Morning Preview: November 06, 2019

Auto PostDaily Market Report

Early Look

Wednesday, November 6, 2019

Futures

Up/Down

%

Last

DJ Industrials

11.00

0.04%

27,432

S&P 500

0.50

0.01%

3,072

Nasdaq

0.50

0.01%

8,211

 

 

U.S. stocks futures are mostly flattish, inching up after mostly smaller gains on Tuesday, as investors brace for another heavy dose of quarterly earnings the next few sessions. Optimism over a possible resolution to the U.S.-China trade conflict dimmed somewhat while mixed economic data out of Europe kept those markets trading lackluster. In corporate news, HPQ shares are higher amid a WSJ report that XRX is considering making an offer for the company. In Asian markets, The Nikkei Index gained 51 points to 23,303, the Shanghai Index dipped about -13 points to 2,978 and the Hang Seng Index inched higher 5 points to 27,688. In Europe, the German DAX is up a few points to 13,160, while the FTSE 100 is little changed at 7,380. There are only a few economic data points today, a ton of earnings and a couple of Fed speakers (Evans, Williams, Harker) but the big story will be if markets can hold their record highs or if markets will get tired after eclipsing all-time highs.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -3.65 points, or 0.12%, to 3,074.62

·     The Dow Jones Industrial Average rose 30.52 points, or 0.11%, to 27,492.63

·     The Nasdaq Composite gained 1.48 points, or 0.02%, to 8,434.68

·     The Russell 2000 Index advanced 2.21 points, or 0.14% to 1,599.61

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Nonfarm Productivity, Q3-P…est. 0.9%

·     8:30 AM EST      Unit Labor Costs, Q3-P…est. 2.3%

·     10:30 AM EST    Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AES, AYR, BCRX, BKI, BLMN, CARS, CCO, COTY, CRL, CVS, DNOW, ELAN, ESPR, FUN, HUM, HZNP, IONS, LL, LXP, MNKD, MRNA, NYT, ODP, OMI, PFGC, PZZA, SBGI, SEE, SMG, SPKE, VER, VG, VMC, WD, WEC, WEN, WNC

·     Earnings After the Close: AAOI, ACRX, AEL, ALB, ALSK, ANGI, ANSS, ATO, BAND, BL, BRKS, CECO, CHRS, COLL, CTL, CVNA, CWX, DCP, DVAX, DXCM, ELF, ES, ERI, EQH, EXPE, FISV, FLO, FLT, FOSL, FOXA, FSCT, GDDY, GDOT, GLUU, IAC, III, INFN, LCI, LNT, MRO, NKTR, NTRA, NVTA, PBYI, PLYA, PRI, QCOM, RDFN, ROKU, SAIL, SGMO, SQ, STAY, SUN, TRIP, UHAL, VNDA, WK, ZAGG, ZAYO

 

Other Key Events:

·     Piper Western Bank Symposium, 11/6-11/7, in Santa Monica, CA

·     RW Baird Global Industrial Conference, 11/5-11/7, in Chicago

·     Society of Immunotherapy of Cancer, 11/6-11/10, in Maryland

 

 

Macro

Up/Down

Last

WTI Crude

-0.04

57.19

Brent

-0.20

62.76

Gold

3.40

1,487.10

EUR/USD

0.0009

1.1084

JPY/USD

-0.14

109.02

10-Year Note

-0.01

1.847%

 

 

World News

·     Factory Orders in Germany were up 1.3% compared with the previous month, led higher by demand from countries outside the eurozone, which was up 3%, and domestic orders, which rose 1.6%; orders from other countries in the 28-nation eurozone dropped 1.8%.

