US OPEN: Wall Street indices to trim gains at session launch

• US futures point to a slightly lower opening

• Xerox (XRX.US) launches tender offer for Hewlett-Packard (HPQ.US)

• Visa (V.US) lowers revenue forecast for February-April period

US indices are set to launch today’s cash session lower. The scale of declines is rather minor therefore there is a chance for Wall Street benchmarks to finish the day higher. However, given that yesterday’s last minute surge was triggered by hopes of monetary stimulus, indices may trade under pressure today as awaited G7 statement lacked calls for more decisive actions.

S&P 500 (US500) tested 3090 pts handle during yesterday’s session and today’s pre-market trade. So far, bulls’ attempts to break above it has failed. The index is painting a spinning top candlestick pattern that often heralds price reversal. Having said that, investors should keep on guard as the index may trade under pressure today. More meaningful break below 200-session moving average could hint at bigger market impulse being underway. Source: xStation5

Target (TGT.US) released Q4 2019 earnings report for fiscal Q4 2020 (ended February 1 2020). The US retailer generated revenue of $23.40 billion in the quarter (exp. $23.44 billion) while adjusted EPS from continuing operations came in at $1.69 (exp. $1.67). Gross margin at 26.3% was slightly weaker than expected (26.4%). The company issued forecasts for fiscal 2021. Target expects full-year sales to increase in low-single digits while operating income should increase in mid-single digits. Forecasts came in at the lower end of market’s expectations.

Tilray (TLRY.US), one of the biggest cannabis-oriented companies in the world, has released Q4 earnings report yesterday after the session closed. Revenue of $46.9 million marked an over 200% YoY increase but came short of market’s expectations ($55.4 million). Adjusted EBITDA loss in the quarter amounted to $35.3 million (exp. $21.9 million). The company sold 35,380 kilogram equivalents of cannabis products in Q4 2019. Full-year net loss was $321.2 million, or $3.20 loss per share, and was over 320% bigger than in the previous year.

Hewlett-Packard (HPQ.US) climbed above the price zone at $21.50 yesterday. The stock may be set to rally towards $24 handle today - the level of Xerox’ tender offer. Note that this level has been limiting upward moves a few times in the previous years and may find it as a hurdle this time as well. Source: xStation5

Visa (V.US) decided to lower revenue guidance for fiscal-Q2 2020 (ends on March 31). The US payments company said that growth of cross-border transactions has deteriorated since the coronavirus outbreak in China with travel-related business seeing the biggest negative impact.. Moreover, the company said that it does not think that this trend has bottomed out already. The company said it expects quarterly revenue to be 2.5-3.5% lower than initially expected. 

Xerox Holdings (XRX.US) launched a tender offer in an attempted hostile takeover of Hewlett-Packard (HPQ.US). Tender price is $24/share paid on a cash-and-stock basis.

Thermo Fisher (TMO.US) announced that it will acquire Qiagen, the Dutch manufacturer of tests for cancer and coronavirus. Deal value amounts to €9 billion and translates to €39 per share, 23% higher than Monday’s close. The two companies were discussing a tie-up last year but failed to reach a conclusion. Thermo Fisher said that the acquisition is expected to close in the first half of 2021 and should result in synergies of $200 million.

Visa (V.US) found support at the long-term price zone ranging below $172.00 handle. The stock moved higher during the previous two sessions and managed to recoup over 40% of the recent plunge. However, lower revenue forecast and lack of central banks action may cause the stock to trade under pressure today. Near-term resistance can be found at $184.00. Source: xStation5