From Briefing.com: Tech Stocks from Briefing.com
When the dust settled on Wednesday, the trifecta was complete as the broader market made new all-time highs across the board; the Dow Jones Industrial Average led out of the gate and never looked back, advancing 97.58 points (+0.45%) to 21711.01. The Nasdaq Composite came in second, adding 10.57 points (+0.16%) to 6422.75, while the S&P 500 gained less than a point (+0.03%) to 2477.83. To that end, all three major US averages made all-time highs today.
As expected, the FOMC unanimously voted to keep the fed funds target range at 1.00%-1.25%. Regarding the central bank's $4.5 trillion balance sheet, the Fed indicated that it expects to begin the paring process "relatively soon", which has been largely interpreted as September.
Market data today included the New Home Sales reading for June which hit an annualized rate of 610,000, which was above the revised May rate of 605,000 (from 610,000). Also, the weekly MBA Mortgage Applications Index rose 0.4% to follow last week's 6.3% increase.
The Technology (XLK 57.72, +0.22 +0.38%) space cracked into all-time high territory today. Component AT&T (T 38.03, +1.81 +5.00%) was the best performing name today after reporting better than expected Q2 earnings and best-ever postpaid phone churn of 0.79%. As it were, the Utility XLU +0.95% space was the best performing S&P sector today, followed by XLRE +0.83%, IYZ +0.47%, XLI +0.13%, XLE +0.11%, XLP -0.02%, XLY -0.04%, XLV -0.34%, XLB -0.61%, XLF -0.67%.
In the S&P 500 Information Technology (994.72, +1.98 +0.20%) space, trading managed to climb out of the red as afternoon losses did not hold. Component Electronic Arts (EA 118.00, +4.34 +3.82%) had a hot session after a premarket upgrade of the stock to a Buy rating at BofA/Merrill. On the flip side, component Corning (GLW 30.42, -1.71 -5.32%) was pressured today despite an earnings and revenue beat. Other names which got hot today included ATVI +2.77%, ADP +2.71%, LRCX +2.36%, AMAT +2.26%, MCHP +2.16%, EBAY +1.98%, TSS +1.78%, KLAC +1.76%, ADSK +1.62%, ADI +1.51%.
Other notable news items among sector components:
Qualcomm (QCOM 53.14, -0.13 -0.24%) and Japanese-based Nichicon enter into a Wireless Electric Vehicle Charging license agreement.
Guidance Software (GUID 7.11, +0.21 +3.04%) to be acquired by OpenText (OTEX 34.42, +1.08 +3.24%) for $7.10 per share in cash; transaction valued at about $240 million.
ViaSat (VSAT 67.68, +0.25 +0.37%) was selected by Northrop Grumman (NOC 263.86, -0.19 -0.07%) in the delivery of a next-generation satellite communications network to the Australian Defence Force.
LINE Corp (LN 34.20, -0.72 -2.06%) to establish a new subsidiary, LINE Friends Japan Corporation, by a simplified incorporation-type company split to succeed its LINE Friends Store business.
SITO Mobile (SITO 5.12, -0.61 -10.65%) responded to the 13D/A filing by the Singer Group 'that included material erroneous misstatements'.
In reaction to quarterly results:
AT&T (T) reported better than expected Q2 EPS of $0.79 on in-line revenues of $39.84 billion. Reported 2.8 million wireless net adds; 2.3 million in U.S., driven by connected devices, prepaid and postpaid 476,000 Mexico net adds. Also reported best-ever postpaid phone churn of 0.79% with total postpaid churn, including tablets, of 1.01%.
Texas Instruments (TXN 82.55, +1.16 +1.43%) reported better than expected Q2 EPS and revenues of $1.03 and $3.69 billion, respectively. For Q3, the company sees in-line EPS and revenues of $1.04-1.18 and $3.74-4.06 billion, respectively.
TE Connectivity (TEL 80.65, -2.57 -3.09%) reported better than expected Q3 EPS and revenues of $1.24 and $3.37 billion. Also guided Q4 EPS and revenues ahead of market expectations at $1.14-1.16 and $3.2-3.3 billion, respectively. For FY17, the company sees EPS ahead of market expectations at $4.72-4.74 on in-line revenues of $12.85-12.95 billion.
Corning (GLW) reported better than expected Q2 EPS and revenues of $0.42 and $2.59 billion, respectively.
