Hammerstone’s Early Look
January 9, 2020|
Thursday, January 9, 2020
U.S. stock futures are adding to yesterday gains, pushing major averages into record territory as tensions over the Middle East fade after U.S. President Donald Trump said he would not take military action in response to Iran launching missiles but not causing any American casualties (though said he would impose heavy sanctions). Iran said it was done with military action in retaliation for the U.S. killing of a top general. Meanwhile on Thursday, China’s Vice Premier Liu He, its chief envoy in trade talks, will visit Washington next week for the signing of an interim trade deal. In Asian markets, The Nikkei Index jumped 535 points (2.31%) to settle at 23,739, the Shanghai Index rose 27 points to 3,094 and, the Hang Seng Index surged 473 points (1.68%) to finish at 28,561. In Europe, the German DAX is higher by 160 points to 13,485, while the FTSE 100 is up around 40 points to 7,615. European stocks on Thursday were on track to reach a record high, as concerns over Iran and China fade into the background. Safe-haven/defensive asset classes extend their slide for a second day as gold prices drop (after snapping its 10-day winning streak the day prior) and Treasuries edge higher (pushing yields to their best levels in over a month). Economic data include initial jobless claims, and several Fed speakers are on the agenda while markets brace for the upcoming earnings season starting next week.
Market Closing Prices Yesterday
- The S&P 500 Index jumped 15.87 points, or 0.49%, to 3,253.05
- The Dow Jones Industrial Average rose 161.45 points, or 0.56%, to 28,745.09
- The Nasdaq Composite spiked 60.66 points, or 0.67%, to 9,129.24
- The Russell 2000 Index advanced 5.29 points, or 0.32% to 1,663.59
Events Calendar for Today
- 8:30 AM EST Weekly Jobless Claims
- 8:30 AM EST Continuing Claims
- 10:30 AM EST Weekly EIA Natural Gas Inventory Data
- 1:00 PM EST US Treasury will auction $16 billion reopened 30-year bonds
- Earnings Before the Open: AYI, AZZ, LNN, SMPL
- Earnings After the Close: FC, KBH, PSMT, SNX, VOXX, WDFC
Other Key Events:
- Consumer Electronics Show, 1/6-1/10, in Las Vegas
- Goldman Sachs Annual Healthcare CEO Conference, 1/8-1/9, in New York
- Fed’s Clarida speaks in New York at 8:00 AM EST
- Fed’s Williams speaks at Bank of England in London 11:30 AM EST
- Fed’s Evans speaks on Economic Outlook at 1:20 PM EST
- Fed’s Bullard speaks in Wisconsin
- China’s consumer inflation held steady at a near eight-year high in December as the consumer-price index rose 4.5% in December from a year earlier. The key inflation reading was the same as November’s growth and slightly slower than a median forecast of a 4.6% increase. Food prices in December grew 17.4% from a year earlier, retreating from an over 11-year high of 19.1% prior.
- The World Bank forecast the global economy will grow 2.5% this year, up only slightly from 2.4% growth in 2019. That had been the weakest performance since the 2008 financial crisis and a significant slowdown from growth rates above 3% in 2017 and 2018
Sector News Breakdown
- Bed Bath & Beyond (BBBY) Q3 EPS loss (3c) on revs $2.76B vs. est. $2.85B; 3Q operating loss $29.8M vs. profit $49.5M YoY, vs. estimate profit $17.9M; company withdraws FY19 guidance; Q3 comp sales fell (-8.3%) vs. est. loss (-4.9%); plans to reveal a new strategic vision for 2020
- Chico’s (CHS) raises Q4 revenue view to flat versus prior of low single-digit decline – outlook reflects sequential comparable sales improvement at Chico’s and White House Black Market, as well as continued strong sales growth at Soma
- Costco (COST) Dec total comp sales rose 9% vs. est. 7.3% and US comp sales ex-gas and FX rises 7.8% vs. est. 6.3%; reported net sales of $17.04B for the retail month of December, the five weeks ended January 5, 2020, an increase of 10.5% from $15.42B last year
- Helen of Troy (HELE) Q3 adj EPS $3.12 on sales $474.7M vs. est. $2.50 and $446.3M; now expects consolidated net sales revenue to be in the range of $1.650B-$1.675B, which implies consolidated sales growth of 5.5% to 7.1% compared to the prior expectation of 2.9% to 4.8%; raises year EPS view to $8.90-$9.10 from prior view of $8.50-$8.75
- Hawaiian Airlines (HA) reports Q4 traffic up 5.6%, capacity up 3.7% with load factor increased 1.5 points to 86.1% and reports December traffic up 7.7%, capacity up 5.4% as load factor increased 1.9 points year-over-year to 85.9%.
