Early Look

Thursday, August 6, 2020

Futures	Up/Down	%	Last
DJ Industrials	-15.00	0.06%	27,040
S&P 500	-2.50	0.09%	3,313
Nasdaq	-17.50	0.16%	11,074

 

 

Stock futures have slipped from earlier highs ahead of another busy day of earnings, a reading on weekly jobless claims (estimate for 1.4M to have reported first time claims – ahead of tomorrows nonfarm payroll report), and await the completion of the coronavirus stimulus/relief bill out of Washington after weeks of back and forth talks between the White House and Democrats. In Asian markets, The Nikkei Index fell -96 points to 22,418, the Shanghai Index gained 8 points to 3,386 and the Hang Seng Index fell -171 points to 24,930. In Europe, the German DAX is down -15 points at 12,645, while the FTSE 100 is down over 80 points to 6,025. UK stocks slipped as the Bank of England warned of a slower economic recovery from the COVID-19 crisis, saying it may now be the end of 2021 rather than the second half of next year. U.S. stocks closed higher Wednesday, leaving the Nasdaq Composite Index higher for a 6^th straight session and post its 31st record close this year, as investors embraced corporate earnings and service-sector data that surprised to the upside. Reports of some progress in Congress toward a fresh coronavirus relief package also offered some support for the bulls.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 21.26 points, or 0.64%, to 3,327.77

·     The Dow Jones Industrial Average surged 373.05 points, or 1.39%, to 27,201.52

·     The Nasdaq Composite jumped 57.23 points, or 0.52%, to 10,998.40

·     The Russell 2000 Index spiked 29.02 points, or 1.91% to 1,546.24

 

Economic Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims

·     8:30 AM EST      Continuing Claims

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABMD, ADNT, AMAG, BCRX, BDX, BLL, BMY, CBB, CHH, CNP, DNB, EDIT, FLIR, FTNT, GCI, GEO, HEAR, HFC, HL, HLT, IDCC, IRM, JLL, KBR, LAMR, LEE, MUR, MYL, NWSA, OLED, PBH, PENN, PH, PWR, PZZA, SERV, TEN, TWI, VG, VIAC, VSTO, WLK, XRAY, YETI, ZTS

·     Earnings After the Close: AAOI, AAXN, AEE, AINV, AL, APPN, BCEI, BHF, BKNG, CARG, CBT, CHUY, CLVS, CUBE, CZR, DBX, DDOG, DXC, ED, EOG, EPAY, EVBG, FLT, FNKO, FSLR, G, GPRO, GRPN, HASI, HLF, ILMN, IOVA, JACK, LGF/A, LSI, LVGO, MHK, MSI, NET, NKTR, PBYI, PRAH, REAL, RPD, RSG, SAIL, STMP, TLND, TMUS, TRIP, UBER, WCN, YELP, ZG

 

Other Key Events:

·     Jefferies Industrial Virtual Conference, 8/5-8/6

·     William Blair Biotech Virtual Conference, 8/4-8/6

 

 

Macro	Up/Down	Last
WTI Crude	-0.26	41.93
Brent	0.00	45.17
Gold	12.30	2,061.60
EUR/USD	-0.0002	1.1861
JPY/USD	-0.05	105.55
10-Year Note	-0.022	0.524%

 

 

World News

·     Expanding Washington’s “5G Clean Path” program, Secretary of State Mike Pompeo has detailed a new five-pronged “Clean Network” effort aimed at curbing potential national security risks

·     The Bank of England said the U.K.’s economic slump would be less severe than previously expected as it now expects the U.K. economy to shrink by 9.5% in 2020, from an initial forecast of a 14% drop. The BoE said it would take longer for the U.K. economy to recover, warning it may now be the end of 2021 rather than the second half of next year. The Bank’s 15% surge in 2021, predicted in May, was revised down to a 9% rise.

·     German industrial orders surged 27.9% month-on-month in June, smashing economists’ expectations for a 10.1% rise, led by strong demand for domestic goods. Automotive orders rose 66.5% but still remained below February’s pre-crisis level.