Advanced Micro (AMD 14.76, +0.65 +4.61%) reported better than expected Q2 EPS and revenues of $0.02 and $1.22 billion, respectively. For Q3, the company sees revenue growth of 20-26% quarter-over-quarter to about $1.47-1.54 billion.
Analyst actions:
EA was upgraded to Buy from Neutral at BofA/Merrill,
MBT was upgraded to Overweight from Neutral at JP Morgan,
VEON was upgraded to Neutral from Underweight at JP Morgan;
STX was downgraded to Hold from Buy at Craig Hallum,
AMD was downgraded to Market Perform from Outperform at BMO Capital,
ITRI was downgraded to Neutral from Outperform at Robert W. Baird,
CEL was downgraded to Sell at Citigroup,
GUID was downgraded to Neutral at Piper Jaffray,
UMC was downgraded at Daiwa and Citigroup;
AMD was initiated with an Outperform at Robert W. Baird,
CALD was initiated with a Buy at Jefferies
Expect quarterly results tonight/tomorrow morning from the following companies: AXTI BCOV CMPR DMRC FFIV FB FORR FTNT KS KN LRCX LLNW LPSN MLNX MB MPWR NTGR NTRI PYPL NOW TER TYL XLNX/ACIW ADP BCOR CCMP CLFD CTS DHX DSPG DST ENTG EXLS I IDCC IRDM MA MITL NTCT NOK SFE TDC TZOO TWTR VZ WEX
4:31 pm Closing Market Summary: Stocks Settle Slightly Higher (:WRAPX) :
The Fed's latest policy directive did little to upset equity investors on Wednesday as all three major averages notched new record highs. The S&P 500 (unch) and the Nasdaq (+0.2%) fought hard for their slim gains while the Dow (+0.5%) settled with a more comfortable margin of victory thanks to Boeing's (BA 233.45, +20.99) upbeat earnings report. Meanwhile, the small-cap Russell 2000 underperformed, dropping 0.6%.
As expected, the FOMC unanimously voted to keep the fed funds target range at 1.00%-1.25%. Regarding the central bank's $4.5 trillion balance sheet, the Fed indicated that it expects to begin the paring process "relatively soon", which has been largely interpreted as September.
Treasuries rallied to fresh session highs following the release of the Fed's policy statement while the U.S. Dollar Index (93.35, -0.56, -0.6%) slid into negative territory from its flat line. The 2-yr yield was hovering three basis points below its flat line in front of the release and eventually settled six basis points lower at 1.34%. Similarly, the benchmark 10-yr yield also dropped six basis points to 2.28%.
The somewhat counter-intuitive reactions in the bond and currency markets have been attributed to the notion that it seems unlikely that the Fed would announce a rate hike at the September meeting if it plans to start paring its balance sheet at that time. The CME FedWatch Tool now points to the March FOMC meeting (from December) as the most likely time for the next rate-hike announcement with an implied probability of 55.1%.
Outside of monetary policy, earnings season was the focal point on Wall Street as another batch of quarterly reports came in largely better than expected. Boeing was maybe the most notable post-earnings advancer, surging 9.9%, after reporting better than expected earnings and raising its earnings guidance for the fiscal year.
AT&T (T 38.03, +1.81) also had a solid performance, pinning the telecom services sector (+3.0%) to the top of the leaderboard. T shares jumped 5.0% after AT&T beat bottom-line estimates.
As for the remaining ten sectors, six finished in positive territory with gains ranging between 0.1% and 0.9%. The rate-sensitive utilities (+0.9%) and real estate (+0.8%) groups exhibited relative strength, benefiting from the slide in interest rates.
Meanwhile, the energy sector (+0.1%) eked out a slim victory despite a strong performance from crude oil, which climbed 1.8% to $48.73/bbl. The commodity rallied around the EIA's latest crude inventory report, which showed a much larger than expected draw in U.S. stockpiles for the week ended July 21 (-7.2 million barrels actual vs -3.0 million consensus).
Like energy, the consumer staples space (+0.1%) also eked out a slim victory with soft-drink giant Coca-Cola (KO 45.74, +0.50) advancing 1.1% on better than expected earnings.
On the flip side, the heavily-weighted financial sector weighed on the broader market, dropping 0.6%. The bulk of the sector's loss came in the afternoon session amid the bond market's post-FOMC decision rally. The lightly-weighted materials sector (-0.6%) also registered a notable decline.
