Америка сегодня. Индексы Шиллера и продажи новых домов.

 

 Sotherly Hotels increases quarterly dividend to $0.105/share from $0.10/share  (5.70)

 Wells Fargo upgraded to Neutral from Sell at Guggenheim  (53.65)

 

 American Express upgraded to Buy from Neutral at Guggenheim  (80.45)

 

 

 

 Rite Aid beats by $0.08, beats on revs  (3.73)

• Reports Q4 (Feb) adj. EPS $0.00, $0.08 better than the two analyst estimate of ($0.08); revenues rose 3.3% year/year to $8.54 bln vs the $8.26 bln Capital IQ Consensus. Retail Pharmacy Segment revenues were $7.1 billion and increased 4.3% compared to the prior year period primarily as a result of the extra week in the fourth quarter, partially offset by a decrease in same store sales. Revenues in the company's Pharmacy Services Segment were $1.5 billion and decreased 1.3% compared to the prior year period.
• Same store sales for the quarter decreased 3.0% over the prior year, consisting of a 4.3% decrease in pharmacy sales and a 0.3% decrease in front-end sales.
• From Jan 30: WBA and Rite Aid agreed to reduce the price for each share of Rite Aid common stock to be paid by WBA. In addition, WBA will be required to divest up to 1,200 Rite Aid stores and certain additional related assets if required to obtain regulatory approval. The exact per share merger consideration will be determined based on the number of retail stores that WBA agrees to divest in connection with the parties' efforts to obtain the required regulatory approvals for the merger, with the price set at $7.00 per share if 1,000 retail stores or fewer retail stores are required to be divested and at $6.50 per share if 1,200 retail stores are required to be divested (or more, if WBA agrees to sell more). Additionally, WBA and Rite Aid agreed to extend the end date to July 31, 2017.

 Biogen beats by $0.22, beats on revs  (276.86)

• Reports Q1 (Mar) earnings of $5.20 per share, $0.22 better than the Capital IQ Consensus of $4.98; revenues rose 3.1% year/year to $2.81 bln vs the $2.73 bln Capital IQ Consensus.
• Product revenue highlights:
  
  • TECFIDERA $958 mln +1% YoY
  • AVONEX $537 -5% YOY
  • PLEGRIDY $112 mln +5% YOY
  • TYSABRI $545 mln +14% YoY 
• TYSABRI revenue grew 14% versus the prior year. Outside the U.S., TYSABRI revenues benefited by approximately $45 million due to reaching an agreement with the Price and Reimbursement Committee of the Italian National Medicines Agency (AIFA) related to TYSABRI sales in prior periods.
• Versus Q4 2016, Biogen estimates TECFIDERA U.S. revenues were negatively impacted by approximately $50 million to $60 million due to lower inventory levels in the channel. Worldwide SPINRAZA revenues were $47 million.
• «We are encouraged by the progress we made launching SPINRAZA in the U.S., and, following the positive CHMP opinion, we are ramping up pre-launch activities in Europe. The value this therapy provides to patients is compelling, and we are working to accelerate patient access globally,» Vounatsos continued. «Overall, I believe we're building positive momentum at the company, and I look forward to leading Biogen into a new and exciting era.»

 Resonant initiated with a Buy at Rodman & Renshaw on their favorable view of co's RF filter design; tgt $8  (4.80)

 

 Condor Hospitality Trust initiated with a Buy at Janney  (10.68)

 Best Buy upgraded to Buy from Neutral at BofA/Merrill  (51.15)

 General Electric downgraded to Neutral from Buy at BofA/Merrill  (29.55)

 

 

 C.R. Bard downgraded to Mkt Perform from Strong Buy at Raymond James  (302.41)

 GasLog initiated with a Outperform at Credit Suisse  (14.00)

 

 

 

 

 

 European Markets Update: DAX UNCH, FTSE +0.3%, CAC +0.4%

Major European indices trade in the neighborhood of their flat lines while the euro is also little changed, having added 0.1% against the dollar to 1.0879. Market participants are setting their sights on Thursday's European Central Bank policy meeting with little expectations for a hawkish surprise, given the elevated uncertainty in the region.

• Economic data was limited:
  • UK's March Public Sector Net Borrowing GBP4.36 billion (expected GBP1.50 billion; last GBP660 million)
  • France's April Business Survey 108 (expected 104; last 105)
  • Spain's PPI +6.0% year-over-year (last 7.4%)

---Equity Markets---

• Germany's DAX trades flat. Merck leads with a gain of 2.8% while heavyweights Daimler, Volkswagen, and Adidas are up between 0.4% and 0.8%. SAP has added 1.0% despite missing bottom-line expectations. On the downside, Continental, Commerzbank, BASF, and Siemens hold losses between 0.3% and 2.3%.
• UK's FTSE has added 0.3% with drug makers contributing to the strength. Hikma Pharmaceuticals, Shire, AstraZeneca, and GlaxoSmithKline hold gains between 0.8% and 2.6%. Restaurant operator Whitbread is the weakest performer, falling 7.5%, in reaction to cautious guidance.
• France's CAC is higher by 0.4%. Louis Vuitton has jumped 4.5% after agreeing to acquire Christian Dior's fashion subsidiary. Other consumer names like Kering, Carrefour, and Danone are up between 0.6% and 1.6%. On the downside, Peugeot and Valeo hold respective losses of 1.4% and 1.1%.

 Qorvo, FIT, ORBC, CAMP, WIFI, MOBL, DGII, IMMR, SQNS, IPAS all initiated with Buy ratings at The Benchmark Company  (70.94)

 

 On The Wires

• JinkoSolar Holding (JKS) has supplied 42 MW of solar modules to Asunim Yenilenebilir Enerji Teknolojileri Ins. Muh. San. Tic. Ltd. («Asunim»), for use in two PV power plants implemented by Asunim in Izmir Province, southwest Turkey.
• Canadian Solar (CSIQ) announced that it has secured debt and equity financing for its 92 MWp IS-42 solar power project near Fayetteville, North Carolina. Prudential (PRU) will provide a $97 mln debt facility, including tax equity bridge loan, term loan, and revolving loan to the project. USBCDC, a division of U.S. Bank (USB), will make a tax equity investment in the project under a separate agreement.
• RXi Pharmaceuticals (RXII) announced that the Company's VP of Research, Dr. Karen Bulock, will present at the 19th Annual TIDES: Oligonucleotide and Peptides Therapeutics Conference. The presentations will be available at www.rxipharma.com.

 

 

 Allergan has been granted marketing authorization from the FDA for TrueTear Intranasal Tear Neurostimulator  (236.98)

 Digital Turbine upgraded to Buy from Hold at Craig Hallum  (0.95)

 

 Overnight Treasury Summary

Treasury Yields Continue Higher 

• U.S. Treasury yields are trading higher across the board this morning as markets remain in a good mood from Sunday's French presidential election result and fresh hope for corporate tax cuts. French centrist candidate Emmanuel Macron continues to lead the National Front's Marine Le Pen by roughly 20 percentage points in polling for May 7's run-off vote. On Monday, a White House official revealed that the Administration wants to reduce the corporate tax rate to 15% from 35%. That is easier said than done with only a 52-48 Republican majority in the Senate. The international economic data was light but U.S. New Home Sales for March will be released this morning. The S&P 500 is set to open up by 0.15% at 2,377.5 and the U.S. Dollar Index is down 0.03% at 99.06. WTI crude is edging higher by 0.10% at $49.28/bbl. and gold is losing 0.56% to $1,270.4/troy oz.
• Yield Check:
  • 2-yr: +2 bps to 1.25%
  • 5-yr: +3 bps to 1.83%
  • 10-yr: +3 bps to 2.30%
  • 30-yr: +2 bps to 2.95%

• International News:
  • In Japan, the Corporate Services Price Index rose by 0.8% y/y in March, matching expectations and February's pace
  • The French Business Survey unexpectedly jumped to 108 for April (105 prior)
  • Spain's producer price index was up 6.0% y/y in March (7.4% prior)
  • In the U.K., public sector net borrowing jumped more than expected to GBP4.4 bln in March from -GBP0.66 bln in February (not seasonally adjusted)
    • The public sector's net cash requirement was GBP34.31 bln in March (GBP12.88 bln)

• Data out Tuesday:
  
  • February Case-Shiller 20-city Home Price Index (09:00 ET)
  • February FHFA Housing Price Index (09:00 ET)
  • March New Home Sales (10:00 ET)
  • April Consumer Confidence (10:00 ET)
• Treasury Auction:
  