- Kura Sushi (KRUS) Q1 EPS loss (15c)/$17.4M vs. est. loss (3c)/$18.81M; sees FY20 revenue $84M-$87M (est. $87.4M) and sees FY20 adjusted EBITDA margin between 9%-10%
- Coca-Cola (KO) upgraded to Outperform at Credit Suisse and raise tgt to $64 from $54
- Kellogg (K) upgraded to Outperform from Market Perform at BMO Capital
- Tesla (TSLA) downgraded to Neutral from Outperform at Baird and up tgt to $525 from $355 saying the risk/reward is more balanced following the recent stock appreciation
- K. clothing and food retailer Marks & Spencer shares tumbled as it forecast gross margins for the March-ending fiscal year to be at the lower end of guidance. Comparable-store clothing and home sales during its fiscal third quarter fell a worse-than-forecast 1.7%
- Tesco (TSCDY) reported sales over the Christmas period, on a comparable basis, rose in the U.K. and Ireland.
Energy, Industrials & Materials
- AZZ Inc. (AZZ) Q3 EPS 84c vs. 80c est.; still sees year revs $1.02B-$1.06B vs. est. $1.03B and EPS of $2.60-$2.90 vs. est. $2.79
- The Boeing (BA) jet that crashed after takeoff from Tehran was on fire before it hit the ground, Iran’s aviation regulator said – WSJ reports
- Lindsay (LNN) Q1 EPS 77c on revs $109.4M vs. est. 53c and $112.5M
- Saratoga Investment (SAR) said metrics were remarkably strong with LTM return on equity of 17.6%, adjusted NII per share of $0.61 per share, earnings per share of $1.37, and an additional increase in NAV per share this quarter of $0.83, or 3.4%, to $25.30
- Bank America upgraded shares of Goldman Sachs (GS) and PNC Financial (PNC) to buy from neutral
- Jefferies (JEF) reported Q4 EPS of 62c vs. 15c QoQ and revs of $1.11B
- TriplePoint Venture (TPVG) 5M share Spot Secondary priced at $14.08
- DBV Technologies (DBVT) shares rose 18% as announces positive long-term results from the open-label extension study (PEOPLE) of its Phase 3 clinical trial, PEPITES, evaluating Viaskin Peanut in peanut-allergic children aged 4 – 11 years.
- Mirum Pharmaceuticals (MIRM)4M share Secondary priced at $20.00
- Osmotica Pharmaceuticals (OSMT) 6M share Secondary priced at $5.00
- Mirati Therapeutics (MRTX) files to sell $250M in common stock
Technology, Media & Telecom
- HP Inc. (HPQ) once again rejected a takeover bid by Xerox Holdings Corp. (XRX) saying “we reiterate that the HP Board of Directors’ focus is on driving sustainable long-term value for HP shareholders. Your letter dated January 6, 2020 regarding financing does not address the key issue — that Xerox’s proposal significantly undervalues HP — and is not a basis for discussion. Earlier this week, Xerox said it had secured funding for an unsolicited $33 billion takeover bid.
- Advanced Micro (AMD) upgraded to Buy from Neutral at Mizuho and boosts price target to $55
- MongoDB (MDB) files to sell $750M of convertible senior notes due 2026
- Spotify (SPOT) initiated with an Underperform at Bernstein with $127 tgt
- Tufin (TUFN) cuts Q4 revenue view to $29.5M-$30.1M from $34M-$38M (est. $36.1M); sees Q4 adjusted operating loss $1.1M-$2.6M
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