Similarly, the influential health care sector (-0.3%) struggled amid broad weakness. Amgen (AMGN 175.89, -5.00) was one of the sector's weakest components despite reporting better than expected earnings/revenues and issuing upbeat revenue guidance. AMGN shares settled with a loss of 2.8%.
Reviewing Wednesday's economic data, which was limited to June New Home Sales and the weekly MBA Mortgage Applications Index:
New Home Sales in June hit an annualized rate of 610,000, which was above the revised May rate of 605,000 (from 610,000), and in line with the Briefing.com consensus.
The key takeaway from the report is that sales activity was subdued month-over-month despite a 3.4% drop in the median sales price of $310,800. The average sales price, however, was up 4.2% to $379,500, which points to the affordability factor acting as a sales constraint.
The weekly MBA Mortgage Applications Index rose 0.4% to follow last week's 6.3% increase.On Thursday, investors will receive three pieces of economic data--June Durable Orders (Briefing.com consensus 2.9%), the weekly Initial Claims Report (Briefing.com consensus 240K), and June International Trade in Goods (Briefing.com consensus -$64.9 billion). All three reports will be released at 8:30 ET.
Nasdaq Composite +19.3% YTD
S&P 500 +10.7% YTD
Dow Jones Industrial Average +9.9% YTD
Russell 2000 +6.3% YTD
4:28 pm Monolithic Power beats by $0.01, beats on revs; guides Q3 revs above consensus (MPWR) :
Reports Q2 (Jun) earnings of $0.68 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.67; revenues rose 19.3% year/year to $112.2 mln vs the $110.94 mln Capital IQ Consensus.
Non-GAAP gross margin was 55.6%, excluding the impact of $0.5 million for stock-based compensation expense and $0.5 million for the amortization of acquisition-related intangible assets, compared with 55.1% for the quarter ended June 30, 2016, excluding the impact of $0.4 million for stock-based compensation expense and $0.5 million for the amortization of acquisition-related intangible assets.
Co issues upside guidance for Q3, sees Q3 revs of $124-128 mln vs. $123.49 mln Capital IQ Consensus Estimate; sees Non-GAAP gross margin between 55.2% and 56.2%,
4:25 pm Xilinx beats by $0.03, reports revs in-line; guides Q2 EPS in-line, revs in-line (XLNX) :
Reports Q1 (Jun) earnings of $0.63 per share, $0.03 better than the Capital IQ Consensus of $0.60; revenues rose 7.0% year/year to $615.4 mln vs the $615.69 mln Capital IQ Consensus.
Co issues in-line guidance for Q2, sees EPS of ~$0.55-0.69 (assuming 265 mln shares), excluding non-recurring items, vs. $0.61 Capital IQ Consensus Estimate; sees Q2 revs of $605-635 mln vs. $617.05 mln Capital IQ Consensus Estimate; GM 69-71%.
"Our focused investment in software, integration and technology leadership has driven a fundamental transformation, allowing Xilinx to expand from a supplier of FPGAs to an innovator of All Programmable devices and programming models," said Moshe Gavrielov, Xilinx President and Chief Executive Officer. "We continue to consistently execute across the board-in engineering, operations and sales while maintaining robust profitability and cash generation. Growth from Advanced Products continues to be solid, increasing 33% from the same quarter a year ago. Sales from the 28nm, 20nm and 16nm technology nodes increased during the quarter driven by multi-market strength."
4:16 pm AXT reports EPS in-line, beats on revs (AXTI) :
Reports Q2 (Jun) earnings of $0.05 per share, in-line with the Capital IQ Consensus of $0.05; revenues rose 14.9% year/year to $23.56 mln vs the $22.55 mln Capital IQ Consensus.
Gross margin was 30.8 percent of revenue for the second quarter of 2017, compared with 30.5 percent of revenue in the first quarter of 2017. Second quarter substrate gross margin was higher than the total company gross margin and was offset by lower gross margin on raw materials.
"Across our portfolio, we are seeing emerging technologies and strengthening demand from established applications that are driving growth in each of our substrate product categories. As a result, we achieved record revenue in indium phosphide substrates in Q2, and posted solid improvement in semi-insulating gallium arsenide, semi-conducting gallium arsenide, and germanium substrates. Our customer and revenue base continues to diversify, giving us a broad-based opportunity for continued business expansion."
4:14 pm Lam Research beats by $0.10, beats on revs; guides Q1 EPS above consensus, revs above consensus (LRCX) :
Reports Q4 (Jun) earnings of $3.11 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus of $3.01; revenues rose 51.6% year/year to $2.34 bln vs the $2.31 bln Capital IQ Consensus.
