Hammerstone’s Early Look

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Thursday, February 6, 2020

FuturesUp/Down%Last
DJ Industrials125.000.43%29,366
S&P 50011.500.35%3,346
Nasdaq40.500.43%9,422

 

 

Global stocks are up across the board (again), paced by gains in Asia on trade news as China announced it will cut tariffs on $75 billion of U.S. imports by half, starting next week. China’s Ministry of Finance said 10% tariffs on some U.S. goods would be cut to 5%, while other goods that have faced 5% levies will have those cut to 2.5%, starting at 1:01 p.m. Feb. 14, Beijing time. In Asian markets, The Nikkei Index surged 554 points (2.38%) to settle at 23,873, the Shanghai Index gained 48 points (1.72%) to finish at 2,866 and the Hang Seng Index jumped over 700 points (2.64%) to 27,493. In Europe, the German DAX is higher by 85 points to 13,560, while the FTSE 100 is up 20 points to the 7,500 level. News that President Trump was acquitted by the Senate on the charges contained in two articles of impeachment, related to abuse of power and obstruction of Congress also helping sentiment. The overhang remains the coronavirus as according to the latest figures early Thursday, the number of confirmed cases jumped by 3,694 to 28,018, and the death toll rose to 563. While the impact on global economies (specifically China) is yet to be determined as this virus continues to grow, investors have taken every opportunity to scoop up stocks over the last few days as the S&P and Nasdaq Comp each traded to new record highs on Wednesday. U.S. stocks extended recent gains on Wednesday, adding to their record run after stronger economic data showed a surge in private payrolls while services data improves, while at the same time waning fears of the potential economic damage from the coronavirus being helped lift stocks. Oil prices gained with WTI crude jumping above $50 per barrel level while haven currencies like the yen and the franc fell, and 10-year Treasury yields leaped to 1.65%.

Market Closing Prices Yesterday

  • The S&P 500 Index jumped 37.10 points, or 1.13%, to 3,334.69
  • The Dow Jones Industrial Average rose 483.22 points, or 1.68%, to 29,290.85
  • The Nasdaq Composite gained 40.71 points, or 0.43%, to 9,508.68
  • The Russell 2000 Index advanced 25.15 points, or 1.52% to 1,681.92

 

Events Calendar for Today

  • 7:30 AM EST       Challenger Job Cuts YoY for January
  • 8:30 AM EST       Weekly Jobless Claims…est. 215K
  • 8:30 AM EST       Continuing Claims…est. 1.72M
  • 8:30 AM EST       Unit Labor Costs, Q4-P…est. 1.3%
  • 8:30 AM EST       Nonfarm Productivity, Q4-P…est. 1.6%
  • 10:30 AM EST     Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

  • Earnings Before the Open: ABMD, AGCO, ALNY, ARCH, BCO, BDX, BGCP, BLL, BMY, CAH, CDW, CI, DNKN, EIGI, EL, GLAD, HAIN, ICE, IRMD, K, KEM, MAC, MBUU, MDP, MTD, NJR, NYT, ODFL, PBH,PM, PTEN, REGN, SAVE, SNA, SPGI, SPH, TDC, TPR, TSN, TWTR, UBER, VSTO, WMS, WWE, XYL, YUM
  • Earnings After the Close: APDN, ASYS, ATVI, BHE, BILL, BRKS, CBL, CCD, COLM, CPST, CSL, DLX, DXC, EHC, ENTA, FLT, FSCT, FTNT, FTV, FWRD, G, LGF/A, LGND, MSI, MTW, NGVC, NLOK, NOV, NR, NWSA, PINS, POST, PRO, PXLW, SGEN, SMCI, SYNA, TTWO, TWOU, VCRA, VRSN, VRTU, ZEN

 

 

MacroUp/DownLast
WTI Crude0.4251.17
Brent0.0155.29
Gold6.801,569.60
EUR/USD-0.00021.1099
JPY/USD0.06109.89
10-Year Note-0.0121.638%

 

 

World News

  • President Trump was acquitted by the Senate on the charges contained in two articles of impeachment, related to abuse of power and obstruction of Congress, that had been endorsed by the House of Representatives in December. The final vote was 48 to 52 on Article I, and 47 to 53 on Article II. The only surprise was when Mitt Romney of Utah voted to convict Trump on the first article, in what would prove the lone GOP defection.
  • Germany’s manufacturing disappoints as factory orders fell 2.1% month on month in December — the most in more than a decade and down from a revised decline of 0.8% in November. Consensus was for a 0.6% gain
  • China’s Ministry of Finance said 10% tariffs on some U.S. goods would be cut to 5%, while other goods that have faced 5% levies will have those cut to 2.5%, starting at 1:01 p.m. Feb. 14, Beijing time.