  • $26 bln 2-year Treasury auction (results at 13:00 ET)

 Overseas Research Calls

Upgrades: 

• The Weir Group PLC (WEIGF) upgraded to Overweight from Neutral at JP Morgan
• The Weir Group PLC (WEIGF) upgraded to Hold from Reduce at Numis

Downgrades: 

• Anglo American (NGLOY) downgraded to Neutral from Buy at Goldman
• Antofagasta plc (ANFGY) downgraded to Sell from Neutral at Goldman

Miscellaneous: 

• Norsk Hydro (NHYDY) added to Conviction Buy List at Goldman
• Vedanta Ltd (VEDL) removed from Conviction Buy List at Goldman

 Wintrust Fin target raised to $76.50 from $74 at Hovde Group to reflect increased EPS ests following the Q1 report  (72.70)

 

 On The Wires

• Jacobs Engineering (JEC) received a 4yr contract extension from Kraton to provide maintenance and product handling and packaging services at Kraton's Belpre, Ohio facility. Jacobs' presence at the Belpre site includes approximately 125 full-time employees. Financial details were not disclosed.
• IBM (IBM) and Flotek (FTK) announced a global agreement to develop a cognitive reservoir performance system for the oil and gas industry. The system uses IBM Watson technology to analyze Flotek's proprietary oilfield chemistry research, oil & gas client-contributed data and publicly reported sources from completion and production to enhance the performance of wells.

 Shopify: SHOP has achieved escape velocity, previewing 1Q17 earnings — Maxim Group  (75.83)Maxim forecasts SHOP revenue and adj. EBITDA to be in line with the consensus ests. Firm's revenue projection is at the midpoint of mgmt's guidance range. They est that the adj. EPS loss will be slightly lower than the consensus figure. They will be listening for details on co's subscription sales and merchant solutions revs. They also look for comments on the additions for Shopify Plus merchants, both those that have grown on its platform and those added by its first-party sales force. Firm looks for an update on co's efforts with Amazon.com, (AMZN — $907.41 — Buy) including enabling its merchants to leverage co's platform to sell their merchandise; Hold.

 

 

 

 S&P futures vs fair value: +3.00. Nasdaq futures vs fair value: +9.50.

Wall Street opened the week with some vigor as investors cheered Emmanuel Macron's victory in the first round of the French presidential election. Remnants of that positive sentiment have given the bulls a slight edge this morning with the S&P 500 futures trading three points above fair value.

President Trump is expected to announce his tax plan, or at least a broad outline, on Wednesday with reports claiming that he will seek to lower the corporate tax rate to 15.0%. In addition, the president signaled that, in order to avoid a government shutdown, he may temporarily tone down his push to secure funding for his promised barrier along the U.S./Mexico border. The two developments certainly haven't hurt the bulls' cause this morning.

In the bond market, U.S. Treasuries show losses across the board, leaving the benchmark 10-yr yield three basis points higher at 2.30%. The 2.30% mark has been a key technical level for the 10-yr yield, first acting as a support, but now posing as a level of resistance. 

Crude oil is looking to break its streak of six consecutive losses today. The energy component is currently hovering near its flat line at $49.26/bbl. 

Investors will receive several economic reports today. The February Case-Shiller Home Price Index (Briefing.com consensus 5.8%) and the February FHFA Housing Price Index will both be released at 9:00 ET, while March New Home Sales (Briefing.com consensus 590,000) and April Consumer Confidence (Briefing.com consensus 122.3) will both cross the wires at 10:00 ET.

In U.S. corporate news:

• Caterpillar (CAT 101.80, +4.99): +5.2% after beating top and bottom line estimates and issuing positive guidance.
• DuPont (DD 80.68, +1.31): +1.7% after beating top and bottom line estimates.
• 3M (MMM 197.75, +3.52): +1.8% after reporting better than expected earnings and revenues in addition to providing upbeat guidance.
• Biogen (BIIB 289.50, +12.64): +4.6% after beating on the top and bottom lines. 
• Express Scripts (ESRX 59.80, -7.35): -10.9% after disclosing that its contract with Anthem (ANTM 168.41, 0.00) is unlikely to be extended. Also of note, the company beat bottom-line estimates and issued positive guidance, but missed the mark on revenues.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Tuesday on a higher note. Japan's Nikkei +1.1%, Hong Kong's Hang Seng +1.3%, China's Shanghai Composite +0.2%, India's Sensex +1.0%.
  • In economic data:
    • Japan's Corporate Services Price Index 0.8% year-over-year, as expected (last 0.8%)
    • Hong Kong's March trade deficit narrowed to HKD42.30 billion from HKD56.30 billion. March Imports +13.0% month-over-month (last 25.4%) and March Exports +16.9% month-over-month
    • South Korea's April Consumer Confidence 101 (last 97)
  • In news:
    • The former chief of China's National Bureau of Statistics was indicted on bribery charges.
    • Markets in Australia and New Zealand were closed for ANZAC Day.

• Major European indices trade in the neighborhood of their flat lines while the euro is also little changed, having added 0.1% against the dollar to 1.0879. Germany's DAX unch, UK's FTSE +0.3%, France's CAC +0.4%.
  • Economic data was limited:
    • UK's March Public Sector Net Borrowing GBP4.36 billion (expected GBP1.50 billion; last GBP660 million)
    • France's April Business Survey 108 (expected 104; last 105)
    • Spain's PPI +6.0% year-over-year (last 7.4%)
  • In news:
    • Market participants are setting their sights on Thursday's European Central Bank policy meeting with little expectations for a hawkish surprise, given the elevated uncertainty in the region.

 

 

 

 

 On The Wires

• PPG (PPG) announced that it is implementing price increases and surcharges to offset a significant rise in raw material costs. The price changes will impact packaging coatings products globally. Details of the price increases will be communicated directly to customers.
• Crescita (CTX) announced it has entered into a development and commercialization license agreement with Taro Pharmaceuticals (TARO). Under the terms of the Agreement, Crescita has granted Taro an exclusive license to the rights to sell and distribute Pliaglis in the U.S. and for a second-generation enhanced version with patent pending.
• Long Island Iced Tea (LTEA) announced that it has secured placement of its flagship brand Long Island Iced Tea in 11 Sam's Club locations across Puerto Rico that will commence in April 2017.
• Wingstop (WING) announced that it has entered into an international expansion agreement with The Great Fundamentals to open 30 franchise locations in Malaysia over the next 6yrs with the first restaurant set to open later in 2017.
• VMware (VMW) announced an agreement that will streamline the purchase of VMware technologies by CENIC's members. Universities, schools, libraries and other cultural, scientific and arts organizations can now purchase VMware's products that simplify complex IT environments for end users, accelerate digital transformation and positively impact student learning at «favorable» terms and prices.

 Sony initiated with a Outperform at Bernstein  (33.82)

 European Summary

Borrowing Costs Move Higher Across Europe

• European sovereign debt yields are broadly higher today as the tailwind from the Sunday's first round of the French presidential election continues to blow risk asset prices and borrowing costs higher. According to the latest poll, Emmanuel Macron leads National Front candidate Marine Le Pen by 22 points for the run-off vote on May 7. Le Pen has pledged to withdraw France from the eurozone. We noted a few times last week that the German 10-year bund yield was testing its 200-day moving average at 0.17% and a retest of that level appears unnecessary if yields are indeed going higher. In economic news, French business confidence rose to a five-year high in April, even before the vote on Sunday. Economic sentiment has been improving across the single-currency bloc since the Brexit vote last June but year-on-year core inflation remains at only 0.7%, well below the ECB's target of 2% 
• Bloomberg notes today that one-month implied volatility for the EUR/USD currency pair has fallen to 8.5% from 13.5% last week. The current level is firmly within the range from the six months leading up to the first round of voting and therefore suggests that the major risk of eurozone break-up has passed. The euro is trading above its 200-day moving average ($1.0841) for the second-straight day, the first time that has happened since October 2016
• New Issuance:
  • Germany sold EUR3.222 bln of 2-year schatz at an average yield of -0.69% with a bid-to-cover of 1.17
• European Economic Data:
  • The French Business Survey unexpectedly jumped to 108 for April (105 prior)
  • Spain's producer price index was up 6.0% y/y in March (7.4% prior)
  • In the U.K., public sector net borrowing jumped more than expected to GBP4.4 bln in March from -GBP0.66 bln in February (not seasonally adjusted)
    
    • The public sector's net cash requirement was GBP34.31 bln in March (GBP12.88 bln)
  • In Denmark, retail sales rose by 0.3% m/m in March, exceeding estimates after 0.1% growth in February
  • Sweden's ILO Unemployment Rate fell more than expected to 6.6% in March (6.9% prior)
• Yield Check:
  • France, 10-yr OAT: +4 bps to 0.87%
  • Germany, 10-yr bund: +4 bps to 0.37% 
  • Greece, 10-yr note: -2 bps to 6.34%
  • Italy, 10-yr BTP: +5 bps to 2.24%
  • Portugal, 10-yr PGB: +1 bp to 3.56%
  • Spain, 10-yr ODE: +3 bps to 1.64%
  • U.K., 10-yr gilt: +3 bps to 1.08%

 

 S&P futures vs fair value: +6.80. Nasdaq futures vs fair value: +17.40.

