Our Head of North American Research, Gary Christie gives us a look at notable U.S. equity news last week and some potential earnings movers for this week.
The S&P 500 declined by 2.18% last week.
Looking at the S&P 500, we remain bearish below the 2916 price level as we look to test last weeks lows at 2825.
The VIX shot up to 23 before correcting down to the 17 level. The index remains above support at 15.9 with continued upside potential which has put some pressure on U.S. indices.
Regarding the sectors, we downgraded Food & Staples retailing, Financial, Energy, Telecom, Materials and Semiconductors to Negative-UNDERPERFORM and will only look for short opportunities in these sectors. The strongest sectors relative to the S&P 500 are Household & Personal Products, Insurance and Consumer services.
EQUITY SHAKERS AND MOVERS: These stocks had the biggest moves last week and may have some volatility in this weeks trading.
Symantec (SYMC -17.66% WoW to $19.39) announced 4Q adj. EPS of $0.39, in-line with estimates, vs. $0.44 a year ago on adj. revenue of $1.19B (forecasted $1.21B) from $1.21B in the prior year. The Co sees 2020 adj. EPS of $1.65-$1.8 (expected $1.78) and anticipates 2020 adj. revenue of $4.76B-$4.9B (forecasted $4.98B). Finally, the CEO Greg Clark will step down as President and CEO, effective immediately, and will be replaced by Richard Hill as Interim President and CEO while Vincent Pilette, CFO of Logitech, has been appointed EVP and CFO, effective May 21st.
TripAdvisor (TRIP -13.82% WoW to $47.47) announced 1Q adj. EPS of $0.36 (estimated $0.31) vs. $0.30 last year on revenue of $376M (expected $387.3M) from $378M in the previous year. Net income jumped by 420% YoY to $26M while adj. EBITDA improved by 11% YoY to $89M.
Marathon Petroleum (MPC -11.36% WoW to $53.15) reported 1Q LPS of $0.01 vs. EPS of $0.08 a year ago on revenue of $28.62B (forecasted $29.5B) from $18.98B in the previous year. In other news, two U.S. pipelines controlled by the Co, MPLX (MPLX -3.57% to $31.04) and Andeavor Logistics (ANDX +4.28% to $35.3), agreed to merge in a unit-for-unit transaction representing an equity value of about $9B. Andeavor Logistics shareholders will receive 1.135x MPLX common units for each common unit held while Marathon Petroleum will receive 1.0328x MPLX common units for each common unit held.
AIG (AIG +9.62% WoW to $51.64) announced 1Q adj. EPS of $1.58 (estimated $1.05) vs. $1.04 a year ago on net income of $654M compared to $938M in the prior year. General insurance combined ratio improved to 97.4 from 103.8 a year earlier while adj. ROE increased to 11.6% vs. 7.7% in 1Q2018.
Mylan (MYL -20.85% WoW to $22.17) unveiled 1Q adj. EPS down 15% YoY to $0.82 (estimated $0.79) on revenue of $2.5B (forecasted $2.69B) from $2.68B in the previous year. Net sales fell 14% YoY in Europe and 6% YoY in North America. The Co still sees FY adj. EPS of $3.8-$4.8 (expected $4.42) and still sees FY revenue of $11.5B-$12.5B (estimated $11.99B). Besides, the Co printed a new 52w low.
KLA-Tencor (KLAC -11.25% WoW to $114.02) reported 3Q adj. EPS of $1.80 (estimated $1.65) from $2.02 a year ago on revenue of $1.10B (expected $1.06B) from $1.02B last year. Management expects memory market related weakness to persist throughout the year.
Affiliated Managers Group (AMG -14.83% WoW to $94.39) unveiled 1Q economic EPS of $3.26, in-line with estimates, vs. $3.92 last year on revenue of $543.1M (forecasted $541.2M) from $612.4M in the previous year. AUM dropped by 7% YoY to $774.2B. The Co appointed Jay Horgen, current President and CFO, as CEO effective following the Co's 2019 Annual Meeting of Stockholders.
Earnings season is coming to a close, here are some notable earnings stocks to watch this week.
Company Earnings Preview:
TTWO : On Monday in the after-hours, Tako-Two Interactive is expected to report 4Q EPS of $0.738 vs. $0.74 last year on higher revenues of $508.7M from $411.4M in the previous year. In other news, the Co was downgraded to "hold" from "buy" at Morningstar. Technically speaking, the RSI is above 50 while the MACD is positive and above its signal line. The configuration is positive. Moreover, the stock is above its 20 and 50 day MA (respectively at 95.73 and 93.99). We expect to reach the upside target of $110.7 with a stop-loss at $96.3.
M : On Wednesday, Macy's is likely to announce 1Q EPS of $0.338 vs. $0.48 last year on revenue remaining unchanged YoY at $5.5B. The Co's outlook was switched to "stable" from "negative" at S&P and Fitch. Looking at the chart, the RSI is below its neutrality area at 50 while the MACD is below its signal line and negative. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at 24.45 and 24.27). Macy's is currently trading near its 52 week low at 22.73 reached on 08/03/19. As long as prices remain below $24.6, we are confident they will continue lower towards $21.10.
WMT: On Thursday, Walmart is awaited to unveil 1Q EPS of $1.02 vs. $1.14 a year ago on revenue improving to $125B compared to $122.7B in the prior year. Also, the Co was cut to "underperform" from "peer perform" at Wolfe Research. From a technical point of view, the RSI is below 50 while the MACD is positive and below its signal line. The MACD must penetrate its zero line to expect further downside. Moreover, the share stands below its 20 and 50 day MA (respectively at 102.04 and 99.8). Finally, Wal-Mart has penetrated its lower daily Bollinger band (99.86). The stock will most likely decline towards $95.2 with a stop-loss at $101.5.
NVDA: On the same day in the after-hours, Nvidia is anticipated to post 1Q EPS of $0.806 vs. $2.05 last year on lower revenue of $2.2B from $3.2B in the previous year. Recently, the Co was under pressure after its rival Intel (INTC) cut its revenue forecast for 2019. From a chartist point of view, the RSI is bearish and calls for further downside. We anticipate further pressure towards $152.70 with a stop-loss at $177.4.
Happy Trading.
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