Hammerstone’s Early Look

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Friday, July 24, 2020

FuturesUp/Down%Last
DJ Industrials-69.000.26%26,474
S&P 500-11.500.34%3,216
Nasdaq-95.500.91%10,452

 

 

Stock futures are pointing to a lower open, with tech futures under more pressure after the Nasdaq Composite declined nearly -2.3% on Thursday, its biggest one-day decline since June 26th, and will try and avoid its first back-to-back decline since May 12-13th. Global futures are under pressure given the increased tensions between the U.S. and China, which escalated again. In Asian markets overnight, The Nikkei Index was closed, the Shanghai Index fell -128 points (3.86%) to end just below the 3,200 level and the Hang Seng Index dropped -557 points (2.2%) to settle at 24,705. In Europe, the German DAX is lower by -190 points to 12,900, while the FTSE 100 is down about -50 points to 6,150. Asian markets dropped after China retaliated by ordering the U.S. to close its consulate in the southwestern city of Chengdu, a day after Washington forced Beijing to leave its mission in Houston. The other big story heading into the weekend (other than the daily coronavirus total cases), remains the high expectations for a new stimulus bill out of Washington, as Senate Republicans scrapped their plans to release a proposal for the next coronavirus relief bill Thursday after continued differences with the White House. Dow futures are also under pressure due to a more than 10% decline in Dow component Intel after the companies earnings results and news about its chip delay.

Market Closing Prices Yesterday

  • The S&P 500 Index dropped -40.36 points, or 1.23%, to 3,235.66
  • The Dow Jones Industrial Average fell -353.51 points, or 1.31%, to 26,652.33
  • The Nasdaq Composite dropped -244.71 points, or 2.29%, to 10,461.42
  • The Russell 2000 Index little changed up 0.06 points, or 0.00% to 1,490.20

 

Economic Calendar for Today

  • 9:45 AM EST       Markit US Manufacturing PMI, July-P…est. 52.0
  • 9:45 AM EST       Markit US Services PMI, July-P…est. 51.0
  • 10:00 AM EST     New Home Sales MoM for June…est. 3.6% to 700K
  • 1:00 PM EST        Baker Hughes Weekly Rig Count

 

Earnings Calendar:

  • Earnings Before the Open: AIMC, AXP, BLMN, FHB, GNTX, HON, IEX, NEE, NEP, SLB, TPH, TR, VZ

 

 

MacroUp/DownLast
WTI Crude0.4441.51
Brent0.4643.77
Gold-0.601,889.40
EUR/USD-0.00021.1594
JPY/USD-0.54106.32
10-Year Note+0.0090.587%

 

 

World News

  • In the EU, flash PMIs showed July figures jumped to 54.8, well above the June 47.5 figure and well above the May 31.9 reading; economic activity grew for the first time since February.
  • K. retail sales rose sharply in June as consumers returned to shopping following the easing of lockdown; sales rose 13.9% on month, the Office for National Statistics said Friday
  • Russia lowered its central bank interest rate to 4% from 4.25%

 

Sector News Breakdown

Consumer

  • Boston Beer (SAM) Q2 EPS $4.88 on sales $481.1M vs. est. $2.45 and $430.4M; Gross margin was 46.4% for the second quarter, a decrease from 49.9% in the comparable 13-week period in 2019, and 45.7% for the 26-week period; raises 2020 EPS to $11.70-$12.70 from $10.70-$11.70
  • BJ Restaurants (BJRI) 2Q revs $128Mm vs. est. $128.6Mm, 2Q EPS ($1.38) vs. est. ($1.95), qtr comps -57.2%, remains confident in long-term opportunity to expand to at least 425 units, has canceled or delayed all but on remaining openings for 2020
  • Del Taco (TACO) Q2 adjusted EPS 0c on revs $104.6M vs. est. loss (8c)/$104.32M; Q2 comp sales system-wide sales down -10% and company-operated comp restaurant sales decreased -12.6%; Franchised comparable restaurant sales decreased -7.2%
  • Mattel (MAT) Q2 adjusted EPS loss (26c) on sales $732M vs. est. loss (34c) and $678.52M; 2Q adj. gross margin was 43.8%, an improvement of 410 basis points; said Q2 dolls sales were $261M, down 2% YoY while Infant, Toddler, and Preschool sales were $199.8m, down 19% YoY; vehicles sales were $158.7M, down 23% YoY, driven by declines in Hot Wheels and CARS
  • Skechers (SKX) Q2 EPS loss (44c) on revs $729.5M better than the loss of (66c) and $659.68M; said Q2 comparable same store sales in its direct-to-consumer business decreased -45.6%, including a decrease of -35.9% in the U.S. and -66.9% internationally; not providing guidance
  • Scientific Games (SGMS) Q2 diluted EPS loss ($2.15) on revs $539M vs. est. loss ($1.65)/$449.06M; 2Q adjusted Ebitda fell -64% YoY to $121M, but came in above estimates $80.6M
  • DraftKings (DKNG) and Kambi reach agreement to mutually support and cooperate on DraftKings planned migration to its proprietary platform services
  • Knoll Inc. (KNL) 2Q adj EPS $0.19 vs. est. $0.07 on revs $274.1Mm vs. est. $248.2Mm, says most principal showrooms and home design shop in NY are open, says 100% operational across manufacturing and distribution
  • Scholastic (SCHL) 4Q EPS ($0.23) ex-items vs est. ($0.93) on revs $284Mm vs. est. $273Mm, says school distribution channels significantly impacted by Covid school closings; guides FY21 revs down slightly yr/yr, says planning for slower than normal start to 2020-2021 school yr with expectations for most schools to be open

 

Energy

  • DMC Global (BOOM) Q2 EPS loss (29c) on revs $43.2M vs. est. loss (13c)/$42.95M; guides Q3 revenue $45M-$50M vs. est. $49.33M; Consolidated second quarter sales were $43.2 million, down 41% sequentially and down 61% from Q2 2019, as a collapse in oil and gas demand and well-completion activity drove a sharp sales decline at DynaEnergetics; gross margin was 15%, down from 33% in Q1 2020 and 38% in Q2 2019; operating loss was $8.0 million versus operating income of $24.7 million in Q2 2019
  • Centrica PLC said Friday that it is selling its North Energy business Direct Energy to NRG Energy Inc. for $3.63 billion, so it can focus on its core U.K. and Ireland markets.

