Hammerstone’s Early Look


Wednesday, February 5, 2020

DJ Industrials210.000.73%28,999
S&P 50022.500.69%3,322



Stock futures are on pace for another higher open, with the Nasdaq Composite set for another all-time high and energy prices rebound following reports about progress toward a coronavirus cure. According to a report from China’s Changjiang daily, researchers at Zhejiang University had zeroed in on two drugs to successfully fight the coronavirus (note that major U.S. newswires have yet to confirm the veracity of the report). Separately, Sky News reported progress in the U.K. on creating a vaccine. The death toll from the new virus rose to around 500 in mainland China and the number of new cases increased to 24,324. Stocks soared on Tuesday as markets focused on corporate earnings, central bank stimulus in China, improving economic data, and investors scooping up stocks after its recent pullback. In Asian markets, The Nikkei Index gained 234 points to 23,319, the Shanghai Index jumped 34 points to 2,818 and the Hang Seng Index gained 110 points to 26,786. In Europe, the German DAX is surging over 160 points to 13,450, while the FTSE 100 rises over 50 points to around the 7,500. President Trump gave his State of the Union address last night, speaking about child-care initiatives, the opioid crisis, the need for greater transparency for medical bills, the recent trade deals and the spreading of the coronavirus. In the Iowa caucuses, Sanders with a strong showing along with Pete Buttigieg, while Warren finished third and Biden a disappointing fourth. Markets prepare for another heavy dose of earnings today.

Market Closing Prices Yesterday

  • The S&P 500 Index surged 48.67 points, or 1.50%, to 3,297.59
  • The Dow Jones Industrial Average rose 407.82 points, or 1.44%, to 28,807.63
  • The Nasdaq Composite spiked 194.57 points, or 2.10%, to 9,467.97
  • The Russell 2000 Index advanced 24.56 points, or 1.50% to 1,656.77


Events Calendar for Today

  • 7:00 AM EST       MBA Mortgage Applications Data
  • 8:15 AM EST       ADP Employment Change for January…est. 158K
  • 8:30 AM EST       Trade Balance for December…est. (-$48.2B)
  • 9:45 AM EST       Markit US Services PMI, Jan-F…est. 53.2
  • 10:00 AM EST     ISM Non-Manufacturing Index for January…est. 55.1
  • 10:30 AM EST     Weekly DOE Inventory Data


Earnings Calendar:




WTI Crude1.4651.07
10-Year Note+0.0361.635%



World News

  • Iowa caucuses: Pete Buttigieg and Bernie Sanders were locked in a tight race as Iowa’s Democratic Party released partial caucus results after a delay on Monday. With 62% of Iowa precincts reporting, Buttigieg had 27% of the state delegate count to Sanders’ 25%. The pair were followed by Elizabeth Warren in third place with 18% and Joe Biden at 16%. It wasn’t clear when final results would be available.


Sector News Breakdown


  • Ford (F) shares fall over 7%; Q4 EPS 12c/$36.7B vs. est. 17c and $36.3B; guidance misses as sees 2020 adj Ebitda $5.6B-$6.6B below the $7.37B estimate
  • Chipotle (CMG) Q4 adjusted EPS $2.86/$1.4B vs. est. $2.75/$1.48B; Q4 comp sales rose 13.4% vs. est. 9.8% with no net impact from loyalty deferral, and included 8.0% comparable restaurant transactions growth; Q4 digital sales grew 78.3% and accounted for 19.6% of sales; Q4 operating margin was 19.2%, an increase of 220 bps; sees 2020 comp restaurant sales up mid-single digits
  • Macy’s (M) to cut roughly 2,000 positions, plans to close around 125 of its least productive stores over the next three years, including about 30 stores that are in the process of closure now – says these approximately 125 stores currently account for about $1.4 billion in annual sales
  • Boot Barn (BOOT) shares fell -6%; Q3 EPS 81c/$284M vs. est. 82c/$282.41M; sees Q4 EPS 36c-38c on revs $212M-$214M vs. est. 39c/$213.75M; sees Q4 comp sales growth roughly 5%; backs FY20 EPS view $1.67-$1.75 (est. $1.82) while raises FY20 comps growth view to roughly 7% from 6.5%
  • Modine Manufacturing (MOD) 3Q adj EPS $0.37 vs. est. $0.20 on sales $473.4Mm vs. est. $474.7Mm; guides FY adj EPS $0.85-1.00 vs. prior $0.75-0.90, est. $0.83, sees FY sales -7% to -9% vs prior +7-12%
  • Usana (USNA) shares rose 20%; Q4 EPS $1.41 on sales $271.3M vs. $1.32 YoY; 4Q Change in total active customers +5% and total active customers at end of 4Q was 586k vs 616k YoY; sees FY20 EPS $4.10-$4.90 on revs $1.03B-$1.13B vs. est. $4.36/$1.05B
  • American Airlines (AAL) said Tuesday it has suspended flights to Hong Kong through Feb. 20 due to weak demand, and United Airlines (UAL) will do the same next weekend.


