Morning Preview: January 29, 2020

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Early Look

Wednesday, January 29, 2020

Futures

Up/Down

%

Last

DJ Industrials

76.00

0.26%

28,786

S&P 500

10.50

0.31%

3,288

Nasdaq

41.50

0.46%

9,147

 

 

Stocks futures in the U.S. are looking higher, along with gains in Europe and mixed results in Asia as attention has turned to corporate earnings after large cap giants out with results. Technology stocks are mixed as a stellar earnings report from Dow component Apple (AAPL) which posted EPS of $4.99 a share for the quarter on revenue of $91.82 billion, topping estimates of $4.54 a share in earnings and $88.48 billion in revenue, while revenue from iPhones totaled $55.96 billion helped offset weakness in chips as AMD shares slump on a lower revenue outlook. Earnings results for Dow components Boeing and McDonald’s are expected, as well as industrial giants like GE. Countries on Wednesday began evacuating their citizens from the Chinese city hardest-hit by an outbreak of a new virus that has killed 132 people and infected more than 6,000 on the mainland and abroad in the latest update on the coronavirus in China. U.S. stocks are looking to add to yesterday gains, where major averages rebounded from the biggest one-day selloff in nearly four months on Monday, as investor concerns over the impact of the coronavirus outbreak in China seemed to recede for now. U.S. Treasury prices slipped back, raising the two-year yield by 3 bps to 1.46% and the 10-year yield by 4 bps to 1.64%. The yield on the 10-year Treasury briefly inverted, slipping below the three-month bill before paring back declines. In Asian markets, The Nikkei Index rose 163 points to 23,379, the Shanghai Index remained closed for its week long holiday and the Hang Seng Index plunged -789 points (2.82%) to 27,160 as markets reopened. In Europe, the German DAX is up over 20 points to 13,345, while the FTSE 100 is up about 20 points. Also of note today, the FOMC holds their interest rate policy meeting at 2:00 PM with no changes expected.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 32.61 points, or 1.01%, to 3,276.24

·     The Dow Jones Industrial Average rose 187.05 points, or 0.66%, to 28,722.85

·     The Nasdaq Composite spiked 130.37 points, or 1.43%, to 9,269.68

·     The Russell 2000 Index declined -3.92 points, or 0.24% to 1,658.31

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Advance Goods Trade Balance for December

·     10:00 AM EST    Pending Home Sales MoM for December

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       FOMC Rate Decision Meeting

 

Earnings Calendar:

·     Earnings Before the Open: ADP, ANTM, AVY, BA, CVLT, DOW, DT, EAT, EVR, EXTR, FCFS, GD, GE, GLW, HES, HESM, IR, IVZ, KNX, LFUS, MA, MCD, MKTX, MPC, MPLX, NDAQ, NSC, NYCB, OSK, PGR, RES, ROK, ROL, SC, SLAB, SMG, SNDR, SWK, T, TROW, TXT

·     Earnings After the Close: ADM, AGNC, ALGN, ALGT, AMP, AZPN, BDN, CACI, CASH, CNMD, CREE, CRUS, DLB, ESS, FB, FBHS, HOLX, ILMN, ISBC, IVAC, LM, LRCX, LSTR, LVS, MDLZ, MSFT, MTH, NOW, PKG, QRVO, SEIC, TSLA, URI, VAR

 

 

Macro

Up/Down

Last

WTI Crude

0.39

53.87

Brent

0.49

60.00

Gold

0.20

1,576.00

EUR/USD

-0.0021

1.1001

JPY/USD

-0.08

109.07

10-Year Note

-0.032

1.623%

 

 

World News

·     Investor Intelligence poll shows equity newsletter writers considered bullish slumped to a three-month low of 52.8% from a 15-month high of 59.4% last week while Bears jump to 18.9%, highest since April 2019, from 17.9% last week and those expecting a correction rebounds to six-week high of 28.3% after falling to a 15-month low last week of 22.7%

 

Sector News Breakdown

Consumer

·     Starbucks (SBUX) Q1 adjusted EPS 79c vs. est. 76c; Q1 comp sales rose 5% vs. est. 4.6% driven by a 3% increase in average ticket and a 2% increase in comparable transactions; says FY20 guidance unchanged but excludes coronavirus; Q1 America comp sales rose 6% vs. est. 5%; 1Q adjusted operating margin 18.2% vs. 17.2% q/q

·     Skyline (SKY) Q3 adjusted EPS 32c/$342.2M vs. est. 31c/$358.36M; Q3 adjusted EBITDA up 12.6% at $29.7M; EBITDA margin up 130bps to 8.7%; U.S. factory-built homes sold increased 0.3% to 5,033; Q3 backlog $133M vs. $181M last year

·     Tim Hortons restaurants have stopped selling Beyond Meat (BYND) products at its coffee and donut shops across two of Canada’s biggest provinces.

