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Earnings release

Aug 19/a BBL BIDU IQ FN QTT VNET NOVA HOOK
Aug 20/b HD MDT TJX SE KSS MSG PINC SFL


In Play from Briefing.com

Updated: 20-Aug-19 19:00 ET

17:05  FANH Fanhua Q2 non-GAAP EPS -5% to RMB 2.51; revenue -8% to RMB 898 mln (28.50 -1.50)

 
17:04  CVM CEL-SCI Corp files for 250,000 share common stock offering by holders (8.58 -0.09)

 
16:52  CAH Cardinal Health files mixed securities shelf offering (43.76 +0.28)

 
16:40  TOL Toll Brothers beats by $0.19, beats on revs; raises low end of FY19 delivery and ASP guidance; reaffirms gross margin (36.91 +0.50)

  • Reports Q3 (Jul) earnings of $1.00 per share, $0.19 better than the S&P Capital IQ Consensus of $0.81; revenues fell 7.7% year/year to $1.77 bln vs the $1.7 bln S&P Capital IQ Consensus. 
  • Deliveries 1,994 vs. 1,800-2,000 guidance; adjusted gross margin 23.1% vs. 22.5% guidance.
  • Net signed contract value was $1.87 billion, down 8%; contract units were 2,241, down 3% -- both an improvement from the second quarter.
  • Raises low end of FY19 deliveries 7800-8100 from 7700-8100 and ASP ($860-880K from 855-880K); reaffirms adj. gross margin at 23%.
  • Backlog value at third-quarter end was $5.84 billion, down 10%; units in backlog totaled 6,839, down 4%.
  • "In our third quarter, we had strong revenues, gross margin, and earnings. While our third quarter contracts were down modestly, we are off to a good start in our fourth quarter. Low mortgage rates, a limited supply of new and existing homes, and a strong employment picture are providing tailwinds."
16:39  JKHY Jack Henry beats by $0.02, reports revs in-line (140.77 -0.76)

  • Reports Q4 (Jun) earnings of $0.79 per share, $0.02 better than the S&P Capital IQ Consensus of $0.77; revenues rose 4.0% year/year to $393.5 mln vs the $390.7 mln S&P Capital IQ Consensus.
  • Reports operating margin of 20% vs 22% in  year ago quarter.
  • Commentary: "We continue to see strong demand for Jack Henry's industry-leading core solutions. During the quarter we signed 15 new core customers, which makes for a total of 57 new core customers signed during the fiscal year with the majority of them choosing our private cloud delivery model. We also signed 25 existing in-house core customers to migrate to our private cloud offering during the quarter, which comes to a total of 60 customers signing during the fiscal year..."
16:33  ORLY O'Reilly Auto to acquire Mayasa Auto Parts; terms not disclosed (383.24 -2.53)

  • O'Reilly Automotive has entered into a definitive stock purchase agreement with the shareholders of Mayoreo de Autopartes y Aceites, S.A. de C.V. (Mayasa), headquartered in Guadalajara, Jalisco, Mexico, under which O'Reilly will acquire all of the outstanding shares of Mayasa and affiliated entities. Mayasa is a large specialty retailer of automotive aftermarket parts, operating five distribution centers and 20 Orma Autopartes stores and serving over 2,000 independent jobber locations in 28 Mexican states. The acquisition represents O'Reilly's inaugural expansion outside of the US.
  • The stock purchase is expected to be completed in the fourth quarter of this year.
16:32  NDSN Nordson misses by $0.21, misses on revs, backlog +3% (135.48 -1.72)

  • Reports Q3 (Jul) earnings of $1.62 per share, excluding non-recurring items, $0.21 worse than the S&P Capital IQ Consensus of $1.83; revenues fell 3.7% year/year to $559.75 mln vs the $587.74 mln S&P Capital IQ Consensus.
  • Backlog for the quarter ended July 31, 2019 was $431 million, an increase of 3 percent compared to the same period a year ago.
  • For the full year fiscal 2019, the company now expects flat to modest organic sales growth and unfavorable foreign currency effects of ~2 percent on sales as compared to the prior year [prior guidance was for organic growth in the low single digits for fiscal 2019]. The company will remain focused on continuous improvement initiatives to offset costs and weaker than expected sales growth in order to hold or modestly improve operating margin and EBITDA margin against prior year's performance.
16:24  WRAPX Closing Stock Market Summary

The stock market retraced some of its recent gains on Tuesday, as buyers appeared weary after a sharp two-day rally. The S&P 500 fell 0.8%, which was comparable to the declines in the Dow Jones Industrial Average (-0.7%), Nasdaq Composite (-0.7%), and Russell 2000 (-0.7%) 

The day began modestly lower following lackluster performances overseas, and stocks quickly fell to session lows on no specific news catalysts. After a brief intraday rally to the flat line, the S&P 500 and the other major averages steadily returned to those session lows by late afternoon. Selling accelerated into the close, stamping a sour note to the session.  

All 11 S&P 500 sectors finished in negative territory, with the financials (-1.4%), materials (-1.2%), and consumer staples (-1.2%) sectors losing over 1.0%. The consumer discretionary sector (-0.1%) finished just below its flat line, supported by the positive reaction to Home Depot's (HD 217.09, +9.14, +4.4%) earnings results. 

In other earnings news, fellow retailers Kohl's (KSS 44.88, -3.32, -6.9%) and TJX Companies (TJX 51.51, -0.04, -0.1%) finished mixed following their reports. Kohl's fell despite beating top and bottom-line estimates. TJX finished little changed despite missing revenue estimates and guiding Q3 EPS below consensus. 

Netflix (NFLX 298.99, -10.39, -3.4%) shares fell over 3%, likely pressured by a Bloomberg report that indicated Apple (AAPL 210.36, +0.01, unch) plans to launch its streaming service in November for $9.99/month. 

Separately, President Trump said his administration was looking at ways to reduce various taxes to help stimulate growth despite repeated claims on how the good the economy is doing. Market reaction was muted, as it remained unclear if discussions would lead to proposals that Congress would approve.

Mr. Trump also dismissed recessionary fears, which appeared to linger in the U.S. Treasury market in the form of some curve-flattening action. The 2-yr yield declined two basis points to 1.51%, and the 10-yr yield declined four basis points to 1.56%. The U.S. Dollar Index declined 0.2% to 98.15. WTI crude declined 0.1% to $56.18/bbl. 

Investors did not receive any economic data on Tuesday. Tomorrow, investors will receive Existing Homes Sales for July, the FOMC Minutes from the July meeting, and the weekly MBA Mortgage Applications Index. 

  • Nasdaq Composite +19.8% YTD
  • S&P 500 +15.7% YTD
  • Dow Jones Industrial Average +11.3% YTD
  • Russell 2000 +11.1% YTD
16:18  SEDG SolarEdge Technologies appoints Uri Bechor as Chief Operating Officer (84.71 +0.59)

Mr. Bechor brings to SolarEdge over twenty years of experience serving in both senior vice president and GM level roles at Flextronics International Ltd. In his last position, Mr. Bechor served as SVP, Global Operations, Europe and the Americas.
16:17  LZB La-Z-Boy beats by $0.08, reports revs in-line (30.54 -1.34)

  • Reports Q1 (Jul) earnings of $0.42 per share, $0.08 better than the S&P Capital IQ Consensus of $0.34; revenues rose 7.5% year/year to $413.6 mln vs the $415.95 mln S&P Capital IQ Consensus.
  • Written same-store sales for the La-Z-Boy Furniture Galleries network increased 4.7%.
  • Delivered same-store sales for company-owned Retail segment increased 3.5%.
  • Outlook: "The home furnishings environment remains somewhat challenging amid tariff uncertainty and other geopolitical concerns. Against that backdrop, however, we continue to believe La-Z-Boy is competitively well positioned with a strong brand; multi-channel distribution, including a growing retail business; and a world-class supply chain, which we continue to work to optimize. Additionally, we are optimistic about the long-term growth prospects for Joybird as our eCommerce strategy and business continue to evolve. Our balance sheet remains healthy and we are making prudent investments to deliver long-term performance for all stakeholders."

16:16  PLXS Plexus authorizes $50 mln common stock repurchase program - expected to extend through fiscal 2020 (57.09 -0.57)

 
16:15  NRZ New Residential Investment authorized the repurchase of up to $200 million of common shares through December 31, 2020 (14.14 -0.12)

 
16:10  SCSC ScanSource misses by $0.11, misses on revs; guides Q1 revs in-line, announces planned divestitures of businesses outside U.S., Canada, Brazil (31.27 -0.56)

  • Reports Q4 (Jun) earnings of $0.71 per share, $0.11 worse than the S&P Capital IQ Consensus of $0.82; revenues fell 3.3% year/year to $960.8 mln vs the $999.63 mln S&P Capital IQ Consensus.
  • Planned Divestitures: Earlier today, SCSC announced plans to divest certain businesses outside of the United States, Canada and Brazil. SCSC will continue to operate and invest in its digital distribution business in these geographies, including its recent acquisitions of intY, Canpango and Intelisys Global. The planned divestitures, comprised of physical product businesses in Europe, UK, Mexico, Colombia, Chile, Peru and the Miami-based export operations, had net sales of $623 mln for FY19 and at June 30, 2019 had working capital of $205 mln.
  • Co issues guidance for Q1, sees Non-GAAP EPS of $0.70-$0.75, excluding results of the planned divestitures. The Capital IQ Consensus is EPS of $0.90. Co sees Q1 GAAP revs of $970-$1.03 bln vs. $1 bln S&P Capital IQ Consensus.
16:07  URBN Urban Outfitters beats by $0.03, misses on revs; comps -3% but positive so far in Q3 (20.91 +0.06)

  • Reports Q2 (Jul) earnings of $0.61 per share, $0.03 better than the S&P Capital IQ Consensus of $0.58; revenues fell 3.0% year/year to $962.3 mln vs the $981.4 mln S&P Capital IQ Consensus. 
  • Comparable Retail segment net sales decreased 3%, driven by negative retail store sales, partially offset by growth in the digital channel. By brand, comparable Retail segment net sales increased 6% at Free People and decreased 3% at the Anthropologie Group and 5% at Urban Outfitters. Wholesale segment net sales decreased 8%.
  • "I am pleased to report that customer reaction to our early fall apparel assortments have improved significantly from our second quarter results," said Richard A. Hayne, Chief Executive Officer. "Third quarter-to-date 'comp' sales are positive at all three brands," finished Mr. Hayne.
16:03  CREE Cree beats by $0.01, reports revs in-line; guides Q1 EPS and revenue below consensus (58.24 -0.04)

  • Reports Q4 (Jun) earnings of $0.11 per share, excluding non-recurring items, $0.01 better than the S&P Capital IQ Consensus of $0.10; revenues fell 5.6% year/year to $251 mln vs the $248.95 mln S&P Capital IQ Consensus.
  • Co issues downside guidance for Q1, sees EPS of ($0.07)-(0.03), excluding non-recurring items, vs. $0.15 S&P Capital IQ Consensus; sees Q1 revs of $237-243 mln vs. $259.24 mln S&P Capital IQ Consensus. 
  • "We are pleased with our performance in the quarter as non-GAAP earnings per share was within the top end of our updated range despite the challenging operating environment," stated Gregg Lowe, Cree CEO. "While the Huawei ban and softness in the LED market will continue to impact the sector in the short-term, our long-term outlook remains unchanged - there is a significant opportunity to help customers make the shift from silicon to silicon carbide solutions for their next generation applications."
16:01  TALKX Market Briefing: S&P 500 going out at the lows

Stock market sinks to session lows just in front of close in a broad-based manner that resembles a basket trade. The financial sector (-1.4%) paced today's retreat along with the materials (-1.2%) and consumer staples (-1.2%) sectors.

S&P 500 (-0.7%) going out at 2900 level after taking out earlier support levels at 2922, 2913, and 2904.

15:31  SUMRX Earnings out this afternoon/tomorrow morning

  • This afternoon: AMCR CREE JKHY LZB NDSN SCSC TOL URBN
  • Tomorrow morning: ADI BZUN KLXE LOW PDD PLCE RY TGT VIOT
15:28  TOL Toll Brothers will report third quarter results this afternoon (37.02 +0.61)

Luxury homebuilder Toll Brothers (TOL) will report third quarter (July) results this afternoon; management will host a call tomorrow morning at 11:00.