Energy, Industrials and Materials

  • The American Petroleum Institute (API) reported that U.S. crude supplies rose by 4.2M barrels, showed a stockpile increase of about 2M barrels for gasoline, while distillate stocks declined by -1.8M barrels
  • Plains All American (PAA) Q4 adj EPS 63c/$9.15B vs. est. 50c/$8,2B; 4Q adjusted Ebitda $860M, down -9.4% YoY but above estimates
  • YRC Worldwide (YRCW) reports adjusted EBITDA of $47.3M vs. $43.8M consensus and $77.5M a year ago; consolidated operating ratio was 99.2 during the quarter vs. 95.6 a year ago. The operating ratio at YRC Freight was 98.4 vs. 84.9 last year and the regional segment’s operating ratio was 99.1 vs. 96.0 a year ago



  • Aflac (AFL) Q4 adjusted EPS $1.03/$5.6B vs. est. $1.02/$5.54B; targets FY20 EPS $4.32-$4.52 vs. est. $4.45, assuming the 2019 weighted-average exchange rate of 109.07 yen to the dollar; slightly raises dividend to 28c from 27c
  • Allstate (ALL) Q4 adjusted EPS $3.13 vs. est. $3.24; announces $3B share buyback; 4Q combined ratio reported 88.7% vs. 97% YoY; 4Q net investment income $689M, -12% YoY and 4Q catastrophe losses $295M, down -69% YoY
  • BNP Paribas SA (BNP) cut its profitability target for this year as fourth-quarter net profit rose significantly; now expects a return on tangible equity of 10% this year, down from previous expectations of more than 10.5%
  • Chubb (CB) Q4 operating EPS $2.28 v. est. $2.12; 4Q net premiums written up 8.8% YoY to $8.00B; Q4 book value per share $122.42 vs. $109.56 YoY; said 4Q P&C combined ratio 92.7% vs. 93.1% YoY; 4Q tangible book value per share $78.14 vs. $65.89 YoY; 4Q net premiums earned $7.94B
  • Fiserv (FISV) 4Q adj EPS $1.13 vs. est. $1.14; guides 2020 adj EPS $4.86-5.02 vs. est. $4.97, sees internal rev growth +6-8%
  • Prudential Financial (PRU) Q4 adjusted operating EPS $2.33 vs. estimate $2.02; Q4 assets under management (AUM) $1.55 trillion, +13% YoY with adjusted book value per share $101.04 vs. $96.06 YoY; 4Q U.S. Retirement Solutions adjusted operating profit $281 million, +30% YoY, 4Q U.S. Individual Life adjusted operating profit $58 million vs. loss $26.0 million YoY
  • Unum (UNM) Q4 operating EPS $1.44 tops the $1.39 est.; Q4 revs $3.03B vs. est. $3.02B; 4Q book value per share $49.10 vs. $40.19 YoY; expects after-tax adjusted operating income growth per share for full-year 2020 to be within the range of 4-7%



  • Gilead Sciences (GILD) Q4 adjusted EPS $1.30/$5.88B vs. est. $1.67/$5.71B; sees FY20 adjusted EPS $6.05-$6.45 below est. $7.01 and sees FY20 product sales $21.8B-$22.2B; raises dividend to 68c from 63c; product sales: Q4 Truvada revenue $768M, Genvoya revenue $958M (-21% YoY), Atripla revs $128M (-55% YoY), Complera revs $75M (-40% YoY), Stribild revs $71M (-48% YoY)
  • Cerner (CERN) Q4 adj EPS $0.75 vs. est. $0.74 on revs $1.44B vs. est. $1.44B; guides 1Q adj EPS $0.69-0.71 vs. est. $0.70, sees 2020 adj EPS $3.09-3.19 vs. est. $3.14; Q4 bookings totaled $1.665B and operating cash flow totaled $437.6M with FCF of $292.1M
  • Coherus BioSciences (CHRS) says FDA requested additional manufacturing data for its review of BLA application; believes it will take about four months to generate the additional data; as a result, it decided to withdraw BLA for Lucentis biosimilar candidate and then resubmit it


