Morning Preview: February 14, 2019

Auto PostDaily Market Report

Early Look

Thursday, February 14, 2019

Futures

Up/Down

%

Last

DJ Industrials

94.00

0.37%

25,582

S&P 500

8.50

0.29%

2,757

Nasdaq

25.50

0.36%

7,041

 

 

U.S. stock futures are on track for a stronger open after Bloomberg news reported President Donald Trump may extend the tariff truce with China by another 60 days if a trade deal appears close. Note the President has said prior he would raise tariffs on more than $200 billion in Chinese goods from 10% to 25% starting March 2 if a trade deal is not reached, but has recently eased his tone, offering to extend that deadline if talks with China go well. Earlier Wednesday, Trump told reporters trade talks have been "going along very well." Treasury Secretary Steve Mnuchin and U.S. Trade Representative Robert Lighthizer started a new round of negotiations with Chinese officials today. In Asian markets, The Nikkei Index dipped -4 points to 21,139, the Shanghai Index was little change having slipped -1 point to 2,719 and the Hang Seng Index fell -65 points to 28,432. In Europe, the German DAX is higher by about 40 points at 11,200, while the FTSE 100 is up around 20 points, back above the 7,200 level. Today also marks another busy day of corporate quarterly earnings and several economic data points for investors to sift through along with the busy macro headlines.

 

Stocks fell from their highs on Thursday, but still managed to close higher, with the S&P 500 and Nasdaq Comp rising for a 4th straight session amid continued optimism over U.S.-China trade talks under way in Beijing and news that the U.S. is likely to avert another government shutdown. The Dow was up 200 points at its session high, while the S&P 500 closed above its 200-day moving average (2,743) for a second straight day to its best levels in over 2-months.

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 225K

·     8:30 AM EST      Continuing Claims…est. 1.74M

·     8:30 AM EST      Advance Retail Sales MoM…est. 0.1%

·     8:30 AM EST      Producer Price Index (PPI) MoM for January…est. 0.1%

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

·     8:30 AM EST      PPI Ex: Food & Energy YoY for January…est. 2.5%

·     9:45 AM EST      Bloomberg Consumer Comfort Index

·     10:00 AM EST    Business Inventories for November…est. 0.2%

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AAN, AEE, AGIO, ALE, BCOR, BGCP, BLMN, BWA, CBB, CME, COWN, DGX, DUK, EQM, EQT, FNMA, GNRC, GTLS, HII, INCY, IQV, IRM, KO, MTRN, PBF, POOL, PPL, R, SIX, SON, THS, TPX, TRU, USG, VMC, WLH, WM, WST, ZBRA, ZTS

·     Earnings After the Close: ACOR, AIRG, AMAT, AMN, ANET, BL, CBS, CC, CGNX, CPS, CTT, CVA, ELLI, INVH, LOGM, MRC, NVDA, RDFN, TLND, TREX, TRUE, WES, WGP, WRE, XPO

 

Other Key Events:

·     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

·     2019 ASCO Cancers Symposium, 2/14-2/16, in San Francisco, CA

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 8.30 points, or 0.30%, to 2,753.03

·     The Dow Jones Industrial Average rose 117.51 points, or 0.46%, to 25,543.27

·     The Nasdaq Composite gained 5.76 points, or 0.08%, to 7,420.38

·     The Russell 2000 Index advanced 8.30 points, or 0.31% to 1,542.94

 

 

Macro

Up/Down

Last

WTI Crude

0.55

54.45

Brent

0.90

64.51

Gold

-6.30

1,308.80

EUR/USD

0.0013

1.274

JPY/USD

0.05

111.06

10-Year Note

-0.012

2.695%

 

 

World News

·     China’s exports to the U.S. dropped 2.4% from a year earlier in January, easing from the 3.5% decline recorded in December, according to data. China’s imports from the U.S. fell 41.2% last month, sharper than December’s 35.8% drop.

·     Germany’s GDP slowed in the fourth quarter, which translates into an annualized growth rate of 0.1%, according to the Federal Statistical Office. In the three months through September, the economy contracted by 0.8% in annualized terms

·     China’s foreign direct investment rose 2.8% in January from a year earlier, to $12.41 billion, the Commerce Ministry said Thursday. Last month’s growth slowed sharply from a 23.2% increase in December.

 

Sector News Breakdown

Consumer

·     Fossil (FOSL) shares fell -18%; Q4 EPS $1.01/$787M vs. est. $1.21/$806.67M; Q4 comp sales fell (-7%) vs. est. (-6%); sees FY19 revenue down 12%-7% and sees gross margin in the range of 51.5% to 53.5%; sees Q1 sales down -16%-22%

·     Hyatt (H) Q4 adjusted EPS 62c/$1.14B vs. est. 28c/$1.15B; adjusted EBITDA increased 5.0% to $182M, up 6.8% in constant currency; Q4 comparable system-wide RevPAR increased 1.5%, including an increase of 3.0% at comparable owned and leased hotels; reaffirms Comparable system-wide RevPAR forecast for year; boosts quarterly dividend by 26.7% to 19c

