Early Look

Friday, June 7, 2019

U.S. stock futures point to a higher open, on track for a 4^th straight days of gains and at the same time, register their best weekly gain of 2019 as markets dial back concern about trade talk and turn their attention to the potential for interest rate cuts from the Fed to help boost the economy. Today’s monthly nonfarm payroll will give the Fed more details on the health of the economy, with jobs data expected around 8:30 AM EST (est. 175K nonfarm payrolls, 172K private payrolls and unemployment rate to hold at 3.6%). The data follows a surprisingly weak ADP private payrolls report showed slowest job growth in over 9-years. A weak jobs report will likely raise calls for more Fed easing on interest rates to help stimulate growth, while a strong jobs report may cloud the rate situation. In Asian markets, The Nikkei Index rose 110 points to 20,884, the Shanghai Index and Hang Seng Index were both closed for holiday. In Europe, the German DAX is higher by about 95 points to 12,050, while the FTSE 100 is higher by over 50 points to 7,315. In corporate news, recent 2019 IPO’s BYND and ZM are both sharply higher overnight after their first quarterly earnings reports as public companies. Regarding trade, U.S. President Donald Trump has warned that tariffs of 5% on all Mexican exports to the United States will go into effect on Monday (delaying it a few days) if Mexico does not step up efforts to stem an increase in mostly Central American migrants heading for the U.S. border.

Events Calendar for Today

·     8:30 AM EST      Change in Nonfarm Payrolls for May…est. 178K

·     8:30 AM EST      Change in Private Payrolls for May…est. 172K

·     8:30 AM EST      Change in Manufacturing Payrolls for May…est. 3K

·     8:30 AM EST      Unemployment Rate for May…est. 3.6%

·     8:30 AM EST      Average Hourly Earnings MoM for May…est. 0.3%

·     8:30 AM EST      Average Weekly Hours for May…est. 34.5

·     10:00 AM EST    Wholesale Inventories MoM for April…est. (-0.2%)

·     1:00 PM EST       Baker Hughes Weekly Rig Count

·     3:00 PM EST       Consumer Credit for April…est. $13.0B

Market Closing Prices Yesterday

·     The S&P 500 Index gained 17.34 points, or 0.61%, to 2,843.49

·     The Dow Jones Industrial Average rose 181.09 points, or 0.71%, to 25,720.66

·     The Nasdaq Composite gained 40.08 points, or 0.53%, to 7,615.55

·     The Russell 2000 Index declined -3.25 points, or 0.22% to 1,503.54

World News

·     German industrial production fell more sharply than expected in April, as it decreased -1.9% in April from the month before. The drop–which follows two consecutive months of growth–was steeper than economists’ forecast of a -0.5% decline.

·     China has “tremendous” room to adjust monetary policy if the trade war with the U.S. deepens, People’s Bank of China Governor Yi Gang said Friday, in an interview with Bloomberg. “We have plenty of room in interest rates, we have plenty of room in required reserve ratio rate, and also for the fiscal, monetary policy tool kit, I think the room for adjustment is tremendous,” Yi said

Sector News Breakdown

Consumer

·     Beyond Meat (BYND) shares rose 25%; Q1 EPS loss (14c) on revs $40.2M; sees year revenue above $210M vs. est. $205M and sees FY19 adjusted EBITDA to be approximately break-even

·     Guess (GES) Q1 adjusted EPS loss (25c)/$537M vs. est. loss (26c)/$536.58M; sees Q2 EPS 27c-30c vs. est. 38c; and consolidated net revenue in U.S. dollars increase between 4.0% and 5.0%; sees FY2020 EPS of $1.19-$1.30 vs. est. $1.21

·     Caesars (CZR) has dismissed a takeover bid from Eldorado Resorts (ERI) as too low, though continued talks could soon lead to an improved offer, the NY Post reported https://nyp.st/2Wt7kKv

·     Hawaiian Airlines (HA) reports May traffic up 5.8%, capacity up 4.1% and load factor was up 1.4 pts to 87.3%

·     Ollie’s Bargain Outlet (OLLI) Q1 EPS 46c/$324.85M vs. est. 44c/$319.54M; Q1 comparable store sales increased 0.8% vs. est. 1.5%; sees FY adjusted EPS $2.13-$2.17 vs. prior $2.10-$2.15 (est. $2.17) and sees FY net sales $1.44B-$1.45B vs. est. $1.45B; sees FY capital expenditure $75M-$80M

