Daily Dose ($VSI Preview)

Vitamin Shoppe will report Q2 results tomorrow morning 

• Vitamin Shoppe (VSI) will report Q2 results tomorrow morning and host a call at 8:30.
• VSI is expected to report Q2 EPS of $0.59 vs. $0.57 last year with rev +2.6% to $330.7 mln on ~flat comps.
• Co previously guided for FY16 adj. EPS of $2.25-2.45 with comps flat to up in the low single digits.
• VSI was testing resistance near the $32 level when peer/competitor GNC (GNC) missed Q2 comp estimates and suspended earnings guidance last week.
• VSI has quickly fallen to support near the $8 level ahead of this report.

Click here to listen to my podcast and learn about my theory on the similarities between relationships and the stock market.

Just A Little Bit ($FIT Earnings)

Fitbit (FIT) is set to report Q2 results tonight after the close with a conference call to follow at 5pm ET. FIT reported Q1 results at 4:05 pm. 

Current Capital IQ consensus stands at EPS of $0.11 on Revenue of $577.9 mln.

Shares of FIT have been building a base in this $12-14 area since reporting Q1 results back in early May. The stock is attempting to press above its 50-sma (13.40) ahead of tonight's report.

Shares of FIT were able to rally to the $18 level ahead of Q1 results but weak Q2 guidance led to some profit taking and selling in the name. The Q2 EPS outlook of $0.08-0.11 was well below the $0.27 Capital IQ consensus at the time as higher investments in the company are taking its toll on the bottom line. FIT is expected to provide an update to its Q3 guidance on the call but expectations will be low as plans to launch new products in Q4 will have an impact on channel orders int he quarter. So an update to FY16 might be the more meaningful item to watch. If FIT were to see a negative response to a cautious Q3 outlook we would keep an eye on the FY16 guidance as that may provide more insight into the direction of FIT.

Key Metrics

• Revenue Growth- This has been declining over the past four quarters as economies of scale take its toll. But investors would like to see this steady ahead of the Q4 holiday season. Current Capital IQ consensus is calling for a 44% increase y/y. Revenue growth over the past four quarters has been Q1- 50.1%, 4Q15- 92.2%, 3Q15- 167.7%; 2Q15- 252.5%.
• Margins- Gross Margin is expected to rebound to 48.0% in Q2. Q1 saw it fall 320 bps to 46.6%; EBIT Margin fell to 7.3% from 27.5% as higher operating expenses weighed heavily on the bottom line.
• Inventory- Q1 saw inventory pick up 54% (compared to the 50% revenue increase). With churn to new products expected in Q3 investors will be closely watching how well this was managed.
• Devices Sold- FIT sold 4.8 mln devised in Q1.

Guidance

• Q2
  • FIT issued mixed guidance for Q2, seeing EPS in the range of $0.08-0.11 vs. then-$0.27 Capital IQ Consensus Estimate. For revenue FIT forecast Q2 revs of $565-585 mln vs. then-$535.17 mln Capital IQ Consensus Estimate.
  • Non-GAAP Gross Margin expected to be 48.0%.
• FY16
  • FIT revised its EPS expectations higher which might point to only a temporary increase in operating expense as it ramps up delivery of new products. For FY16 it raised its EPS outlook to $1.12-1.24 (Prior gudiance was $1.08-1.20), excluding non-recurring items, vs. then-$1.13 Capital IQ Consensus Estimate. FIT also raised its FY16 revenue outlook to the range of $2.5-2.6 bln (Prior $2.4-2.5 bln) vs. then-$2.45 bln Capital IQ Consensus Estimate.
  • Non-GAAP Gross Margin was reaffirmed to be in the range of 48.5-49.0% (Reaffirm).

Q1 Recap

• FIT reported Q1 (Mar) earnings of $0.10 per share, excluding non-recurring items,$0.07 better than the Capital IQ Consensus of $0.03. Revenues rose 50.1% year/year to $505.4 mln vs the $440.03 mln Capital IQ Consensus.
  • U.S. comprised 70% of 116 revenue; EMEA 15%, APAC 11%, and Other Americas 4%
  • U.S. revenue grew 33% year-over-year; EMEA 113%, APAC 142%, and Other Americas 74%
  • Fitbit Blaze and Alta, selling a million units each in the latter part of the quarterQ

Click here to listen to my podcast and learn about my theory on the similarities between relationships and the stock market.

Alphabetical Order ($GOOGL $GOOG Earnings Preview)

Alphabet (GOOG, GOOGL) is set to report Q2 results tonight after the close with a conference call to follow at 4:30pm ET. 