Equity futures point to a higher open for the stock market this morning with the S&P 500 futures trading seven points above fair value.

From the Korean Peninsula, North Korea decided to celebrate the 85th anniversary of its army by conducting a large-scale artillery drill. Meanwhile, a U.S. submarine made a port call in South Korea earlier on Tuesday in what some U.S. officials have deemed a show of force, according to CNN. If nothing else, these reports highlight the fact that the tension between the U.S. and North Korea is ever-present and the ongoing narrative will continue to play in the back of investors' minds. 

Elsewhere, in the commodities market, crude oil has slipped into negative territory as of late with the energy component now trading lower by 0.2% at $49.13/bbl. Gold hovers near its overnight low, down 0.6% at $1,269.59/ozt.

 Apple: Raising FY17 & FY18 ests — remains Top Pick — Needham  (143.64)

Needham maintains FY2Q17 ests at rev of $53.2B (up 5% y/y) and EPS of $2.01 (up 6% y/y), but raise FY17 ests as their survey data suggests pent-up demand for the 10th anniversary iPhones plus stronger services rev. New FY17 rev is $229.9B (up 7% y/y) and EPS is $9.06 (up 9% y/y). AAPL remains our top stock pick for 2017 owing to: 1) Catalysts; 2) Fundamentals, 3) Technical Analysis and 4) Valuation. Potential catalysts for AAPL during 2017 include a falling corporate tax rate and repatriation of over $200B from cash balances offshore. Fundamentally, they think the right way to think about AAPL's barriers to entry, pricing power, and competitive advantage period is through the lens of its ecosystem dominance of the wealthiest 15% of smartphone owners globally; Buy, $165 tgt.

AAPL reports on May 2, after the close

 

 

 Gapping up/down: CAT +6%, BIIB +4.5%, HUM +3%, AA +3%, MCD +2% and NVS +2% after earnings, APFH +9% after M&A news. BBY +2%, JPM +1% and WFC +1% after upgrades; ESRX -11%, LMT -3%, PHM -3% and LLY -3% after earnings

Gapping up
In reaction to strong earnings/guidance:

• CATB +37.3%, UIS +16.6%, MDR +9.5%, LLNW +9.1%, SVU +7.8%, GCI +7.6%, CAT +6.4%, RDWR +5.8%, AKS +5.5%, ATI +5.4%, MAS +5.3%, BIIB +4.5%, LXU +4.1%, RAD +3.8%, HUM +3.2%, RRC +3.2%, CR +3.1%, ICHR +3%, (also commences public offering of 4,500,000 ordinary shares by selling shareholders), AA +3%, JBLU +3%, FNB +2.5%, MCD +2.4%, NVS +2.3%, RE +2.3%, DD +2%, WNC +1.9%, CNC +1.4%, GPK +1.3%, EAT +1.2%, TSN +1.1%, VLO +1%

M&A news:

• NORD +26.5% (to be acquired by by consortium led by Canada Pension Plan Investment Board and Baring Private Equity Asia for $32.50/share)
• APFH +9.2% (to be acquired by Tyson Foods (TSN) for $40.25/share in cash)
• STRP +7.4% (Board determines that an unsolicited offer from a 'multi-national telecommunications company' for $104.64/share in stock constitutes a 'Superior Proposal')
• MVC +4.8% (MVC Capital announced that Equus Total Return (EQS) will acquire MVC's largest portfolio holding U.S. Gas & Electric; Transaction consideration values USG&E at $167.5 mln)
• TSN +0.9%

Select EU financial related names showing strength:

• CS +2%, RBS +1.4%, SAN +1.4%, LYG +1.2%

Other news:

• CATB +35.3% (announced additional favorable results across multiple functional assessments in the MoveDMD trial)
• CANF +25.3% (Barzilai Medical Center's Institutional Review Board has approved the Phase III ACRobat trial protocol and patient enrollment for the study)
• CAPR +16.2% (positive top-line results from a safety and exploratory efficacy analysis of 6 month data from the randomized 12-month Phase I/II HOPE Clinical Trial of CAP-1002)
• QURE +8.7% (will present data on its technologies to improve gene therapy as a therapeutic approach at the ASGCT on May 12 )
• OPGN +5.7% (presents prelim results on its Acuitas Rapid Test)
• ZSAN +4.4% (continued strength)
• PRTK +3.7% (presents new data from a Phase 1 study on its once-daily oral and IV, broad spectrum investigational antibiotic omadacycline at the ECCMID 2017)
• IMGN +3.6% (Highbridge Capital discloses passive stake)
• ABEO +2.9% (announces that updated Phase 1/2 clinical trial data on the EB-101 gene therapy program)
• GALT +2.5% (received a Decision to Grant for its patent application for «Composition of Novel Carbohydrate Drug for Treatment of Human Diseases.»)
• NVO +2.1% (in sympathy with NVS), LOGI +2% (enters new $250 mln share buyback program)
• CVS +1.7% (in sympathy with RAD)
• DE +1.5% (in sympathy with CAT earnings)
• SNY +1.3% (in sympathy with NVS)
• X +1.3% (in sympathy with AA and AKS)
• SHPG +1.3% (in sympathy with NVS)
• NFLX +1.2% (signs licensing agreement with China's iQiyi, according to The Hollywood Reporter)
• GSK +1% (in sympathy with NVS)

Analyst comments:

• IDRA +5.8% (initiated with a Outperform at Robert W. Baird; tgt $5)
• BBY +2.6% (upgraded to Buy from Neutral at BofA/Merrill)
• SUN +1% (upgraded to Neutral from Sell at Citigroup)
• JPM +0.8% (upgraded to Buyfrom Neutral at Guggenheim)
• WFC +0.7% (upgraded to Neutral from Sell at Guggenheim)
• AXP +0.6% (upgraded to Buy from Neutral at Guggenheim)

Gapping down
In reaction to disappointing earnings/guidance:

• ESRX -11.5%, NGL -10.6%, (lowers FY17 guidance) R -6.7%, CDNS -5.9%, SWFT -5.3%, ABX -3.7%, LH -3.2%, LMT -3.2%, PHM -2.9%, LLY -2.7%, TECK -2.2%, CNI -2.2%, XRX -2%, ERIC -1.6%, ZION -1.1%, RMBS -1%, TROW -0.9%, TMUS -0.8%, ST -0.8%

Select metals/mining stocks trading lower:

• EGO -3.1%, KGC -1.6%, AG -1.5%, GG -1.1%, GDX -0.9%, GOLD -0.7%

Other news:

• CTRV -25.4% (commences an underwritten public offering)
• MBII -17.7% (proposes common stock public offering)
• KPTI -3.8% (commences underwritten public offering of $40 mln in shares of common stock)
• PZRX -2.1% (modest pullback)
• SITE -2.1% (announces secondary offering of 8,500,000 shares of common stock by selling stockholders)
• WPZ -2% (reduces quarterly distribution to $0.60/share from $0.85/share)
• OMED -1.3% (OncoMed Pharma will reduce its workforce by approximately 50%; co will also seek to maximize the value from potential interest in partnering the assets to which it has worldwide rights)

Analyst comments:

• ORLY -0.8% (downgraded to Hold from Buy at Deutsche Bank)
• COL -0.6% (resumed with a Sell at Goldman)
• GE -0.6% (downgraded to Neutral from Buy at BofA/Merril)
• BHP -0.5% (downgraded to Sell from Neutral at Goldman)

 Cadence Design color on qtr  (33.48)

• RBC Capital Mkts noted CDNS's solid results that were in-line with expectations along with a full-year guide that remains unchanged. While the stock was down a tad in the after market, firm thinks this was primarily due to 1) high expectations into the print, 2) pause in buybacks for the quarter and 3) a slowdown in digital on a y/y basis — although this is due to a tough compare from a large completed service contract in 1Q16 of last year. Finally, they note that y/y growth remains healthy at +6.5% for the quarter and EPS growth came in at +13.6% y/y as well. Net Net: the quarter was largely in-line with Street expectations and firm thinks the stock is taking a small step back due to higher buy-side expectations after a material leg up in the stock to start the year (CDNS is up +32.75% on a YTD basis); Outperform, $33 tgt.
• Needham kept their Hold rating on CDNS after co delivered what firm felt were largely in-line 1Q17 results and reiterated its prior 2017 top and bottom line guidance, while providing 2Q17 guidance just shy of consensus. They think co remains well positioned to meet or slightly exceed its 2017 guidance, as it benefits from a stable macro backdrop, share gains in Digital and renewed growth in its IP business. That said, shares are up 33% yt-d (vs S&P 500 up ~6% ytd) and now trade at a post-model-transition high NTM P/ E of ~24x, sharply above the stock's 5-yr average of ~17x. As such, while appreciative of co's solid fundamentals, firm admits they are hard pressed to make an upside valuation case for the shares.