 

Sector News Breakdown

Consumer

  • Costco (COST) January sales rose 8% to $11.57B and U.S. comparable sales for January up 6.9%
  • Casper Sleep (CSPR)35M share IPO priced at $12.00
  • l.f. Beauty (ELF) shares rose 7%; Q3 adjusted EPS 24c/$80.8M vs. est. 15c/$76.69M; raises its FY20 adjusted EPS view to 55c-59c from 44c-48c (est. 48c) and also boosts FY20 net sales view to $274M-$277M from $265M-$272M (est. $271.62M); sees long-term adjusted EBITDA growth outpacing net sales growth
  • Funko Inc. (FNKO) shares fall over 30% as guides Q4 EPS 16c-18c on sales $214M, well below the est. 44c and $264.8M; sees Q4 adj Ebitda $24.7M-$25.7M vs. est. $45.9M and said sees 2020 net sales up high-single to low-double digits
  • GoPro (GPRO) shares fall -13%; Q4 adj EPS $0.70 vs. est. $0.79, adj EBITDA $112.1Mm vs. est. $126.5Mm; guides FY adj EPS $0.40-0.50 vs. est. $0.46; Q4 gross margin rate of 38.6% vs. 38.4% a year ago
  • iRobot (IRBT) Q4 EPS 70c/$426.8M vs. est. 40c/$415.51M; sees FY20 revenue $1.32B-$1.35B vs. est. consensus $1.32B; announces CFO transition; said Q4 avg. selling price rose 5.6% YoY to $321
  • O’Reilly Automotive (ORLY) Q4 EPS $4.25 vs. est. $4.27; Q4 comp sales rose 4.4% vs. est. 4.3%; sees 2020 EPS $19.03-$19.13 vs. est. $19.85; sees 1Q comparable sales +2% to +4% and sees 1Q EPS $4.37-$4.47 vs. est. $4.52
  • Peloton (PTON) 2Q connected fitness subs +96% vs. est. +90%; guides FY revs $1.53-1.55B vs. prior $1.45-$1.5B; Q3 EPS loss (20c)/$466.6M vs. est. loss (36c)/$422.9M) but guides Q3 revs $470M-$480M vs. est. $494.2M; sees FY20 adj. Ebitda loss $95M-loss $115M from prior loss $150M-$170M; sees FY20 Connected fitness subscribers 920,000 to 930,000, 81% growth at midpoint, had seen 885,000 to 895,000 in November
  • Yum China (YUMC) Q4 comps +2% vs. est. +1.6%, 4Q revs $2.03B vs. est. $2.03B, adj EPS $0.25 vs. est. $0.19; Q4 total system sales grew 8% year over year, with growth of 10% at KFC and 1% at Pizza Hut, excluding F/X; same-store sales grew 2% year over year, with a 3% increase at KFC and flat same-store sales at Pizza Hut, excluding F/X; restaurant margin was 12.4%, compared with 11.5% in the prior year period

 

Energy, Industrials and Materials

  • ArcelorMittal (MT) shares jumped, helping pace steel producers after reporting a higher operating profit, lower debt and a better dividend than anticipated; reported a 53% drop in EBITDA to $925 million in Q4, with sales falling 15% to $15.51 billion; said it will pay a 30 cents a share dividend
  • FMC Corp. (FMC) 4Q adj EPS $1.76 vs. est. $1.54 on revs $1.2B vs. est. $1.19B; guides 1Q adj EPS $1.76-1.86 vs. est. $1.88, sees 1Q revs $1.23-1.27B vs. est. $1.25B; guides FY adj EPS $6.45-6.70 vs. est. $6.63, sees FY revs $4.8-4.95B vs. est. $4.86B; sees FY adj EBITDA $346-366Mm vs. est. $363.5Mm

 

Financials

  • Lincoln National (LNC) Q4 adjusted EPS $2.41 (in-line with est.) on revs $4.34B vs. est. $4.49B; said Q4 Book Value per Share, Including AOCI $100.11 vs. $69.71 last year and Book Value per Share ex: AOCI $71.27 vs. $67.73 last year
  • MetLife (MET) Q4 adjusted EPS $1.98/$18.2B vs. est. $1.38/$16.82B; 4Q net investment income $4.64B, rising 34% YoY with book value per share $68.62 vs. $51.53 YoY and Q4 premium, fees and other revs $13.8 billion, up 24% YoY
  • CME Group (CME) raises quarterly dividend 13% to 85c from 75c per share
  • Clarivate Analytics (CCC) 24M share Secondary priced at $20.25
  • Two Harbors Investment (TWO) Q4 core earnings 25c below the 36c estimate; added $22.3B in unpaid principal balance of mortgage servicing rights, through bulk acquisitions and monthly flow-sale arrangements, bringing total holdings to $175.9B UPB

 

Healthcare

  • Cigna (CI) Q4 adj. EPS $4.31/$38.25B vs. est. $4.20/$35.07B; expects adjusted income from operations of $6.8 billion to $7 billion, or $18-$18.60 a share for the full year (vs. est. $1.59) and sees adjusted revenue of $154 billion to $156 billion, representing 10% to 11% growth over 2019
  • Regeneron (REGN) Q4 adjusted EPS $7.50 on revs $2.17B vs. est. $6.93 and $2.11B
  • Applied Genetic (AGTC) files to offer 6M shares of common stock
  • Beam Therapeutics (BEAM)59M share IPO priced at $17.00
  • PPD, Inc. (PPD) 60M share IPO priced at $27.00