Media & Telecom

  • Disney (DIS) Q1 adjusted EPS $1.53/$20.86B vs. est. $1.44/$20.79B; Disney+ subs 26.5Mm vs. est. 20.8Mm, ESPN+ subs 6.6Mm, Hulu subs 30.4Mm; revenue breakdown: 1Q Cable Networks revenue up 19% YoY to $4.77B, 1Q media network revs up 24% YoY to $7.36B, 1Q parks, experiences & consumer products revs +11% YoY to $7.40B
  • Match Group (MTCH) Q4 EPS 45c/$547M vs. est. 48c/$552.9M; 4Q operating income $180M vs. est. $181.3M; total avg. subscribers 9.8M, up 19% YoY vs. est. 8.61M; International subscribers increased 30% to 5.1M; Tinder now has nearly 5.9M subscribers; sees 1Q revenue $545M-$555M below the estimate $562.2M on lower adjusted Ebitda



  • KLA-Tencor (KLAC) Q2 adjusted EPS $2.66/$1.51B vs. est. $2.58/$1.48B; 2Q R&D expenses $220.8M while 2Q product revenue up 34% YoY to $1.14B and Q2 service revenue up 36% YoY to $364.9M; sees Q3 sales $1.325B-$1.525B vs. est. $1.41B and sees EPS $2.04-$2.82 vs. est. $2.44
  • Snap Inc. (SNAP) shares fell -10%; Q4 EPS 3c/$560.9M vs. est. 1c/$562.9M; 4Q daily active users (DAUs) 218M (up 31M or 17% YoY) vs. est. 214.2M; sees 1Q revs $450M-$470M vs. est. $463.1M; sees 1Q adjusted Ebitda loss $70M-$90M; 4Q adjusted Ebitda $42.3M vs. est. $26M;
  • Microchip (MCHP) Q3 EPS $1.32/$1.287B vs. est. $1.26/$1.28B; sees Q4 EPS $1.35-$1.51 on revs $1.31B-$1.4B vs. est. $1.39; increases quarterly dividend; cuts full-year cap-ex view to $76M-$81M from prior $90M-$100M
  • Take-Two Interactive (TTWO) shares dropped -5% after the game publisher said that Dan Houser, Vice President, Creative at Rockstar Games will be leaving the company on March 11. It said Houser has been on an “extended break” since the spring of last year
  • New Relic (NEWR) shares fell -8%; Q3 adj EPS $0.09 vs. est. $0.12 on revs $153Mm vs. est. $149Mm; guides 4Q adj EPS $0.02-0.06 vs. est. $0.08, sees 4Q revs $154-156Mm vs. est. $155Mm; guides FY adj EPS $0.54-0.59 vs. prior $0.60-0.67, est $0.63
  • Plantronics Inc. (PLT) shares dropped over -30%; after guiding Q4 EPS loss (19c-36c) on sales $354M-$394M below est.55c and $440.9M; came after Q3 results missed estimates
  • Seagate (STX) Q2 adjusted EPS $1.35/$2.70B vs. est. $1.32/$2.72B; sees Q3 EPS $13.5 and revs $2.7B both plus/minus 7%; reports Q4 operating margin 28.7% vs. 29.9% last year
  • Paylocity (PCTY) 2Q adj EPS $0.36 vs. est. $0.29 on revs $132.4Mm vs. est. $130Mm; guides 3Q revs $168.5-169.5Mm vs. est. $167.3Mm, sees FY revs $572.5-573.5Mm vs. prior $567-569Mm, still sees FY adj EBITDA $163.5-165.5Mm
  • Inphi (IPHI) 4Q adj EPS $0.47 vs. est. $0.45 on revs $102.9Mm vs. est. $99.9Mm; guides 1Q adj EPS $0.42-0.52, sees 1Q revs $130.4-134.4Mm vs. est. $103.9Mm, sees adj gr margin 64.2-65.2% vs. est. 69%






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