CDNS is indicated about -5.9% on thin volume in the premarket

 W.R. Grace initiated with a Neutral at Susquehanna  (70.25)

 On The Wires

• OSI Systems (OSIS) announced that its Security division was awarded a multi-year contract valued at approximately $7 mln to provide Rapiscan 620XR baggage and parcel inspection systems, including follow on maintenance and support services, to a prominent international airport authority.
• BeyondSpring (BYSI) announced that they have enrolled the first patient at the Hematology / Oncology Northshore, Illinois, in its Phase 2/3 study of BeyondSpring's lead asset, Plinabulin, for the prevention of neutropenia, in combination with docetaxel.
• Marvell (MRVL) announced that Neil Kim has joined Marvell as its CTO. In this role, Mr. Kim will lead Marvell's advanced engineering efforts, process technology roadmaps and key IP development functions worldwide. Prior to joining Marvell, he served as Broadcom's Executive VP of Operations and Central Engineering.

 Akorn downgraded to Hold from Buy at Gabelli & Co following Fresenius (FSNUY) deal; Overbid unlikely  (32.72)

 S&P futures vs fair value: +5.80. Nasdaq futures vs fair value: +14.90.

The S&P 500 futures trade six points, or 0.2%, above fair value.

Equity indices in the Asia-Pacific region ended Tuesday on a higher note with Hong Kong's Hang Seng (+1.3%) showing relative strength. Elsewhere, the former chief of China's National Bureau of Statistics was indicted on bribery charges. Markets in Australia and New Zealand were closed for ANZAC Day.

• In economic data:
  • Japan's Corporate Services Price Index 0.8% year-over-year, as expected (last 0.8%)
  • Hong Kong's March trade deficit narrowed to HKD42.30 billion from HKD56.30 billion. March Imports +13.0% month-over-month (last 25.4%) and March Exports +16.9% month-over-month
  • South Korea's April Consumer Confidence 101 (last 97)

---Equity Markets---

• Japan's Nikkei jumped 1.1% with help from most components. Showa Denko led the way, surging 9.2%, after agreeing to produce aluminum cans as part of a joint venture with Carbao Group. Komatsu, SUMCO, Alps Electric, Hitachi Construction, Dai-ichi Life Insurance, Hino Motors, and Okuma posted gains between 3.0% and 4.4%.
• Hong Kong's Hang Seng climbed 1.3% with financials ending among the leaders. Bank of East Asia, ICBC, China Construction Bank, Bank of China, Ping An Insurance, and HSBC rose between 1.3% and 2.8%. On the downside, Want Want China was the weakest performer, falling 0.9%.
• China's Shanghai Composite added 0.2%. Chongqing Brewery, Dalian Thermal Power, Shandong Pharmaceutical, and China CSSC Holdings posted gains between 5.1% and 7.6%.
• India's Sensex advanced 1.0%. AXIS Bank and Mahindra&Mahindra led, climbing 3.4% apiece. Hero MotoCorp, ICICI Bank, Bajaj Auto, Maruti Suzuki, and SBI posted gains between 0.2% and 2.9%.

Major European indices trade in the neighborhood of their flat lines while the euro is up 0.3% against the dollar to 1.0894. Market participants are setting their sights on Thursday's European Central Bank policy meeting with little expectations for a hawkish surprise, given the elevated uncertainty in the region.

• Economic data was limited:
  • UK's March Public Sector Net Borrowing GBP4.36 billion (expected GBP1.50 billion; last GBP660 million)
  • France's April Business Survey 108 (expected 104; last 105)
  • Spain's PPI +6.0% year-over-year (last 7.4%)

---Equity Markets---

• Germany's DAX shows a slim gain of 0.1%. Merck leads with a gain of 3.2% while heavyweights Daimler, Volkswagen, and Adidas are up between 0.5% and 1.1%. SAP has added 0.8% despite missing bottom-line expectations. On the downside, Continental, Commerzbank, and BASF hold losses between 0.5% and 2.0%.
• UK's FTSE has added 0.2% with drug makers contributing to the strength. Hikma Pharmaceuticals, Shire, AstraZeneca, and GlaxoSmithKline hold gains between 0.6% and 2.0%. Restaurant operator Whitbread is the weakest performer, falling 7.5%, in reaction to cautious guidance.
• France's CAC is higher by 0.3%. Louis Vuitton has jumped 4.1% after agreeing to acquire Christian Dior's fashion subsidiary. Other consumer names like Kering, Carrefour, and Danone are up between 0.3% and 1.1%. On the downside, Peugeot and Valeo hold respective losses of 1.1% and 0.9%.

 

 Universal Display, IDCC, SWIR, SSNI, DSPG all initiated with Hold ratings at The Benchmark Company  (86.35)

 

 

 

 

 Express Scripts: Analyst color and conference call notes following ANTM news, earnings  (67.25)

• Analyst color on news/earnings:
  • Maxim recommends that investors buy shares of ESRX following relatively inline 1Q17 results and increased 2017 guidance, particularly as the shares are likely to open sharply lower on the news about its relationship with Anthem (ANTM). Although ESRX announced that it does not expect to renew its contract with Anthem, the current contract, which runs through December 31, 2019, will not be affected. The Anthem business contributed 31% of total EBITDA in 2016. However, the firm believes that in the early years of the contract, which began in 2009, the business contributed significantly less EBITDA. They believe ESRX initially paid $4.7B for the contract because it expected returns to ramp up significantly in the later years. Moreover, they did not expect a potential new contract with Anthem to be on as favorable terms as the existing deal.
  • As mentioned earlier, Mizuho cut their ESRX target to $61 from $76 following the ANTM news, noting they estimate the impact of losing ANTM could contribute up to 37% of 2017E adjusted EPS, or $2,61, significantly higher than their previous estimates.
• ESRX mgmt is currently holding a conference call to discuss the news and earnings. Notes from call: 
  • Does not have $3bln in savings to give Anthem pricing concessions.
  • Anthem is forgoing additional price concessions with each day and the annual relief rate of $3bln cannot be offered.
  • It took 3 years to bring Anthem on, with or w/out Anthem the co is collectively positioned for a good future.
  • Co is the only PBM that can provide rate relief to Anthem by 2020, frankly surprised Anthem is not interested.
  • Mgmt says «We are moving on, that's the message you should get today.»
  • Initiatives to increase efficiency, further automation, to transform co and what the co offers patients and clients.
  • 2018 retention rate is expected to be 98%.
  • Expects growth for core PBM to ramp up through the remainder of the year.
  • From FY17-20 CAGR of 2-4% from core PBM.
  • Continues to search for strategic acquisitions to advance core.
  • Anticipates that they will add materially to their client base over the next few years.
  • Will deploy cash carefully, will be thoughtful about how the invest in themselves, will look at M&A.
  • Says buying stock back may not be a bad use of cash.
• ESRX shares are currently -13% at $58.23 in the pre-market. PBM competitors CVS and HUM are +2.4%.

 S&P futures vs fair value: +7.50. Nasdaq futures vs fair value: +20.00.

A batch of mostly positive earnings reports has given the bulls an early edge on Tuesday. The S&P 500 futures trade eight points, or 0.3%, above fair value.

Dow components Caterpillar (CAT 102.72, +5.89), McDonald's (MCD 138.09, +3.86), DuPont (DD 80.75, +1.38), 3M (MMM 193.35, -0.88), and Coca-Cola (KO 43.02, -0.26) delivered their latest earnings reports this morning. The results were largely positive with CAT, MCD, DD, and MMM beating both top and bottom line estimates. KO reported better than expected revenues but missed earnings expectations.

