Morning Preview: February 13, 2019

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Early Look

Wednesday, February 13, 2019

Futures

Up/Down

%

Last

DJ Industrials

66.00

0.26%

25,472

S&P 500

5.50

0.21%

2,750

Nasdaq

27.50

0.39%

7,046

 

 

U.S. stock futures are pointing to a higher open, looking to add to yesterday’s strong gains a day after President Donald Trump said he may let a China trade-deal deadline slide if the two sides were making enough progress. Trade talks between the U.S. and China move into a third day in Beijing, with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer expected Thursday for more high-level discussions. Note March 1st marks the deadline by the White House for a trade deal. Asian markets move to 4-month highs as the Nikkei Index gained 280 points to settle at 21,144, the Shanghai Index gained 49 points (1.84%) to settle at 2,721 and the Hang Seng Index jumped 326 points to finish at 28,497. In Europe, the German DAX is up about 15 points at 11,140, while the FTSE 100 is up over 30 points at 7,170. There are a few important economic data points today (CPI) as well as several Fed speakers. Oil prices are looking to add to yesterday’s gains while gold and Treasuries are little changed.

 

U.S. stocks surged on Tuesday in a broad-based rally (as 10 of the 11 S&P sectors finished higher), sending the S&P 500 above its 200-day moving average for the first time since mid-December while the Dow Jones Industrial Average to a ten-week high, rising as much as 400-points. Strength was attributed to a tentative spending deal out of Washington (with funds for a border wall) in an effort to prevent another government shutdown as well as optimism surrounding U.S.-China trade talks ahead of high profile talks later this week. The CBOE Volatility index slumped to the lowest levels since October as the VIX dropped to 15.5. According to Bespoke, there were 43 new 52-week highs in the S&P 500 yesterday, the highest reading since 12/3, which is the last time the S&P 500 closed higher than it did Tuesday.

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 34.93 points, or 1.29%, to 2,744.73

·     The Dow Jones Industrial Average rose 372.65 points, or 1.49%, to 25,425.76

·     The Nasdaq Composite spiked 106.71 points, or 1.46%, to 7,414.62

·     The Russell 2000 Index advanced 19.25 points, or 1.27% to 1,538.23

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Consumer Prices (CPI) MoM for January…est. 0.1%

·     8:30 AM EST      CPI Ex: Food & Energy MoM for January…est. 0.2%

·     8:30 AM EST      CPI Ex: Food & Energy YoY for January…est. 2.1%

·     8:50 AM EST      Fed’s Mester speaks on Economic Outlook and Monetary Policy

·     8:50 AM EST      Fed’s Bostic to speak to European Financial Forum in Dublin

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       Monthly Budget Statement for December…est. (-$11.0B)

 

Earnings Calendar:

·     Earnings Before the Open: AB, ACCO, BABY, BKI, CBRE, CBZ, CEVA, CFX, CIM, CRL, DBD, DISH, ECOM, FLIR, FUN, GPN, HLT, IPG, IRWD, KELYA, LAD, NTWK, TMHC, VERU, WH

·     Earnings After the Close: AIG, AM, AMGP, AR, ASGN, BAND, BCOV, BKD, CHEF, CRY, CSCO, CTL, CXP, DIOD, DVA, EQIX, FOSL, FR, H, HCP, HOS, IFF, IVC, LPI, LPX, MGM, MMLP, MRO, NLY, NTAP, NUS, OII, PPC, PXD, QDEL, REG, RYAM, SKT, SPWR, TCO, TRUP, VNDA, WCN, WMB, YELP

 

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

·     The House Ways and Means Committee to hold first hearing examining the GOP tax law

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

 

 

Macro

Up/Down

Last

WTI Crude

0.67

53.77

Brent

0.99

63.41

Gold

0.30

1,314.30

EUR/USD

-0.0009

1.1317

JPY/USD

0.20

110.68

10-Year Note

+0.002

2.681%

 

 

World News

·     The International Energy Agency (IEA) has left its global demand growth forecast of 1.4M bpd for 2019 unchanged from its last report in January, stating the oil market will struggle to absorb fast-growing crude supply from outside OPEC, even with the group’s production cuts and U.S. sanctions on Iran and Venezuela.