S&P Capital IQ Consensus calls for third quarter EPS down 39% to $0.81 with revenue down 11% to $1.70 bln. The company guided for third quarter deliveries down 15% at the midpoint to 1,800-2,000 homes with an average price of $855-880K at an adjusted gross margin of 22.5%.

Toll Brothers guided for FY19 deliveries of 7,700-8,100 units (-4% at midpoint) at an ASP of $855-880K with an adj. gross margin of 23% (-70 bps).

Last quarter, net signed contracts fell 16% (9% in units), which was an improvement from the 31% decline in dollars or 24% decline in units in the prior quarter.

The entry level new home market has rebounded well this year after a slowdown last fall, driven by a continued supply deficit, favorable demographics and lower mortgage rates. The luxury home market is softer, driven in part by tax changes in states like California, New Jersey and New York with higher local taxes.

As a result, the stock is up just 12% year-to-date vs. a 33.5% gain in the Home Construction ETF (ITB), which hit a new high today. Toll Brother trades at just under 10x EPS, which is in-line with peers, but 1.1x book value is a discount to peers at ~1.5x.

15:18  SABR Sabre affirms that it will challenge DOJ lawsuit seeking to block the planned acquisition of Farelogix (23.77 -0.16)

Sabre and Farelogix have extended the termination date of their acquisition agreement to April 30, 2020, allowing time to resolve the challenge by the DOJ. Sabre will file its formal written response to the DOJ's complaint in court at the appropriate time.
15:17  SCANX Large cap notable movers of interest -- Baidu (BIDU) gains following second quarter results -Technical-

The following are some of today's most notable large cap movers of interest ($10 bln - $200 bln market cap), ranked by % change (all stocks over 100K average daily volume).

Large Cap Gainers

  • BIDU (110.46 +5.99%): Topped consensus for Q2 EPS and revs (+1% yr/yr to $3.84 bln, or +6% yr/yr excluding the impact of announced divestitures). Online marketing revs decreased 9% yr/yr but increased 9% sequentially to RMB19.2 bln; other revs increased +44% yr/yr to RMB7.1 bln, driven by growth in iQIYI membership services (+38% yr/yr), cloud, and smart devices. Baidu App DAUs grew +27% yr/yr to reach 188 mln in June. Issued in-line guidance for Q3 revs.
  • LYFT (53.78 +4.06%): Improves from yesterday's three-month lows on above average volume. Co's lock-up period expired yesterday.
  • LOW (98.34 +3.46%): Trades moderately higher ahead of its second quarter earnings report, which will be delivered before the open tomorrow morning, and in sympathy with mega cap home improvement retailer peer Home Depot (HD), which gains more than 4% after announcing mixed results/guidance in its second quarter press.

Large Cap Losers

  • SE (32.72 -9.38%): Reported Q2 results, topping consensus for revs while missing on EPS; co's total adj. revs rose +203.1% yr/yr to $665.4 mln while total adj. EBITDA was $(11.0) mln vs $(161.9) mln in the prior year quarter. Cost of revenue for co's e-commerce and other services category combined increased +118.0% to $198.4 mln in the quarter, partly due to costs incurred to grow co's e-commerce marketplace; that segment reported adj. revenue of $177.4 mln (+201.7% yr/yr), and its adj. EBITDA was $(248.3) mln vs $(188.3) mln in the prior year period. Raised guidance for adj. revenue for e-commerce and digital entertainment for the full year.
  • ELAN (27.11 -9.07%): Announced that it will acquire Bayer's (BAYRY) animal health business in a transaction valued at $7.6 bln, financed by a combination of $5.32 bln in cash and approx. $2.28 bln of ELAN common shares, representing a 70% to 30% cash-to-equity mix. The combination is expected to deliver adj. EPS accretion in the first full year post-closing, followed by high-single to low-double-digit percentage accretion in year two. Both Fitch and S&P placed co's ratings on Watch Negative following the deal, citing the additional leverage the combined company will hold. At all-time lows.
  • DOW (43.29 -5.07%): Gives back gains posted in the prior two sessions; in recent items, co announced that it will retrofit proprietary fluidized catalytic dehydrogenation technology into one of its mixed-feed crackers in Plaquemine, Louisiana to produce on-purpose propylene. Various chemicals peers also underperform. 
15:15  BONDX Treasury Market Summary

Climbing Again

  • U.S. Treasuries rallied on Tuesday, allowing most tenors to reclaim their losses from Monday. The advance began taking shape in the Treasury futures market last night, after it was reported that the Trump administration is considering a temporary cut to the payroll tax in order to prevent consumption from decreasing. The White House poured cold water on the report, but President Trump said in the afternoon that he is "always" looking at the payroll tax. Treasury futures built on their gains throughout the night, hitting pre-market highs shortly before 6:00 ET. The pullback continued until the start of the cash session, when the 10-yr note and shorter tenors returned to their closing levels from last week. The rest of the session was very quiet as Treasuries drifted in a sideways range near their highs. The U.S. Dollar Index slipped 0.2% to 98.19, recording its first loss since last Monday.
  • Yield Check:
    • 2-yr: -2 bps to 1.51%
    • 3-yr: -3 bps to 1.45%
    • 5-yr: -3 bps to 1.43%
    • 10-yr: -4 bps to 1.56%
    • 30-yr: -4 bps to 2.04%
  • News:
    • FDIC approved a loosening of the Volcker Rule to simplify regulations that govern proprietary trading. The change still needs to be approved by the SEC and the Federal Reserve.
    • Florida Senator, Rick Scott, reportedly proposed Italy's Prime Minister, Giuseppe Conte, has resigned. This increases the likelihood of a general election in the fall but M5S is reportedly considering forming a coalition government with PD.
    • President Trump reiterated his call for aggressive rate cuts.
    • The People's Bank of China fixed the yuan at a modestly lower level and lowered China's prime rate to 4.25% from 4.31%.
    • The Reserve Bank of Australia's August policy minutes indicated that more rate cuts will be considered.
    • Germany is expected to sell zero-coupon 30-yr bunds tomorrow.
  • Commodities:
    • WTI crude: -0.1% to $56.18/bbl
    • Gold: +0.3% to $1515.80/ozt
    • Copper: -1.0% to $2.58/lb
  • Currencies:
    • EUR/USD: +0.2% to 1.1097
    • GBP/USD: +0.4% to 1.2168
    • USD/CNH: -0.1% to 7.0692
    • USD/JPY: -0.3% to 106.27
  • The Day Ahead:
    • 7:00 ET: Weekly MBA Mortgage Index (prior 21.7%)
    • 10:00 ET: July Existing Home Sales (Briefing.com consensus 5.40 mln; prior 5.27 mln)
    • 10:30 ET: Weekly crude oil inventories (prior +1.6 mln)
    • 14:00 ET: July FOMC Minutes
14:51  SE Sea Limited down 9% after reporting a larger than expected adjusted net loss on higher than expected revenue and raising revenue guidance (32.61 -3.49)

Sea Ltd (SE) fell to a two-month low after reporting a larger than expected net loss this morning.

The company reported a Q2 adjusted net loss of ($0.52) vs. the ($0.43) S&P Capital IQ consensus. Adjusted revenue grew 203% to $665 mln vs. the $615.8 mln consensus. Quarterly active users (QAUs) reached 310.5 million, an increase of 93.3%. Average revenue per user was US$1.4 compared to US$0.9 for the second quarter of 2018.

Sea raised guidance for both digital entertainment and e-commerce for the full year of 2019. The company raised digital entertainment revenue to $1.6-1.7 bln (+142-157%) from $1.2-1.3 bln and e-commerce rev to $780-820 mln (+168-182%) from $630-660 mln. 

Singaporean Sea operates Garena (entertainment), Shopee (eCommerce) and AirPay (fin. services) in Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia and Singapore.

With a $15 bln market cap, the stock trades at ~6x sales; the stock is still up almost 190% year-to-date.

Partner Tencent (TCEHY) owns 25% of the company.

14:42  COMDX Energy Settlement Prices

  • Sep Crude Oil futures rose $0.18 (0.32%) to $56.18/barrel
  • Sep Natural Gas $0.01 higher (0.45%) at $2.22/MMBtu
  • Sep RBOB Gasoline settled $0.02 higher (1.34%) at $1.6823/gallon
  • Sep Heating oil futures settled $0.03 higher (1.39%) at $1.8554/gallon
13:44  TALKX Market Briefing: On secondary thought

A quick five-point drop in the S&P 500 without any specific news catalyst to account for the pullback. It's worth noting, however, that the move coincided with a test, and then break, of a secondary technical support level at 2914/2913.

That level was identified before today's open on Briefing.com's Technical Take page.

In general, though, there hasn't been a lot of involvement from buyers today. The market started on a lower note, came within a hair of yesterday's close (2923.65) on a subsequent rebound effort before fading again.

At this juncture, the consumer discretionary sector (+0.3%) is the only sector in positive territory and that is owed predominately to the outsized gain in Home Depot (HD 217.25, +9.30, +4.5%) following its earnings report.

The Dow Jones Industrial Average is down 0.3%; the Nasdaq Composite is down 0.3%; the S&P 500 is down 0.4%; and the Russell 2000 is down 0.9%.

13:42  COMDX Metals Settlement Prices

  • Sep gold settled today's session up $4.40 (0.29%) at $1506.5/oz
  • Sep silver settled today's session $0.22 higher (1.27%) at $17.145/oz
  • Sep copper settled $0.03 lower (1.02%) at $2.576/lb
13:23  SCANX Mid cap notable movers of interest -- Sarepta Therapeutics (SRPT) drops following Complete Response Letter for DMD treatment candidate -Technical-

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

Mid Cap Gainers

  • HGV (31.13 +10.35%): Reports circulate indicating that Apollo Global (APO) could aim to purchase co for as much as $36/share.
  • GFI (5.84 +8.35%): Gold and silver stocks see strength on higher pricing. (Related: AU, SBGL, AG...)
  • BYND (153.01 +5.88%): Upgraded to Overweight from Neutral and price target bumped up to $189 at JP Morgan, citing factors including valuation, continued strength in measured data, and co's potential to acquire new food-service customers. In recent press items, consumer products sales and marketing agency C.A. Fortune today announced co as its newest client.

Mid Cap Losers

  • SRPT (100.28 -16.65%): Received a Complete Response Letter from the FDA for its NDA seeking accelerated approval of golodirsen injection for the treatment of Duchenne muscular dystrophy in patients with a confirmed mutation amenable to exon 53 skipping. The CRL cited concerns regarding risk of infections related to intravenous infusion ports and renal toxicity. Co notes that renal toxicity was not observed in Study 4053-101, the study on which the golodirsen application was based. Co will immediately request a meeting with the FDA to determine next steps; a separate study assessing the safety and efficacy of golodirsen and casimersen (the ESSENCE study) is ongoing. Price target lowered at various firms. The stock moves to its lowest levels since December.
  • FN (47.16 -16.47%): Reported upside Q4 results but guided Q1 EPS and revs below consensus. During its call, co connected its guidance to such factors as a near-term slowdown in industrial laser markets and the fact that its customers are working through the restart of certain shipments to Huawei; co expects the related timing of changes in supply changes to temporarily impact some of its optical communications business.
  • HAIN (19.49 -11%): Downgraded to Underweight from Neutral and price target lowered to $18 at JP Morgan. Posts five-month lows.
13:15  OPTNX Unusual Options Activity

The following options are exhibiting notable trading, potentially indicating changing sentiment toward the underlying stocks, and/or potentially representing positioning for increased volatility.

Bullish Call Activity:

  • KGC Jan20 4 calls (volume: 2180, open int: 20, implied vol: ~50%, prev day implied vol: 9%). 2K traded in a single transaction. Co is confirmed to report earnings November 6 after the close.
  • POST Sep 100 calls (volume: 2810, open int: 20, implied vol: ~26%, prev day implied vol: 24%). 1500 contracts traded in a single transaction. Co is expected to report earnings mid-November.
  • CCJ Oct 9 calls (volume: 9380, open int: 30, implied vol: ~36%, prev day implied vol: 35%). Over 3600 contracts traded in a single transaction. We noted activity in the Sep 9 puts earlier this month (see 8/5 13:17 OPTNX). Co is confirmed to report earnings November 1 before the open.
  • VLO Weekly Aug23 80 calls (volume: 3060, open int: 260, implied vol: ~33%, prev day implied vol: 32%). Co is expecting to report earnings October 24 before the open.