Outside of Dow components, Biogen (BIIB 289.00, +12.14) trades higher by 4.4% after reporting better than expected earnings and revenues. Conversely, Express Scripts (ESRX 58.14, -9.11) has plunged 13.6% after disclosing that its contract with Anthem (ANTM 169.65, +1.24) is unlikely to be extended. Also of note, the company beat bottom-line estimates and issued positive guidance, but missed the mark on revenues.

Moving away from the earnings front, reports that President Trump is willing to put his promised barrier along the U.S./Mexico border on hold in order to avoid a government shutdown have aided the bullish sentiment. In addition, investors have their eyes on President Trump's tax reform plan, an outline of which is expected to be released tomorrow. Reports indicate that the president will seek to lower the corporate tax rate to 15.0%.

U.S. Treasuries trade lower across the board, leaving the benchmark 10-yr yield three basis points higher at 2.31%. Meanwhile, crude oil is down 0.4% at $49.04/bbl. 

Released not long ago, the February Case-Shiller 20-city Index hit 5.9% to follow last month's unrevised 5.7% increase. The Briefing.com consensus expected a reading of 5.8%.

Separately, the FHFA Housing Price Index for February increased 0.8%, which followed a revised uptick of 0.2% (from 0.0%) in January.

Investors will also receive March New Home Sales (Briefing.com consensus 590,000) and April Consumer Confidence (Briefing.com consensus 122.3). Both reports will cross the wires at 10:00 ET.

 

 

 

 

 

 Opening Market Summary: Dow Shoots Higher at the Jump

The Dow (+0.9%) opens Tuesday's session way out in front of the S&P 500 (+0.4%) as Dow components Caterpillar (CAT 102.10, +5.58), McDonald's (MCD 137.59, +3.36), and DuPont (DD 81.23, +1.86) trade solidly higher after all three companies beat top and bottom line estimates.

A few sectors like utilities (-0.2%), telecom services (unch), and real estate (unch) have lagged in the early going, but most other groups trade in positive territory. The financial (+1.1%) and materials (+1.1%) spaces hover at the top of the day's leaderboard, extending their week-to-date gains to 3.3% and 2.3%, respectively. However, most other sectors show modest gains of 0.5% or less.

U.S. Treasuries trade modestly lower, leaving the benchmark 10-yr yield three basis points higher at 2.30%. Meanwhile, gold ($1,268.91/ozt) shows a loss of 0.7%, further strengthening today's risk-on tone.

 

 Mail.ru created games investment division which proposes up to $100 million of potential funding for games and game developers over the long termThe initiative will be open to game developers, both in Russia and globally, wishing to apply for potential funding. The division will be financing accomplished game studios and publishers that need funding for scaling, as well as young game developers. (EA, ATVI, GLUU, TTWO)

 Sector Summary: Technology (XLK +0.36%) trading higher today, modestly behind the broader market

The tech sector — XLK — trades modestly behind the broader market. Semiconductors, meanwhile, display relative strength as the SOX index trades +0.44%. Within the SOX index, CREE(+1.56%) outperforms, while ON (-0.34%) lags. Among other major indices, the SPY is trading 0.59% higher, while the QQQ +0.42% and the NASDAQ +0.67% trade modestly higher on the session. Among tech bellwethers, AVGO (+0.74%) is showing relative strength, while BCE (-0.30%) lags.

Notable gainers following earnings:

• GLW (+2.9%), TMUS (+1.5%), SAP (+0.2%)

Notable laggards following earnings:

• CDNS (-5.0%), XRX (-4.2%), ERIC (-1.7%)

Gainers on news:

• STRP (+10.9%) co's Board determined that an unsolicited offer from a 'multi-national telecommunications company' for $104.64/share in stock constitutes a 'Superior Proposal'.
• IBM (+0.6%) co increased its quarterly dividend to $1.50/share from $1.40/share.
• ACN (+0.1%) co received a one-year base and three one-year options, worth a total of $64 mln from the TSA to modernize, enhance and maintain over 70 TSA enterprise applications using Agile and DevOps software development practices.

Laggards on news:

• FNJN (-2.2%) co closed a Confidential Patent License Agreement with Avira.
• ENTG (-0.8%) co acquired W. L. Gore & Associates' water and chemical filtration product line for microelectronics applications in an asset purchase for ~ $20 million; expects the transaction to be accretive to earnings beginning in 2017.

Among notable analyst upgrades:

• AMX (+0.2%) upgraded to Hold from Sell at Deutsche Bank
• APPS (+4.0%) to Buy from Hold at Craig Hallum

Among notable analyst downgrades:

• AMZN (-0.4%) downgraded to Mkt Perform from Outperform at Raymond James
• CDNS (-5.0%) to Neutral from Buy at DA Davidson
• DSPG (-1.8%) to Hold from Buy at Wunderlich

Scheduled to report earnings after the bell:

• T CLGX CREE EEFT JNPR LOGI MRCY RNG TXN TSS ULTI ZIXI

Scheduled to report earnings tomorrow morning:

• APH AUDC BCE FLIR LN STX SLAB SONS TEL TWTR VNTV

 Huaneng Power +1.5% following Q1 results — net profit decreased 86.97% y/y to RMB 0.652 bln; operating revenue +7.5% y/y to RMB 37.577 bln  (27.04 +0.41)The profit decrease is mainly attributable to the increase of fuel price.

 

 Hearing Banco Santander was downgraded earlier to Neutral from Buy at Citigroup  (6.60 +0.13)

 

 Notable movers of interest: ESRX -10.1% after disclosing that it's contract with Anthem (ANTM) is unlikely to be extended

The following are some of today's most notable movers of interest, categorized by market capitalization (large cap over $10 billion and mid cap between $2-10 billion) and ranked by % change (all stocks over 100K average daily volume).

Large Cap Gainers

• CAT (103 +6.39%): Reports Q1 EPS and revenue beats; guides FY17 EPS and revenues above consensus.
• MCD (139.64 +4.03%): Shares rise on Q1 EPS and revenue beats.
• BIIB (289.77 +4.66%): Reports Q1 EPS and revenue beats.

Large Cap Losers

• ESRX (60.43 -10.14%): Discloses that contract with Anthem (ANTM) is unlikely to be extended; reports Q1 EPS beat; guides Q2 EPS above consensus; raises FY17 EPS guidance.
• ABX (17.42 -8.51%): Reports Q1 EPS and revenue miss; lowers gold production forecast.
• NLSN (38.86 -6.58%): Shares fall on Q1 EPS and revenue misses.

Mid Cap Gainers

• NORD (32.42 +17.38%): To be acquired by by consortium led by Canada Pension Plan Investment Board and Baring Private Equity Asia for $32.50/share.
• TUP (73 +11.13%): Reports Q1 EPS and revenue beats; raises FY17 EPS above consensus.
• APFH (40.25 +9.76%): To be acquired by Tyson Foods (TSN) for $40.25/share in cash.

Mid Cap Losers

• NGL (16.75 -22.81%): Shares fall after co lowers FY17 guidance.
• R (70.89 -10.58%): Reports Q1 EPS miss; lowers FY17 EPS below consensus.
• XRX (6.68 -5.38%): Reports Q1 revenue miss.

 

 Early Options Activity

Taking an early look at the options market, we found the following names that may be worth watching throughout the day for further indication of investor expectations given their options volume and implied volatility movement.

Stocks seeing volatility buying (bullish call buying/bearish put buying):

Calls:

• PFE Weekly Apr28 34 calls are seeing interest ahead of its April 27 Annual Meeting. The PFE Weekly Apr28 34 calls have traded 1510 contracts vs. open int of 2290, pushing implied vol up around 1 points to ~13% -- Aquinnah Pharmaceuticals announced that two additional pharmaceutical companies, Pfizer and AbbVie have invested in Aquinnah's work to treat ALS, Alzheimer's disease and other neurodegenerative diseases. Co is also confirmed to report earnings May 2 before the open. 

Puts:

• MNST Weekly Apr28 44.5 puts are seeing interest with 1610 contracts trading vs. open int of 40, pushing implied vol up around 13 points to ~35% — Co's Chief Marketing Officer Mark J. Hall to resign effective May 1.  Co is expected to report earnings early May.

Stocks seeing volatility selling:

• AKS, MMM, RAD, TECK, VLO, OI, SWFT implied vol is lower following earnings/guidance

Sentiment: The CBOE Put/Call ratio is currently: 0.79… VIX: (10.56, -0.28, -2.6%).
May 19 is options expiration — the last day to trade May equity options.
*Please use the Talk to Us link at the top of the page to provide feedback on this comment as well as the OPTNX comments.