 

Sector News Breakdown

Consumer

·     Etsy (ETSY) Q2 EPS 75c on revenue $428.7M vs. est. $330.0M; 2q gross merchandise sales $2.69 billion vs. $1.09 billion YoY; 2q adjusted Ebitda $150.6M vs. $39.7M YoY; 2q active sellers 3.14 million, +35% YoY; 2q active buyers 60.3 million, +41% YoY; 2q mobile sales as percentage gross merchandise sales 61% vs. 58.0% YoY and gross margin 74% vs. 67.6% YoY

·     Camping World (CWH) Q2 adj. EPS $1.64 on revs $1.61B vs. est. 63c/$1.4B;

·     Costco (COST) July total comp sales 13.2% vs. est. 7.6% and comp sales ex-gas up 15.7% vs. est. 10%

·     Hilton Worldwide Holdings Inc. (HLT) reported Q2 EPS loss wider than expected, with revenue dropping 77%, as the COVID-19 pandemic had a “significant adverse impact” on occupancy; swung to a net loss of $430 million from net income of $260 million a year ago; total revenue dropped to $564 million from $2.48 billion, below the FactSet consensus of $818.8 million

·     Jack in the Box (JACK) Q3 operating EPS $1.37 vs. est. $242.3M vs. est. $1.03/$240.36M; Q3 same-store sales increased 6.6% for the quarter and same-store sales increased 4.1% in the third quarter driven by average check growth of 20.2% while transactions decreased 16.1%

·     Sprout Social (SPT) Q2 EPS loss (11c) on revs $31.4M vs. est. loss (14c)/$31.18M; said while don’t know the depth or duration of the pandemic, our key metrics accelerated through the quarter and we have confidence in our ability to perform at the high end of the expectations that we shared prior

 

Energy

·     ConocoPhillips (COP) files mixed securities shelf

·     Marathon Oil (MRO) Q2 adjusted EPS loss (60c) on revs $272M vs. est. loss (61c)/$618.3M; Q2 total company oil production of 197,000 net boepd, inclusive of approximately 11,000 net boepd of curtailments; reduced its full year 2020 capital spending guidance to $1.2B and raised its full year 2020 oil production guidance

·     SunPower (SPWR) Q2 adj EPS loss (22c) on revs $352.9M vs. est. loss (36c)/$312M; guides Q3 revs $360M-$400M vs. est. $395M; Q3 gross margins 0%-5% weaker than expected and net loss of $110M-$95M

·     Warrior Met Coal (HCC) said it is pushing back development of its Blue Creek mine in Alabama until “at least the early part of 2021,” according to a statement citing weak international market for metallurgical coal, economic uncertainty from coronavirus; Q2 EPS and revs beat

·     Transocean (RIG) says it has hired Lazard Freres as its financial adviser to proactively evaluate strategic alternatives to manage its capital structure.

 

Financials

·     Lincoln National (LNC) Q2 EPS 97c misses by 41c and revenue of $4.21B (-5.8% Y/Y) misses by $180M; Retirement Plan Services deposits of $2.3B, up 11% YoY, Life Insurance expense ratio improved 20 bps YoY and Group Protection insurance premiums of $1.1B, up 5% YoY

·     MetLife (MET) Q2 adj EPS 83c on op revs $13.85B vs. est. 91c; Q2 book value per share $78.65 and said net investment income was $4.09B

·     Voya Financial (VOYA) Q2 adjusted EPS $1.09 vs. est. 79c; in Retirement, full-service recurring deposits increased 10.4% compared with the trailing 12 months ended June 30, 2019. In Investment Management, we generated $6.8 billion in positive net

 

Healthcare

·     Bristol Myers Squibb (BMY) and collaboration partner Pfizer (PFE) shares rise in response to an unconfirmed patent ruling related to blood thinner Eliquis (apixaban). The decision, if upheld, would be a big win for BMY since the automatic 30-month stay related to the patent challenge expired on June 28

·     Bausch Health Cos. (BHC) plans to spin off its faster-growing eye-care business from its core pharmaceutical operations, breaking apart a company previous management had built through such acquisitions, according to people familiar with the matter – WSJ reports

·     Immunomedics (IMMU) Q2 EPS loss (73c) vs. est. loss (34c); cash and cash equivalents $971.2 million, +97% YoY