·     The final composite purchasing managers index for the euro area showed the region remained “close to stagnation” in October, according to IHS Market on Wednesday. The index rose to 50.6, though that was an improvement on a preliminary 50.2 level and a 50.1 level for September. The data still signals a rate of growth that’s among the weakest in the past six-and-a-half years

 

Sector News Breakdown

Consumer

·     Liquidators Holdings Inc. (LL) reported soft demand in a “challenging quarter,” and cut its full-year 2019 sales and operating margin guidance; cut its full-year revenue outlook to flat to slightly positive from a previous outlook of low-single-digits growth; sees year comp sales from roughly flat to down 2% to flat; and adjusted operating margin is now seen at 1%-1.4%, from 1.4%-1.9%

·     Nu Skin (NUS) Q3 EPS 79c/$589.9M vs. est. 76c/$606.25M; forecast for EPS and revenue including negative foreign currency impact trailed estimates; sees FY19 EPS $3.07-$3.14 on revs $2.41B-$2.43B below consensus of $3.27 and $2.49B

·     Red Robin (RRGB) Q3 adjusted EPS loss (24c)/$294.2M vs. est. loss (22c)/$289.52M; Q3 comparable restaurant revenue increased 1.6% using constant currency rates vs. est. up 0.2%; lowers year EPS view to 64c-99c from prior 95c-$1.50 (est. $1.11) and year comps seen -1% to flat from prior -1% to up 1%

·     WW Int’l (WW) Q3 EPS 68c/$348.6M vs. est. 66c/$352.72M; sees FY19 EPS $1.63-$1.75 vs. est. $1.72 and said subscriber growth gained momentum in the third quarter, with end of period subscribers increasing 6% year-over-year to 4.4 million

·     Adidas AG (ADDYY) reported Q3 net profit and sales that beat analysts’ expectations, and backed its 2019 view; said sales for the quarter were EUR6.41 billion compared with EUR5.87 billion the year previous, beating analysts’ forecast EUR6.32 billion

·     Hasbro (HAS) 9.21M share Secondary priced at $95.00

 

Energy

·     The American Petroleum Institute (API) reported that U.S. crude supplies rose by roughly 4.3 million barrels for the week ended Nov. 1, showed stockpile declines of about 4 million barrels for gasoline and 1.6 million barrels for distillates

·     Devon (DVN) core Q3 EPS 26c vs. est. 16c; said sees 4Q production 420 to 448 mboe/d after reporting Q3 production 428 mboe/d, -18% YoY; says Q4 oil production from retained assets is forecasted to average 154,000 to 160,000 barrels per day

·     Diamondback Energy (FANG) shares fell -10%; Q3 EPS $1.47/$975M below est. $1.76/$1.07B; sees full year 2020 average daily production of 310.0 – 325.0 MBOE/d and average daily oil production of 205.0 – 215.0 MBO/d with an estimated capital spend of $2.8B-$3B which includes $200M-$225M of midstream capital and $150M-$175M of infrastructure capital

·     Whiting Petroleum (WLL) Q3 adjusted EPS loss (38c)/$375.89M vs. est. loss (9c)/$410.4M; much larger than forecast Q3 loss and a one-third Y/Y drop in revenues, as production and averaged realized prices fell; Q3 production fell 4% Y/Y to 11.36M boe and YTD output slipped less than 1% to 34.5M boe, but WLL reaffirms full-year production guidance of 45M-46.5M boe.

 

Financials

·     Avalara (AVLR) Q3 EPS loss $0.01 vs est loss $0.09 on revs $98.5Mm vs est $93.1Mm; guides 4Q revs $99.5-100.5Mm vs est $96.2Mm; raises FY revs guide to $374-375.3Mm from $364-366Mm

·     LendingClub (LC) Q3 adjusted EPS 9c/$204.9M vs. est. 2c/$204.81M; narrow full year 2019 Net Revenue range to $760M-$770M (rom $765M-$795M) and updating full year GAAP Consolidated Net Loss range to ($31M) to ($26M) reflecting $26M year-to-date expenses related to legal, regulatory and other expense related to legacy issues, cost structure simplification expense, and other items

·     Medical Properties Trust (MPW) 50M share Secondary priced at $18.50

 