·     U.K. inflation is back below the Bank of England’s 2% target for the first time in two years, as consumer prices rose a less-than-forecast 1.8% in January from a year earlier, down from 2.1% in December and the smallest increase since January 2017

·     The U.S. nation debt topped a record $22 trillion this week less than a year after it crossed the $21 trillion mark, indicating a further deterioration in the nation’s finances

 

Sector News Breakdown

Consumer

·     Hilton (HLT) Q4 adjusted EPS 79c/$2.29B vs. est. 69c/$2.27B; sees Q1 adjusted EPS 73c-78c vs. est. 59c; system-wide RevPAR is expected to increase between 1%-3% on a comparable and currency neutral basis compared to the first quarter of 2018

·     Wyndham Hotels & Resorts (WYN) Q4 EPS 58c/$527M vs. est. 56c/$494.99M; sees FY revenue $2.11B-$2.16B vs. est. $2.19B; sees FY adjusted EPS $3.05-$3.17 vs. est. $3.28

·     TripAdvisor (TRIP) Q4 EPS 27c/$346M vs. est. 28c/$342.8M; 4Q adjusted Ebitda $87M

·     Denny’s (DENN) Q4 EPS 18c/$159.5M vs. est. 18c/$159M; sees FY adjusted Ebitda $95M-$100M vs. est. $102.6M; sees 1Q company restaurant comparable sales 0% to +2% after 4Q company restaurant comparable sales +2.1%

·     Red Rock Resorts (RRR) Q4 revenue $431.5M vs. est. $408.7M; 4Q adjusted Ebitda $135.1M vs. est. $125.3M

·     Sunstone Hotel (SHO) Q4 AFFO 29c/$280.85M vs. est. 27c/$276.73M; sees FY19 AFFO $1.01-$1.11 vs. est. $1.11 and sees FY19 net income $100M-$134M

 

Energy, Industrials and Materials

·     American Electric Power (AEP) announced that its competitive renewable energy subsidiary has signed an agreement to acquire Sempra Renewables LLC and its 724 megawatts of operating wind generation and battery assets for approximately $1.056B, including $551M in cash, assumption of $343M in existing project debt and $162M in tax equity obligation

·     Occidental (OXY) Q4 core EPS $1.22 vs. est. $1.14 and Q4 revenue $4.76 billion; 4Q Realized domestic gas price per Mcf $1.33 vs. $2.08 y/y; 4Q U.S. Production 410 MBOE/D vs. 319 y/y; 4Q realized NGLs price per barrel $22.88 vs. $25.08 y/y

·     The American Petroleum Institute (API) reported that U.S. crude supplies fell by -998K barrels for the week ended Feb. 8, showed that gasoline stockpiles rose by 746K barrels, while distillate inventories declined by -2.5M barrels

·     BHP Group PLC (BHP) said it has approved total funding of $952 million to develop the Atlantis Phase 3 project in the U.S. Gulf of Mexico and to drill an appraisal well in Mexico’s Trion field

·     Freeport McMoRan (FCX) upgraded to Overweight from Equal Weight at Morgan Stanley

·     Deere (DE) downgraded to neutral from buy at Bank America/Merrill

 

Financials

·     Arch Capital (ACGL) Q4 operating EPS 46c vs. est. 38c; 4Q book value per share $21.52, estimate $21.54 and 4Q net premiums written $1.30 billion

·     CNO Financial (CNO) Q4 operating EPS 36c vs. est. 50c; 4Q book value per share $20.78, 4Q new annualized premiums $89.6M and 4Q collected segment premiums $987.3M

·     UDR Inc. (UDR) Q4 FFO 50c vs. est. 49c; sees 1Q FFO per share 48c-50c vs. est. 50c; sees FY FFO per share as adjusted $2.03-$2.07 vs. est. $2.06

·     Regional Management (RM) Q4 EPS 90c/$83.7M vs. est. 81c/$81.77M

 

