The current stock market rally continued to look strong, with the S&P 500 index and later the Nasdaq clearing their 200-day moving averages. Optimism about China trade talks and a deal to avert a government shutdown helped, along with continued heavy earnings. Another batch of top software stocks reported, including CyberArk (CYBR) and Twilio (TWLO), while some lesser-known vendors broke out to buy zones. Under Armour (UAA) and Cisco (CSCO) earnings were strong while Nvidia (NVDA) guidance was better than feared.
Stock Market Continues To Climb
The major averages rallied in the latest week, with investors upbeat over China trade negotiations and a government funding deal. The S&P 500 index cleared its 200-day line, with the Nasdaq fighting to close above that key level at Friday's close. Top stocks sometimes lagged but generally led, with more breaking out or extending runs. Earnings season was past its peak but still heavy, especially for top-rated software stocks.
Enterprise Software
A large number of highly rated business software makers reported earnings in the latest week:
Twilio (TWLO) soared past revenue growth views and met earnings estimates. But the communications software maker guided low on 2019 EPS, including the recent $2 billion SendGrid acquisition. Analysts expect Twilio to step up investments as it integrates SendGrid and cross-sells products. Twilio stock fell 6.9%, but from record highs.
Shopify (SHOP) adjusted earnings rose 73% and revenue 54%, both topping Q4 views, but its profit outlook for full-year 2019 disappointed. The e-commerce software provider cited international investments as well as a $30 million branding campaign. Shares initially tumbled but rose more than 1% for the week.
HubSpot (HUBS) Q4 earnings and revenue topped estimates with 208% and 35% gains, respectively. The online marketing firm guided 2019 profit in line and revenue above views. A day later HubSpot announced plans to sell 1.7 million shares. HubSpot stock rose slightly.
RingCentral (RNG) EPS leapt 64% and revenue 34%, both beating views. The provider of software-as-a-service solutions for business communications guided higher for 2019. Shares rose.
SPS Commerce (SPSC) reported 89% earnings growth, well above views. The supply-chain management software firm also guided up on Q1 views. Shares jumped out of a base to a new high.
Cornerstone OnDemand (CSOD) reported Q4 revenue above views and in-line EPS. Shares of the human capital management software maker fell below a buy point on weaker-than-expected 2019 guidance.
Varonis (VRNS) tumbled after announcing a shift to a subscription-based business model from licensing. Varonis reported Q4 EPS of 54 cents, up 30%, topping estimates of 34 cents. Revenue rose 20% to $87.5 million, just above views.
SS&C Technologies (SSNC) earnings rose 76% to 95 cents a share, beating views by a dime. Revenue swelled 157% to $1.13 billion. Acquisitions are fueling accelerating growth for the financial software maker. Shares jumped 6.25% Friday to near a buy point.
Cybersecurity Software
CyberArk Software (CYBR) earnings leapt 117% in Q4 to 89 cents a share while revenue rose 36% to $109.1 million. Both easily beat views. CyberArk also guided higher for Q1. Mimecast(MIME) earnings tripled to 9 cents in Q3 while revenue grew 30% to $87.6 million. The company guided higher on revenue for the current year. Qualys (QLYS) earnings topped Q4 views while revenue met. The company also gave weak revenue guidance for Q1 and 2109 amid disappointing growth in new products. Shares tumbled.
Cisco Earnings
Cisco Systems (CSCO) said adjusted Q2 earnings rose 16% to 73 cents a shares while revenue rose 4% to $12.45 billion, both narrowly topping views. Q3 guidance also was slightly bullish. Cisco upped its quarterly dividend by 6% to 35 cents a share, from 33 cents a share. It also added $15 billion to its share buyback program, bringing the total to $24 billion. Shares cleared a buy point. Rival Arista Networks (ANET) reported 32% EPS growth as revenue rose 27% to $595.7 million, both beating. Arista guided higher on March-quarter revenue. Arista stock soared Friday.
'Fortnite' Rival Boosts EA
Video game publisher Electronic Arts (EA) is drawing away players from Epic Games' smash-hit "Fortnite" with a rival battle-royale game. EA's multiplayer online game "Apex Legends" attracted 25 million players in just its first week of release. The free-to-play game had well over 2 million concurrent players at its peak during the first weekend of availability. The new game boosted beleaguered EA stock. Meanwhile, shares of Activision Blizzard (ATVI) fell on disappointing fourth-quarter sales and light guidance for the current quarter and full year. BMO Capital Markets downgraded Take-Two Interactive Software (TTWO) to underperform on concerns that hit holiday game "Red Dead Redemption 2" is losing its buzz.