 Morning Commodities: WTI Oil Modestly Lower, Holding Over $49

• Commodities are flat in morning trade
  • Overall, commodities, as measured by the Bloomberg Commodity Index, are currently -0.01% at 83.7068
• Dollar index is currently -0.2% at 98.85
• Looking at energy…
  • June WTI crude oil futures are now -$0.12 (or -0.2%) at $49.11/barrel
  • In other energy, May natural gas is -$0.02 at $3.05/MMBtu
• Moving on to metals…
  • June gold is currently -$8.50 (or -0.7%) at $1269.00/oz, while May silver is -$0.19 (or -1.1%) at $17.67/oz
  • May copper is now +$0.03 (or +1.1%) at $2.58/lb

 

 Rumor Round Up

Rumor Activity was slow today.

• There was a report that First Potomac Realty (FPO 10.95 +0.34) might be considering a sale.
• Marvell (MRVL 15.26 +0.20) renewed M&A rumors circulated.
• NAR detailed that Hitachi (HTHIY 54.24 +0.31) might be interested in Toshiba (TOSBF 1.98 +0.04) Swiss unit.

While many rumors circulate during the day, and the validity of the source of these rumors can be questionable, the speculation may increase volatility in the near term.

 New Supply

Treasury Auction Preview

• $26 bln 2-year Treasury auction (results at 13:00 ET)
  • Prior auction results:
    • High yield: 1.261% 
    • Bid-to-cover: 2.73 
    • Indirect bid: 53.6% 
    • Direct bid: 10.8%
  • Average results of prior 12 auctions:
    • High yield: 0.975%
    • Bid-to-cover:  2.72 
    • Indirect bid: 42.6% 
    • Direct bid: 15.4%

 French luxury retailer Kering reported Q1 revs up 31.2% y/y to €3,573.5 million (+28.6% on a comparable basis)  (29.00 +1.27)

• The particularly remarkable growth reported by Gucci in the first quarter of 2017 demonstrates the resounding success of the brand's creative reinvention and the exceptional skill with which its strategy has been implemented. Revenue shot up by 51.4% as reported and 48.3% on a comparable basis, with all regions and product categories contributing to the overall rise.
• Puma (PMMAF) revenue up 17.9% year on year as reported and 15.3% on a comparable basis; all product categories contributing to the brand's ongoing growth momentum.
• Bottega Veneta's revenue was up 4.7% as reported and 2.3% on a comparable basis, marking an upturn for the brand against a backdrop of more favourable market conditions.

 European Markets Closing PricesEuropean markets are now closed; stock markets across Europe performed as follows:

• UK's FTSE: + 0.2%
• Germany's DAX: + 0.1%
• France's CAC: + 0.2%
• Spain's IBEX: + 0.2%
• Portugal's PSI: + 1.0%
• Italy's MIB Index: + 0.6%
• Irish Ovrl Index: -0.5%
• Greece ASE General Index: + 2.1%

 

 Stocks that traded to new 52 week highs/lows this session — New highs (447) outpacing new lows (51)Stocks that traded to 52 week highs: A, AAON, AAXJ, ABB, ACGL, ACWI, ACWX, ADBE, ADC, ADX, AEIS, AFG, AFL, AGD, AINV, AJRD, ALB, ALGN, AMAT, AME, ANET, ANH, ANSS, ANTM, AOD, AOS, APFH, APH, ARDC, ARR, ASG, ASGN, ASH, ASML, ASR, ATRC, ATVI, AVVIY, AVX, AVY, AWP, AZPN, BABA, BANC, BATRK, BBRY, BBVA, BBY, BCC, BCH, BCO, BCOR, BDJ, BEAT, BECN, BGG, BGT, BHLB, BIO, BIT, BKH, BLBD, BLDR, BLMN, BMI, BOBE, BOE, BOJA, BPI, BRCD, BRKS, BST, BSX, BUI, BWXT, BYD, CACQ, CAI, CAJ, CAKE, CAMP, CAT, CBOE, CBT, CBZ, CC, CCL, CCOI, CENT, CENTA, CETV, CEVA, CFA, CFO, CHCO, CHCT, CHH, CHTR, CHW, CHY, CI, CII, CIT, CLH, CNA, CNHI, CNTY, COHR, COHU, COKE, COO, CR, CRTO, CRUS, CSII, CSQ, CST, CTRL, CUK, CVGI, CWST, CYTK, DE, DEX, DGX, DNP, DOOR, DORM, DV, DWCH, EA, ECL, EDI, EDU, EFX, ELLI, EMN, ENR, EOS, EPZM, ESE, ETG, ETN, ETV, ETW, ETY, EUFN, EVRI, EXAS, EXPD, EXPE, FB, FBC, FBHS, FBNC, FDEU, FDT, FDUS, FELE, FEP, FFA, FGEN, FGL, FICO, FIS, FISV, FLIR, FLOW, FNF, FOF, FRME, FTC, FTCS, FTNT, FTV, GBDC, GDDY, GDEN, GDOT, GDV, GEO, GGG, GLW, GMS, GNCA, GNCMA, GNE, GOF, GOOG, GOOGL, GPN, GRFS, HAE, HCSG, HD, HDB, HLS, HOFT, HOLX, HON, HPQ, HQL, HRC, HRG, HSKA, HTGC, HUBS, HUN, HYT, IBCP, IDA, IDXX, IEX, IFN, IGA, IGD, IGF, IHG, ILG, INDY, ING, INGN, INN, INSM, INVN, IPCC, IPGP, IR, IRBT, ISRG, IT, IVR, IXUS, JBL, JBSS, JD, JFC, JIVE, JKHY, JPS, KBAL, KEF, KEX, KFY, KLAC, KLIC, KMG, KMT, KN, KRO, KWEB, LBRDA, LBRDK, LECO, LLNW, LMOS, LOGM, LOW, LPX, LRCX, LSXMA, LSXMK, LUX, LVLT, LVNTA, LYV, MA, MASI, MB, MBUU, MCD, MCHI, MCHP, MCO, MCS, MDSO, MELI, MFA, MGI, MHK, MITT, MKSI, MLCO, MMM, MMYT, MPSX, MPWR, MSFT, MSGN, MTD, MTLS, MTN, MTOR, MTSI, MVIS, MXL, NATI, NEFF, NEWR, NFLX, NGVT, NLY, NNBR, NORD, NOVT, NSP, NTRS, NXTM, OGS, OI, OLLI, OMAM, OMCL, OOMA, OSBC, OSK, OTEX, PAH, PAR, PAYC, PCI, PCLN, PCMI, PCN, PEN, PFG, PFL, PH, PICO, PKI, PLAY, PLUS, PNK, POR, PTY, PYPL, QDEL, QIWI, QNST, QQEW, QQQ, QSR, QTEC, QTWO, RAI, RBC, RDWR, RE, RELX, RENX, REXR, RH, RMT, RNG, ROBO, ROK, ROL, ROP, RPXC, RSG, RST, RUSHA, RVT, RWT, SAGE, SAN, SAP, SASR, SBCF, SCD, SCL, SCZ, SHW, SKYY, SNY, SODA, SPGI, SPPI, SQ, SSNC, STK, STM, STRA, STX, SWC, SWZ, SXT, SYK, SYT, TAL, TBPH, TECD, TEF, TER, TEX, TFX, TITN, TKR, TMUS, TOT, TQQQ, TREE, TRMB, TRNO, TRTN, TRU, TSLX, TTC, TUP, TWX, TY, UCTT, UL, UN, UNH, UPLD, USA, UTEK, UTF, UTX, VAC, VAL, VECO, VMW, VNTV, VOXX, VTWO, VVC, VXUS, WAT, WBC, WBT, WCG, WCST, WD, WEN, WHF, WIFI, WIX, WM, WNC, WSFS, WYN, XL, YHOO, ZBRA, ZLTQ

Stocks that traded to 52 week lows: AEMD, ANY, APTO, ATOS, BONT, CBIO, CBRIQ, CCCL, CERU, CMLS, COSIQ, CPG, CTRV, DCIX, DYN, EIGR, EPRSQ, ESRX, EVAR, EXK, FENX, FI, FLKS, FNBC, FSM, GFA, GLRI, GMANQ, HLX, JONE, JRJC, LFVN, MSDI, NLSN, NWBO, ONTX, PPP, RELY, RRC, RTTR, RWLK, SMRT, SQQQ, SSH, TCON, TDW, TEVA, TVIX, UNXL, VNRSQ, VYGR

 

 Market Internals

The broader market is rolling along at midday, led higher by the Dow Jones Industrial Average which adds about 247 points (+1.19%) to 21010, the Nasdaq Composite is up 42 (+0.70%) to 6025, while the S&P 500 gains 15 (+0.62%) to 2388. Action has come on higher than average volume (NYSE 361 vs. avg. of 306; NASDAQ 833 mln vs. avg. of 780), with advancers outpacing decliners (NYSE 2107/852, NASDAQ 2061/705) and new highs outpacing new lows (NYSE 284/17, NASDAQ 284/35).