·     Stanley Black & Decker (SWK) announced that it has entered into a definitive agreement to acquire Consolidated Aerospace Manufacturing, or CAM, for up to $1.5B in cash, with $200M of the purchase price held back and contingent on the Boeing (BA) 737 MAX receiving FAA authorization to return to service and Boeing achieving certain production levels

 

Energy

·     The American Petroleum Institute (API) reported that U.S. crude supplies fell by -4.3M barrels for the week ended Jan. 24, showed a stockpile increase of 3.3M barrels for gasoline, while distillate stocks declined by about -141,000 barrels

·     Martin Midstream Partners (MMLP) shares fall over -20% as reported Q4 net income $0.0M vs. $1M last year; revenue $241.9M vs. est. $224.2M; to reduce quarterly cash distribution to re-allocate capital;

·     Bonanza Creek Energy (BCEI) provided preliminary 2019 results and 2020 guidance. Highlights for fourth quarter and full year 2019 include: Average sales volumes of 24.3 MBoe/d for the fourth quarter 2019; up 37% over fourth quarter 2018 Average sales volumes of 23.5 MBoe/d for full year 2019

·     ENI SpA (ENI.MI) said Wednesday that it has signed an agreement to collaborate on a project worth over 600 million euros ($660.9 million)

 

Financials

·     Principal Financial (PFG) Q4 adjusted ops EPS $1.41 vs. est. $1.39; delivered $17.3 billion of positive net cash flow in 2019. Our positive net cash, combined with favorable investment performance, led to record AUM of $735 billion

·     Santander (SC) Q4 adjusted EPS 43c vs. est. 37c; 4Q net charge-offs ratio 8.2% vs. 10.6% YoY and 4Q provision for credit losses $545.3 million, -21% YoY

·     Trustmark (TRMK) 4Q EPS 53c below est. 57c; 4Q FTE net interest margin 3.56% vs. 3.56% YoY, 4Q net charge-offs $2.61M, -78% YoY and 4Q provision for loan losses $3.66 million, +67% YoY

·     W.R. Berkley (WRB) 4Q EPS $0.62 vs. est. $0.72 on revs $1.98B vs. est. $2.01B; reports Q4 Gross and net premiums written increased 10.1% and 9.3%, respectively

 

Healthcare

·     Akcea Therapeutics, Inc. (AKCA), and Ionis Pharmaceuticals, Inc. (IONS) announced positive topline results from the Phase 2 study of AKCEA-ANGPTL3-LRx in patients with hypertriglyceridemia, type 2 diabetes and non-alcoholic fatty liver disease (NAFLD). The study met the primary endpoint of significant triglyceride lowering and multiple secondary endpoints with a favorable safety and tolerability profile

·     Anthem (ANTM) Q4 EPS $3.88/$27.1B vs. est. $3.88/$27.1B; reports medical enrollment totaled 41M members at December 31, 2019, an increase of 1.1M, or 2.7% YoY; Sees 2020 operating revenue about $117B vs. et. $115.48B and sees 2020 adjusted EPS above $22.30 vs. est. $22.72

·     Annovis Bio (ANVS) 2M share IPO priced at $6.00

·     Denali Therapeutics (DNLI) 7.83M share Secondary priced at $23.00

·     Hepion Pharmaceuticals Inc. (HEPA) shares rose 42% after saying its drug candidate, CRV431, prevented experimentally induced liver fibrosis to a greater extent than other leading non-alcoholic steatohepatitis, or NASH, drug candidates. These results support the potential for CRV431 to exert potent antifibrotic activity in NASH

·     Accuray (ARAY) 2Q EPS $0.12 vs. est. loss ($0.07); sees FY adj EBITDA $21-26Mm vs. prior $19-24Mm

·     Stryker (SYK) Q4 adj EPS $2.49 vs. est. $2.45 on net sales $4.1B vs. est. $4.11B; guides 1Q adj EPS $2.05-2.10 vs. est. $2.05, sees 2020 adj EPS $9.00-9.20 vs. est. $9.04; expects FY20 organic net sales growth to be in the range of 6.5%-7.5%

 

Industrials & Materials

·     General Electric (GE) Q4 adjusted EPS 21c on revs $26.2B vs. est. 17c and $25.29B; sees 2020 industrial revenues up in the low single digits; sees FY20 adjusted EPS 50c-60c vs. est. 66c; Sees 2020 adj. industrial free cash flow $2 billion to $4 billion vs. estimate $2.20 billion

·     Dow Inc. (DOW) Q4 operating EPS 78c/$10.2B vs. est. 74c/$10.07B

·     Clearwater Paper Corp (CLW) boosts its view for 4Q Ebitda to $49M-$53M from prior $38M-$46M; says Arsen S. Kitch to become CEO effective April 1; he is currently SVP and general manager of consumer products division to succeed Linda K. Massman, who is retiring

·     Mercury Systems (MRCY) 2Q adj EPS $0.54 vs. est. $0.48 on revs $193.9Mm vs. est. $192.9Mm; guides 3Q adj EPS $0.50-0.53 vs. est. $0.56; guides FY adj EPS $2.09-2.13 vs. est. $2.11.