·     MGM Resorts (MGM) reports Q4 EPS (6c) with expenses on revs $3.1B vs. est. 11c/$2.98B; current quarter included a non-recurring, non-cash income tax expense of $92M, 17c per share on a diluted basis; 4Q MGM China revenue rose 33% to $687M, 4Q MGM China adj. property EBITDA rose 11% to $167M, and 4Q Las Vegas Strip RevPAR rose 8.2%

·     Sleep Number (SNBR) shares rose 12%; Q4 EPS 81c/$411.8M vs. est. 73c/$409.9M; sees FY EPS $2.25-$2.75 vs. est. $2.38; Q4 comparable sales +10% vs. est. +8.3%; said expects adj. sales, EPS growth trajectory to continue in 2019

·     Andersons (ANDE) Q4 EPS 84c/$812.7M vs. est. 92c/$1.08B

·     Chefs’ Warehouse (CHEF) Q4 EPS 32c/$394.06M vs. est. 32c/$384.67M; sees FY sales $1.52B-$1.57B vs. est. $1.54B and sees FY adjusted EPS 91c-$1.01 vs. est. $1.00; 4Q gross margin 26%

·     International Flavors (IFF) Q4 EPS 89c/$1.22B below est. $1.27/$1.24B; reconfirms long-term combined guidance over 2019-2021

·     Nu Skin (NUS) Q4 EPS ex-items $1.05/$683.3M vs. est. $1.05/$678.12M; sees FY19 EPS $3.80-$4.05 on revs $2.76B-$2.82B vs. est. $4.01/$2.77B

·     Pilgrim’s Pride (PPC) Q4 adjusted EPS 9c/$2.66B vs. est. 6cc/$2.61B;

 

Energy

·     Laredo Petroleum (LPI) Q4 EPS 16c/$215.29M vs. est. 22c/$235.41M; Total production for FY19 is expected to grow approximately 9% versus FY18 and oil production is expected to decline approximately 5% versus 2018.

·     Marathon Oil (MRO) Q4 adjusted EPS 15c/$1.77B vs. est. 15c/$1.42B; sees total 2019 capital budget of $2.6B, down from 2018; organic free cash flow positive above approx. $45/bbl WTI, post-dividend

·     Pioneer Natural (PXD) Q4 adjusted EPS $1.18/$2.68B vs. est. $1.37/$1.26B; sees Q1 Permian production 302-317 MBOEPD; Q1 Permian production is forecasted to average between 302 to 317 MBOEPD and 194 to 204 MBOPD, while Eagle Ford/South Texas production is forecasted to average between 13.0 to 14.5 MBOEPD and 2.8 to 3.8 MBOPD

·     SunPower (SPWR) Q4 EPS loss (21c)/$525.4M vs. est. loss (32c)/$571.8M; sees 1Q adjusted gross margin 3%-5% vs. Bloomberg est. 10.9%; sees 1Q adjusted revenue $350M-$390M

·     Antero Resources (AR) Q4 adjusted EPS 46c/$1.05B vs. est. 43c/$1.22B; net daily gas equivalent production averaged a record 3,213 MMcfe/d – 30% liquids -, a 37% increase over the prior year period and an 18% increase sequentially

·     Oceaneering (OII) Q4 EPS 7c/$495.1M vs. est. loss (26c)/$4874.99M; sees FY19 adjusted EBITDA $140M-$180M vs. $143M last year

 

Financials

·     AIG Inc. (AIG) Q4 EPS loss (63c) vs. est. 42c; said Q4 net loss of $622M, including net unfavorable prior-year loss reserve development of $365M; 4Q total net investment income of $2.8B vs. $3.5B y/y “significantly impacted” by market performance; increased buy back authorization to $2B, including about $512M that remained under the previous authorization; 4Q net pre-tax catastrophe losses $798M; book value per share $65.04 vs $72.49 y/y

·     Credit Suisse Group AG (CS) swung to a profit in the fourth quarter and posted the first annual profit in four years; net profit for the quarter was 292 million Swiss francs ($290 million), which compares with a net loss of CHF2.13 billion a year earlier

·     Fidelity National (FNF) Q4 adjusted EPS 63c/$1.7B vs. est. 68c/$1.89B

 

Healthcare

·     DaVita (DVA) Q4 adjusted EPS 90c/$2.82B vs. est. 90c/$2.94B; sees FY19 adjusted operating income $1.54B-$1.64B vs. $1.51B in FY18; sees FY19 effective tax rate of 28.5%-29.5%

·     Quidel (QDEL) Q4 EPS 80c/$132.6M vs. est. 60c/$132.11M; Q3 legacy revenue up 3% from last year at $69.6M; Q4 Total influenza revenue increased 4% to $34.9M; Q4 Cardiac Immunoassay revenue grew 34% from the fourth quarter of 2017 to $62.9M

·     Novartis (NVS) said the FDA has approved Egaten for the treatment of fascioliasis in patients six and older.