Relative Strength:

Poland-EPOL +2.9%, Greece-GREK +2.6%, Cocoa-NIB +2.6%, Philippines-EPHE +2.1%, Sweden-EWD +1.8%, S. Korea-EWY +1.7%, India-INP +1.5%, Corn-CORN +1.4%, Biotech-IBB +1.4%, Taiwan-EWT +1.3%, Materials-XLB +1.3%, US Basic Materials-IYM +1.3%, Clean Energy-PBW +1.2%, Russell 2000-IWM +1.2%.

Relative Weakness:

Jr. Gold Miners-GDXJ -5.6%, Gold Miners-GDX -4.9%, Silver Miners-SIL -4.1%, Short-Term Futures-VXX -1.8%, Silver-SLV -1.7%, US Diesel/Heating Oil-UHN -1.3%, Japanese Yen-FXY -1.2%, Brazil-EWZ -1.1%, Gold-GLD -1.0%, Colombia-GXG -0.8%, Canadian Dollar-FXC -0.7%, Saudi Arabia-KSA -0.7%, Latin Am. 40-ILF -0.7%, New Zealand-ENZL -0.7%.

 Sector Summary: The Healthcare sector (%) is trading today, the S&P 500 (%)Gainers on news:

• Epizyme (EPZM +16.61%) announces that the FDA has granted Fast Track designation to tazemetostat for the treatment of patients with relapsed or refractory follicular lymphoma, either wild type EZH2 or with EZH2 activating mutations
• Asterias (AST +10.29%) announced Data Monitoring Committee recommended continuation of enrollment in Phase 1/2a Clinical Trial
• Sangamo Therapeutics (SGMO +9.3%) will present data from its therapeutic and research programs at the Meeting of the American Society of Gene & Cell Therapy May 10-13

Decliners on news:

• ContraVir Pharma (CTRV -30.51%) prices $12 mln underwritten public offering of common stock and warrants to purchase common stock at a combined offering price of $1.00
• PhaseRx (PZRX -13.09%) announces that the EMA Committee for Orphan Medicinal Products COMP has issued a positive opinion recommending orphan medicinal product designation for PRX-OTC for the treatment of ornithine transcarbamylase deficiency
• Karyopharm Therapeutics (KPTI -9.3%) prices public offering of 3,902,439 shares of its common stock at $10.25/share

Gainers on earnings:

• Healthstream (HSTM +16.85%) beats by $0.01, beats on revs; guides FY17 revs in-line
• ICHOR Corp (ICHR +9.51%) sees Q1 EPS and revs above consensus; sees Q2 revs above consensus
• Quidel (QDEL +5.62%) beats by $0.16, beats on revs

Decliners on earnings:

• Fresenius SE (FSNUY -1.55%) confirms 2020 earnings target range of EUR2.4 to 2.7 billion following AKRX / MKGAY transaction news
• Eli Lilly (LLY -3.06%) beats by $0.02, reports revs in-line; reaffirms FY17 guidance
• Laboratory Corp (LH -3.49%) beats by $0.02, reports revs in-line; guides FY17 EPS below consensus, revs below consensus

Upgrades/Downgrades:

• TG Therapeutics (TGTX +8.68%) initiated with a Buy at Jefferies
• Idera Pharma (IDRA +7.55%) Robert W. Baird Initiated Coverage: OUTPERFORM — Price Target: 5

 Today's biggest % gainers/losersThe following are today's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

Today's top 20 % gainers

• Healthcare: EPZM (17.55 +17.79%), AMRI (17.58 +10.5%), ATRA (17.2 +7.84%), CHRS (20.5 +7.61%), BTX (3.42 +6.87%)
• Materials: AA (36.37 +9.17%), ATI (19.61 +8.34%), CSTM (6.05 +8.04%)
• Industrials: WNC (22.98 +12.88%), TEX (35.86 +8.37%), CAT (103.82 +7.24%)
• Consumer Discretionary: TUP (73.17 +11.39%), EDU (67.35 +7.23%)
• Information Technology: BITA (30.77 +10.88%), ICHR (20.68 +9.24%), WIX (79.2 +7.61%), RDWR (16.48 +6.87%)
• Consumer Staples: APFH (40.24 +9.72%)
• Telecommunication Services: STRP (125.26 +12.96%), NIHD (1.02 +7.37%)

Today's top 20 % losers

• Healthcare: ESRX (58.96 -12.33%), KPTI (10.24 -9.46%)
• Materials: ABX (17.05 -10.45%), SA (9.98 -8.9%), FSM (4.43 -8.09%), NG (3.94 -7.99%), GORO (3.39 -7.84%), IAG (3.94 -7.73%), AKS (6.57 -7.72%), PVG (9.38 -7.31%), EXK (2.81 -7.12%), MAG (11.36 -7.11%), MUX (2.79 -7%), AUY (2.76 -6.79%), AG (7.97 -6.4%), PAAS (16.69 -6.32%)
• Industrials: R (70.01 -11.69%)
• Consumer Discretionary: SHLD (11.57 -7.07%)
• Information Technology: CDNS (31.41 -6.2%)
• Energy: NGL (16.83 -22.47%)

 

 Earnings Calendar for Tuesday, April 25th

• Today after the close look for the following companies to report:
  • T, COF, CB, CHRW, TXN, ARNC, X, SYK, UHS, DFS, TX, WYNN, ACGL, ASH, JNPR, TSS, CMG, TRN, EW, PNRA, ACHC, BXP, EQR, ILMN, KMT, VVV, LOGI, EEFT, CLGX, PRAH, CVA, SPN, HTH, ALGT, CENX, CREE, JBT, FOE, O, MSA, NUVA, DDR, ULTI, SFLY, MTSI, HIW, FMBI, IRBT, MC, TRMK, CHSP, RNST, RNG, BOFI, MRCY, HT, PEI, FR, PSB, NEFF, BXMT, CVBF, EXAC, SBCF, FFIC, OKSB, ZIXI
• Tomorrow before the open look for the following companies to report:
  • FCAU, BA, ANTM, PG, UTX, PEP, GD, NOC, BCE, LEA, PAG, TMO, CVE, WRK, WM, TEL, IT, DTE, STT, STX, ETR, NSC, HUN, BAX, SAH, HSY, ALK, OSK, DPS, AVY, APH, ROK, HES, MGLN, WYN, OC, BLMN, SC, AXTA, QSR, SLGN, BCO, TKR, NDAQ, TWTR, VNTV, FLIR, UTHR, MHO, GRA, ROL, EVR, TPH, BOKF, FSV, NYCB, CFR, RES, UMBF, IART, VLY, PB, SLAB, SUP, MDSO, BABY, SIX, UCBI, MKTX, NEO, SONS, CPF, USAP, MDCO, AUDC, SMED

 

 

 

 

 

 Ceva target raised earlier to $42 at Canaccord Genuity; Initially mixed 2017 royalty growth guidance looking much more conservative  (37.00 +1.25)Canaccord Genuity raises their CEVA tgt to $42 from $41. As the outlook for 2017 CEVA licensee fundamentals gradually becomes more clear, firm believes initially disappointing 2017 royalty growth guidance of 10-20% appears now to be more conservative. In fact, firm remains confident in their LT royalty growth thesis, with more visibility toward material 2018 base station modem royalties and more confident CEVA will trend toward the higher end of its 10-20% royalty growth guidance range in 2017 before re-accelerating growth again in 2018. Further, they remain confident in our bullish thesis of continued strong royalty and royalty/unit growth in mobile and royalty diversification into connectivity, vision, auto, base station, and IoT chips.

 Midday Market Summary: Earnings Stir Up the Bulls

The latest batch of earnings reports has stirred up the bulls in the first half of Tuesday's session, leaving the major averages comfortably higher at midday. The S&P 500 currently sports a gain of 0.6% while the Dow (+1.1%) outperforms.