Healthcare

·     Acadia Healthcare (ACHC) 3Q adj EPS $0.52 vs est $0.55 on revs $777.3Mm vs est $790.4Mm; guides FY adj EPS $2.00-2.05 vs prior $2.15-2.23, sees FY revs $3.1-3.13B vs prior $3.15-3.18B

·     CVS Health (CVS) Q3 EPS $1.84/$64.8M vs. est. $1.77/$62.99B; Q3 total comps up 3.6% and raises FY adj EPS $6.97-7.05, est $6.98 (above prior view $6.89-$7.00)

·     Elanco (ELAN) Q3 adjusted EPS 30c/$771.3M vs. est. 26c/$765.43M; narrows FY19 adjusted EPS view to $1.04-$1.08 from $1.04-$1.10 while lowers FY19 revenue view to $3.07B-$3.085B from $3.08B-$3.12B (est. $3.12B)

·     Humana (HUM) Q3 adjusted EPS $5.03/$16.24B vs. est. $4.58/$16.15B; raises FY19 adjusted EPS view to about $17.75-$17.60 (est. $17.64)

·     DaVita (DVA) 3Q adj EPS cont ops $1.53 vs est $1.24 on revs $2.9B; guides FY adj op inc $1.74-1.77B, sees FY adj cash flow from ops $1.53-1.68B

·     Dermira (DERM) 3Q loss/shr $1.06 vs est $1.28 on revs $11.5Mm vs est $11.1Mm

·     Fluidigm (FLDM) shares fell -24%; beats EPS by $0.01 but misses on revs $26.5Mm vs est $28.74Mm; guides 4Q revs below ests, sees $29-32Mm vs est $33.4Mm

·     Jazz Pharmaceuticals (JAZZ) Q3 adjusted EPS $4.10/$538M vs. est. $3.59/$524.39M; boosts FY19 adj. EPS view to $15.50-$16.15 from $14.30-$15.00 (above 415.03) and raises FY19 revenue view to $2.10B-$2.18B from $2.070B-$2.150B (est. $2.11B)

·     Insulet (PODD) Q3 EPS 1c/$192.1M vs. est. 3c/$179.49M; raises FY19 revenue view to $722M-$730M above est. $711.48M; guides U.S. Omnipod of $410 to $414 million, representing growth of 27% to 28% vs. previously 21% to 23%

·     Ligand Pharma (LGND) Q3 revs $24.8M vs. est. $22.4m; cut its adjusted EPS for the year to $3.00, down from prior $3.20 (est. $3.25) and guides year revs $118M in line with guidance

·     Mallinckrodt (MNK) said in a regulatory filing that in August 2019, the company received a subpoena from the SEC for documents related to the company’s disclosure of its dispute concerning the base date average manufacturer price under the Medicaid Drug Rebate Program for Mallinckrodt’s Acthar Gel

·     Supernus (SUPN) lowers FY19 net product sales view to $390M-$395M from $400M-$410M and sees FY19 operating earnings in the range of $150M-$155M, compared to the previously expected range of $150M-$160M; expects that the combined impact of product unit volume growth and price increases will be offset by continued pressure on gross-to-net sales deductions

 

Industrials & Materials

·     Livent Corp. (LTHM) shares fell -8%; missed third-quarter GAAP earnings and sales expectations and called for lower full-year profit and revenue; reported Q3 EPS 12/$97.7M vs. est. 14c/$112.6M; guides year revs $400M-$410M on EPS 44c-47c vs. est. $453M/58c; said it has signed a memorandum of understanding for a multi-year supply agreement with LG Electronics Inc. for lithium hydroxide starting in 2020.