·     OSI Systems (OSIS) raises FY20 EPS view to $4.63-$4.85 from $4.61-$4.83 (est. $4.71) while cuts FY20 revenue view to $1.205B-$1.24B from $1.238B-$1.273B (est. $1.25B) after Q4 EPS $1.27/$305.3M vs. est. $1.23/$316.75M

·     Rexnord (RXN) Q3 adjusted EPS 48c/$492M vs. est. 42c/$487.2M; sees FY adj ebitda $460M to $464M, saw $460.0m to $467M and raises year net income from cont ops $192M-$195M from prior $184M-$189M

 

Technology, Media & Telecom

·     Apple (AAPL) rises 2%; Q1 EPS $4.99/$91.8B vs. est. $4.55/$88.5B; sees 2Q revenue $63.0 B-$67.0B vs. est. $62.33B; 1Q iPhone revenue $55.96 billion, +7.6% YoY above est. $51.5B; 1Q service revenue $12.72B, +17% YoY, 1Q products revenue $79.10B, +54% QoQ; 1Q cash and cash equivalents $39.77B, -19% QoQ; 1Q gross margin $35.22B, +45% QoQ

·     Advanced Micro Devices (AMD) falls on lower Q1 guidance; Q4 adjusted EPS 32c/$2.13B vs. est. 30c/$2.11B; guides Q1 revenue $1.75B-$1.85B vs. est. $1.87B; sees Q1 gross margins about 46% vs. est. 44.1%; for full year 2020, expects revenue growth of approximately 28%-30% over 2019 and expects non-GAAP gross margin to be approximately 45% for 2020

·     eBay (EBAY) shares slip; Q4 adjusted EPS 81c/$2.8B vs. est. 76c/$2.81B; 4Q adj EPS cont ops $0.81 vs. $0.75 on net revs $2.82B vs. est. $2.81B, 4Q gross merch vol $23.3B; sees 1Q adj EPS cont ops $0.70-0.73 vs. est. $0.71, sees 2020 adj EPS cont ops $2.95-3.05 vs. est. $2.89, sees 2020 net revs $10.72-10.92B vs. est. $10.99B; reports gross merchandising volume fell 5.4% Y/Y in Q4 to $23.3B; GMV was down 4% on a currency neutral basis; active buyers were up 2% Y/Y across all eBay platforms; raises dividend 14%, expands share repurchase plan by $5B

·     Maxim Integrated (MXIM) Q2 EPS 56c/$551M vs. est. 53c/$545.31M; sees Q3 EPS ex-items 57c-65c on revs $555M-$595M vs. est. 56c/$556.77M; sees Q3 gross margin 65%-67% GAAP or 65.5%-67.5% excluding special items

·     Macom (MTSI) Q1 adjusted EPS 7c/$119.1M vs. est. 3c/$114.51M; sees Q2 EPS 9c-13c on revs $122M-$126M vs. est. 5c/$116.65M

·     MKS Instruments (MKSI) Q4 EPS $1.20/$499.7M vs. est. $1.07/$474.91M; Q4 operating margin 18.4% down from 23.7% YoY; guides Q1 EPS $1.14-$1.49 on revs $495M-$545M vs. est. $1.29/$495.5M

·     Match Group Inc. (MTCH) Chief Executive Mandy Ginsberg is stepping down following challenges in her personal life, according to a company statement.

·     Xilinx (XLNX) shares down -9%; Q3 adjusted EPS 68c/$723M vs. est. 59c/$730.63M; guides 4Q revs $750-780Mm well below consensus est. $827.4Mm; cutting 7% of workforce, sees pretax charge $25-30Mm

·     Vodafone Group PLC (VOD) said Wednesday that it has agreed to sell its 55% stake in its Egypt unit to Saudi Telecom Co. for $2.39 billion.

 

Transports

·     Alaska Air (ALK) reports Q4 adjusted EPS $1.46/$2.23B vs. est. $1.41/$2.22B; raises dividend; Q4 traffic up 3.9%, capacity up 3.5%; load factor increased 0.4 pts to 83.7%

·     Canadian National (CNI) Q4 EPS C$1.25 on revs C$3.58B, both below last year quarter figures of C$1.49 and C$3.81B; approved buyback of up to 16m shares; sees FY20 EPS up mid-single-digits

·     CH Robinson Worldwide (CHRW) shares fell -8%; Q4 adjusted EPS 73c/$3.79B misses the 96c estimate abut revs $3.75B; to acquire Prime Distribution Services for $225M from Roadrunner; targets $100M operating expense reduction; said pricing adjustments to reflect the current market enabled us to deliver flat volume in NAST truckload, including a mid-single-digit increase in contractual volume, and 4.5% volume growth in LTL

_________________________________________________________________

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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