Morning Preview: November 08, 2019

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Early Look

Friday, November 8, 2019





DJ Industrials




S&P 500










Stock futures in the U.S. are pointing to a flattish open, managing to hold yesterday’s gains that produced record all-time highs for major U.S. averages, but not advancing further as optimism waned regarding the U.S. and China making progress in resolving the trade war. In Asian markets, The Nikkei Index rose 61 points to 23,391, the Shanghai Index dropped -14 points to settle at 2,964 and the Hang Seng Index fell -196 points to 27,651. In Europe, the German DAX is down about -10 points to 13,275, while the FTSE 100 is down a few points trading just under 7,400. In Europe, European Commission President Jean-Claude Juncker said he doesn’t believe President Donald Trump will levy tariffs on imported European cars next week. Stocks have posted a generally solid week of returns, getting a boost this quarter on better-than-expected earnings (though forward guidance has been rocky in general), a continuing accommodative Fed (which cut interest rates for the third time this year last week) and improving trade optimism with investors betting that a partial trade deal would be accompanied by a rolling-back of existing tariffs (according to reports yesterday. In corporate news, Gap Inc. (GPS) shares slid nearly 10% after the apparel maker pared its profit targets for the year and said its CEO would step down immediately while Dow component and media giant Disney (DIS) shares rise about 5% after its earnings beat analysts’ expectations in what has been a strong two days of earnings in the media space (DISCA, FOXA, NWSA).

Market Closing Prices Yesterday

·     The S&P 500 Index gained 8.40 points, or 0.27%, to 3,085.18

·     The Dow Jones Industrial Average rose 182.24 points, or 0.66%, to 27,674.80

·     The Nasdaq Composite surged 23.89 points, or 0.28%, to 8,434.52

·     The Russell 2000 Index advanced 4.45 points, or 0.28% to 1,593.99


Events Calendar for Today

·     10:00 AM EST    Wholesale Inventories MoM for September…est. (-0.3%)

·     1-:00 AM EST     University of Michigan Sentiment, Nov-P…est. 95.5

·     1:00 PM EST       Baker Hughes Weekly Rig Count


Earnings Calendar:

·     Earnings Before the Open: AEE, CLNY, DRH, DUK, EPAY, ESNT, OCGN, OSG, SMLP, USCR, ZEUS


Other Key Events:

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






WTI Crude















10-Year Note





World News

·     Michael R. Bloomberg is laying the groundwork to enter the Democratic presidential primary and is seen filing the paperwork to do so this week “designating himself as a candidate in at least one state with an early filing deadline – NY Times reported

·     Outgoing European Commission President Jean-Claude Juncker said he doesn’t believe President Donald Trump will levy tariffs on imported European cars next week, according to an interview with German newspaper Sueddeutsche Zeitung.

·     German exports were up 1.5% in September from August in adjusted terms, while imports increased 1.3% on the month, the statistics office said. The figures account for seasonal swings and calendar effects

·     Chinese exports last month fell 0.9% from a year earlier, following September’s 3.2% decline, data from the General Administration of Customs showed Friday (est. was for -3.1% drop)

·     China imports fell 6.4% on year in October, compared with September’s 8.5% drop, the customs data showed (vs. est. for -8.6% decline)

·     China’s overall trade surplus stood at $42.81 billion in October, wider than September’s $39.65 billion surplus and the $42.6 billion surplus expected.


Sector News Breakdown


·     Gap Stores (GPS) Q3 comps -4%; Gap global -7%, Banana Republic global -3%, guides 3Q adj EPS $0.34-0.36 and lowers FY adj FY EPS $1.70-1.75 below prior guide $2.05-2.15; said CEO Peck will step down from his position and from the company’s board following a brief transition period; said was a challenging quarter, as macro impacts and slower traffic further pressured results that have been hampered by product and operating challenges across key brands

·     GoPro (GPRO) Q3 non-GAAP EPS loss (42c)/$131M vs. est. loss (48c)/$126.35M; sees Q4 non-GAAP EPS 74c-84c vs. est. 84c; reiterating annual revenue outlook of 6%-9% growth, and increasing profitability outlook 4Q; Q3 adj Ebitda loss $52.7M vs. est. loss $59M

·     Monster Beverage (MNST) Q3 EPS 55c/$1.13B vs. est. 54c/$1.11B; authorizes $500M stock repurchase program; Q3 gross margin 59.4% vs. est. around 60%

·     Planet Fitness (PLNT) Q3 adjusted EPS 36c/$166.8M vs. est. 36c/$162.27M; raises year total revenue view to increase approximately 19% as compared to the year ended December 31, 2018, up from prior guidance of approximately 18%; Q3 system-wide comparable sales were up 7.9% vs. +7.3% est. and franchise comparable sales rose 8.1%, while corp-owned comp sales up 4.9%

·     Scientific Games (SGMS) Q3 EPS $0.15 vs. est. loss (4c); revs $855Mm vs. est. $851.1Mm

·     Zillow (ZG) Q3 adjusted EPS loss (12c)/$745.2M vs. est. loss (22c)/$714.01M; guides Q4 revs $790M-$825M vs. est. $759.6M and year revs $2.59B-$2,62B vs. est. $2.53B guides Q4 adj Ebitda loss (425M-$43M vs. est. loss $22.2M