Bearish Put Activity:

  • ABBV Weekly Aug23 65.5 puts (volume: 3860, open int: 60, implied vol: ~25%, prev day implied vol: 21%).  Co is expected to report earnings early November.

Sentiment: The CBOE Put/Call ratio is currently: 0.85, VIX: (16.57, -0.31, -1.8%).
September 20 is options expiration -- the last day to trade September 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.

12:59  WRAPX Midday Market Summary: Wall Street trades lower after two-day rally

The stock market is down modestly today as investors exhibit a lack of conviction after a sharp two-day rally, while U.S. Treasuries regain buying interest. The S&P 500 (-0.2%), Nasdaq Composite (-0.1%), and Dow Jones Industrial Average (-0.2%) trade slightly below their flat lines, while the Russell 2000 (-0.5%) shows relative weakness. 

Home Depot (HD 216.92, +8.97, +4.3%) has provided investors positive earnings results amid the negative disposition today, but it hasn't been enough to lift the broader market out of its volatile trading range. There isn't a concerted effort to sell, though, evidenced by no S&P 500 sector trading lower by at least 1.0%. The materials sector is today's laggard with a 0.8% decline. 

The lone sectors trading higher today are the S&P 500 consumer discretionary sector (+0.3%), which can credit its outperformance to Home Depot and its trickle-effect on Lowe's (LOW 98.51, +3.46, +3.6%), and the information technology sector (+0.1%) amid strength in Apple (AAPL 212.57, +2.22, +1.1%). 

Apple, according to sources from Bloomberg, is planning on releasing its streaming services in November with a price target of $9.99/month. A report from The Financial Times indicated that Apple was spending $6 billion on new content, but some have come out and said that the figure is much less. Shares of Netflix (NFLX 300.10, -9.23, -3.0%) have dropped 3%.

In other earnings news, department stores Kohl's (KSS 45.34, -2.86, -5.9%) and TJX Companies (TJX 50.73, -0.82, -1.6%) trade lower following their results. It should be noted that Kohl's rallied nearly 9% over the prior two days heading into the report, which came in better than expected. Medtronic (MDT 108.64, +4.47) is up 4.3% after beating top and bottom-line estimates.

The fact that U.S. Treasury yields remain low may be lending some support for equities, although the underlying cause for the low yields has been rooted in growth concerns. The 2-yr yield is down three basis points to 1.50%, and the 10-yr yield is down four basis points to 1.56%. The U.S. Dollar Index is down 0.2% to 98.19.

Investors did not receive any economic data today.

12:51  NVDA NVIDIA pulls back from three-week high (167.66 -3.12)

  • NVIDIA is pulling back today after yesterday's 7.0% spike lifted the stock past its 200-day moving average (161.71) to its highest level since August 1.
  • Yesterday's surge took place after the company revealed a list of upcoming video game titles that will support ray tracing technology, which is a key hardware feature of NVIDIA's GeForce RTX product line. Only a handful of games supported ray tracing prior to yesterday's announcement, resulting in weaker than expected demand for NVIDIA's latest product line. Yesterday's news should be positive for future demand.
12:42  HIIQ Health Insurance Innovations jumps 5% as shares bounce off 52-week lows after company posts updated investor presentation (18.04 +0.91)

  • In the slides, the company elaborated on customer concentrations, its long-term growth strategy, expected quarterly rev/adj-EBITDA seasonality breakdown, and repeated its FY19 guidance provided earlier this month. 
  • The co also disclosed that it has engaged Grant Thornton LLP as its independent registered public accounting firm for the fiscal year ended December 31, 2019.
12:41  SCANX Today's most active stocks -Technical-

The following are today's most active stocks ranked by volume and relative volume, categorized by sectors (over $300 mln market cap and 100K average daily volume).

Today's top 20 volume
  • Healthcare: TEVA (22.8 mln +4.28%), ENDP (13.08 mln +26.47%), ELAN (11.52 mln -7.72%)
  • Materials: VALE (10.74 mln +1.64%)
  • Industrials: GE (57.35 mln -3.29%)
  • Consumer Discretionary: KSS (9.67 mln -6.2%), TJX (9.35 mln -1.73%)
  • Information Technology: AMD (26.59 mln -0.97%), AAPL (12.28 mln +1.27%), INTC (10.54 mln -1.31%)
  • Financials: BAC (25.54 mln -1.65%), TQQQ (10.04 mln +0.14%), ITUB (9.05 mln +0.54%)
  • Energy: CHK (20.06 mln -0.94%), RIG (12.96 mln -2.39%)
  • Utilities: PCG (9.32 mln +2.58%)
Today's top relative volume (current volume to 1-month average daily volume)
  • Healthcare: SRPT (5.82x -16.66%), ELAN (3.9x -7.72%), ANAB (2.51x -9.85%), ENDP (2.19x +26.47%)
  • Consumer Discretionary: KSS (2.39x -6.2%), HGV (2.16x +10.19%)
  • Information Technology: CMCM (14.19x +27.28%), FN (6.16x -16.01%), AVYA (5.63x +12.39%), VNET (2.37x +11.23%)
  • Financials: MOSC (7.21x -0.2%), GUT (3.69x -4.72%), ATAX (3.35x +1.9%), MFG (2.48x +0.68%)
  • Energy: SDRL (2.74x -1.11%)
  • Utilities: EDN (2.09x +2.24%)
12:39  SCANX Today's biggest % gainers/losers -Technical-

The 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: ENDP (3.23 +26.47%), ACOR (3.13 +6.83%), MRNA (14.17 +5.75%)
  • Materials: HMY (3.18 +8.21%), GFI (5.82 +7.88%), MUX (1.81 +7.1%), AU (21.71 +7.05%), SBGL (5.43 +6.16%), IAG (3.46 +5.49%)
  • Consumer Discretionary: HGV (31.09 +10.19%), JCP (0.63 +6.18%), TACO (11.65 +5.48%)
  • Information Technology: CMCM (4.2 +27.28%), AVYA (13.97 +12.39%), VNET (7.81 +11.23%)
  • Energy: CRK (6.05 +5.77%)
  • Consumer Staples: DF (0.97 +9.56%), PPC (30.75 +5.53%)
Today's top 20 % losers
  • Healthcare: SRPT (100.27 -16.66%), ANAB (44.04 -9.85%), CYH (1.92 -8.57%), ELAN (27.51 -7.72%), NVAX (6.85 -6.03%)
  • Industrials: BGG (4.49 -9.11%)
  • Consumer Discretionary: TLRD (4.25 -9.1%), AXL (6.69 -6.48%), KSS (45.21 -6.2%), EXPR (1.91 -5.45%)
  • Information Technology: FN (47.42 -16.01%)
  • Energy: RRC (4.26 -5.96%), QEP (3.87 -5.73%), UNT (3.19 -5.62%), CRC (9.47 -5.49%)
  • Consumer Staples: HAIN (19.25 -12.12%)
  • Utilities: JE (1.39 -11.22%)
12:32  ELAN Elanco Animal Health drops 7% to 52-week lows after $7.6 bln deal to acquire Bayer's (BAYRY) animal health business raises leverage concerns (27.64 -2.17)

  • As covered earlier, Elanco announced it has entered into an agreement with Bayer AG to acquire its animal health business in a transaction valued at US$7.6 billion. The transaction, which is subject to regulatory approval and other customary closing conditions, creates the second largest animal health leader while strengthening and accelerating the company's proven Innovation, Portfolio and Productivity (IPP) strategy. Elanco will finance the transaction through both cash and equity. Bayer AG will receive $5.32 billion in cash, subject to customary purchase price adjustments, and $2.28 billion or approximately 68 million Elanco Animal Health common shares. This represents a 70 percent to 30 percent cash-to-equity mix. In connection with its entry into the Purchase Agreement, Elanco entered into a commitment letter with Goldman Sachs, pursuant to which the Commitment Parties committed to provide $3.0 billion of term loans, a $0.75 billion revolving credit facility and $2.75 billion of bridge loans in connection with the Transaction, subject to the terms and conditions set forth in the commitment letter.
  • In the wake of the announcement, both Fitch & S&P placed Elanco's ratings on Watch Negative citing the additional leverage the combined company will hold. 
  • Elanco deal slides
  • Top competitor Zoetis (ZTS) unchanged following the deal
11:33  ADI Analog Devices to report tomorrow morning (111.24 +0.07)

Analog Devices (ADI 111.24, +0.07, +0.1%) will report its Q3 results ahead of tomorrow's opening bell, followed by management's conference call at 10:00 ET.

  • The Capital IQ consensus expects the manufacturer of signal converters, processors, and power management products to report a 19.6% yr/yr decrease in EPS to $1.23 on a 7.4% yr/yr decrease in revenue to $1.46 bln.
  • The company issued below-consensus guidance on May 22, priming the market for Q3 EPS between $1.15 and $1.29 on revenue between $1.40 bln and $1.50 bln. ADI acknowledged that the cautious outlook was impacted by the restriction on shipments of components to Huawei. The company is likely to maintain cautious expectations due to a lack of significant progress in the dispute with China.
  • The market expects ADI's Q3 results to include restructuring charges and an increase in costs associated with higher R&D spending.
  • Goldman Sachs upgraded the stock to Buy from Sell on June 10 while Nomura initiated coverage with a Neutral rating on June 3.

Analog Devices trades at 20.5x forward earnings expectations, which represents a premium to NPX Semiconductor (NXPI 102.95, -0.52, -0.5%) and Cirrus Logic (CRUS 55.07, +0.50, +0.8%), but a discount to Maxim Integrated (MXIM 54.61, -0.08, -0.2%) and Texas Instruments (TXN 124.87, +0.27, +0.2%).

11:02  TALKX Market Briefing: Pressured early by lack of leadership

The risk-on mentality that has prevailed the last two sessions has been tempered today. The major indices have all retreated in the early going and are sporting modest losses.

There isn't a lot of specific news to account for the pullback, although another drop in Treasury yields is drawing some attention as a negative cue as it is said to be stoking growth concerns along with some peculiar press reports suggesting the Trump Administration is looking at ways to stimulate growth in a weakening economy. The 2-yr note yield is down four basis points to 1.49% and the 10-yr note yield is down five basis points to 1.55%.

Then again, today's pullback could just be a case of absent buyers, which is forcing down ask prices.

At the moment, there isn't much leadership. Nine out of 11 sectors are negative, with losses ranging from 0.2% (real estate) to 0.8% (energy).

The consumer discretionary sector (+0.3%), which is being underpinned by the gain in Home Depot (HD 216.73, +8.78, +4.2%) following its earnings report, and the information technology sector (+0.1%) are the only sectors in positive territory.

Separately, market participants will be keeping a close eye on the financial sector (-0.6%) to see how it responds to the recent news that the FDIC has approved an easing of the Volcker Rule. That decision, according to CNBC, still needs to be approved by the SEC, CFTC, and Federal Reserve.

The Dow Jones Industrial Average is down 0.1%; the Nasdaq Composite is down 0.2%; the S&P 500 is down 0.2%; and the Russell 2000 is down 0.4%.

11:01  SCANX Small cap notable movers of interest -- Cheetah Mobile (CMCM) gains following second quarter press -Technical-

The following are some of today's most notable small cap movers of interest ($300 mln - $2 bln market cap), ranked by % change (all stocks over 100K average daily volume).

