Monday, February 27, 2017

Stocks Set To Open At Highs: Workday, Priceline In Buy Range With Earnings Due; Trump Looms

By Ed Carson
IBD
February 27, 2017

The Dow Jones industrial average eked out an 11th straight gain on Friday, its longest win streak in decades. The S&P 500 index starts at an all-time high this week while the Nasdaq composite is less than 1% from record levels, with Workday (WDAY) and Priceline (PCLN) reporting earnings late Monday.

Dow industrials futures were slightly lower vs. fair value early Monday morning. S&P 500 futures rose a fraction while Nasdaq 100 futures climbed 0.1%.

It wouldn't be a surprise, or even that unhealthy, is the current rally took a breather. Investors may be cautious leading up to President Trump's big speech and the long-awaited Snap (SNAP) IPO later in the week.

Trump will give a primetime speech before Congress Tuesday, in which he may offer more details on his plans for tax reform, replacing ObamaCare, deregulation and infrastructure. In recent days Trump and his aides have given mixed signals on a border adjustment tax.

Executives from Dow component UnitedHealth (UNH) and other big health insurers reportedly will meet with Trump on Monday. While UnitedHealth and its rivals are exiting and mulling exits from the ObamaCare exchanges due to ongoing losses, they'll want to shape Trump's health care ideas.

The Mobile World Congress in Barcelona officially kicks off Monday, running through Thursday. But LG Electronics, Huawei and others began unveiling their latest devices on Sunday, hoping to build buzz and sales before Dow stock Apple (AAPL) releases its 10th anniversary phone later this fall.

Alphabet (GOOGL) unit Google announced Sunday at the Mobile World Congress that Google Assistant will able to run on phones running Google Play on Android 7 (Nougat) and Android 6 (Marshmallow), giving its AI personal helper a reach closer to that of Apple's Siri or Alexa from Amazon (AMZN).

Meanwhile, Workday and Priceline are both in buy range heading into earnings.

Workday


Workday is expected to report a 1-cent loss per share excluding items, equal to a year earlier, as revenue grows 33% to $430.2 million. The cloud-based human resources software firm has been alternating between profits and losses in recent quarters, but analysts expect consistent and accelerating EPS going forward.

Workday competes against business software giants Oracle (ORCL) and SAP (SAP) in the human resources software field, though it's expanding into other markets such as financial management software. Workday, Oracle and SAP are in buy range.

Workday rose 1.7% to 89.66 on Friday, holding above an 88.10 buy point initially cleared on Feb. 17 from a cup-with-handle base.

Priceline

Priceline is expected to report a 3% rise in quarterly earnings to $12.98 per share with revenue up 16% to $2.32 billion.

Priceline cleared a 1600.10 buy point on Feb. 8, hitting a record intraday high of 1664.99 on Thursday. Priceline closed Friday at 1631.62.

Shale Sector

Frac sand provider Emerge Energy Services (EMES) reports before Monday's open while shale producers EOG Resources (EOG) and RSP Permian (RSPP) are on tap after the market close.

Economic Data

Durable Goods:
The Commerce Department will release the durable goods report at 8:30 a.m. ET. Durable goods are big-ticket, long-lasting goods. Business surveys show sentiment booming since election day. Will those "animal spirits" spur companies to step up capital spending?

Pending Home Sales:
The National Association of Realtors will release its pending home sales index at 10 a.m. ET. The index gauges contract signings of existing homes. That will foreshadow how actual existing home sales, when they have closed, will look in the next month or so.

Overseas

In Asian trading Monday, Japan's Nikkei was down 0.8%, China's Shanghai composite lost 0.3% while Hong Kong's Hang Seng index dipped 0.2%.


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