FOMC | Morning News

JANUARY 27, 2016
US futures under pressure as traders await the FOMC announcement at 2PM EST with no policy change expected, however analysis will peruse the statement for clues to future rate hikes. Overnight, global markets trade mixed with Asia closing mostly higher and Europe modestly lower. Crude flirting yet again with the $30 level as the commodity trades 2.6% lower at this hour.

NEWS:

• CNC: guides FY16 adjusted EPS $4.10-$4.40 vs consensus of $3.77
• UAL: Altimeter Capital Management and PAR Capital Management increase their stakes in United Continental
• NFLX: Netflix blocked by Indonesia's Top Telecom Provider, reports nasdaq
• GOOGL: GOOG: Google files patent for drone "deliver yreceptacle", reports reuters
• TAP: files to sell $2.35B of Class B shares
• FDX: announces authorization to launch a 25M share repurchase program
• WFC: announces authorization to raised buyback by 350M shares
• CLR: lowers 2016 capex by 66% to $920M
• HBI: raises dividend 10% to $0.11
• RIO: announces agreement to sell its Mount Pleasant coal project for $224M plus royalties

THE ECONOMIC CALENDAR:

• 7AM: MBA Mortgage Applications
• 10AM: New Home Sales
• 10:30AM: EIA Petroleum Inventories
• 11:30AM: $15B, 2 Year FRN Auction
• 1PM: $35B, % Year Note Auction
• 2PM: FOMC Announcement

SOME NOTABLE EARNINGS REPORTED YESTERDAY AFTER THE CLOSE:

• AAPL:  FQ1 EPS of $3.28 beats by $0.05: revenue of $75.87B misses by $720M: revenue +1.7% y/y: guides below consensus: CFO calls macroeconomic environment "very difficult"
• VMW: Q4 EPS of $1.26 beats by $0.01: revenue of $1.87B beats by $20M: revenue +10.1% y/y: guides FY16 EPS of $4.07-$4.16 vs consensus of $4.20: guides FY15 revenue below consensus
• T: Q4 EPS of $0.63 in-line: revenue of $42.1B misses by $650M: revenue +22.2% y/y
• HA: Q4 EPS of $0.85 beats by $0.01: revenue of $574.2M beats by $6.96M: revenue -0.1% y/y
• PLCM: Q4 EPS of $0.23 in-line: revenue of $316.8M beats by $2.08M: revenue -9.2% y/y
• CNI: Q4 EPS of C$1.18 beats by C$0.06: revenue C$3.17B misses by C$90M: revenue -1.2% y/y
• CA: FQ3 EPS of $0.63 beats by $0.05: revenue of $1.03B beats by $30M: revenue -5.5% y/y: solid bookings: raises EPS guidance
• COF: Q4 EPS of $1.67 beats by $0.06: revenue of $6.19B beats by $80M: revenue +6.5% y/y
• SYK: Q4 EPS of $1.56 beats by $0.01: revenue of $2.72B beats by $10M: revenue +3.8% y/y: guides FY16 in-line with consensus
• CB: Q4 EPS of $2.38 beats by $0.12: revenue of $3.63B misses by $270M: revenue -4.5% y/y
• X: Q4 EPS of -$0.23 may not be comparable to consensus of $0.83: revenue of $2.57B beats by $50M: revenue -36.9% y/y: sees lower results across operating segments in FY16
• TSS: Q4 EPS of $0.57 misses by $0.03: revenue of $716.8M beats by $24.93M: revenue +12.9% y/y: announces agreement to acquire Vista Equity Partners' TransFirst for $2.35B

SOME NOTABLE EARNINGS REPORTED TODAY BEFORE THE OPENING:

• BA: Q4 EPS of $1.60 beats by $0.34: revenue of $23.6B beats by $50M: revenue -3.6% y/y: weak guidance
• BIIB: Q4 EPS of $4.450 beats by $0.42: revenue of $2.84B beats by $130M: revenue +7.6% y/y
• HES: Q4 EPS of -$1.40 beats by $0.07: revenue of $1.39B misses by $140M: revenue -45.1% y/y
• ITW: Q4 EPS Of $1.23 beats by $0.02: revenue of $3.27B beats by $30M: revenue -6.6% y/y: guides FY16 in-line
• NSC: Q4 EPS of $1.20 misses by $0.03: revenue of $2.52B misses by $50M: revenue -12.2% y/y
• ROL: Q4 EPS of $015 in-line: revenue of $362.5M beats by $3.09M: revenue +5.4% y/y
• EMC: Q4 EPS of $0.65 in-line: revenue of $7.01B misses by $120M: revenue -0.6% y/y
• BAH: FQ3 EPS of $0.41 beats by $0.01: revenue of $1.31B misses by $10M: revenue +0.8% y/y
• ROK: FQ1 EPS of $1.49 beats by $0.16: revenue of $1.43B beats by $50M: revenue -8.9% y/y
• TUP: Q4 EPS of $1.35 misses by $0.03: revenue of $592.1M misses by $14.43M: revenue -12.9% y/y: weak FY16 and Q1 EPS guidance
• PGR:
• STJ: Q4 EPS of $1.02 beats by $0.01: revenue of $1.45B misses by $20M:revenue +0.7% y/y: guides Q1 adjusted EPS in-line with consensus
• STT: Q4 EPS of $1.21 beats by $0.03: revenue of $2.59B misses by $50M: revenue -4.8% y/y
• TXT: Q4 EPS of $0.81 misses by $0.02: revenue of $3.92B misses by $310M: revenue -4.4% y/y
• UTX:rQ4 EPS of $1.53 beats by $0.01: revenue of $14.65B misses by $700M: revenue -2.2% y/y: affirms FY16 guidance
• CAJ: FY15 EPS of $1.67 misses by $0.06: revenue of $31.41B misses by $1.09B: revenue +2.0% y/y
• ROK: cuts FY16 adjusted EPS guidance but remains in-line