Small Cap Gainers

  • CMCM (4.18 +26.58%): Posted Q2 results. Co's revs declined 12.1% yr/yr to RMB970.1 mln, exceeding co's guidance, on a non-GAAP diluted income per ADS of RMB0.52. Revenues from utility products and related services fell 44.0% yr/yr to RMB423.5 mln, largely due to the slowdown of co's overseas mobile utility business, resulting from negative publicity, as well as to softness in co's domestic advertising industry. Meanwhile, revenues from co's mobile entertainment business increased +49.6% yr/yr to RMB498.0 mln, featuring +108.5% yr/yr growth in mobile games business revenues to RMB289.2 mln; AI and other revs increased +236.2% yr/yr to RMB48.6 mln, driven primarily by sales of co's AI-based interpretation device, Cheetah Translator. At two-month highs. Also announced a special cash dividend of US$0.50 per ADS.
  • ENDP (3.21 +26.01%): Co and certain of its subsidiaries have reached a settlement in principle in connection with the "Track 1 Cases," a collection of pending lawsuits that assert various claims relating to the manufacturing, distribution, prescribing, abuse, etc. of branded and generic opioid medications. Among other terms of the settlement, co will pay a total sum of $10 mln and will provide up to $1 mln of its Vasostrict and Adrenalin products free of charge. The settlement will include no admission of wrongdoing, fault, or liability by Endo entities. Co remarks that it "is important to note that the value of the settlement should not be extrapolated to any other opioid-related cases or claims."
  • VNET (7.9 +12.53%): Co reported Q2 results; net revs increased +7.2% yr/yr to RMB888.0 mln while adj. EBITDA increased +17.9% yr/yr to RMB260.7 mln, with adj. EBITDA margin expanding to 29.4% vs 26.7% in the prior year period. Co attributes yr/yr revenue increases primarily to growing demand for data centers in its domestic market.

Small Cap Losers

  • AMRX (2.66 -6.89%): The stock continues to see volatility, today reverting lower after netting gains of circa +18% during yesterday's session; it is currently lower by circa 27% month-to-date.
  • CRC (9.36 -6.59%): Energy sector lags. (Related: SWN, NOVA -- also reported Q2 results, NBR...)
  • ANAB (45.77 -6.31%): Co disclosed that its CFO, Dominic Piscitelli, has announced his intention to resign, effective September 9; co has appointed Eric Loumeau, who has served as co's General Counsel since August 2018, as interim CFO. Mr. Piscitelli had joined co as CFO in January 2017. At 52-week lows.
10:20  OPTNX 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:

  • CCJ Oct 9 calls are seeing interest with 7070 contracts trading vs. open int of 30, pushing implied vol up around 3 points to ~39%. Over 3600 contracts traded in a single transaction. We noted activity in the Sep 9 puts earlier this month (see 8/5 13:17 OPTNX). Co is confirmed to report earnings November 1 before the open.

Puts:

  • ABBV Weekly Aug23 65.5 puts are seeing interest with 3070 contracts trading vs. open int of 60, pushing implied vol up around 4 points to ~27%. Co is expected to report earnings early November.

Stocks seeing volatility selling:

  • TJX, KSS, HD implied vol is lower following earnings/guidance

Sentiment: The CBOE Put/Call ratio is currently: 0.94, VIX: (17.56, +0.68, +4.0%).
September 20 is options expiration -- the last day to trade September 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.

09:43  WRAPX Opening Market Summary: Stocks give back some gains at the open

The major averages begin the day retracing some of their gains from the previous sessions. The S&P 500 is down 0.4%, the Dow is down 0.1%, and the Nasdaq Composite is down 0.4%. 

Looking at the S&P 500 sectors shows ten of the 11 sectors trading in the red. The energy (-0.9%), financials (-0.8%), and materials (-0.7%) sectors show relative weakness, while the health care sector (+0.1%) is the lone sector trading higher. 

U.S. Treasuries are higher, pushing yields lower across the curve. The 2-yr yield is down four basis points to 1.49%, and the 10-yr yield is down six basis points to 1.54%. The U.S. Dollar Index is unchanged at 98.37. WTI crude is down 1.3%, or $0.76, to $55.39/bbl.

09:38  ENDP Endo Intl confirms settlement in principle to resolve "Track 1" Opioid cases (2.89 +0.34)

If finalized, the settlement will resolve the Track 1 Cases. The Track 1 Cases assert various claims arising from or otherwise relating to the manufacturing, marketing, distribution, supply, sale, prescribing, use and/or abuse of branded and generic opioid medications. Under the settlement in principle, Endo will pay a total sum of $10 million and will provide up to $1 million of its Vasostrict and Adrenalin products free of charge, all to be allocated by and between the two plaintiff counties in their sole discretion. Further, in the event of a comprehensive resolution of government-related opioid claims, the Company has agreed that the two plaintiff counties will receive the value they would have received under such resolution less the total value of the settlement in principle announced today. The settlement will include no admission of wrongdoing, fault or liability of any kind by the Endo Entities and is based on the avoidance of litigation risk and associated costs.
09:38  SCANX Earnings/guidance movers

  • SDRL +14.99% BIDU +5.57% MDT +3.62% HD +3.55% CMCM +3.03% PLAB +2.25% SFL +1.87% HMY +1.36%
  • FN -12.35% MSG -6.96% SE -7.34% IQ -5.14% PPDF -3.79% PINC -3.46% TJX -3.30% NOVA -1.78% KSS -1.49%
09:33  IAC InterActiveCorp acquires NurseFly, reportedly for $15 mln (249.65 -0.14)

Founded in 2017, NurseFly's platform aggregates the largest index of real-time travel nursing jobs nationwide, offering travel healthcare professionals unprecedented transparency to aid in their job search. Tech Crunch reports that the deal was valued at $15 mln.
09:28  WIRES On The Wires

  • Overstock.com's (OSTK) tZERO Crypto unit announced today its plans to offer to investors using both iOS and Android devices the ability to trade Ravencoin on the tZERO Crypto app, in addition to bitcoin and ethereum, which are already supported by the app.
  • Hasbro (HAS) announced that, beginning in 2020, it plans to begin phasing out plastic from new product packaging, including plastic elements like polybags, elastic bands, shrink wrap, window sheets, and blister packs. The company's ambition is to eliminate virtually all plastic in packaging for new products by the end of 2022.
09:19  SUMRX Economic Summary: No US data today; Existing Home Sales due out Wednesday at 10:00 ET

Upcoming Economic Data:

  • Weekly MBA Mortgage Applications due out Wednesday at 7:00 ET (Last Week was 21.7%)
  • July Existing Home Sales due out Wednesday at 10:00 ET (Briefing.com consensus of 5.40 mln; June was 5.27 mln)

Upcoming Fed/Treasury Events:

  • Fed Governor Randal Quarles to speak today at 18:00 ET
  • Fed Chair Jerome Powell to speak at Jackson Hole Friday at 10:00 ET

Other International Events of Interest:

  • In a separate move, the PBoC lowered China's prime rate to 4.25% from 4.31% and announced that the prime rate pricing model will be reviewed.
09:13  WRAPX S&P futures vs fair value: -2.90. Nasdaq futures vs fair value: -11.00.

The stock market is on pace to start the day slightly lower with the S&P 500 futures trading three points, or 0.1%, below fair value. Futures have wavered near fair value this morning following a broad-based rebound over the last two sessions.

Retail earnings have come in mixed this morning. Home Depot (HD 212.89, +4.94, +2.4%) and Kohl's (KSS 49.65, +1.45, +3.0%) are up on better-than-expected earnings results, while TJX (TJX 49.88, -1.67, -3.2%) trades lower after missing revenue estimates and guiding Q3 EPS below consensus. Home Depot also guided its FY20 revenue below consensus.

The U.S. Treasury yield curve, meanwhile, has seen some flattening action. The 2-yr yield is down two basis points to 1.51%, and the 10-yr yield is down five basis points to 1.55%. 

09:06  SCSC ScanSource plans to sell certain businesses outside of the US, Canada, and Brazil (31.83 )

The planned divestitures, comprised of nondigital distribution businesses in Europe, UK, Mexico, Colombia, Chile, Peru, and the Miami-based export operations, had net sales of $623 mln for fiscal year 2019 and at June 30, 2019 had working capital of $205 mln. ScanSource currently has approximately 490 employees in these geographies and will communicate regularly with its employees on the sales process. There is no assurance that this sale process will result in a transaction or the timing of such transaction. These plans are part of a strategic portfolio repositioning to align investments with higher-growth, higher-margin businesses.
09:03  TYPE Monotype Imaging shareholder Gilead Capital sends letter to the Board expressing its concerns regarding the proposed sale to HGGC for $19.85/share, believes the Company is worth at least $30/share (19.76 )

Gilead Capital calls on the Board to inform shareholders about the Company's recent business performance and its rationale for proposing a sale of Company at the same price it executed its most recent buybacks so that all shareholders can make a fully informed vote.
08:51  WIRES On The Wires

  • Aerie Pharmaceuticals, Inc. (AERI) announced the commencement of patient dosing in a first-in-human clinical trial of AR-13503 Sustained Release Implant in patients with neovascular age-related macular degeneration or diabetic macular edema.
  • Canopy Growth Corporation (CGC) announced that it has received a licence from Health Canada for its KeyLeaf Life Sciences facility in Saskatoon, Saskatchewan. Including the Smiths Falls site and the recently licensed BC Tweed extraction site, Canopy Growth now operates three significant extraction assets to support the throughput required for large scale value-add product development.
  • Qualcomm Incorporated (QCOM) announced that LGE has entered into a new direct worldwide patent license agreement with Qualcomm. Under the terms of the five-year, royalty-bearing agreement, Qualcomm has granted LGE a patent license to develop, manufacture and sell 3G, 4G and 5G single-mode and multimode complete devices. The agreement is consistent with Qualcomm's established global licensing terms.
  • BioXcel Therapeutics, Inc. (BTAI) announced that the U.S. DoD's CDMRP has awarded a planning grant1 as a part of its Alcohol and Substance Abuse Disorders Research Program related to the development of the Company's product candidate, BXCL501. The grant will support the development of a clinical study to evaluate the use of BXCL501 for the treatment of ASUD, particularly related to PTSD and TBI.
  • Motorola Solutions, Inc. (MSI) announced that its patent infringement case against Hytera Communications Corporation Limited of Shenzhen, China in the U.S. District Court for the Northern District of Illinois, which was previously stayed pending a decision from the International Trade Commission, will proceed to trial. This follows the Illinois District Court's denial of Hytera's motion to dismiss on August 12, 2019 and its establishment of a pre-trial calendar, which includes pre-trial milestone and discovery dates, on August 15, 2019.
08:50  WRAPX S&P futures vs fair value: -0.10. Nasdaq futures vs fair value: +4.00.

The S&P 500 futures trade roughly in-line with fair value.

Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. On-shore yuan is approaching its low from last week after the People's Bank of China fixed the currency at a modestly lower level overnight. In a separate move, the PBoC lowered China's prime rate to 4.25% from 4.31% and announced that the prime rate pricing model will be reviewed. The Reserve Bank of Australia's August policy minutes indicated that rates will remain at a low level for an extended period and that additional easing will be considered.

  • In economic data:
    • Hong Kong's July CPI +3.3% yr/yr (last 3.3%)

---Equity Markets---

  • Japan's Nikkei: +0.6%
  • Hong Kong's Hang Seng: -0.2%
  • China's Shanghai Composite: -0.1%
  • India's Sensex: -0.2%
  • South Korea's Kospi: +1.1%
  • Australia's ASX All Ordinaries: +1.2%

Major European indices are mixed. Italy's Prime Minister Giuseppe Conte will address parliament later today amid growing expectations that he will offer his resignation. European Central Bank policymaker Olli Rehn reiterated his belief that the central bank needs to provide additional stimulus.

