Early Look

Friday, May 1, 2020

Futures	Up/Down	%	Last
DJ Industrials	-435.00	1.80%	23,795
S&P 500	-56.50	1.95%	2,846
Nasdaq	-217.50	2.41%	8,771

 

 

U.S. stock futures are pointing to a lower open, seeing additional selling pressure on the first day of trading in May after falling on Thursday as President Trump said last night he was considering tariffs to retaliate against China over its handling of the pandemic. The Washington Post late Thursday had reported that U.S. officials are beginning to explore proposals for punishing China for its handling of the pandemic, adding to bearish sentiment on Wall Street. The report said some administration officials have discussed having the U.S. cancel part of its debt obligations to China. Asked about that option, Trump said “I could do the same thing but even for more money, just putting on tariffs.” Amazon (AMZN) shares fell over 4% after posting over $75 billion in sales in the first quarter but reported a profit decline, and it may lose money as it spends to keep up with demand amid the coronavirus crisis. Apple (AAPL) shares also declined as profits dipped slightly and the company declined to give a forecast for the second quarter. While stocks are pointing to weakness early, major averages recorded stellar gains in April as The Dow Jones Industrial Average posted a gain of about 11%, the S&P 500 index gained 12.7% return month to date (both the best monthly returns since 1987), while the Nasdaq Composite Index jumped over 15.5% for April, with those returns representing the first monthly advance for the equity benchmarks this year. The Russell 2000 index posted its sharpest monthly rise since 2011 and its best April since 2009. In Asian markets overnight, The Nikkei Index dropped -574 points (2.84%) to settle at 19,619, while both the Shanghai Index and Hang Seng Index remained closed. In Europe, the German DAX is down about -250 points to 10,860, while the FTSE 100 is down around -125 points to 5,780.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -27.08 points, or 0.92%, to 2,912.43

·     The Dow Jones Industrial Average fell -288.14 points, or 1.17%, to 24,345.72

·     The Nasdaq Composite slipped -25.16 points, or 0.28%, to 8,889.55

·     The Russell 2000 Index declined -50.10 points, or 3.68% to 1,310.66

 

Economic Calendar for Today

·     9:45 AM EST      Markit US Manufacturing PMI, Apr-F

·     10:00 AM EST    Construction Spending MoM for March

·     10:00 AM EST    ISM Manufacturing for April

·     1:00 PM EST       Baker Hughes Weekly Rig Count

·     Monthly auto sales data for April

 

Earnings Calendar:

·     Earnings Before the Open: ABBV, APO, BERY, CBOE, CHTR, EL, HON, HUN, ITT, LYB, MGI, MINI, MMP, NWL, PCG, PSX, TEX, TKR, WETF, WPC, WSC, WY, ZEUS

 

 

Macro	Up/Down	Last
WTI Crude	-0.32	18.52
Brent	-0.38	26.10
Gold	-8.80	1,685.40
EUR/USD	0.0029	1.0984
JPY/USD	-0.37	106.81
10-Year Note	-0.027	0.6118%

 

 

Sector News Breakdown

Consumer

·     Amazon.com (AMZN) Q1 EPS $5.01/$75.5B vs. est. $6.25/$73.61B; sees Q2 revenue $75B-$81B or to grow between 18% and 28% compared with second quarter 2019 vs. est. $77.99B; anticipates an unfavorable impact of approximately 70 basis points from foreign exchange rates; sees operating income (loss) is expected to be between ($1.5B) and $1.5B, compared with $3.1B in second quarter 2019 ; reports Q1 AWS net sales $10.22BB vs. $7.7BB a year ago and reports Q1 AWS operating income of $3.08B vs. $2.22B a year ago

·     Beazer Homes (BZH) 2Q EPS cont ops $0.35 vs est $0.26 on revs $489.4Mm, homes backlog +14.3%, avg selling price of homes in backlog +1.9%; qtrly unit orders of 1,661, up 3.9%; at close of q2, total liquidity was $294.3M

·     Builders FirstSource (BLDR) Q1 EPS 34c/$1.79B vs. est. 28c/$1.77B; Q1 gross margin 26% vs. 27.1% YoY; said for now, we are planning for weak demand levels to persist at least through the 2q of 2020

·     Columbia Sportswear (COLM) Q1 EPS 0c/$568.2M (and prior year EPS $1.07) vs. est. 59c/$612.47M; suspends dividends and buyback

·     El Pollo Loco (LOCO) reports comparable sales fell (-1.5%), in line with views as comparable sales at company-owned restaurants were down (-0.7%) and franchised outlets saw a (-2.2%) decline/restaurant margin was 17.6% of sales vs. 16.1% consensus; said is seeing sequential improvement during the restaurant dine-in closing period, with system same store sales improving six straight weeks and coming in at slightly better than negative 10% last week.