·     Century Aluminum (CENX) said it expects soft conditions in aluminum to continue the next couple of quarters, CEO Mike Bless said; said think it’s prudent to prepare for a prolonged period of soft-ish conditions over the next couple quarters

·     Aircastle Limited (AYR) in pact to be acquired by a newly-formed entity controlled by affiliates of Marubeni Corporation and Mizuho Leasing Company, Limited. Companies say deal represents total valuation of approximately $2.4 billion, or approximately $7.4 billion including debt obligations to be assumed or refinanced net of cash https://yhoo.it/2WXMqAx

·     Ryanair (RYAAY) has grounded at least three Boeing (BA) 737s after detecting cracks between the wings and the fuselage, the Guardian reports

 

Technology, Media & Telecom

·     HP Inc. (HPQ) shares rise 10% after the WSJ reported Xerox (XRX) is considering making a cash-and-stock offer for HPQ at a premium to its market value, WSJ reports citing people familiar with the matter. HPQ had a market cap of $27.27 bln, as of Tuesday’s close https://on.mktw.net/2WLSbRs

·     CarGurus (CARG) 3Q adj EPS $0.14 vs est $0.09; guides FY adj EPS $0.47-0.48 vs prior $0.42-0.45, est $0.44; sees FY revs $583-586Mm vs prior $576.5-582.5Mm

·     Five9 Inc. (FIVN) 3Q adj EPS $0.20 vs est $0.15 on revs $83.8Mm vs est $78.6Mm

·     HubSpot (HUBS) Q3 adj EPS $0.3 vs est $0.24 on revs $173.6Mm vs est $168.7Mm; guides 4Q adj EPS $0.40-0.42 vs est $0.44, guides FY adj EPS $1.44-1.46 vs prior $1.39-1.41

·     Altice USA (ATUS) Q3 EPS 12c/$2.44B vs. est. 15c/$2.48B; said Q3 total unique residential customer relationships grew +0.7% year-over-year and were flat compared to the prior quarter; lowers year rev outlook to up 2.5% from prior view up 3%-3.5%

·     Boingo Wireless (WIFI) Q3 EPS 0c/$64.7M vs. est. loss (10c)/$62.8M; narrows FY19 EPS view loss to (32c)-(23c) and narrows FY19 revenue view to $267M-$273M (vs. est. $269.9M); sees FY19 adjusted EBITDA in the range of $80M-$85M

·     Match Group’s (MTCH) shares fell -18%; Q3 EPS 51c/$541.5M vs. est. 41c/$540.7M; Q3 operating income $176.6M, up 26% YoY; metrics include: Total avg. subscribers 9.6M, up 19% YoY and Tinder has 5.7m avg. subscribers, increasing 1.6M Yoy

·     Microchip (MCHP) 2Q adj EPS $1.43 vs est $1.43 on revs $1.34B; guides 3Q adj EPS $1.12-1.32 vs est $1.45; sees 3Q net sales $1.204-1.311B vs est $1.35B, guides 3Q adj gr mgn 61-61.4% vs est $62.2%; cuts FY capital expenditure $90M-$100M from $110M-$130M

·     New Relic (NEWR) Q2 adjusted EPS 24c/$145.8M vs. est. 15c/$143.39M; said delivered a record number of platform innovations on top of the New Relic One observability platform during Q2; sees Q3 adjusted EPS 12c-13c on revs $148M-$150M vs. est. 10c/$148.99M

·     Poly (PLT) shares plunged -28%; Q2 EPS $1.24/$462M vs. est. $1.33/$482.88M; sees 3Q revs $383M-$423M below est. $509M

·     Sierra Wireless (SWIR) guides lower, sees FY adj EPS $0.00-0.03 vs prior $0.30-0.35, est $0.32; reported 3Q adj EPS $0.03 vs est $0.11

·     comScore (SCOR) Q3 revs $94.3M vs. $102.9M YoY; net loss of $10.6 million, or $(0.16) per share, compared to a net loss of $24.6 million, or $(0.42) per share in the year-ago quarter; adjusted EBITDA for the third quarter increased 23.2% year-over-year to $6.4 million; cash, cash equivalents and restricted cash of $58.5 million increased 16.5% since Dec. 31, 2018

_________________________________________________________________

Content is provided by Hammerstone Inc., which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the Hammerstone content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.

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