  • In economic data:
    • Eurozone's June Construction Output 0.0% (prior -0.5%) Germany's July PPI +0.1% m/m (expected 0.0%; last -0.4%); +1.1% yr/yr (expected 1.0%; last 1.2%)
    • U.K.'s August CBI Industrial Trends Orders -13 (expected -25; last -34)
    • Swiss July trade surplus CHF3.63 bln (expected surplus of CHF3.87 bln; last surplus of CHF4.01 bln)

---Equity Markets---

  • STOXX Europe 600: -0.1%
  • Germany's DAX: -0.2%
  • U.K.'s FTSE 100: UNCH
  • France's CAC 40: -0.2%
  • Italy's FTSE MIB: -0.9%
  • Spain's IBEX 35: -0.8%
08:42  WIRES On The Wires

  • Mersana Therapeutics, Inc. (MRSN) dosed the first patient in the expansion portion of the Phase 1 study of XMT-1536, its first-in-class, wholly-owned Dolaflexin ADC targeting NaPi2b. The expansion cohorts will assess the efficacy, safety and tolerability of XMT-1536 at 36 mg/m2 every four weeks in patients with platinum-resistant ovarian cancer and non-small cell lung cancer adenocarcinoma. The  company also announced that it has not determined a maximum tolerated dose and that it plans to continue the dose escalation portion of the study in parallel.
  • Stoke Therapeutics, Inc. (STOK) enrolled the first patient in an observational study of children and adolescents ages 2 to 18 with Dravet syndrome. Dravet syndrome is a severe and progressive genetic epilepsy characterized by frequent, prolonged and refractory seizures, beginning within the first year of life. The effects of the disease go beyond seizures and often include cognitive regression or developmental stagnation, ataxia, speech impairment and sleep disturbances.
  • Teva Pharmaceutical Industries (TEVA) announced availability of the FDA-approved generic version of EpiPen Jr1 (epinephrine injection, USP) Auto-Injector, 0.15 mg, in the U.S. The product is available in most retail pharmacies, and the Wholesale Acquisition Cost is $3002 for a 2-pack.
  • C.A. Fortune, a consumer products sales and marketing agency, today announced its newest client, Beyond Meat (BYND), an industry leader in plant-based protein. The partnership will officially take effect on September 1, 2019. C.A. Fortune has a significant amount of experience in representing plant-based and alternative protein clients and will use that expertise to support the Beyond Meat business with most retailers across the United States.
  • Myovant Sciences (MYOV) completed patient recruitment for its SPIRIT 2 study, the first of two Phase 3 replicate studies evaluating relugolix combination therapy in women with endometriosis-associated pain. The SPIRIT 2 study is part of an international clinical development program designed to gain regulatory approval of relugolix for the treatment of moderate-to-severe endometriosis-associated pain.
08:38  TJX TJX reports EPS in-line, misses on revs; guides Q3 EPS below consensus; reaffirms FY20 EPS and comp guidance; Q2 comps +2% (51.55 )

  • Reports Q2 (Jul) earnings of $0.62 per share, in-line with the S&P Capital IQ Consensus of $0.62; revenues rose 4.8% year/year to $9.78 bln vs the $9.89 bln S&P Capital IQ Consensus.
  • Consolidated comparable store sales increased 2%, over last year's 6% increase.
  • For the second quarter of Fiscal 2020, the Company's consolidated pretax profit margin was 10.4%, a 0.2 percentage point decrease versus 10.6% in the prior year.
  • Co issues downside guidance for Q3, sees EPS of $0.63-0.65 vs. $0.68 S&P Capital IQ Consensus. This EPS outlook is based upon estimated comparable store sales growth of 1% to 2% on a consolidated basis versus a 7% increase in the prior year. The Company is also estimating comparable store sales growth of 1% to 2% at Marmaxx versus a 9% increase last year.
  • Co reaffirms guidance for FY20, sees EPS of $2.56-2.61 vs. $2.63 S&P Capital IQ Consensus. This EPS outlook is based upon estimated comparable store sales growth of 2% to 3% on a consolidated basis and at Marmaxx (reaffirmed from prior guidance).
08:32  TESS TESSCO Tech names Sandip Mukerjee CEO, effective today (14.67 )

  • Former CEO Murray Wright will retire following a transition period to ensure a smooth succession process. Mr. Mukerjee also has replaced Mr. Wright on the company's Board of Directors.
  • Mr. Mukerjee was most recently President, Global Professional & Consulting Services Business, Nokia Software.
08:32  HRTX Heron Therapeutics announces publication of results from EPOCH 2 in the journal, Hernia (17.75 )

In EPOCH 2, all primary and key secondary endpoints were achieved. HTX-011 provided superior and sustained pain reduction compared to placebo and bupivacaine solution through the critical 72-hour postoperative window, when pain is often most severe. Significant reductions in pain occurred both early (in the first 8 through 24 hours) and were sustained from 24 through 72 hours. In addition to reductions in average pain intensity scores, HTX-011 significantly reduced the proportion of patients experiencing severe pain through 72 hours compared to placebo and bupivacaine solution. Significant reductions in pain were consistent with the significant decrease in total opioid consumption and the significant increase in opioid-free patients receiving HTX-011, both through 72 hours and as compared to placebo and bupivacaine solution. HTX-011 was well tolerated, with a safety profile comparable to placebo and bupivacaine solution.
08:31  GIS General Mills CFO Don Mulligan to retire June 1, 2020; Kofi Bruce to succeed as CFO (55.20 )

Kofi Bruce, currently VP, Controller, will be promoted to VP, Financial Operations effective September 1 and will later be promoted to the CFO role, effective February 1, 2020, at which time Mr. Mulligan will transition to an advisory capacity.
08:28  WRAPX S&P futures vs fair value: -2.10. Nasdaq futures vs fair value: +9.50.

The S&P 500 futures trade two points, or 0.1%, above fair value.

Bloomberg reported yesterday that Apple (AAPL 211.20, +0.85, +0.4%) is targeting a November release for its streaming service with a possible $9.99 price after a free trial. The Financial Times reported that Apple was spending $6 billion on content, but some have been saying that the figure is much less. 

Shares of Disney (DIS 134.31, -0.98, -0.7%) and Netflix (NFLX 306.40, -2.98, -1.0%) are indicated lower in pre-market action. 

08:16  SUMRX Gapping up/down: BIDU +9%, KSS +5%, MDT +4.5%, HD +2% after earnings, HGV +13% after M&A spec; FIN -17%, MSG -3% and BHP -1% after earnings, LVS -1% after downgrade

Gapping up
In reaction to strong earnings/guidance
:

  • BIDU +9.4%, CMCM +5.5%, KSS +4.6%, MDT +4.5%, PPDF +4.1%, PLAB +2.5%, SFL +2.2%, HD +2.1%, HMY +1%

M&A news:

  • HGV +13.4% (Apollo Global (APO) aiming to purchase HGV for as high as $36/share according to NY Post)

Other news:

  • NBRV +23.1% (FDA has approved its NDA for the oral and IV formulations of Xenleta for the treatment of community-acquired bacterial pneumonia in adults)
  • MRNA +8.7% (receives FDA Fast Track designation for investigational Zika vaccine mRNA-1893)
  • PCG +1.7% (after closing more than 25% lower on the day)
  • AZN +1.6% (Farxiga met primary endpoint in landmark Phase III DAPA-HF trial for the treatment of patients with heart failure)

Analyst comments:

  • CC +3.9% (upgraded to Positive from Neutral at Susquehanna)
  • RGNX +2.6% (upgraded to Mkt Perform from Underperform at SVB Leerink)
  • VSLR +2.5% (initiated with Overweight at KeyBanc Capital Markets)
  • CAH +1.7% (upgraded to Buy from Neutral at Guggenheim)
  • RUN +1.5% (initiated with Overweight at KeyBanc Capital Markets)

Gapping down
In reaction to disappointing earnings/guidance
:

  • FN -16.8%, IQ -8.2%, MSG -2.9%, BHP -1.3%

Other news:

  • SYBX -23.4% (discontinues development of SYNB1020 to treat hyperammonemia)
  • SRPT -17.3% (received Complete Response Letter for NDA seeking accelerated approval of golodirsen injection for treatment of Duchenne muscular dystrophy)
  • ELAN -4.7% (confirms deal to acquire Bayer's (BAYRY) animal health business in a transaction valued at $7.6 bln)
  • WTI -3% (CEO disclosed the purchase of ~15K shares)
  • TELL -2.1% (relinquishing late gains)
  • FOMX -0.7% (entered into $30 mln Controlled Equity Offering sales agreement)
  • WMC -0.5% (commences public offering of 6.75% Convertible Senior Notes due 2022)

Analyst comments:

  • LVS -1% (downgraded to Hold from Buy at Argus)
  • VNO -0.6% (downgraded to Hold from Buy at Argus)
08:11  SCANX Gapping down

Gapping down
In reaction to disappointing earnings/guidance
:

  • FN -16.8%, IQ -8.2%, MSG -2.9%, BHP -1.3%

Other news:

  • SYBX -23.4% (discontinues development of SYNB1020 to treat hyperammonemia)
  • SRPT -17.3% (received Complete Response Letter for NDA seeking accelerated approval of golodirsen injection for treatment of Duchenne muscular dystrophy)
  • ELAN -4.7% (confirms deal to acquire Bayer's (BAYRY) animal health business in a transaction valued at $7.6 bln)
  • WTI -3% (CEO disclosed the purchase of ~15K shares)
  • TELL -2.1% (relinquishing late gains)
  • FOMX -0.7% (entered into $30 mln Controlled Equity Offering sales agreement)
  • WMC -0.5% (commences public offering of 6.75% Convertible Senior Notes due 2022)

Analyst comments:

  • LVS -1% (downgraded to Hold from Buy at Argus)
  • VNO -0.6% (downgraded to Hold from Buy at Argus)
08:10  SCANX Gapping up

Gapping up
In reaction to strong earnings/guidance
:

  • BIDU +9.4%, CMCM +5.5%, KSS +4.6%, MDT +4.5%, PPDF +4.1%, PLAB +2.5%, SFL +2.2%, HD +2.1%, HMY +1%

M&A news:

  • HGV +13.4% (Apollo Global (APO) aiming to purchase HGV for as high as $36/share according to NY Post)

Other news:

  • NBRV +23.1% (FDA has approved its NDA for the oral and IV formulations of Xenleta for the treatment of community-acquired bacterial pneumonia in adults)
  • MRNA +8.7% (receives FDA Fast Track designation for investigational Zika vaccine mRNA-1893)
  • PCG +1.7% (after closing more than 25% lower on the day)
  • AZN +1.6% (Farxiga met primary endpoint in landmark Phase III DAPA-HF trial for the treatment of patients with heart failure)

Analyst comments:

  • CC +3.9% (upgraded to Positive from Neutral at Susquehanna)
  • RGNX +2.6% (upgraded to Mkt Perform from Underperform at SVB Leerink)
  • VSLR +2.5% (initiated with Overweight at KeyBanc Capital Markets)
  • CAH +1.7% (upgraded to Buy from Neutral at Guggenheim)
  • RUN +1.5% (initiated with Overweight at KeyBanc Capital Markets)
08:07  WMC Western Asset Mortgage prices $40 mln public offering of 6.75% Convertible Senior Notes due 2022 (9.70 )

 
08:06  VST Vistra Energy to acquire Ambit Energy for $475 mln plus net working capital in all-cash transaction (23.69 )

Ambit is headquartered in Dallas, Texas and serves approximately 1.1 mln residential customer equivalents in 17 states. The North Texas overlap of administrative functions will uniquely position Vistra to capture synergies and enable the teams to quickly integrate operations. Vistra expects the Ambit business will contribute approximately $125 mln to adjusted EBITDA after the full run-rate of approximately $25 mln of anticipated annual synergies is achieved. Following the closing of the transaction, Vistra's share of the ERCOT residential market will grow from approximately 25% to approximately 32% and an industry-leading 26% in all U.S. competitive markets.
08:05  NCNA NuCana announces Clatterbridge Cancer Centre-sponsored ongoing metastatic pancreatic Phase III ACELARATE study has been suspended following a prespecified futility analysis (7.32 )

  • The enrollment of new patients has been suspended on the advice of the Independent Safety and Data Monitoring Committee.
  • A futility analysis was included in the ACELARATE study design to assess the likelihood of the study achieving its primary objective of Acelarin monotherapy demonstrating at least a 42% reduction in risk of death compared to gemcitabine. This analysis indicated that this efficacy objective was unlikely to be met in this difficult to treat patient population. Upon review of the interim data by the ISDMC, the sponsor decided to suspend recruitment, allow the data to mature and conduct additional sub-group analyses. Patients who are deriving benefit can continue treatment with Acelarin. There are 25 patients who are receiving or have received Acelarin monotherapy and who will continue to be followed by the study sponsor.
  • Professor Daniel Palmer, Director of the Liverpool CRUK/NIHR Experimental Cancer Medicine Centre and Chief Investigator of the ACELARATE study said: "Metastatic pancreatic cancer remains an area of high unmet need and the population included in ACELARATE have particularly poor outcomes and very limited treatment options. Importantly, there were imbalances in unfavorable prognostic factors for the patients in the Acelarin arm which may have impacted the futility analysis. In particular, 54% of the patients in the Acelarin arm were diagnosed at the most advanced stage T4, compared to 36% of patients in the gemcitabine arm. We need to allow the data to mature and conduct additional analyses, including biomarker assessment, in order to determine the most appropriate course of action."
08:05  BONDX Overnight Treasury Market Summary