 

Financials

  • Goldman Sachs (GS) has agreed to a $3.9 billion settlement with the government over the multibillion-dollar 1MDB scandal. The deal includes a $2.5 billion cash payout by Goldman and a guarantee by the bank to return at least $1.4 billion in assets linked to 1MDB bonds,
  • E*TRADE (ETFC) 2Q EPS $0.88 vs. est. $0.76 on revs $716Mm vs. est. $676Mm, says remains prudent on expense management; 2Q adjusted operating margin 37% vs. 42% YoY and 2Q daily average revenue trades 1.01 million vs. 268,488 YoY while net new accounts 356,071
  • Everest Re Group, Ltd. (RE) provided pretax pandemic loss estimates of $160m for Q2 in advance of earnings and said it expects to see a profitable quarter in spite of the Covid-19 pandemic and related economic impacts.
  • People’s United (PBCT) Q2 operating EPS 24c on revs $191.2M vs. est. 22c/$510.18M; Q2 provision for credit losses totaled $80.8M and net charge-offs $8.5M vs. $7.6M and $4.5M a year ago respectively; tangible book value per common share was $10.18 at quarter end vs. $10.07 at previous quarter end

 

Healthcare

  • Edwards Lifesciences (EW) Q2 adjusted EPS 34c on revs $925M vs. est. 17c/$797.53M; raises FY20 adjusted EPS to $1.75-$1.95 from $1.58-$1.75 (est. $1.63) while FY20 revenue view reiterated at $4B-$4.5B; qtrly global TAVR sales $594M, down 12%;  expects sales in q3 to return to 2019 levels, and to start growing again in Q4
  • E-Health (EHTH) 2Q adj EPS $0.07 vs. est. $($0.14) on revs $88.8Mm vs. est. $80.8Mm; raises FY20 adj. EPS view to $3.83-$4.32 from $3.41-$3.90 (est.$ 3.82) and boosts FY20 revenue view to $630M-$670M from $600M-$640M (est. $639.48M)
  • The European Medicines Agency (EMA) grants PRIME status to Adaptimmune Therapeutics’ (ADAP) lead candidate ADP-A2M4, a SPEAR T-cell therapy, for the treatment of synovial sarcoma, a cancer of soft tissue such as muscle or ligaments.
  • Novavax (NVAX) and FUJIFILM Diosynth Biotechnologies announced an agreement to manufacture bulk drug substance for NVX-CoV2373, Novavax’ COVID-19 vaccine candidate. FDB’s site in Morrisville, North Carolina has begun production of the first batch of NVX-CoV2373
  • BioMarin Pharmaceutical (BMRN) said it submitted a Marketing Authorization Application to the European Medicines Agency for vosoritide, an investigational, once daily injection analog of C-type Natriuretic Peptide (CNP) for children with achondroplasia

 

Industrials & Materials

  • Honeywell (HON) Q2 adj EPS $1.26 on revs $7.48B vs. est. $1.20 and $7.28B; reports Q2 aerospace revs $2.54B vs. est. $2.4B
  • Idex Corp. (IEX) Q2 adjusted EPS $1.10 on revs $561.2M vs. est. $1.00/$527.87M; expect q3 organic sales to be down approximately 12 to 17 percent versus prior year; expects months ahead will remain challenging; has implemented certain cost reduction actions, including employee reductions

 

Technology, Media & Telecom

  • Intel Corp. (INTC) shares fall -11% on chip delay; 2Q adj EPS $1.23 vs est. $1.11 on revs $19.7B vs est. $18.6B, guides 3Q revs about $18.2B vs est. $17.9B, sees FY revs $75B vs est. $73.9B; shifting 7nm-based CPU product timing by about 6 months vs prior, accelerating 10nm transition this yr with increasing volumes and strong demand for expanding line (lifted shares of AMD on news)
  • Skyworks (SWKS) Q3 adjusted EPS $1.25 on revs $736.8M vs. est. $1.12/$690.67M; raises quarterly dividend 14% to 50c per share; sees Q4 adjusted EPS $1.51 on revs $830M-$850M, above consensus $1.47 and $809.52M
  • Apple Inc. (AAPL) is delaying its annual fall event until the latter half of October instead of early September, according to a tech blog. The company was forced to push back the event for the 5G-compatible iPhone 12 line because of production delays caused by the pandemic (note the NY Post first reported the possible delay late yesterday)
  • Manhattan Associates (MANH) Q2 EPS 40c on revs $135.63M vs. est. 34c/$127.34M; said Q2 cloud subscription revenue was $18.5M vs. $9M YoY and license revenue was $5.7M in Q2 vs. $11.7M YoY; guides FY20 EPS 1.53-$1.59 vs. est. $1.54 on revs $554M-$570M vs. est. $553.72M
  • SciPlay (SCPL) 2Q EPS $0.27 vs. est. $0.25 on revs $166Mm vs. est. $138.3Mm, avg monthly revs per payer +24%

 

 

 

 

 

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