Energy, Industrials & Materials

·     Tronox (TROX) Q3 adjusted EPS 21c/$768M vs. est. 15c/$795.03M; said TiO2 selling prices less than 1% lower on local currency basis and volumes down sequentially within seasonally typical range, 7%, versus Q2 on pro forma basis; sees 2019 adjusted EPS 25c-36c vs. est. 40c

·     Air Lease (AL) reports Q3 EPS $1.80 on revs $530.9M vs. est. $1.32 and $525.8M; Pre-tax profit margin of 36.5% for the three months ended September 30, 2019 and adjusted pre-tax profit margin of 38.4% for the three months ended September 30, 2019; boosts dividend to 15c from 13c



·     Green Dot (GDOT) 3Q adj EPS $0.20 vs. est. $0.02 on op revs $240.4Mm vs. est. $228.5Mm; guides FY adj EPS $2.73 vs. prior $2.71-2.77, est. $2.67; sees FY op revs low end of $1.06-1.08B

·     NCR Corp. (NCR) Q3 EPS 73c/$1.78B vs. est. 68c/$1.62B; raises FY19 revenue growth view to 5%-6% from 3%-4% while reaffirms FY19 EPS view of $2.75-$2.85 vs. est. $2.83



·     Agios Pharmaceuticals (AGIO) 8.25M share Secondary priced at $31.00

·     TELA Bio (TELA) 4M share IPO priced at $13.00

·     Arena Pharma (ARNA) Q3 EPS loss ($1.46)/$1.35M in revs vs. est. loss ($1.32)/$2.06M; 3Q cash and cash equivalents $170.9M, -66% YoY

·     Conformis (CFMS) rises 19% after announcing FDA approval for its next generation hip replacement implant; will launch the product at the 2019 American Academy of Hip and Knee Surgeons annual conference this week in Dallas, Texas

·     Lexicon (LXRX) files $150M mixed securities shelf

·     Medifast (MED) shares fell -28%; Q3 EPS $1.32/$190.1M vs. est. $1.34/$195.17M; guides Q4 EPS $1.03-$1.13 on revs $157M-$167M well below the consensus of $2.05/$202.33M; lowers 2019 EPS view to $5.80-$5.90 from $6.75-$6.95 and cuts 2019 revenue view to $700M-$710M from $730M-$750M

·     Sarepta (SRPT) Q3 EPS loss ($1.70) on revs $99M vs. est. loss ($1.37)/$96.9M; 3Q cash and other $1.1B

·     Sientra (SIEN) Q3 EPS loss (45c)/$22.41M vs. est. loss (47c)/$20.06M; raises FY19 revenue view to $82.5M-$83.5M from $79M-$83M (est. $81.8M); Q3 adj Ebitda loss reported in-line with ests at $17.3M


Media & Telecom

·     Walt Disney (DIS) 4Q adj EPS $1.07 vs. est. $0.95; gains paced by strong gains in its TV networks and film studio juiced by its Fox acquisitions; revenues grew 34% Y/Y to $19.1B for the quarter; total segment operating income rose 5% to $3.44B. Net income from continuing operations was $785M; revenue by segment: Media Networks, $6.51B (up 22%); Parks, Experiences and Products, $6.66B (up 8%); Studio Entertainment, $3.31B (up 52%); Direct-to-Consumer and International, $3.43B (up 316%) – Broadcast was an unexpected strength

·     Eventbrite (EB) shares rose 19%; Q3 EPS loss (36c)/$82.1M vs. est. loss (26c)/$86.53M; said Q3 paid ticket volume was 26.9M, up 13% YoY channel, where paid ticket volume grew 23% YoY; sees 2019 revenue $319M-$323M above est. $315.12M

·     Lions Gate (LGF/A) 2Q adj EPS $0.22 vs. est. $0.21, 2Q adj OIBDA $145Mm vs. est. $118.4Mm, revs $983.5Mm vs. est. $914.5Mm

·     The Madison Square Garden Company (MSG) said its board of directors has unanimously approved pursuing a revised plan for the proposed separation of its sports and entertainment businesses. The Company is now pursuing a spin-off of its entertainment businesses into a separately traded public company and, as part of this revised structure, the entertainment company would not retain an equity interest in the sports company.