Eyeing a Rebound

  • U.S. Treasuries are on track for a higher start after Treasury futures reclaimed a portion of yesterday's losses in overnight trade. Treasury futures began climbing off yesterday's closing levels after it was reported that the White House is studying a temporary payroll tax cut to boost consumption. That report was later denied by the administration, but it didn't stop Treasury futures from continuing their push. Treasury futures hit highs around 6:00 ET and they hover a bit below those levels at this juncture. The U.S. Dollar Index hovers just above its flat line at 98.39, seeking its sixth consecutive advance.
  • Yield Check:
    • 2-yr: -1 bp to 1.52%
    • 3-yr: -1 bp to 1.47%
    • 5-yr: -1 bp to 1.46%
    • 10-yr: -2 bps to 1.58%
    • 30-yr: -3 bps to 2.06%
  • News:
    • The People's Bank of China fixed the yuan at a modestly lower level and lowered China's prime rate to 4.25% from 4.31%.
    • The Reserve Bank of Australia's August policy minutes indicated that rates will remain at a low level for an extended period and that additional easing will be considered.
    • Hong Kong's July CPI increased 3.3% yr/yr (last 3.3%).
    • Eurozone's June Construction Output was unchanged 0.0% m/m (prior -0.5%).
    • Germany's July PPI ticked up 0.1% m/m (expected 0.0%; last -0.4%), growing 1.1% yr/yr (expected 1.0%; last 1.2%).
    • U.K.'s August CBI Industrial Trends Orders improved to -13 (expected -25) from -34.
    • Swiss July trade surplus narrowed to CHF3.63 bln (expected surplus of CHF3.87 bln) from CHF4.01 bln.
    • Italy's Prime Minister Giuseppe Conte will address parliament later today amid growing expectations that he will offer his resignation.
    • Germany is expected to sell 30-yr bunds tomorrow at or below 0.00%.
  • Commodities:
    • WTI Crude: -0.5% to $55.94/bbl
    • Gold: +0.3% to $1516.60/ozt
    • Copper: -0.8% to $2.58/lb
  • Currencies:
    • EUR/USD: UNCH at 1.1076
    • GBP/USD: -0.4% to 1.2082
    • USD/CNH: -0.1% to 7.0689
    • USD/JPY: -0.2% to 106.35
  • No Data Scheduled for Today
08:04  SOLY Soliton announces results of preclinical studies that "reveal its RAP device appears to deliver increased disruption of the fibrotic septa that contribute to the appearance of cellulite with increased treatment time, implying a dose response to the therapy" (11.06 )

Co states, "The new discovery, referred to as 'acoustic subcision,' helps explain the recent proof-of-concept (POC) trial results, which demonstrated a 20-47% improvement in the patient's Cellulite Severity Score following the use of the Company's RAP device. The RAP device for the treatment of cellulite is investigational and not available for sale in the United States... Until now, the only way to have this kind of mechanical disruption of fibrous septa has been through painful invasive procedures. We believe Soliton's acoustic subcision could change this entirely. The longer-term effect seen in our POC trial is an improvement in the overall appearance of the skin, which we believe is driven through the stimulation of new collagen production."
08:02  EIGR Eiger BioPharmaceuticals: FDA has granted Breakthrough Therapy Designation for peginterferon lambda (Lambda) for the treatment of hepatitis delta virus (HDV) infection (10.41 )

 
08:02  VRTX Vertex Pharma: FDA accepted its NDA for the VX-445, tezacaftor and ivacaftor triple combination regimen; FDA has granted Priority Review of the NDA and assigned a PDUFA target action date of March 19, 2020 (187.09 )

 
08:02  PFPT Proofpoint to offer $750 mln aggregate principal amount of convertible senior notes due 2024 (118.23 )

Proofpoint expects to use a portion of the net proceeds from the offering of the Notes to pay the cost of capped call transactions. Proofpoint intends to use the remainder of the net proceeds for general corporate purposes, which may include acquisitions or other strategic transactions. Proofpoint currently has no agreements or understanding with respect to any such acquisitions or transactions.
07:56  WRAPX S&P futures vs fair value: +1.10. Nasdaq futures vs fair value: +3.90.

The S&P 500 futures trade roughly in-line with fair value following a three-day rebound in equities. It's been a relatively quiet morning from a news perspective, but investors have been given some retail earnings to review. 

Home Depot (HD 211.99, +4.04) is up 1.9% in pre-market action after the Dow component beat earnings estimates, although it also guided FY20 revenue below consensus. Kohl's (KSS 49.75, +1.55, +3.2%) has pleased investors with its results so far, while TJX Companies (TJX 52.45, +0.90, +1.8%) will release its results soon. 

Aside from the earnings reactions, there appears to be a general wait-and-see mindset ahead of the FOMC Minutes from the July meeting on Wednesday and the Fed's Jackson Hole symposium on Thursday and Friday. Elsewhere, China lowered its prime rate to 4.25% from 4.31% but reaction was muted. 

U.S. Treasuries are higher this morning, pushing yields lower across the curve. The 2-yr yield is down one basis point to 1.52%, and the 10-yr yield is down three basis points to 1.57%. The U.S. Dollar Index is up 0.1% to 98.40. WTI crude is down 0.6% to $55.82/bbl. 

In U.S. Corporate news:

  • Home Depot (HD 211.99, +4.04): +1.9% after beating earnings estimates, although it guided its FY20 revenue below consensus.  
  • Kohl's (KSS 49.75, +1.55): +3.2% after beating top and bottom-line estimates and reaffirming its FY20 EPS guidance. 
  • Medtronic (MDT 107.79, +3.61): +3.5% after the company beat top and bottom-line estimates. 
  • HP (HPQ 18.90, -0.31): -1.6% after the stock was downgraded to Neutral from Buy at Citigroup with a price target of $21 .

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. Japan's Nikkei +0.6%, Hong Kong's Hang Seng -0.2%, China's Shanghai Composite -0.1%, India's Sensex -0.2%, South Korea's Kospi +1.1%, Australia's ASX All Ordinaries +1.2%.
    • In economic data:
      • Hong Kong's July CPI +3.3% yr/yr (last 3.3%)
    • In news:
      • On-shore yuan is approaching its low from last week after the People's Bank of China fixed the currency at a modestly lower level overnight.
      • In a separate move, the PBoC lowered China's prime rate to 4.25% from 4.31% and announced that the prime rate pricing model will be reviewed.
      • The Reserve Bank of Australia's August policy minutes indicated that rates will remain at a low level for an extended period and that additional easing will be considered.
  • Major European indices are mixed. STOXX Europe 600 -0.1%, Germany's DAX -0.2%, U.K.'s FTSE 100 +0.3%, France's CAC 40 -0.1%, Italy's FTSE MIB -0.8%, Spain's IBEX 35 -0.6%.
    • In economic data:
      • Eurozone's June Construction Output 0.0% (prior -0.5%) Germany's July PPI +0.1% m/m (expected 0.0%; last -0.4%); +1.1% yr/yr (expected 1.0%; last 1.2%)
      • U.K.'s August CBI Industrial Trends Orders -13 (expected -25; last -34)
      • Swiss July trade surplus CHF3.63 bln (expected surplus of CHF3.87 bln; last surplus of CHF4.01 bln)
    • In news:
      • Italy's Prime Minister Giuseppe Conte will address parliament later today amid growing expectations that he will offer his resignation.
      • European Central Bank policymaker Olli Rehn reiterated his belief that the central bank needs to provide additional stimulus.
07:31  BIIB Biogen and Invitae (NVTA) announce that SMA stat will be offered at no charge to individuals in the U.S. as part of the SMA Identified program (235.72 )

 
07:30  SUMRX European Markets Update: DAX -0.2%, FTSE +0.3%, CAC -0.1%

Major European indices are mixed. Italy's Prime Minister Giuseppe Conte will address parliament later today amid growing expectations that he will offer his resignation. European Central Bank policymaker Olli Rehn reiterated his belief that the central bank needs to provide additional stimulus.

  • In economic data:
    • Eurozone's June Construction Output 0.0% (prior -0.5%) Germany's July PPI +0.1% m/m (expected 0.0%; last -0.4%); +1.1% yr/yr (expected 1.0%; last 1.2%)
    • U.K.'s August CBI Industrial Trends Orders -13 (expected -25; last -34)
    • Swiss July trade surplus CHF3.63 bln (expected surplus of CHF3.87 bln; last surplus of CHF4.01 bln)

---Equity Markets---

  • STOXX Europe 600: -0.1%
  • Germany's DAX: -0.2%
  • U.K.'s FTSE 100: +0.3%
  • France's CAC 40: -0.1%
  • Italy's FTSE MIB: -0.8%
  • Spain's IBEX 35: -0.6%

---FX---

  • EUR/USD: UNCH at 1.1081
  • GBP/USD: -0.5% to 1.2071
  • USD/CHF: -0.2% to 0.9793
07:27  S&P futures vs fair value: -2.60. Nasdaq futures vs fair value: -5.60.

07:06  PINC Premier beats by $0.03, misses on revs; guides FY20 EPS in-line, revs in-line (38.47 )

  • Reports Q4 (Jun) earnings of $0.68 per share, excluding non-recurring items, $0.03 better than the S&P Capital IQ Consensus of $0.65; revenues rose 1.2% year/year to $316.2 mln vs the $426.69 mln S&P Capital IQ Consensus.
  • Co issues in-line guidance for FY20, sees EPS of $2.76-2.89, excluding non-recurring items, vs. $2.84 S&P Capital IQ Consensus; sees FY20 revs of $1.231-1.280 bln vs. $1.27 bln S&P Capital IQ Consensus. Net administrative fees revenue growth of 1% to 5%. Revenue growth of the company's products business of 5% to 9%. Extension of the Hospital Improvement Innovation Network contract with CMS at rates approximating 45% of the $14.4 million generated in fiscal 2019.
07:05  QURE uniQure announces retirement of COO following promotions (56.85 )

  • The promotions are of Sander van Deventer, M.D., Ph.D., to Executive Vice President, Research and Product Development, and Alex Kuta, Ph.D., to Executive Vice President, Operations, effective immediately.
  • As a result of these changes, the Company is eliminating the COO role, and Scott McMillan, Ph.D., will be retiring from uniQure.
07:04  MSG Madison Square Garden misses by $0.47, misses on revs (293.43 )

  • Reports Q4 (Jun) loss of $3.08 per share, $0.47 worse than the S&P Capital IQ Consensus of ($2.61); revenues fell 17.1% year/year to $263.56 mln vs the $270.09 mln S&P Capital IQ Consensus.
  • Executive Chairman and CEO James L. Dolan said, "Ongoing demand for our sports and entertainment assets helped drive a number of operational highlights in fiscal 2019, including continued growth in bookings, productions, suites, marketing partnerships and media rights. Looking ahead, we remain confident in the strength of our core businesses and expect fiscal 2020 to be an important year as we work to complete the proposed sports spin-off and begin to usher in the company's next chapter, with MSG Sphere in Las Vegas starting to take shape."
07:02  KSS Kohl's beats by $0.02, beats on revs; reaffirms FY20 EPS guidance (48.20 +2.69)

  • Reports Q2 (Jul) earnings of $1.55 per share, excluding non-recurring items, $0.02 better than the S&P Capital IQ Consensus of $1.53; revenues fell 3.1% year/year to $4.43 bln vs the $4.25 bln S&P Capital IQ Consensus. Comps -2.9%
    • Gross Margin - 72 bps to 38.8%
  • Co reaffirms guidance for FY20, sees EPS of $5.15-5.45, excluding non-recurring items, vs. $5.22 S&P Capital IQ Consensus.
  • Co may provide Q3 comps guidance on the call
  • Co states, "Comparable sales were better than the first quarter and improved during the period, turning positive during the last six weeks of the second quarter with 1% growth. This positive trend has continued into August driven by a successful start to the back-to-school season. We are confident that our upcoming brand launches, program expansions, and increased traffic from the Amazon returns program will incrementally contribute to our performance during the balance of the year and beyond."
07:00  SUMRX Asian Markets Close: Nikkei +0.6%, Hang Seng -0.2%, Shanghai -0.1%

Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. On-shore yuan is approaching its low from last week after the People's Bank of China fixed the currency at a modestly lower level overnight. In a separate move, the PBoC lowered China's prime rate to 4.25% from 4.31% and announced that the prime rate pricing model will be reviewed. The Reserve Bank of Australia's August policy minutes indicated that rates will remain at a low level for an extended period and that additional easing will be considered.