SOME NOTABLE EARNINGS TO BE REPORTED TODAY AFTER THE CLOSE:

• AF, CAVM, CGI, CLB, CLS, CMO, CRUS, CTXS, DFS, EBAY, FB, HOLX, INVN, JNPR, LRCX, LVS, MCK, MLNX, MSTR, MUR, NOW, OSIS, QCOM, SLG, TER, TSCO, TXN, URI, VAR, VRTX

ANALYSTS' RATINGS CHANGES:

UPGRADES:

• MCD: upgrade: hold to buy: Argus: $140
• HBAN: upgrade: neutral to outperform: Baird: $12
• HBAN: upgrade: underperform to neutral: Macquarie: $12
• RPTP: upgrade: neutral to buy: Citigroup: pt cut fro $8 to $6
• SMCI: upgrade: neutral to positive: Susquehanna: pt raised from $28 to $33
• AAL: upgrade: neutral to buy: UBS
• EXC: upgrade: sell to neutral: Citigroup
• HA: upgrade: hold to buy: Deutsche Bank: pt raised from $35 to $40
• S; upgrade: underperform to perform: Oppenheimer: 
• ALV: upgrade: neutral to outperform: Baird: pt raised from $116 to $138
• BHP: upgrade: equal weight to overweight: Morgan Stanley
• TEX: upgrade: underweight to neutral: JP Morgan: $24
• SYK: upgrade: hold to buy: Brean Capital: $115
• PCG: upgrade: neutral to buy: Goldman: $57
• NEE: upgrade: buy to conviction buy: Goldman
• BWA: upgrade: neutral to outperform: Baird: pt cut from $48 to $39

DOWNGRADES:

• BBBY: downgrade: sector weight to underweight: Keybanc
• PIR: downgrade: overweight to sector weight: KeyBanc
• HVT: downgrade: overweight to sector weight: KeyBanc
• WEC: downgrade: conviction buy to neutral: Goldman: pt raised from $54 to $56
• HCN: downgrade: market perform to underperform: BMO Capital: pt cut from $70 to $63
• GRA: downgrade: conviction buy to buy: Goldman
• MDVN: downgrade: buy to hold: Canaccord: pt cut from $90 to $45
• TRIP: downgrade: neutral to sell: Goldman: pt cut from $68 to $59
• BWLD: downgrade: buy to neutral: BTIG:
• BBY: downgrade: neutral to sell: Citigroup
• JAH: downgrade: buy to neutral: Citigroup: pt cut from $56 to $54
• VMW: downgrade: buy to hold: Summit Research: pt cut from $80 to $40
• VMW: downgrade: outperform to neutral: Baird: pt cut from $80 to $60
• REGN: downgrade: buy to hold: Canaccord: pt cut from $700 to $525
• DWA: downgrade: hold to sell: Topeka Capital: $19
• FMER: downgrade: outperform to sector perform: RBC Capital: pt cut from $21 to $19
• TLMR: downgrade: outperform to sector perform: RBC Capital: pt cut from $21 to $16
• TSS: downgrade: overweight to equal weight: First Analysis
• BLD: downgrade: overweight to sector weight: KeyBanc
• BRO: downgrade: equal weight to underweight: Morgan Stanley: pt cut from $33 to $30
• GNTX: downgrade: outperform to neutral: Baird: pt cut from $22 to $14
• MPG: downgrade: outperform to neutral: Baird: pt cut from $28 to $14

INITIATIONS:

• SPTN: initiated: buy: Pivotal Research: $27
• YRD: initiated: buy: Needham: $8.50
• STX: initiated: sell: Citi
• WDC: initiated: buy: Citi
• SNDK: initiated: buy: Citi
• INFN: initiated: buy: Citi
• ANET: initiated: buy: Citi

MAINTAINS:

• AAPL: maintains: buy: Drexel: $200
• AAPL: maintains: hold: Deutsche Bank: $105
• AAPL: maintains: outperform: Oppenheimer: $120

PRICE TARGET CHANGES:

• SERV: pt raised from $44 to $46: RBC Capital
• RLI: pt raised from $52 to $55: Compass Point
• MTSI: pt raised from $46 to $48: Stifel
• BHP: pt cut from $37 to $25: Cowen
• WDAY: pt cut from $88 to $70: Wunderlich
• VMW: pt cut from $75 to $61: Maxim Group
• VMW: pt cut from $76 to $52: BMO Capital
• TYC: pt cut from $45 to $40: Argus
• LMT: pt cut from $250 to $244: RBC Capital
• FTNT: pt cut from $38 to $32: RBC Capital
• BXS: pt cut from $28 to $25: RBC Capital
• BRO: pt cut from $34 to $33: RBC Capital
• CNI: pt cut from $82 to $81: RBC Capital
• CR: pt cut from $50 to $48: RBC Capital
• DD: pt cut from $63 to $57; RBC Capital
• DHR: pt cut from $83 to $87: RBC Capital
• PHM: pt cut from $20 to $18: RBC Capital
• PII: pt cut from $88 to $80: RBC Capital
• PII: pt cut from $103 to $85: Stifel
• AAPL: pt cut from $140 to $120: Stifel: (remains outperform)
• AAPL; pt cut from $143 to $135: Morgan Stanley (remains overweight)
• AAPL; pt cut from $145 to $141: JP Morgan (remains overweight)
• AAPL: pt cut from $179 to $172: Piper Jaffray: (remains Piper's Top Pick for 2016)