Shipments were $2.542 bln.
Co issues upside guidance for Q1, sees EPS of $3.13-3.37, excluding non-recurring items, vs. $2.76 Capital IQ Consensus Estimate; sees Q1 revs of $2.35-2.55 bln vs. $2.17 bln Capital IQ Consensus Estimate.
Sees Q1 shipments in the range of $2.25-2.45 bln.
4:13 pm Mellanox Tech reports EPS in-line, beats on revs; guides Q3 revs below consensus (MLNX) :
Reports Q2 (Jun) earnings of $0.44 per share, in-line with the Capital IQ Consensus of $0.44; revenues fell 1.3% year/year to $212 mln vs the $209.62 mln Capital IQ Consensus.
Co issues downside guidance for Q3, sees Q3 revs of $222-232 mln vs. $233.60 mln Capital IQ Consensus Estimate.
4:08 pm Facebook beats by $0.20, beats on revs (FB) :
Reports Q2 (Jun) earnings of $1.32 per share, $0.20 better than the Capital IQ Consensus of $1.12; revenues rose 44.8% year/year to $9.32 bln vs the $9.19 bln Capital IQ Consensus.
Daily active users (DAUs)- DAUs were 1.32 billion on average for June 2017, an increase of 17% year-over-year.
Monthly active users (MAUs)- MAUs were 2.01 billion as of June 30, 2017, an increase of 17% year-over-year.
Mobile advertising revenue- Mobile advertising revenue represented approximately 87% of advertising revenue for the second quarter of 2017, up from approximately 84% of advertising revenue in the second quarter of 2016.
Capital expenditures for the second quarter of 2017 were $1.44 billion.
Cash and cash equivalents and marketable securities were $35.45 billion at the end of the second quarter of 2017.
Headcount was 20,658 as of June 30, 2017, an increase of 43% year-over-year.
Operating Margin 47% compared to 42% in prior year and Q1.
Effective Tax Rate 13%, expectations were for mid teens.
4:07 pm NETGEAR beats by $0.06, beats on revs; guides Q3 revs in-line (NTGR) :
Reports Q2 (Jun) earnings of $0.60 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of $0.54; revenues rose 6.1% year/year to $330.72 mln vs the $324.64 mln Capital IQ Consensus.
Operating margin, computed in accordance with GAAP, for the second quarter of 2017 was 5.8%, as compared to 8.2% in the year ago comparable quarter, and 7.0% in the first quarter of 2017. Non-GAAP operating margin was 8.5% in the second quarter of 2017, as compared to 11.6% in the second quarter of 2016 and 10.0% in the first quarter of 2017.
Co issues in-line guidance for Q3, sees Q3 revs of $340-355 mln vs. $348.69 mln Capital IQ Consensus Estimate. GAAP operating margin is expected to be in the range of 6.5% to 7.5% and non-GAAP operating margin is expected to be in the range of 9.0% to 10.0%.
4:07 pm F5 Networks reports EPS in-line, misses on revs; guides Q4 EPS in-line, revs below consensus (FFIV) :
Reports Q3 (Jun) earnings of $2.03 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $2.03; revenues rose 4.3% year/year to $517.8 mln vs the $525.57 mln Capital IQ Consensus.
Growth compared with the third quarter of fiscal 2016 was driven by iSeries appliance and security solutions adoption and Services revenue. Results were impacted by slower activity in EMEA and Japan.
Co issues guidance for Q4, sees EPS of $2.20-2.23, excluding non-recurring items, vs. $2.23 Capital IQ Consensus Estimate; sees Q4 revs of $530-540 mln vs. $551.46 mln Capital IQ Consensus Estimate.
"While we delivered year-over-year revenue growth and strong profitability in the third quarter, our product revenue performance fell short of our expectations, in particular in Europe and Japan," said Franois Locoh-Donou, F5 President and Chief Executive Officer. "As we look at the broader environment, we continue to see some pause in activity as customers evaluate how a long-term cloud strategy could impact their application deployment architectures. Where customers have made these decisions around the cloud, the evidence shows we are their critical partner in providing consistent application services and security across environments.
"The reacceleration of product revenue growth is our top priority and we believe we are well positioned to deliver on this over the coming periods. The entire F5 team is focused on ensuring our solutions fit our customers' evolving application deployment needs and we continue to grow our relevance in providing secure application services."