Current Capital IQ consensus stands at EPS of $8.04 on Revenue of $20.77 bln.

• Q1 GOOGL saw one of the top and bottom line misses (GOOGL does not guide) but the strength of its core business remained evident and a pick up in revenue at some of its 'Other' business units was encouraging for investors. Growth trends remain positive in mobile search, YouTube, and programmatic which should help drive results. Investors would like to see GOOGL produce a beat similar to FB.
• The stock has been trying to break out ahead of the report as expectations are high. GOOGL will need to meet these expectations in order to rally back to the $800 level for the first time since February.
• With regards to FB it should be noted that GOOGL's forward P/E stand at 19.3x compared to 25.2x for FB. As arguably the two best tech companies on the planet at the moment these valuations will be watched closely

Key Things to Watch

• Revenue Growth
• Operating Margins
• Aggregate Paid Clicks- Q1 was down 3% q/q and up 29% y/y; Q4 increased 22% on Google Sites.
• Q4 Aggregate Cost-Per-Click- 
• U.K. Exposure

TECHS:

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Like Me ($FB)

Facebook (FB) is set to report Q2 results tonight after the close with a conference call to follow at 5pm ET. 

Current Capital IQ consensus stands at EPS of $0.82 on Revenue of $6.00 bln.

• Revenue Growth- Q1 revenue growth was 51.8%; Q4 saw revenue accelerate to 52% compared to 40% in Q3 and 39% in Q2.
• Advertising Revenue- Q1 increased 57% y/y to $5.2 bln; Q4 came in at $5.637 bln which was also up 57% y/y.
  • Mobile Advertising Revenue- Mobile advertising revenue represented approximately 82% of revenue in Q1 compared to 80% in Q4. This is expected to see a small uptick.

Q1 Recap

• FB reported Q1 (Mar) earnings of $0.77 per share, $0.15 better than the Capital IQ Consensus of $0.62; revenues rose 51.8% year/year to $5.38 bln vs the $5.26 bln Capital IQ Consensus.
  • See key metrics above.
• FB also announced its proposal of a new class of stock so look for some updates on this on the call.

• Why it's important
  • Ad spending drives Facebook's top line, accounting for 97% of the company's revenue in the first quarter.  Facebook, therefore, is watched closely as a barometer for how advertisers are spending and where they are allocating their advertising budgets.
  • Facebook is a leadership stock for the Nasdaq and Nasdaq 100
  • The company and its stock serve as guides for the enthusiasm surrounding the growth of social media
     
• What Facebook said after its first quarter earnings report in April
  • Daily active users (DAUs) were 1.09 billion on average for March 2016 (+16% year-over-year); mobile DAUs were 989 million on average for March 2016 (+24% year-over-year)
  • Monthly active users (MAUs) were 1.65 billion as of March 31, 2016 (+15% year-over-year); mobile MAUs were 1.51 billion (+21% year-over-year)
  • The average price per ad increased 5% in the first quarter while total ad impressions increased 50% (strong growth in mobile ad impressions)
  • Will face tougher comparisons in 2016 given the acceleration of ad growth in 2015
  • Guidance
    • Non-GAAP expense growth of ~45-55% year-over-year
    • Amortization will be $700 million to $800 million
    • Stock-based compensation to be $1.1 billion to $1.3 billion in 2016
    • Sees capex at the high end of $4.0 billion to $4.5 billion range previously provided
    • Second quarter and FY16 tax rates should be similar to first quarter
       
• Other Stocks to Watch
   
  • FB
  • Alphabet (GOOG/GOOGL)
  • LinkedIn (LNKD)
  • Yelp (YELP)
  • PowerShares QQQ Trust (QQQ)
  • Global X Social Media Index ETF (SOCL)
    • FB is third largest holding at 9.37% of assets
  • S&P futures

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Click here to listen to my podcast and learn about my theory on the similarities between relationships and the stock market.

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RESULTS:

Swipe Right on BAE ($MTCH Earnings Preview)

Match Group (MTCH) will report Q2 results after the bell and host a call at 8:30am tomorrow. 

• Analysts are looking for Q2 adj. EPS of $0.16 with adj. EBITDA +37% to $88.8 mln and sales +16.5% Y/Y to $296.8 mln.

• Match guided for Q2 dating rev +4-5% Q/Q to ~$270.8-273.4 mln with a dating EBITDA margin in the low to mid-30% range vs. 26% in Q1.