 

Industrials & Materials

·     Airbus SE (EADSY) pulled the plug on its A380 superjumbo jet even as it reported a record profit and said it would increase production to take advantage of a boom in global air travel. Airbus said it would stop building the jet in 2021 after Emirates Airline cut its A380 order by 39 planes.

·     CF Industries (CF) Q4 EPS 21c/$1.13B vs. est. 48c/$1.24B; sees FY capital expenditure $400M-$500M; announces new $1B share repurchase authorization

·     Kinross Gold (KGC) Q4 EPS 1c/$786.5M vs. est. 0c/$7574.4M; Q4 gold production 2.45M oz vs. 2.5M oz prior forecast. Sees FY19 gold output of 2.5M oz.

·     Ingevity (NGVT) Q4 EPS $1.07/$278.6M vs. est. 77c/$265.59M. Q4 Adjusted EBITDA of $73.3M vs. $52.6M last year; Q4 adjusted EBITDA margin of 26.3% improved 340bps from last year

·     Rush Enterprises (RUSHA) Q4 EPS $1.20/$1.54B vs. est. 90c/$1.35B; anticipates that the pace of growth in the industry-wide parts and service market will slow slightly in 2019

·     Waste Connections (WCN) Q4 EPS 63c/$1.26B vs. est. 61c/$1.23B; sees FY revenue about $5.31B vs. est. $5.39B; 4Q adjusted Ebitda $397.2M

 

REITs

·     Columbia Property (CXP) Q4 FFO 40c vs. est. 37c; sees FY normalized FFO per share $1.35-$1.40 vs. estimate $1.43

·     Federal Realty (FRT) Q4 FFO $1.57/$235.38M vs. est. $1.57/$234.11M

·     HCP (HCP) Q4 adjusted FFO 43c/$441.92M vs. est. 43c/$447.06M; sees FY19 adjusted FFO $1.70-$1.76 vs. consensus $1.76

·     Regency Centers (REG) Q4 FFO 98c vs. est. 95c; same property Net Operating Income increased 2.2% in Q4 and 3.4% in FY18 as compared to the same periods in the prior year; sees year EPS $3.83-$3.89 vs. est. $3.90

·     Tanger Factory (SKT) Q4 adjusted FFO 64c/$127.2M vs. est. 62c/$122.28M; sees FY19 FFO $2.39, vs. consensus $2.31-$2.37

·     Taubman Centers (TCO) Q4 FFO 91c/$167.5M vs. est. 89c/$172.4M; reports Q4 same-store NOI up 4.4% and avg rent per square foot up 3.9%

 

Technology, Media & Telecom

·     Cisco (CSCO) Q2 EPS 73c/$12.45B vs. est. 72c/$12.41B; sees Q3 revenue up 4%-6% vs. consensus $12.84B; sees revenue up 4%-6% year-over-year; sees Q3 non-GAAP gross margin rate of 64%-65% and non-GAAP operating margin rate of 31%-32%; boosts dividend to 35c from 33c and adds $15B stock buyback

·     CenturyLink (CTL) shares fell -10%; Q4 adjusted EPS 37c/$5.78B vs. est. 32c/$5.78B; to reduce annual dividend to $1.00 from $2.16; sees FY19 adjusted EBITDA $9B-$9.2B; sees FY19 free cash flow $3.1B-$3.4B; sees FY19 CapEx $3.5B-$3.8B; effective tax rate ~25%

·     NetApp (NTAP) Q3 EPS $1.20/$1.56B vs. est. $1.15/$1.60B; sees 4Q EPS $1.22-$1.28 on revs $1.59B-$1.69B vs. est. $1.24/$1.70B; 3Q adjusted gross margin 63.7%

·     ASGN Inc. (ASGN) Q4 adjusted EPS $1.14/$929.7M vs. est. $1.15/$916.28M; sees Q1 adjusted EPS 92c-99c on revs $916.6M-$926.6M vs. est. 99c/$899.36M

·     Diodes (DIOD) Q4 EPS 65c/$314.4M vs. est. 58c/$313.3M; sees 1Q revs about $305M, Plus or Minus 2.5% vs. est. $302.0M and sees 1Q GAAP gross margin to be 36.3%, plus or minus 1%

·     Equinix (EQIX) Q4 EPS $1.36/$1.31B vs. est. $1.23/$1.31B; sees FY19 revenue $5.52B-$5.57B, vs. consensus $5.56B and sees FY19 adjusted EBITDA $2.605B-$2.655B, an adjusted EBITDA margin of 47%

·     SVMK Inc. (SVMK) Q4 EPS loss (3c) on revs $67.9M; 4Q cash and cash equivalents $153.8M; sees 1Q revs $67.5M-$68.5M and year revs $290M-$295M

·     Yelp (YELP) Q4 EPS 37c/$243.7M vs. est. 36c/$241.2M; 4Q adjusted Ebitda $52.9M; approves increase of $250M to share repurchase plan; targets mid-teen rev growth in next five years

·     Nintendo (NTDOY) unveiled more than a dozen new games for the Switch hybrid console, with several to be released in the first half. New Switch games include a new Zelda title, Super Mario Maker 2, Dragon Quest Builder, Hellblade

_________________________________________________________________

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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