·     News Corp. (NWSA) Q1 adjusted EPS 4c/$2.34B vs. est. 5c/$2.39B; Q1 News and information services rev $1.15B and Q1 subscription video services rev $514M; subscribers to Dow Jones’ Consumer Products rose 9% to about 3.3M



·     Activision Blizzard (ATVI) Q3 adjusted EPS 38c/$1.21B vs, est. 23c/$1.16B; said for Q3, had 36 million MAUs, Call of Duty: Black Ops 4 reach and net bookings from in-game items grew sharply versus Call of Duty: WWII YoY; Oct launch of Call of Duty: Mobile saw over 100 million downloads in its first month; sees FY19 adjusted EPS $2.13 on revs bookings $6.33B vs. est. $2.21/$6.37B

·     Altair (ALTR) Q3 EPS loss (9c)/$102.66M vs. est. 5c/$105.96M; sees Q4 revenue $107.3M-$111.3M vs. est. $126.17M; cuts FY19 revenue view to $449M-$453M from $460M-$464M (est. $470.91M)

· (BKNG) guides 4Q nights booked +6-8% vs. est. +9.45%, sees gr travel bookings +0.5-2.5% vs. est. +6.7%

·     Ceridian (CDAY) Q3 adjusted EPS 11c/$202.3M vs. est. 10c/$196.47M; said Dayforce recurring revenue grew 32.6%, to $109.4M, and was up 33.0% on a constant currency basis; raises FY19 revenue view to $822M-$825M from $810M-$815M (est. $814.24M) and cloud revenue is expected to be in the range of $659M-$662M

·     Cloudflare (NET) Q3 EPS loss (16c)/$73.9M vs. est. loss (15c)/$69.71M; said for Q1, delivered 48% year-over-year revenue growth, and a solid non-GAAP gross margin of 79%; sees 2019 EPS loss (49c)-(50c)/$281.5M-$282.5M vs. est. loss (46c)/$274.41M

·     Dropbox (DBX) Q3 revs $428.2Mm vs. est. $423.6Mm, adj EPS $0.13 vs. est. $0.11; raises FY19 revenue view to $1.657B-$1.659B from $1.648B-$1.654B (est. $1.65B) and sees FY19 gross margin approximately 12%. Sees FY19 free cash flow at midpoint of $375M-$385M range.

·     Fastly (FSLY) Q3 EPS loss (13c)/$49.8M vs. est. loss (13c)/$48.05M; said Q3 total enterprise customer count of 274, up from 262 in the previous quarter; Enterprise customers generated 86% of our trailing twelve-month total revenue, which remained consistent with 86% in the previous quarter

·     Mimecast (MIME) 2Q adj EPS $0.13 vs. est. $0.10 on revs $103.4Mm vs est $101.9Mm; guides 3Q revs $107.4-108.5Mm vs est $106.6Mm, 3Q adj EBITDA $17.7-18.7Mm vs est $19.2Mm; shrs

· (STMP) 3Q adj EPS $1.12 vs est $0.72 on revs $136.2Mm vs est $123.3Mm; sees FY adj EPS $3.85-4.85 vs prior $3.60-4.85, sees FY revs $535-565Mm vs prior $520-560Mm

·     Switch (SWCH) Q3 EPS 2c/$117.6M vs. est. 4c/$113.18M; said successfully negotiated several key customer contract renewals during Q3, signing multi-year extensions with six of our top 30 customers totaling more than $70 million in total contract value; raises 2019 revenue outlook to $454M-$465M (vs. est. $446.88M) and ups 2019 adjusted EBITDA outlook to the range of $225M to $229M

·     Take-Two (TTWO) Q2 EPS 63c vs. est. $1.68; Q2 net bookings $950.5M vs. est. $925.56M and GAAP net revenue grew 74% to $857.8M; digitally-delivered GAAP net revenue grew 72% to $615.8M vs. $358.4M YoY; sees Q3 EPS $1.39-$1.49 on revs vs. est. $1.89 and bookings $860M-$910M

·     36Kr Holdings (KRKR) 1.38M share IPO priced at $14.50

·     Teradata (TDC) miss & guide lower: 3Q adj EPS $0.32 vs est $0.40; sees 4Q adj EPS $0.13-0.18 vs est $0.58; sees FY adj EPS $0.95-1.00 vs prior $1.45-1.55

·     Tivo (TIVO) not declaring cash dividend this qtr ahead of split; sees FY revs $655-665Mm vs prior $650-665Mm, sees FY adj EBITDA $190-200Mm vs est $183.3Mm

·     Trade Desk (TTD) Q3 adjusted EPS 75c/$164.2M vs. est. 67c/$163.79M; said revenue growth of 38% significantly outpaced worldwide programmatic advertising growth; sees Q4 revenue $213M vs. est. $211.56M and raises FY19 revenue view to at least $658M from $653M (est. $656.15M)

·     Turtle Beach (HEAR) 3Q adj loss/shr $0.18 vs est loss/shr $0.22; cuts FY revs $236-242Mm vs prior $240-248Mm, sees FY adj EPS $0.65-0.75 vs prior $0.90-1.10; gross margin was 32.2% compared to the 41% in last year’s quarter

·     TRUECAR (TRUE) 3Q adj EPS $0.00 vs est ($0.03) on revs $90.6Mm vs est $88Mm; guides FY revs $351-353Mm vs prior $345-350Mm; shrs +12.3%

·     Upland Software (UPLD) 3Q EPS $0.52 vs est $0.57; sees 4Q revs $61.2-64.2Mm vs est $62.7Mm

·     Yelp (YELP) 3Q net revs $262Mm vs est $261.9Mm, EPS $0.14; Adjusted EBITDA1 grew to $58M, a 16% increase over the third quarter of 2018. Adjusted EBITDA margin increased one percentage point to 22%, also in line with the company’s outlook.


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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