·     OraSure Technologies (OSUR) 2Q EPS loss (16c) vs. est. loss (10c) and cash and cash equivalents $173.9 million vs. $72.6 million YoY

·     PTC Therapeutics (PTCT) Q2 EPS loss ($2.78) on revs vs. est. loss ($1.30) and $82.78M

·     SurModics (SRDX) announced it has received FDA 510 clearance for its Sublime Radial Access 0.014 Rapid Exchange, or RX, Percutaneous Transluminal Angioplasty, or PTA, Dilatation Catheter

·     Tivity Health (TVTY) Q2 adj EPS 79c on revs $262.6M vs. est. $225.7M

 

Industrials & Materials

·     Glencore (GLNCY) posted a $2.6 billion net loss in the first half of the year. The loss was driven by impairments of $3.2 billion as a result of lower commodity prices.

·     CF Industries (CF) Q2 EPS 89c on revs $1.2B vs. est. 65c/$1.15B

·     Sunoco (SUN) Q2 adj Ebitda $182M vs. est. $153M; Q2 revs $2.08B vs. est. $2.81B

 

Technology, Media & Telecom

·     Carvana (CVNA) shares fell -9%; says retail units sold rose 25% in FQ1 to 55,098 and revenue was up 13% to $1.118B; total gross profit per unit was $2,726 vs. $3,123 a year ago; no formal guidance was issued, but points to improving trends; Q2 revenue $1.12B vs. est. $1.15B

·     CenturyLink (CTL) 2Q adjusted EPS 42c vs. est. 32c; 2Q revenue $5.19B vs. est. $5.14B; 2Q adjusted Ebitda $2.17 billion, -4.2% YoY

·     3D Systems (DDD) Q2 results missed estimates on the top and bottom lines, and announces reorganizing the business to focus on two verticals: Healthcare and industrial; 3D expects the restructuring to reduce operating costs by $100M per year starting next year; will cut the workforce by about 20% and take a $25-30M charge in H2; Q2 revenue was down 29% YoY

·     Fastly (FSLY) Q2 Non-GAAP EPS of 2c beats by 3c but GAAP EPS of -$0.14 misses by $0.07; revenue of $74.66M (+62.3% Y/Y) beats by $3.21M; total customer count increased to 1,951 up from 1,837 in Q1 2020 – the largest quarterly growth since IPO.

·     GoDaddy (GDDY) Q2 revs $806.4M vs. est. $794.27M; reports total bookings of $936.3 million, up 10.7% year over year; says has now surpassed 20 million paying customers, having added more than 400,000 net new customers during Q2; expects revenue growth of approximately 10% versus 2019. For the full year, unlevered free cash flow is expected in the range of $815M-$825M

·     Roku (ROKU) Q2 revenue $356.1M vs. est. $314.8M; 2Q average rev. per user $24.92, +18% YoY; reports 3.2M incremental active accounts added in Q2 to reach 43M (up 41% YoY) says streaming hours increased by 2.3B hours over last quarter

·     Live Nation (LYV) Q2 EPS loss ($2.67) of revs $74.1M vs. est. ($2.08)/$268.37M; 2Q adjusted operating loss $431.9 million vs. profit $319.2 million YoY; 2Q negative adjusted free cash flow $450.2 million

·     Sonos (SONO) -14%; Q3 EPS loss (52c) vs. est. loss (13c); sees FY revenue $1.28 billion to $1.29 billion vs. estimate $1.25 billion

·     Synaptics (SYNA) Q4 EPS $1.24 on revs $277.6M vs. est. $1.06/$276.02; sees Q1 revenue $315M-$335M vs. est. $294.2M; completed the acquisitions of certain assets and manufacturing rights associated with Broadcom’s wireless IoT connectivity business and on July 31, 2020, completed the purchase of DisplayLink Corp.

·     Western Digital (WDC) Q2 EPS $1.23 on revs $4.3B vs. est. $1.21 and $4.34B; sees Q1 EPS 45c-65c on revs $3.7B-$3.9B well below the $1.33 and $4.35B estimates

·     Zynga (ZNGA) reports Q2 EPS loss of ($0.16), but $451.7M rev, +47% YoY; Q2 bookings $518.1M, +38% YoY; said it would buy hyper-casual game developer Rollic