Upbeat earnings reports from Dow components like Caterpillar (CAT 103.83, +7.04), McDonald's (MCD 141.20, +6.99), and DuPont (DD 81.52, +2.17) have prompted the price-weighted average to nearly double the S&P 500's gain. CAT shares have spiked 7.2% in reaction to a big, upside earnings surprise, better than expected revenues, and upbeat guidance. MCD and DD also trade solidly higher, up 5.2% and 2.8%, respectively, after beating top and bottom line estimates. 

3M (MMM 194.77, +0.56) also reported better than expected earnings and revenues, but it hasn't resulted in much of a gain for the company (+0.3%). Coca-Cola (KO 43.19, -0.09) was the last Dow component to report its quarterly results this morning, but the company has slipped 0.2% after missing earnings estimates. 

Numerous other large-cap companies reported their quarterly results between yesterday's close and today's open with largely favorable outcomes. Biogen's (BIIB 287.24, +10.38) upbeat earnings and revenues are worth noting in light of its positive influence on the iShares Nasdaq Biotechnology ETF (IBB 295.92, +4.31), which trades higher by 1.5%. 

Eight of eleven sectors trade in positive territory with the utilities (-0.4%), telecom services (-0.6%), and real estate (-0.1%) groups being the three laggards. The materials sector (+1.3%) has held the top spot on today's leaderboard since the start of the session, sometimes sharing the accolade with the financial sector (+0.9%). The remaining groups hold gains between 0.4% (consumer staples) and 0.8% (consumer discretionary).

Moving away from the earnings front, reports that President Trump is willing to put his promised barrier along the U.S./Mexico border on hold in order to avoid a government shutdown have aided the bullish sentiment. In addition, investors have their eyes on President Trump's tax reform plan, an outline of which is expected to be released tomorrow. Reports indicate that the president will seek to lower the corporate tax rate to 15.0%.

In the bond market, U.S. Treasuries trade lower across the board, leaving the benchmark 10-yr yield higher by four basis points at 2.31%. Investors will keep an eye on the 10-yr yield to see if it can close above the 2.30% mark, which has acted as a level of resistance as of late. 

On the data front, investors received several economic reports on Tuesday, including March New Home Sales, April Consumer Confidence, the February Case-Shiller Home Price Index, and the February FHFA Housing Price Index:

• New Home Sales in March hit an annualized rate of 621,000, which was above the revised February rate of 587,000 (from 592,000), and more than the 590,000 that was expected by the Briefing.com consensus.
  • The key takeaway from the report is that demand for new homes was strong, notwithstanding higher price points from the same period a year ago.
• The consumer confidence reading for April fell to 120.3 from the prior month's revised reading of 124.9 (from 125.6). The Briefing.com consensus expected the survey to hit 122.3.
  • The key takeaway from the report is that confidence remains at high levels and indicative of an expectation that the economy will continue to expand in the months ahead.
• The February Case-Shiller 20-city Index hit 5.9% to follow last month's unrevised 5.7% increase. The Briefing.com consensus expected a reading of 5.8%.
• The FHFA Housing Price Index for February increased 0.8%, which followed a revised uptick of 0.2% (from 0.0%) in January.

 

 Auction Out

Treasury Auction Results

• $26 bln 2-year Treasury auction
  • Auction results:
    • High yield: 1.280%
    • Bid-to-cover: 2.85
    • Indirect bid: 58.9%
    • Direct bid: 11.4%
  • Average results of prior 12 auctions:
    • High yield: 0.975%
    • Bid-to-cover:  2.72 
    • Indirect bid: 42.6% 
    • Direct bid: 15.4%

 

 Events and conferences of interest for tomorrow

Events and conferences of interest for tomorrow, April 26th include:

• Planet MicroCap Showcase 2017 (April 26-28th)
  • Scheduled to appear: CNTY, MACE, ISR, SMDM, ABIO, GNE, OESX, RICK, OMN, SRAX
• 76th Annual Society of Investigative Dermatology Annual Meeting 2017 (Aug 26-29th)
  • Notable to appear: ABEO, CDTX, MGEN
• 2017 Army Aviation Missions Solutions Summit (Aug 26-28th)
  • Scheduled to appear: NVIV

Conference in progress:

• ICE USA 2017 (April 25th-27th)
  • Scheduled to appear: CDNS, NDSN

 Today's biggest point gainers/losersBiggest point gainers: STRP 125.31(14.42), RE 250.49(11.11), WAT 170.77(10.5), BIIB 286.42(9.56), NFLX 152.82(8.99), TUP 73.32(7.63), MCD 141.69(7.46), CAT 104.03(7.22), WIX 80.45(6.85), BIDU 186.83(6.8), WHR 180.88(6.08), HUM 219.76(6), NORD 32.48(4.86), CMG 473.57(4.78), EDU 67.52(4.71), IBB 296.18(4.44), ANTM 172.8(4.39), TAL 117(4.27), TSLA 312.26(4.23), NTES 278.29(4.15), HSTM 27.64(4.02), PH 164.58(3.97), MELI 229.86(3.96), CMI 152.83(3.73), WSO 143.12(3.69)

Biggest point losers: R 69.91(-9.37), ESRX 58.9(-8.35), LMT 269.13(-7.09), ORLY 263.44(-5.84), LH 139.41(-5.2), NGL 17(-4.7), GFA 11.87(-4.69), HSII 22.6(-4.15), HUBB 117.94(-3.59), TROW 69.78(-2.85), LLY 81.08(-2.34), RGLD 70.13(-2.31), CNI 73.42(-2.24), CDNS 31.33(-2.15), AEM 43.56(-2.1), ST 40.78(-1.99), ABX 17.12(-1.92), GOLD 86.8(-1.82), NLSN 39.82(-1.77), AKTX 15.72(-1.77), ICLR 77.82(-1.75), PCH 45.33(-1.73), AAP 145.4(-1.7), SITE 46.91(-1.69), FNV 66.31(-1.64)

 

 

 Sector Summary: Industrials trade slightly lower than the broader market; CAT +7.5% on Q1 EPS and revenue beats

The Industrials sector (XLI) is trading +0.5% higher today, slightly lower than the broader market (SPY +0.6%), during a day in which many big names including Lockheed Martin (LMT -2.7%), Caterpillar (CAT +7.5%), JetBlue (JBLU +2.3%), and 3M (MMM +0.4%) and many others report.

Earnings/Guidance

• Lockheed Martin (LMT -2.7%) reports Q1 earnings of $3.00/share, excluding $0.39 in non-recurring items, vs. Consensus of $2.79; revs rose 6.6% y/y to $11.06 bln vs the $11.22 bln Consensus.
  • Co issues guidance for FY17, lowers EPS to $12.15-12.45 from $12.25-12.55 vs. $12.53 consensus estimate; sees FY17 revs of $49.5-50.7 bln (from $49.4-50.6 bln) vs. $50.14 bln consensus.
• Caterpillar (CAT +7.5 %) reports Q1 earnings of $1.28/share, $0.65better than Consensus of $0.63. Revenues rose 3.8% year/year to $9.82 bln vs the $9.27 bln Capital IQ Consensus.
  • Co issues upside guidance for FY17, sees EPS of approx $3.75, excluding non-recurring items, vs. $3.26 consensus; sees FY17 revs of $38-41 bln (Prior $36-39 bln) vs. $38.24 bln consensus.
• 3M (MMM +0.4%) reports Q1 earnings of $2.16/share vs. consensus of $2.06; revs rose 3.7% y/y to $7.68 bln vs the $7.48 bln consensus.
  • Co issues upside guidance for FY17, sees EPS of $8.70-9.05 vs. $8.63 Consensus, up from $8.45 to $8.80. The company now forecasts organic local-currency sales growth to be 2-5%, up from previous guidance of 1-3%.

Additional Industrials reporting earnings/guidance: PCAR -2.8%, TRU -2.7%, JBLU +2.3%

News

• Commerce Department confirms that Trump Administration will impose 20% tariff on Canadian lumber products.
• Continental AG (CTTAY -2.2%) introduces new strategy for the Powertrain division; expects Powertrain sales of approximately EUR 8 billion for FY17.
• Emerson (EMR +2.5%) reports March trailing three-month orders increased 4%

Broker Research

Upgrades

• Terex (TEX +8.2%) upgraded to Overweight from Neutral at JP Morgan
• NCI Building Systems (NCS +4.3%) upgraded to Outperform at RBC Capital Mkts; tgt raised to $20
• Illinois Tool (ITW -0.6%) target raised to $144 at Stifel; Guidance has potential upside

Downgrades

• General Electric (GE -0.2%) downgraded to Neutral from Buy at BofA/Merrill