·     Floor & Décor (FND) 1Q adj EPS $0.34 vs est $0.26, on revs $554.9M vs. est. $542M; 1Q comps +2.4%; withdraws FY20 outlook

·     L Brands (LB) reduced its 2020 capex from an original forecast of approximately $550 mln to approximately $250 mln; says extending payment terms to vendors and suspending rent payments to landlords while stores are closed; has over $900 mln in cash as of April 30, 2020

·     MGM Resorts International (MGM) Q1 revenue was down 21% for Las Vegas Strip revenue properties and 10% for regional casinos. MGM China saw a 63% drop in revenue during the quarter; said Q1 consolidated adjusted EBITDAR plunged 61% to $295M, primarily attributable to the temporary suspension of casino operations.

·     Whirlpool (WHR) Q1 adjusted EPS $2.82/$4.33B vs. est. $2.62/$4.3B; sees year net sales decline about (13%-18%) and sees FY20 organic net sales decline of 10%-15%; targeting over $500M in net cost takeout, including raw materials savings in 2020

·     2U (TWOU) 1Q adj loss/shr 33C vs est loss/shr 43C on revs $175.5Mm vs est $173.9Mm

 

Energy

·     Concho Resources (CXO) Q1 adjusted EPS 72c/$922M vs. est. 66c/$1.08B; delivered oil production volumes of 209 Mboepd, exceeding the high end of the Company’s guidance range; further reducing capital spending in 2020 to about $1.6B (down 40% from prior guidance) and targeting $100 million in operating cost reductions; sees FY20 oil production approximately flat with 2019

·     National Fuel (NFG) reduces capex; says the E&P segment is lowering its fiscal 2020 net production guidance to a range of 230 to 240 Bcfe, which reflects the impacts of curtailments during the second quarter and estimated curtailments for the month of April.

 

Financials

·     Visa (V) 2Q adj $1.38 vs est $1.35 on net revs $5.9B vs est $5.75B; not providing FY outlook; cross-border volumes at constant currency 2% vs est 2.88%

·     Wells Fargo (WFC) Home Lending will temporarily stop accepting applications for all new home equity lines of credit after April 30, CNBC reported

 

Healthcare

·     Amgen (AMGN) Q1 adjusted EPS $4.17/$6.2B vs. est. $3.80/$5.98B; backs FY20 adjusted EPS view $14.85-$15.60 (est. $15.42) and backs FY20 revenue view $25B-$25.6B (est. $25.3B); Q1 Enbrel sales $1.15B vs. est. $1.16B

·     Agios Pharmaceuticals (AGIO) files automatic mixed securities shelf

·     Bristol Myers Squibb (BMY) and Acceleron Pharma Inc. (XLRN) said the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency has issued a positive opinion recommending the approval of Reblozyl for the treatment of adult patients with transfusion-dependent anemia.

·     Gilead (GILD) Q1 adjusted EPS $1.68/$5.55B vs. $5.2B prior period and vs. est. $1.57/$5.45B; product sales for the first quarter 2020 were $4.0 billion in the United States, $927 million in Europe and $551 million in other locations; 1Q Truvada revenue $406 million, -33% YoY below views and Q1 Genvoya revenue $824 million, -19% YoY

·     Molina Healthcare (MOH) 1Q adj EPS $3.02 vs est $2.98 on revs $4.55B vs est $4.47B; says to buy Magellan Complete Care for about $820Mm, sees buy adding $0.50-0.75 cash EPS in first year

·     Moderna (MRNA) signs a 10-year collaboration agreement with Basel, Switzerland-based Lonza Ltd. aimed at enabling larger scale manufacturing its SARS-CoV-2 vaccine, mRNA-1273, and additional products in the future.

·     Puma Biotechnology (PBYI) and Bixink Therapeutics, a new South Korean company working in the field of anti-cancer drugs and digital therapeutics, have entered into an exclusive agreement under which Bixink will commercialize NERLYNX in South Korea.

·     Tandem Diabetes (TNDM) Q1 EPS loss (25c)/$97.9M vs. est. loss (17c)/$84.6M; Q1 Worldwide pump shipments increased 18% to 17,378 pumps from 14,732 pumps and adjusted EBITDA improved to 4% of sales from less than 1% of sales last year; guides Q2 revs at least $85M (in-line w est.)