  • In economic data:
    • Hong Kong's July CPI +3.3% yr/yr (last 3.3%)

---Equity Markets---

  • Japan's Nikkei: +0.6%
  • Hong Kong's Hang Seng: -0.2%
  • China's Shanghai Composite: -0.1%
  • India's Sensex: -0.2%
  • South Korea's Kospi: +1.1%
  • Australia's ASX All Ordinaries: +1.2%

---FX---

  • USD/JPY: -0.3% to 106.32
  • USD/CNH: UNCH at 7.0716
  • USD/INR: +0.3% to 71.66
06:54  S&P futures vs fair value: +0.40. Nasdaq futures vs fair value: +5.90.

06:54  European Markets

FTSE...7223.51...+33.90...+0.50%.  DAX...11713...-3.20...0.00%.
06:54  Asian Markets

Nikkei...20677...+114.10...+0.60%.  Hang Seng...26231.54...-60.30...-0.20%.
06:52  SCANX Early premarket gappers

Gapping up:

  • NBRV +21.3%, HGV +17%, BIDU +10%, MRNA +8.4%, PPDF +6.8%, PLAB +2.5%, PCG +2.4%, SFL +2.2%, RUN +1.9%, HMY +1.7%, AZN +1.6%, VSLR +1.2%

Gapping down:

  • SRPT -14%, FN -13.6%, SYBX -9.3%, IQ -8.5%, WTI -3%, ELAN -2.7%, TELL -2%, FOMX -0.7%, WMC -0.5%, NOVA -0.5%
06:37  CX CEMEX S.A. commences stock repurchase program of up to $500 mln (2.99 )

 
06:31  SFL Ship Finance Intl beats by $0.03, misses on revs (12.82 )

  • Reports Q2 (Jun) earnings of $0.26 per share, $0.03 better than the S&P Capital IQ Consensus of $0.23; revenues rose 14.3% year/year to $110.9 mln vs the $116.9 mln S&P Capital IQ Consensus.
  • As of June 30, 2019, and adjusted for subsequent acquisitions, the fixed rate charter backlog from the Company's fleet of 89 vessels and rigs was approximately $3.7 billion, with an average remaining charter term of approximately 5 years, or 8 years if weighted by charter revenue.
06:26  BRKMY Braskem SA comments on filing of Public-Interest Civil Action by the Federal Prosecution Office (14.02 )

Co announces to its shareholders and the market that, in connection with the geological events in the State of Alagoas, it has taken cognizance of the filing of a Public-Interest Civil Action by the Federal Prosecution Office against the company and other plaintiffs, with the following claims for interlocutory relief: (i) the accrual of an own private fund in the initial amount of R$3.075 bln for the execution of social and environmental programs and of emergency measures, and the maintenance in said fund of working capital in the amount of R$2 bln or, after the financial schedule is approved, an amount equivalent to 100% of the expenses projected for the subsequent 12-month period; (ii) the presentation of guarantees in the amount of R$20.5 bln; (iii) a prohibition on the encumbrance or divestment of any of the company's fixed assets and on the distribution of profits, whether in dividends, interest on equity, or any other form; (iv) a court-ordered freeze of any profits not distributed as of the date hereof; and (v) a suspension on financing facilities and government incentives, as well as on the prepayment of existing borrowings.

  • In this respect, the company informs that it was not notified in the records of said action but will evaluate and take all pertinent measures within the applicable legal periods and will keep the market informed of any relevant development in this matter.
06:24  BHP BHP Group reports FY19 results (49.14 )

  • Co reports FY19 EPS of $1.76 vs $1.85 Capital IQ consensus.
  • Global steel production has maintained healthy growth in the second half of the 2019 financial year, continuing the upswing from the trough towards the end of the 2015 calendar year. However, the growth profile has become unbalanced recently, with robust expansion in China and the US offsetting weakness in Europe and Japan. As anticipated, steel mill margins have begun to normalise. We expect iron ore quality differentiation to remain a durable element in price formation for steel making raw materials.
06:20  SDRL Seadrill Ltd beats by $0.52, beats on revs (2.71 )

  • Reports Q2 (Jun) GAAP loss of $2.03 per share, $0.52 better than the two analyst GAAP estimate of ($2.55); revenues fell 7.8% year/year to $321 mln vs the $295.1 mln S&P Capital IQ Consensus.
  • Adj-EBITDA was $69 mln vs guidance for around $55 mln
  • Order Backlog at June 30, 2019 was approximately $1.9 billion of which approximately $450 million is expected to be consumed in the
    remainder of 2019.
  • Co sees Q3 Adjusted EBITDA in the range of $70 million to $75 million vs. $61 mln analyst estimate
06:18  HMY Harmony Gold reports FY19 results and provides FY20 production guidance (2.94 )

  • Co reports FY19 EPS of ($0.14) vs ($0.14) Capital IQ two est average; revs +31% yr/yr to ZAR 26.9 bln vs ZAR 27.1 bln Capital IQ consensus.
  • 17% increase in gold production to 1.438Moz, resulting in a 23% increase in production profit.
  • Co said "In the next financial year, we plan to produce approximately 1.46Moz at an all-in sustaining unit cost of R579 000/kg."
06:14  WIRES On The Wires

  • McDermott International (MDR) announced the beginning of commercial operation with Train 1 by joint owners Sempra LNG, LLC, Total (TOT), Mitsui & Co., Ltd. and Japan LNG Investment, LLC., following its substantial completion. Project includes three liquefaction trains with a projected export capacity of more than 12 million tonnes per annum of LNG (~1.7 billion cubic feet per day)
  • Euronet Worldwide (EEFT) and its Digital Integrated Payments Cloud technology has empowered the Commercial Bank of Ceylon to launch the first Quick Response-based payment app under LANKAQR, the national QR standard for local currency payments introduced by the Central Bank of Sri Lanka.
06:13  JEC Jacobs to acquire John Wood Group's (WDGJF) Nuclear business for an enterprise value of 250 mln (83.99 )

The transaction represents an enterprise value-to-expected pro forma calendar year (CY) 2019 adjusted EBITDA multiple of 7.9x, assuming 10 million ($12 million) of full run-rate cost synergies from the combined organizations. Jacobs expects to close the acquisition by its fiscal 2020 second quarter.

  • Jacobs expects adjusted EPS accretion in the range of $0.10 to $0.12 from the acquisition of Wood Nuclear in the first year of ownership. Beyond year one, accretion will build as the full run-rate of synergies of approximately $12 million are realized and organic growth occurs.
  • Pro forma for the acquisition, estimated Wood Nuclear adjusted EBITDA margin contribution will be 10%+, including the full run-rate benefit of cost synergies from the combined organizations.
06:10  ELAN Elanco Animal Health confirms deal to acquire Bayer's (BAYRY) animal health business in a transaction valued at $7.6 bln (29.81 )

The combination of Bayer and Elanco accelerates Elanco's margin expansion opportunity and delivers adjusted EPS accretion in the first full year post-closing, then high single to low double-digit percentage accretion in year two. The acquisition also unlocks Elanco's ability to achieve 60 percent adjusted gross margin and 31 percent adjusted EBITDA margin faster than on a stand-alone basis, with the increased ability to improve beyond. It brings operating cash flow of approximately $1 billion annually by the third year post-closing, allowing Elanco to reach 3x gross debt to adjusted EBITDA in the same time period, along with the potential for $275 to $300 million in synergies.
06:07  HD Home Depot beats by $0.09, reports revs in-line; reaffirms FY20 EPS guidance, guides FY20 revs below consensus (207.95 )

  • Reports Q2 (Jul) earnings of $3.17 per share, $0.09 better than the S&P Capital IQ Consensus of $3.08; revenues rose 1.2% year/year to $30.84 bln vs the $30.98 bln S&P Capital IQ Consensus.
    • Comparable sales for the second quarter of fiscal 2019 were +3.0%, and comparable sales in the U.S. were +3.1%
  • Co issues guidance for FY20, sees EPS of +3.1% yr/yr to ~$10.34 vs. $10.10 S&P Capital IQ Consensus; sees FY20 revs of +2.3% yr/yr to ~$110.7 bln vs. $111.18 bln S&P Capital IQ Consensus.
    • Co sees FY comp sales for the comparable 52-week period to be up ~4.0%
06:06  PLAB Photronics reports EPS in-line, revs in-line; guides Q4 EPS in-line, revs in-line (9.32 )

  • Reports Q3 (Jul) earnings of $0.10 per share, in-line with the S&P Capital IQ Consensus of $0.10; revenues rose 1.3% year/year to $138.11 mln vs the $137.13 mln S&P Capital IQ Consensus.
  • Co issues in-line guidance for Q4, sees EPS of $0.11-0.17 vs. $0.12 S&P Capital IQ Consensus; sees Q4 revs of $143-151 mln vs. $147.10 mln S&P Capital IQ Consensus.
06:01  SYBX Synlogic discontinues development of SYNB1020 to treat hyperammonemia (4.83 )

  • Co announced that it is discontinuing development of SYNB1020, an early stage clinical product candidate for the treatment of hyperammonemia. The decision to discontinue the program was based on top-line data from an interim analysis of a randomized, double-blind, placebo-controlled Phase 1b/2a study of the Synthetic Biotic medicine in 23 patients with cirrhosis and elevated blood ammonia.
  • The study was designed to evaluate the safety and tolerability of SYNB1020 treatment, as well as changes in blood ammonia levels and several exploratory endpoints associated with early stage hepatic encephalopathy. SYNB1020 was well tolerated in patients with cirrhosis. Plasma and urinary nitrate increased in subjects treated with SYNB1020, indicating that the strain was active, but there was no evidence of blood ammonia lowering or changes in other exploratory endpoints relative to placebo.
06:01  BAYRY Bayer AG to sell its animal health unit to Elanco (ELAN) for $7.6 bln (18.38 )

  • Co has entered into a definitive agreement to acquire Bayer's Animal Health business, Bayer announced on Tuesday. The transaction is valued at $7.6 bln consisting of $5.3 bln in cash, subject to customary purchase price adjustments, and $2.3 bln in Elanco stock based on the unaffected 30-day volume weighted average price as of August 6, 2019.
  • The value of the equity consideration is fixed within a 7.5 percent collar. The transaction value represents an implied multiple of 18.8x based on the 12 months EBITDA before special items of Bayer Animal Health as of June 30, 2019. The divestment is expected to be concluded in mid-2020 subject to the satisfaction of customary closing conditions, including antitrust clearance. Bayer intends to exit its stake in Elanco over time.
06:01  AZN AstraZeneca: Farxiga met primary endpoint in landmark Phase III DAPA-HF trial for the treatment of patients with heart failure (44.42 )

Co announced positive results from the landmark Phase III DAPA-HF trial which showed that Farxiga (dapagliflozin) met the primary composite endpoint with a statistically-significant and clinically-meaningful reduction of cardiovascular death or the worsening of heart failure (defined as hospitalisation or an urgent heart failure visit), compared to placebo. The trial was conducted in patients with reduced ejection fraction (HFrEF) on standard of care treatment, including those with and without type-2 diabetes.
06:00  SUMRX Overnight Summary -- World markets take a breather overnight

  • The global equity markets are little changed heading into the US session. The S&P Futures have settled in to trade about one point higher to around the 2925 level. This comes after a fairly wide overnight range of over 16 handles. The low of the evening was set at 2916.00, while the current high rests at 2932.25. 
  • In Asia, the markets saw Japan rise 0.6%, while China eased by by 0.1%. The strength in the Nikkei was led by semiconductors, which took their cue from the US strength on Monday. TDK and Tokyo Electron both saw gains of around 1%. China saw a relatively quiet day, closing down fractionally after a better than 2% advance in yesterday's session. 
  • In Europe, the major bourses are also having a lackluster showing. Germany's PPI for July came in slightly under expectations at +1.1%. The FTSE is the best-performing index in the region. The UK's benchmark appears to be benefiting from a second straight day of weakness in the British Pound. Pharma name AstraZeneca is trading over 1.5% higher after the company released its Phase III data in its DAPA-HF trial. 