• MTCH flirted with all-time highs last week and is up almost 50% since reporting strong Q1 results after its first public quarter disappointed investors in early February.
• Match dominates the online dating market in the US (with Match, OK Cupid and Plentyoffish) but Tinder is the real gem.
• The total dating business (91% rev mix) generates sales through premium (paid) members (direct revenue) and advertising (indirect rev).
• Total direct Q1 rev was up 23% as total paid member rose 36% to 5.08 mln.
• Last quarter, Tinder added 219K paid members to hit 1.02 mln (+27% Q/Q) and said it was on pace to double paid member count (PMC) this year (to 1.6 mln).
• Tinder continues to add features to its matching app to drive engagement and monetization.
• Indirect (advertising) rev accounted for just $11.4 mln (4%) of dating revenue.
  • In March, Match hired an advertising veteran to run the nascent indirect revenue (advertising) business.
• Match will be careful to roll out an advertising product that does not disrupt engagement at Tinder.
• Roughly 27% of the float is sold short and IAC (IAC) still owns 84.7% of the company after floating it (IPO) in November of last year.

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Click here to listen to my podcast and learn more about my theory on relationships and the stock market.

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$GILD Earnings Preview

Gilead Sciences is scheduled to report 2Q16 earnings on July 25 after the market closes. 

Consensus calls for 2Q16 EPS of $3.01 (vs. $3.15 last year) with revenue down 4.9% to $7.8 bln.

• The stock trades at just 7.3x FY16 EPS estimates as investors demand growth (similar story to that of AAPL). Sales and earnings are expected to fall ~4% this year. Earnings are expected to grow ~2% next year with sales down 1% as the co aggressively buys back shares.
• Investors want the co to acquire its next blockbuster drug. Last month, the CFO said it has the balance sheet to acquire a large oncology asset. Gilead bought back $15 bln shares in FY15 and commenced a $12 bln share buyback in FY16, purchasing $8 bln worth of shares in 1Q16.

FY16 Guidance

The co reiterated FY16 guidance below Consensus on April 28 when they reported 1Q16 earnings. Capital IQ Consensus calls for a 2.5% decrease in FY16 rev to ~$31.8 bln, compared to $32.6 bln in FY15.

• Net product sales: $30-31 bln
• Adj Product gross margin: 88-90%
• Adj R & D expenses: $3.2-3.5 bln
• Adj SG & A expenses: $3.3-3.6 bln
• Adj Effective tax rate: 18%-20%

1Q16 Recap

• The co reported 1Q16 earnings of $3.03/share, $0.10 worse than the Capital IQ Consensus of $3.13, rev rose 2.6% y/y to $7.79 bln vs the $8.07 bln Consensus.

Technical Analysis

Technically, GILD has been an under-performer since its last earnings report in April had its selling back down to its early Jan/Feb lows around the $82 area. Buyers will want to clear this 87/88 resistance and lift price back into the late-April bearish gap between the 92/96 zone.

The 200-day moving averages are also in play around 91/92. Sellers will simply want to keep the pressure on by dropping the stock back towards this year's lows in the 78/82 range.

Implied Vol

Based on GILD options, the current implied volatility stands at ~ 29%, which is 14% higher than historical volatility (over the past 30 days). Based on the GILD Weekly Jul29 $86.5 straddle, the options market is currently pricing in a move of ~5% in either direction by weekly expiration (Friday).

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Click here to listen to my podcast and learn more about my theory on relationships and the stock market.

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$UA Earnings Preview

Under Armour (UA) reports Q2 results tomorrow July 26 followed by conference call at 8:30am ET.

Current consensus is for Q2 EPS of $0.02, operating income of ~$19 mln on revs +28% to $1.00 bln (guided for revenues in high 20s, operating income of ~$17-19 mln and flat gross margin). Since becoming a publicly traded company, UA has never missed earnings estimates.

Last quarter, Under Armour beat Q1 EPS estimate by $0.02, reported revs in-line, guided Q2 operating income / revenues in-line and slightly raised FY16 guidance / reaffirmed margin guidance.

Headed into the print: UA has held onto these recent gains and is back near pre-Q1 levels. 

Based on UA options, the current implied volatility is 14% higher than the historical volatility (over the past 30 days). UA Weekly Jul29 $42.5 straddle is currently pricing in a move of ~8% in either direction by weekly expiration (Friday).

Key metrics and areas of interest:

• Current Quarter: Following the decision of the bankruptcy court to approve the liquidation of The Sport Authority's business rather than a restructuring or sale, Under Armour determined to recognize a Q2 impairment charge of ~ $23 mln and updated its Q2 and FY16 outlook. The company reaffirmed Q2 revenue growth in the high 20s but revised operating income to $17-19 mln (prior $40-42 mln) as a result of the impairment.
• Guidance: The Sport Authority mid-quarter update included revised 2016 guidance for operating income to ~$440 -445 mln (prior +23-24% to $503-507 mln) on net revenues +24% to $4.925 bln (prior +26% to $5.0 bln). Updated outlook will be included in the earnings press release - estimates are tracking slightly ahead of the this prior outlook with operating income of +11% to ~$453 mln estimate and revenues +25% to $4.96 bln.