·     Stryker (SYK) Q1 adj EPS $1.84 on sales $3.6B vs. est. $1.71/$3.45B; not providing Q2 or year organic sales growth guidance

 

Industrials & Materials

·     U.S. Steel (X) Q1 EPS loss (73c) vs. est. loss (85c); 1Q net sales $2.75B, -21% YoY vs. est. $2.80B; 1Q adjusted Ebitda $64M, -78% YoY but vs. est. $35.6M; Q1 adjusted loss $123 million vs. profit $81 million MoM; granted Stelco at a purchase price of $100M the option to acquire a 25% interest in the company’s Minntac iron ore mining operations for an aggregate purchase price of $600M

·     Eastman Chemical (EMN) 1Q adj EPS $2.03 vs est $1.72 on revs $2.24B vs est $2.26B; withdraws FY earnings, cash flow guidance

·     Forward Air (FWRD) 1Q EPS $0.30 vs est $0.41 on op revs $342.5Mm vs est $344.4Mm, suspends qtrly guidance; sees signs of slow recovery emerging entering May, maintains qrtly div at $0.18 per share

·     MasTec (MTZ) Q1 EPS $1.60/$1.4B vs. est. 45c/$1.29B; Q1 backlog $8.3B; sees Q2 EPS 78c-89c vs. est. 93c and revs $1.5B-$1.6B vs. est. $1.76B; lowers year EPS and rev outlook to $7.3B-$7.7B vs. est. $7.54 with EPS $4.50-$5.00 vs. est. $4.61

·     United Airlines (UAL) 1Q adj loss/shr $2.57 vs est loss/shr $3.37, total liquidity about $9.6B as of Apr 29, sees daily cash burn $40-45Mm during 2Q; sees FY adj CAPEX below $4.5B

 

Technology, Media & Telecom

·     Apple Inc. (AAPL) Q2 revs $58.31B vs. est. $54.25B; 2Q iPhone revenue $28.96B, down -6.7% YoY but above est. $25.42B; boosts quarterly dividend to 82c from 77c and authorized an increase of $50 billion to the existing share repurchase program; 2Q service revenue $13.35 billion, +17% YoY, Q2 wearables, home and accessories $6.28 billion and 2Q products revenue $44.97 billion, -3.4% YoY; qtrly iPhone revenue $28.96 bln vs $31.05 B, ipad revenue $4.37 bln vs $4.87 B and Mac revenue $5.35 bln vs $5.51 bln prior; issues no further guidance

·     Atlassian (TEAM) 3Q non-IFRS $0.25 vs est $0.20 on revs $411.6Mm vs est $394.3Mm, sees 4Q adj EPS $0.17-0.22 vs est $0.23, sees 4Q revs $400-415Mm vs est $417.1Mm, sees FY $1.06-1.12 vs est $1.08; Total customer count at quarter’s end was 171,051, after adding a net new 6,261; liquidity at quarter’s end was $2.1B.

·     Bandwidth (BAND) Q1 non-GAAP EPS 4c/$68.5M vs. est. loss (11c)/$63.29M; number of active CPaaS customers was 1,808 as of March 31, 2020, an increase of 34% from 1,351 as of March 31, 2019; sees FY20 non-GAAP EPS (3c)-3c vs. est. loss (27c)

·     Western Digital (WDC) Q3 adj EPS $0.85 vs est $0.93 on revs $4.18B vs est $4.18B; guides 4Q adj EPS $1.00-1.40 vs est $1.24, sees 4Q revs $4.25-4.45B

·     Altice USA (ATUS) Q1 EPS loss (4c) on revs up 2.2% YoY to $2.45B; 1Q adjusted Ebitda $1.03 trillion vs. $1.03 billion YoY; says due to uncertainty related to COVID-19 disruptions, the company will provide an update to FY 2020 revenue growth and adjusted EBITDA margin at a later date; cuts FY20 capex view to below $1.3B from $1.3B-$1.4B prior forecast

·     NeoPhotonics (NPTN) Q1 EPS 12c/$97.4M vs. est. 5c/$86.5M; Q1 non-GAAP Gross margin was 31.2%, up from 30.9% in the prior quarter and up from 22.4% in the prior year; sees Q2 EPS 5c-15c on revs $94M-$102M above est. 6c/$93.0M

·     Zendesk (ZEN) Q1 adjusted EPS 11c/$237.5M vs. est. 6c/$236.8M; sees Q2 revenue $237M-$243M vs. est. $246.17M and guides Q2 adjusted operating income $8M-$12M; withdrawing full-year guidance; Q2 Gross margin ticked up to 78.3% from 73.5%; said it’s seeing a “higher trend of contraction among our smaller customers