·     Vail Resorts (MTN) Q3 EPS $7.12/$958M vs. est. $7.06/$958.75M; is now expecting Resort Reported EBITDA, on a comparable basis with its prior guidance issued on March 8 to be between $700M-$710M

·     Zumiez (ZUMZ) shares rose 15%; Q1 EPS 3c/$212.9M vs. est. loss (9c)/$206.03M; Q1 comp sales rose 3.3% vs. est. 0.3%; sees Q2 EPS 14c-20c vs. est. 19c and revs $220M-$224M vs. est. $223.5M

Energy, Industrials & Materials

·     Mammoth Energy Services (TUSK) said it stands by the “quality and reasonableness of its work” in Puerto Rico and welcomes an open inquiry into its performance. The commentary follows a recent article in the WSJ saying the FBI was looking into its work in Puerto Rico

·     Oil prices rise off five-month lows hit this week amid signs that OPEC and other producers may extend their output reduction deal.

·     Mammoth Energy (TUSK) downgraded to Equal Weight from Overweight at Stephens

·     Helmerich & Payne (HP) upgraded to Overweight from Neutral at Piper Jaffray

·     Schlumberger (SLB) upgraded to Buy from Hold at Stifel

·     Former New York City Mayor Michael Bloomberg is plunging $500 million into an effort to close all of the nation’s remaining coal plants by 2030 and put the United States on track toward a 100% clean energy economy.

Healthcare

·     Abbott Labs (ABT) can’t prevent Edwards Lifesciences (EW) from making its Pascal transcatheter system for repairing leaky heart valves while a patent-infringement lawsuit brought by Abbott is pending, a federal judge in Delaware ruled

·     Endologix Inc. (ELGX) announced today that the CE Mark for the Nellix endoVascular aneurysm sealing system has been reinstated by GMED following an assessment of clinical evidence.

·     Clovis Oncology (CLVS) announced the appointment of Ginger L. Graham as Board Chair to Clovis’ Board of Directors, following the retirement of former Board Chair Dr. M. James Barrett. Graham has served as a member of the Company’s board of directors since 2013. She is the former President and CEO of Amylin Pharmaceutical

·     Senseonics Holdings, Inc. (SENS) said they received FDA approval for the non-adjunctive indication (dosing claim) for the Eversense Continuous Glucose Monitoring System. Patients will soon be able to use Eversense as a replacement for finger sticks to make diabetes treatment decisions throughout the day

·     French drug maker Sanofi SA (SNY) said that CEO Olivier Brandicourt will retire and that he will be replaced Swiss pharmaceutical giant Novartis AG’s (NVS) Paul Hudson

Technology, Media & Telecom

·     DocuSign, Inc. (DOCU) shares fell -18%; Q1 EPS 7c/$214M vs. est. 4c/$208.15M; sees Q2 revenue of $218-222M vs. est. $219.9M and sees FY2020 revenue of $917-922M above prior guide of $910M-$915M and vs. est. $913.6M

·     Domo (DOMO) shares fell -19%; Q1 EPS loss ($1.08)/$40.8M vs. est. loss ($1.28)/$40.68M; reports Q1 billings were $41.1M or 22% YoY growth; sees FY20 EPS loss ($3.79)-($3.87) on revs $173M-$174M vs. est. loss ($4.02)/$173.73M

·     PagerDuty (PD) Q1 EPS loss (22c)/$37.3M vs. est. loss (22c)/$34.99M; 1Q cash and cash equivalents $338.0M; sees FY20 loss (38c)-(37c) on FY20 revenue $161M-$163M vs. est. $155.76M

·     Perspecta (PRSP) Q4 adjusted EPS 54c/$1.09B vs. est. 48c/$1.08B; sees FY20 adjusted EPS $2.05-$2.16 on revs $4.35B-$4.45B vs. est. $2.00/$4.37B; announces backlog of $10.7B at end of Q4

·     Zoom Video (ZM) shares rose 14%; Q1 EPS 3c/$122M vs. est. 0c/$111.73M; said total cash, cash equivalents, and marketable securities as of April 30, 2019 was $737.2M and included $543.5M in proceeds from the IPO and private placement, net of underwriting discounts and commissions and other offering costs; sees Q2 EPS 1c-2c on revs $129M-$130M vs. est. 0c/$123.25M; sees year EPS 2c-3c on revs $535M-$540M vs. est. 1c/$522.2M