 55c/$2.13B; Q4 adjusted Ebitda $275M

·     Livent (LTHM) Q4 EPS 18c/$119.8M vs. est. 23c/$124.26M; sees Q1 EPS 11c-14c on revs $95M-$105M vs. est. 24c/$124.26M

·     ThyssenKrupp announced new details of its plan to split in two on Tuesday, saying more operations will be centralized as the two divisions aim to become “leaner, faster and better.” 

 

Technology, Media & Telecom

·     Amkor Technology (AMKR) Q4 EPS 12c/$1.08B vs. est. 8c/$1.06B; sees Q1 EPS loss (27c)-(7c)/$840M-$920M well below consensus 3c/$1.01B citing the outlook to inventory corrections underway in the smartphone market; sees Full year 2019 capital expenditures of around $475M

·     RingCentral (RNG) Q4 adjusted EPS 23c/$189M vs. est. 18c/$181.05M; said saw healthy growth in mid-market and enterprise business; annualized exit monthly recurring subscriptions rose 33% to $726M; RingCentral Office ARR rose 38% to $644M; sees 1Q adjusted EPS 14c-16c on revs $191.5M-$194.5M vs. est. 14c/$189.2M; signs deal with Columbia University replacing legacy on-premise communications system

·     LiveRamp (RAMP) Q3 adjusted EPS 3c/$80M vs. est. loss (12c)/$76.11M; sees FY19 revenue of up to $284M vs. est. $281.31M and up from previous view $275M-$285M; sees FY19 loss from operations roughly $55M as compared to previous operating loss guidance of $64M to $52M

·     Mimecast (MIME) Q3 EPS 9c/$87.6M vs. est. 6c/$84.78M; sees Q4 revenue $90.6M-$91.5M vs. est. $87.8M; sees Q4 adjusted EBITDA of $14.7M-$15.7M; sees FY19 revenue $338.7M-$339.7M vs. est. $333.19M and sees FY19 adjusted EBITDA of $52.9M-$53.9M

·     Multi-Color (LABL) shares fell -16%; Q3 core EPS 50c/$352.7M below est. 79c/$412.24M; lowers FY19 EPS outlook to $3.50-$3.90, below consensus $4.25; 3Q adjusted gross margin 16.5%, below estimate 19.2%; said “while fiscal 19 performance remains below expectations, primarily due to lower sales growth and operating inefficiencies in the U.S., we continue to make progress on executing our strategy and see positives for fiscal 20 in terms of new business development, benefits from acquisition synergies, and increased cost savings and productivity”

·     Veeco (VECO) Q4 EPS loss (16c)/$98.8M vs. est. loss (16c)/$95.88M; sees Q1 EPS loss (30c)-(10c) on revs $85M-$105M vs. est. loss (11c)/$98.06M

·     Varonis (VRNS) Q4 EPS 54c/$87.5M vs. est. 34c/$87.34M; sees FY19 EPS 4c-16c on revs $297M-$305M below est. 32c/$318.47M

·     Cisco (CSCO) downgraded to Equal Weight from Overweight at Morgan Stanley

·     Electronic Arts (EA) shares rise 5% after saying more than 25 million players flocked to Apex Legends since its launch last week.

·     Verizon (VZ) has expanded Secure Cloud Interconnect to allow its customers to privately connect to Alibaba Cloud, the cloud computing arm of the Alibaba Group (BABA)

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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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