 

Media & Telecom

  • Fox Corp. (FOXA) Q2 adjusted EPS 10c/$3.78B vs. est. loss (2c)/$3.65B; 2Q advertising revs $2.01 billion; said Q2 cable network programming revenue $1.47 billion and 2Q TV revenue $2.27 billion; reports $500M of share repurchases
  • IAC Corp. (IAC) Q4 revenue $1.22B vs. est. $1.23B; 4Q adjusted Ebitda $271M vs. est. $269.8M
  • ANGI HomeServices (ANGI) Q4 EPS flat on revs $321.5M vs. est. 0c/$325.7M; sees 2020 adjusted Ebitda $200M-$250M vs. est. $234.8M; said Q4 marketplace paying service professionals 220,000, +2.8% YoY, Advertising Service professionals 37,000, +2.8% YoY
  • Schrodinger (SDGR)88M share IPO priced at $17.00

 

Technology

  • Ceridian (CDAY) 4Q adj EPS $0.08 vs. est. $0.12; guides 1Q adj EBITDA $47-49Mm vs. est. $54.3Mm, sees 1Q revs $221-223Mm vs. est. $227.3Mm; sees 2020 revenue $903M-$908M vs. consensus $929.78M
  • Coherent (COHR) Q1 adjusted EPS 86c/$320.8M vs. est. 77c/$318.23M; sees Q2 revenue $290M-$330M vs. est. $337.54M; sees Q2 adjusted gross margin 35%-39% and says continues to monitor the situation in China and the impact related to coronavirus
  • Cognizant (CTSH) Q4 adjusted EPS $1.07/$4.3B vs. est. $1.04/$4.23B; sees Q1 revenue up 2.8%-3.8% as growth view is in constant currency and includes estimate of a negative 60 basis points impact from the exit of certain content services business
  • FireEye (FEYE) 4Q adj EPS $0.07 vs. est. $0.04 on revs $235.1Mm vs. est. $226.5Mm; guides 1Q adj loss 3-5c vs. est. flat, sees 1Q revs $222-226Mm vs. est. $223.1Mm
  • GrubHub (GRUB) Q4 adjusted EPS loss (5c)/$341M vs. est. loss of (4c)/$325.28M; Q4 Active Diners rose 28% YoY to 22.6M from 17.7M; Daily Average Grubs: 502,600, a 8% YoY increase and Gross Food Sales were $1.6B, a 13% YoY increase; guides Q1 revs $350M-$370M vs. est. $363.4M
  • Netgear (NTGR) Q4 adj EPS cont ops $0.34 vs. est. $0.29; guides 1Q adj op margin 2-3%, sees 1Q net revs $205-220Mm below est. $234Mm
  • Nuance (NUAN) Q1 adj EPS $0.27 vs. est. $0.24 on adj revs $418.3Mm vs. est. $406.3Mm; guides FY adj revs $1.5-1.54B vs. est. $1.51B
  • Paycom (PAYC) 4Q adj EPS $0.86 vs. est. $0.78 on revs $193.4Mm vs. est. $190Mm; guides 1Q revs $240-242Mm vs. est. $248Mm
  • Qualcomm (QCOM) Q1 adj EPS $0.99 vs. est. $0.85 on revs $5.06B vs. est. $4.83B; guides 2Q adj EPS $0.80-0.95 vs. est. $0.85, sees 2Q revs $4.9-$5.7B vs. est. $5.06B; sees Q2 MSM chip shipments of 125M-145M
  • Sonos (SONO) Q1 EPS $0.60 vs. est. $0.53 on revs $562.1Mm vs. est. $545.5Mm; still sees FY revs $1.37-1.4B vs. est. $1.38B, guides FY adj EBITDA $72-82Mm vs. prior $102-112Mm
  • Twilio (TWLO) Q4 adj EPS $0.04 vs. est. $0.01 on revs $331.2Mm vs. est. $312.7Mm; guides 1Q revs $335-338Mm vs. est. $326.4Mm, sees 1Q adj loss 9-11c vs. est. $0.03; guides FY adj loss 14-20c vs. est. $0.24
  • Zynga (ZNGA) Q4 adj EBITDA $104.3Mm vs. est. $78.4Mm on adj revs $433.4Mm vs. est. $418Mm; guides 1Q adj EBITDA $72Mm vs. est. $80.1Mm, sees 1Q adj revs $400Mm vs. est. $411.6Mm; Q4 bookings rose 62% to $433M, driven by strength in live services along with boosts from ad seasonality and yields; online game (user pay) bookings rose 80% to $354M. Ad revenue and bookings came to $80M guides Q1 bookings of $400M (up 11% Y/Y), a net loss of $26M and EBITDA of $56M

 

 

 

 

 

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