Healthcare

·     Bright Horizons (BFAM) Q4 EPS 90c/$478M vs. est. 84c/$480.13M; sees FY19 adjusted EPS $3.57-$3.63 vs. est. $3.59 and sees FY19 revenue growth 8%-10% vs. consensus $2.07B

·     Exelixis (EXEL) Q4 EPS $1.15/$228.6M vs. est. 23c/$187.6M; 4Q Cabozantinib revenue $176.2M; Q4 cash and other $851.6M; said to initiate phase 1 clinical development of Xl092; sees 2019 R&D expenses $285M-$315M

·     MacroGenics (MGNX) 5.5M share secondary priced at $20 per share

 

Technology, Media & Telecom

·     Activision Blizzard (ATVI) shares rose 3%; Q4 EPS 90c/$2.84B vs. est. $1.28/$3.04B; sees Q1 EPS 0c-1c on revs $222M-$225M vs. est. 2c/$185.55M; Q4 MAUs 53M for Activision unit and also reports 35M MAUs for Blizzard and 268M for King; authorizes 2-year $1.5B stock buyback and raises annual dividend to 37c from 34c; sees FY19 EPS $1.85 vs. est. $2.58

·     Akamai (AKAM) Q4 EPS $1.07/$713.4M vs. est. $1.00/$703.9M; announced CFO succession planned transition; Akamai Technologies and Mitsubishi UFJ Financial Group formed a joint venture to offer a new blockchain-based online payment network; sees Q1 adjusted EPS $1.00-$1.05 on revs $690M-$704M vs. est. 96c/$710.61M

·     Aquantia (AQ) shares fell -19%; Q4 EPS loss (9c)/$29.1M vs. est. 1c/$33.63M; sees 1Q revenue $19M-$21M below est. $33.38M

·     Cornerstone OnDemand (CSOD) Q4 EPS 24c/$138.2M vs. est. 24c/$129.88M; sees FY19 revenue $558M-$568M vs. est. $567.02M and sees FY19 subscription revenue $533M-$543M

·     Groupon (GRPN) shares fell -10%; Q4 EPS 10c/$799.9M vs. est. 13c/$787.65M; Q4 adjusted EBITDA $104.6M vs. $105.3M last year; Q4 global units sold 172.3M, down 9% from last year

·     HubSpot (HUBS) Q4 EPS 37c/$144.0M vs. est. 30c/$137.3M; sees Q1 EPS 23c-25c on revs $146.5M-$147.5M vs. est. 24c/$145.57M. Sees Q1 non-GAAP operating income $9.5M-$10.5M

·     j2 Global (JCOM) Q4 adjusted EPS $2.11/$346.1M vs. est. $2.03/$342.14; sees FY19 adjusted EPS $6.65-$6.95 on revs $1.29B-$1.33B vs. est. $6.75/$1.28B

·     Lattice Semiconductor (LSCC) Q4 adjusted EPS 8c/$96.0M vs. est. 8c/$95.1M; sees Q1 revenue $94M-$98M vs. est. $93.72M; sees Q2 gross margin at about 57.5% plus or minus 2%; 4Q adjusted gross margin 56.7% vs. est. 57.0%

·     Monolithic Power (MPWR) Q4 EPS 99c/$153.5M vs. est. 98c/$153.4M; sees Q1 revs $138M-$144M vs. est. $146.9M; raises quarterly dividend to 40c form 30c

·     Twilio (TWLO) shares fell -5%; Q4 EPS 4c/$204.3M vs. est. 4c/$185.01M; reports 64,286 Active Customer Accounts as of December 31, 2018, compared to 48,979 Active Customer Accounts as of December 31, 2017; sees Q1 EPS 0c-1c on revs $222M-$225M vs. est. 2c/$185.55M

·     Qualys (QLYS) shares fell -14%; Q4 EPS 51c/$74.2M vs. est. 40c/$74.13M; sees FY19 non-GAAP EPS $1.84-$1.89 vs. est. $1.86; sees FY19 revenue $320.0-$323.0M vs. est. $331.2M; Q1 revenue view represents a 15%-16% growth 2018

·     Unisys (UIS) Q4 adjusted EPS 97c/$760.9M vs. est. 66c/$751.9M

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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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