Nvidia Guide Better Than Feared
Graphics-chip maker Nvidia (NVDA) earnings fell sharply in Q4 but easily beat lowered views, though sales still missed. Nvidia sees fiscal 2020 revenue "flat to down slightly" vs. the consensus for a 4% drop. Nvidia stock jumped at Friday's open but closed up just 1.8%. Among other chip industry players, Applied Materials (AMAT) topped fiscal Q2 estimates, but disappointed with its current-quarter outlook. Lattice Semiconductor (LSCC) stock broke out of a cup-with-handle base on an upbeat fourth-quarter report and guidance.
Pot Producers Report Earnings
Canadian pot producers Canopy Growth (CGC) and Aurora Cannabis (ACB) reported earnings, with the first two months of legal recreational sales in Canada boosting revenue. But higher costs – related to production or packaging or bringing facilities online – weighed on margins. Aphria(APHA) said an independent review found "conflicting interests" in its Latin-American acquisitions, after short-sellers three months ago accused it of overpaying on those deals to enrich insiders. Aphria said the review found the prices paid were "within an acceptable range" compared to rivals, "be it near the top of the range." Green Growth Brands struck a deal to sell CBD products in properties run by Simon Property Group (SPG), the U.S.' largest mall operator. Canopy Growth rose solidly for the week, Aurora fell and Aphria edged higher.
Yeti, Canada Goose Earnings Hot, Stocks Split
Yeti (YETI), which makes upscale coolers and drinkware, reported EPS of 38 cents a share, beating views by 5 cents. The October IPO also gave upbeat guidance. Yeti stock soared 27%, blasting past a buy point to a new high. Canada Goose (GOOS) earnings shot up 56.5% as sales jumped 38%, both beating winter-quarter views for the luxury parka maker and retailer. But the EPS beat was smaller than in prior quarters, while gross margins fell on higher labor costs and overseas expansion investments. Shares plunged 11%.
Under Armour Earnings Top
Under Armour (UAA) reported better-than-expected Q4 earnings and sales while slashing inventory, though the athletic apparel maker guided low on Q1 revenue. Shares moved into a buy zone Tuesday, along with yoga-themed apparel maker Lululemon (LULU). But both fell back into their handles Friday. Sports giant Nike (NKE) is at the edge of its buy zone.
Crude Oil Prices Rise; Shale Firms Cut Spending
U.S. crude oil prices rose 5.4% this week to $55.39 a barrel, the highest since November despite concerns about supply trumping demand. The International Energy Agency kept its global oil demand growth forecast flat but increased its non-OPEC supply outlook. The U.S. Energy Information Administration raised its U.S. oil production outlook for 2019 by 2.8%. The agency also saw a 3.63 million barrel increase in U.S. crude supplies, more than expected. Pioneer Natural Resources (PXD) reported mixed results while Marathon Oil (MRO) beat and Laredo Petroleum (LPI) missed. The shale oil companies are also cutting budgets amid pressure to pay shareholders. Occidental Petroleum (OXY) reported strong results and also plans to cut its spending.
Coca-Cola Dives On 2019 Outlook
Coca-Cola met Q4 earnings view and topped revenue estimates on solid 5% organic growth. But the soft drinks giant was gloomy on 2019, sending the Dow Jones stock plunging 8.4% Thursday. Pepsi dipped on Coke's outlook but then rebounded Friday after meeting Q4 targets.
News In Brief
Johnson & Johnson (JNJ) will buy privately held robotic surgery company Auris Health for $3.4 billion, following reports last month that a deal was close. Auris makes a flexible catheter for lung cancer biopsies.
Epam Systems (EPAM) earnings rose 26% while revenue grew 27%, both modestly beating. The IT services provider gave in line guidance for Q1. Shares rose to a new high.
Ingevity (NGVT) rocketed into a buy zone after earnings surged 138%. The specialty chemicals maker's revenue was also above expectations.
Bilibili (BILI) rose on news that Alibaba (BABA) bought a 9% stake in the provider of a youth-focused online entertainment platform in China. But Bilibili stock fell Friday as many Chinese internets retreated.
Global Payments (GPN) surged toward a buy point after beating earnings and revenue views.
Amazon (AMZN) scrapped plans to build a second headquarters in New York City, due to mounting opposition from residents and politicians.
Norfolk Southern (NSC) sees operating ratio improving from 65.4% in 2018 to 60% by 2021 as it boosts productivity and lowers costs. Norfolk Southern stock topped a 175.56 double-bottom buy point.
Insperity (NSP) flew well past a buy point after the outsourcing specialist reported strong earnings and issued sunny guidance.
Deere (DE) fell well short of Q1 EPS views, as the farm equipment giant blamed "tariffs and trade policies" for customer uncertainty and higher costs. Revenue topped views. Deere reiterated guidance for 7% full-year sales growth.