Market Updates 

  • S&P Futures vs Fair Value: +1.0
  • 10 yr Note: 1.57%
  • USD/JPY: 106.35  -0.28
  • EUR/USD: 1.1081  +0.0003
  • Europe: FTSE  +0.4%  DAX  -0.1%  CAC +0.1%
  • Asia: Hang Seng  -0.2% Shanghai -0.1% Nikkei +0.6%
  • Gold (1512.50 +0.90) Silver (16.99 +0.05) Crude (56.25 +0.11)
17:52  SRPT Sarepta Therapeutics received Complete Response Letter for NDA seeking accelerated approval of golodirsen injection for treatment of Duchenne muscular dystrophy (120.31 -4.64)

  • The CRL generally cites two concerns: the risk of infections related to intravenous infusion ports and renal toxicity seen in pre-clinical models of golodirsen and observed following administration of other antisense oligonucleotides. Renal toxicity with golodirsen was observed in pre-clinical models at doses that were ten-fold higher than the dose used in clinical studies. Renal toxicity was not observed in Study 4053-101, on which the application for golodirsen was based.
  • "We are very surprised to have received the complete response letter this afternoon. Over the entire course of its review, the Agency did not raise any issues suggesting the non-approvability of golodirsen, including the issues that formed the basis of the complete response letter." Sarepta will immediately request a meeting with the FDA to determine next steps.
17:40  BSX Boston Scientific announces FDA approval of ImageReady MRI For Vercise Gevia Deep Brain Stimulation System (42.74 +0.59)

This system, with the Vercise Cartesia Directional Lead, is designed to treat the symptoms of Parkinson's Disease by delivering precisely targeted electrical stimulation in the brain to provide optimal symptom relief and better control of unwanted side effects.
17:06  SNE Sony confirmed earlier plans to acquire game developer Insomniac Games (55.72 -0.01)

Insomniac Games is the award-winning studio behind many of PlayStation's most highly-successful franchises, including Spryo the Dragon, Ratchet & Clank, and Resistance.
17:05  RCI Rogers Comms comments on CRTC decision on final broadband wholesale rates (51.27 +0.18)

  • Rogers Communications today said that it "is very disappointed by the CRTC's decision to dramatically reduce the aggregated wholesale rates that third-party Internet resellers pay to access broadband networks in Canada." The final rates, said the company, "do not recognize the true cost of building and expanding Canada's world-class broadband networks and will certainly impact Rogers future network investments."
  • As a result of the CRTC decision, Rogers expects to record a charge of approx. $140 mln in the current quarter to account for the retroactive impact of the lower rates. The company is determining next steps, including a review of all future investments in rural and remote communities.
17:02  IQ iQIYI misses by RMB0.08, reports revs in-line; guides Q3 revs below consensus (18.08 +1.00)

  • Reports Q2 (Jun) loss of RMB 3.22 per ADS, RMB 0.08 worse than the S&P Capital IQ Consensus of (RMB 3.14); revenues rose 15.2% year/year to RMB 7.11 bln vs the RMB 7.05 bln S&P Capital IQ Consensus. The number of total subscribing members was 100.5 million as of June 30, 2019, 98.9% of whom were paying subscribing members. This compares to 67.1 million of total subscribing members as of June 30, 2018, up 50% year over year.
  • Co issues downside guidance for Q3, sees Q3 revs of RMB7.21-7.63 bln vs. RMB 7.87 bln S&P Capital IQ Consensus.
16:44  SRE Sempra Energy announces commencement of commercial operations for Train 1 of the Cameron LNG liquefaction-export project (139.64 +0.76)

Sempra LNG, a Sempra Energy subsidiary, today announced that Cameron LNG's first train of the liquefaction-export project in Hackberry, Louisiana, has begun commercial operations under Cameron LNG's tolling agreements. Sempra Energy's share of full-year run-rate earnings from the first three trains at Cameron LNG are projected to be between $400-450 mln annually when all three trains achieve commercial operations under Cameron LNG's tolling agreements. Sempra Energy indirectly owns 50.2% of Cameron LNG.
16:42  FOMX Foamix entered into $30 mln Controlled Equity Offering sales agreement (3.00 -0.10)

 
16:37  BIDU Baidu beats by $0.55, beats on revs; guides Q3 revs in-line (104.22 +7.52)

  • Reports Q2 (Jun) adj. earnings of $1.47 per share, $0.55 better than the S&P Capital IQ Consensus of $0.92; revenue +1% to $3.84 bln vs. $3.72 bln consensus and $3.74-3.96 bln guidance, or +6% year over year, excluding the impact of announced divestures, and increasing 9% quarter over quarter. Online marketing revenues were RMB19.2 billion ($2.80 billion), decreasing 9% year over year and increasing 9% quarter over quarter. Other revenues were RMB 7.1 billion ($1.03 billion), increasing 44% year over year, driven mainly by robust growth in iQIYI membership services, cloud and smart devices. Revenue from Baidu Core reached RMB 19.5 billion ($2.85 billion), decreasing 2% year over year, or increasing 3% year over year, excluding the impact of announced divestures. Baidu Core's marketing services experienced softness in top sectors, including healthcare, online games, financial services, and auto/logistics sectors.
  • Revenue from iQIYI (IQ) reached RMB 7.1 billion ($1.04 billion), up 15% year over year. iQIYI membership services grew 38% year over year, while online advertising revenue fell 16% year over year. Content costs were RMB 5.8 billion ($847 million), increasing 12% year over year, mainly due to increased investment in iQIYI content and, to a much lesser extent, in content for BJH accounts, Baidu's feed publisher network.
  • Co issues in-line guidance for Q3, sees Q3 revs of $3.84-4.07 bln vs. $4.03 bln S&P Capital IQ Consensus. 
  • "With Baidu traffic growing robustly and our mobile ecosystem continuing to expand, we are in a good position to focus on capitalizing monetization and ROI improvement opportunities to deliver shareholder value."
16:34  GRA W.R. Grace licensed UNIPOL PP Process Technology to PetroChina (PTR) Guangdong Petrochemical Company Limited (64.97 +0.19)

Located in Jieyang, Guangdong province, China, the new facility is slated to be completed in 2023 and will produce 500 KTA of polypropylene. This will be the largest single-line UNIPOL PP unit in China and will produce homopolymer, random copolymer, and impact copolymer resins.
16:31  ATRI ATRION increases quarterly dividend by 15% to $1.55 per share, new annual yield is 0.8% (749.98 +7.30)

 
16:31  LL Lumber Liquidators appoints Nancy A. Walsh as CFO, effective September 9, 2019 (8.07 -0.03)

Ms. Walsh will replace Interim Chief Financial Officer Timothy Mulvaney who will return to his role as Chief Accounting Officer for the company. Ms. Walsh most recently served as Executive Vice President and Chief Financial Officer of Pier 1 Imports, Inc.
16:26  FN Fabrinet beats by $0.06, beats on revs; guides Q1 EPS below consensus, revs below consensus (56.47 +0.85)

  • Reports Q4 (Jun) earnings of $1.00 per share, $0.06 better than the S&P Capital IQ Consensus of $0.94; revenues rose 17.3% year/year to $405.1 mln vs the $399.22 mln S&P Capital IQ Consensus.
  • Co issues downside guidance for Q1, sees EPS of $0.80-$0.84 vs. $0.96 S&P Capital IQ Consensus; sees Q1 revs of $386-$394 mln vs. $407.32 mln S&P Capital IQ Consensus.
16:20  WRAPX Closing Stock Market Summary

The S&P 500 rose 1.2% on Monday in a broad-based advance that extended its rebound rally to a third day. The Nasdaq Composite (+1.4%), Dow Jones Industrial Average (+1.0%), and Russell 2000 (+1.0%) also advanced at least 1.0%. 

Monday's session was much like Friday's in that the market quickly jumped out to a big lead following another round of positive headlines. More reports surfaced about stimulus plans in China and Germany, which helped kindle some curiosity about the Fed's annual Jackson Hole Summit on Thursday and Friday. In addition, the U.S. granted Huawei another 90 days to continue buying supplies from U.S. companies.

None of the news, however, really provided the market anything "new" or surprising. Perhaps the calm that flowed from the absence of negative news and economic data helped the market reset from a perceived short-term oversold condition.

All 11 S&P 500 sectors posted decent gains on Monday. Seven sectors rose at least 1.0%, including a 2.1% gain in the energy sector amid higher oil prices ($56.00/bbl, +$1.11, +2.0%). Noticeable gains in the mega-cap stocks provided strong support for the information technology (+1.6%), communication services (+1.4%), and consumer discretionary (+1.3%) sectors. 

Apple (AAPL 210.35, +3.85, +1.9%) was one of those mega-cap outperformers following a meeting between Apple CEO Tim Cook and President Trump over the weekend. President Trump said Mr. Cook presented a "compelling argument" for how tariffs would make it harder for Apple to compete against foreign competitors. Apple shares rose nearly 2%.

Estee Lauder (EL 201.65, +22.43) was another standout, rising 12.5% after the company beat top and bottom-line estimates and provided upbeat guidance for fiscal 2020. 

U.S. Treasuries pulled back from a lengthy advance amid the positive disposition in equities. The 2-yr yield and the 10-yr yield increased six basis points each to 1.53% and 1.60%, respectively. The U.S. Dollar Index advanced 0.3% to 98.38. 

Investors did not receive any notable economic data on Monday and will not receive any until Wednesday. 

  • Nasdaq Composite +20.6% YTD
  • S&P 500 +16.6% YTD
  • Dow Jones Industrial Average +12.0% YTD
  • Russell 2000 +11.9% YTD
16:17  IBP Installed Building Products acquires Therm-Con and Foamtech (57.96 +1.68)

Co announced the acquisition of Therm-Con, LLC and Foamtech, Inc. Founded in 2005, Therm-Con primarily serves the Tennessee market, as well as the Georgia and Alabama markets through a branch location in Chattanooga, Tennessee. The company provides insulation, fireplace, shower doors, closet shelving, and mirror installation services primarily for residential customers. "With trailing twelve-month revenue of $4.7 million, Therm-Con enhances our presence in attractive markets throughout Tennessee and its surrounding states."
16:10  NOVA Sunnova Energy reports GAAP net loss of ($7.32)/share vs. ($2.69) in 2Q18; revenue increased 19% yr/yr to $34.6 mln (11.14 +0.12)

  • NOVA's total number of customers were 67,600 as of June 30, 2019, an increase of 13,900 compared to June 30, 2018.
  • Adjusted EBITDA was $13.6 mln for the three months ended June 30, 2019 compared to $13.2 mln for the three months ended June 30, 2018.
  • 2019 Outlook: Co expects Adjusted EBITDA between $47-$49 mln; Customer growth rate in annual deployments of at least 30%; and Adjusted Operating Cash Flow between $(2)-$1 mln.
16:08  WMC Western Asset Mortgage commences public offering of 6.75% Convertible Senior Notes due 2022 (9.70 +0.06)

The reopened notes will be a further issuance of, be fully fungible with, and rank equally in right of payment with and form a single series with the $115 mln principal amount of 6.75% Convertible Senior Notes issued by the company in October 2017. The company intends to use proceeds primarily for general corporate purposes, including to opportunistically invest in credit sensitive investments consisting of Residential Whole Loans, Commercial Loans, Non-Agency CMBS, and Non-Agency RMBS.
16:02  MRNA Moderna receives FDA Fast Track designation for investigational Zika vaccine mRNA-1893 (13.40 +0.24)

mRNA-1893 is currently being evaluated in a Phase 1 study for the prevention of Zika virus infection in healthy adults, evaluating safety, pharmacokinetics, and pharmacodynamics.