Techs:

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Click here to listen to my podcast and learn about my theory on the similarities between relationships and the stock market.

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Brexit Stage Left (6/6/17 Weekly Setups)

As I've been telling you guys for months now, the rate increase is not likely to occur in June and most likely to occur in July. My rationale for this has always been two fold: 1) Brexit and 2)A rate hike now is too soon and one in September is too close to the election. Last week's data gave the markets a quick rattle but by the end of it investors and traders had been calmed by the depreciation in likelihood that the Fed would move in June. Well like a kid turning his homework in late, the market seems to be peeking over its shoulder at the Brexit event looming. With that, the market is pricing a lower possibility for a rate hike in June.

That said, we are sitting at 2100 with the potential of an all time high breakout in the stock market. My bias is that we will eventually take out the highs, continue to rally and cause capitulation before ultimately falling apart. So for now, the pain trade remains to the upside until a catalyst occurs to "shake things up". With that in mind, I'm focusing primarily on stocks that are poised for higher. Below are the SPY charts to keep an eye out including a FIBS chart for potential resistance.

AMZN

Winner winner. 717 support. 

AAPL

Could be at support retest, could be a cup and handle, could be a rollover. It all depends on how 97.5 will hold.

ADBE

Support retest held. This should be a long so long as this holds. Rising MA's should push this higher moving forward. 100.30 is the breakout.

AMBA

Heavy short interest, zero debt, channel break, and now an issued buyback. This should catch gas to the flames soon and continue its way higher. Read this post if you are interested in swinging this name and/or want more details.

BMY

This name is itching for a breakout. Here is your level.

HON

Flagging with 112 as support. Look for continuation. 

ICE

Backtest of the breakout. Ready to rip again. 

LLL

Strongest sector on the board at the moment. After months of consolidation, this sector is set to go. This one may get extended quickly so tread lightly.

MGM

Broke out of multi-month downtrend. Add it to your bullish list. Lowest Macau exposure of all the casinos. 24.35 will lead to further upside.

PLAY

Clear downtrend about to break on all time frames. Extremely bullish chase if that occurs.

PCLN

Faked a breakdown and took off. It has been in an uptrend ever since. If this plays like the market has been of late it's poised to fill the gap into the 1317 1331, and 1340 levels and possibly beyond. 

RTN

One of the strongest names in the strongest group. This had 28 weeks of consolidation. Look for a continued breakout. 

SM 

Still ready.

Heating Up (Weekly Setups $AAPL $AMZN $TSLA $TWTR $YELP)

With nearly four weeks of sideways to downside action the pundits would have you think that the market is on the verge of falling apart. The talking heads (for the most part) have you convinced that the sky is falling and that the world economy is abysmal. Hypothetically speaking, even if we are in an outright terrible place in the economy the market doesn't care. Markets unintentionally forecast several months in advance. So with that said, price is truth. Know what you're trading off of and you will be okay. Either direction. I want to be clear and advocate that I am not saying everything is rosey or that they are wrong. I'm simply saying; "Who gives a shit?"

We're not in the business of being "right" we're in the business of making money. Leave the
"being right" to the morons on television who need to fill their ego since they can't fill their bank accounts with their "trading"

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SM

After a rest, this name is nearing a breakout and is almost set to resume its trend higher.

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ZG/Z

Renewed strength with a well defined post-ER range. Keep this one on your list for a potential breakout.

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YELP

This name has founded a rejuvenation. Currently flagging and poised for higher on a breakout.

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NFLX

Aggressive call buying and at the lower end of is two year range. Strip out the competition bullshit and just look at the price action. A break of 94 sets this for round two.

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TSLA

Here are the levels. Nothing more needs to be said.

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XBI LABU IBB

XBI (and in some respect the IBB) has been building a weekly base and is poised for higher highs. The next several weeks will be key in the space as many of these names report vital data that will surely serve as a catalyst. 

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AAPL

Buffet bottom seems to be the theme here. Look for it to press up to the edge of the gap. Look for the part makers to catch a bid as well. 

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AMZN

The retail killer and giant has been basing for round two.  

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TWTR

The giant put seller has seemingly put a bottom in this stock. With volume pops in the name, this stock seems poised to break out. Using 14 as a stop this is worth a long. Look for 14.6 as the breakout level.

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QCOM

Multi-month breakout. Look for follow through.