Early Look

Thursday, May 4, 2023

Futures	Up/Down	%	Last
Dow	-28.00	0.08%	33,464
S&P 500	-4.25	0.10%	4,103
Nasdaq	26.50	0.20%	13.127

 

 

U.S. futures are down slightly, paring overnight losses (SPUZ back above 4,100 after lows of 4,075.50), following several developments in the financial/banking sector and as investors further digest the FOMC rate news and Powell commentary yesterday. The Fed on Wednesday raised interest rates by a quarter of a percentage point and signaled it may pause further increases, giving officials time to assess the fallout from recent bank failures, wait on the resolution of a political standoff over the U.S. debt ceiling, and monitor the course of inflation. While investors initially cheered the possibility of a pause, their certainty appeared to wane as Chair Jerome Powell spoke since the Fed statement’s new language does not guarantee the Fed will hold rates steady at its next meeting in June. Powell noted that the labor market is “very, very strong” and that inflation is still running high and well above the Fed’s 2% goal.

 

Regional banking concerns are not going away with PacWest (PACW) the latest to tumble after reports the company has been weighing a range of strategic options, including a sale. The Bloomberg report late yesterday follows three bank failures over the last month (SBNY, SIVB, FRC) and took shares of other regional bank stocks lower this morning by -40%. This morning, Charlie Gasparino of Fox Business news tweeted: @CGasparino: SCOOP: Senior banking execs tell @FoxBusiness that they believe @SecYellen @FDICgov are moving toward either an explicit or de facto guarantee of deposits above the $250k limit to stem the regional banking crisis now threatening a new set of mid-sized institutions developing.” Regional banks are still down sharply overnight but have slightly pared losses on reports.

 

Another absolute flurry of earnings reports this morning and tonight with Apple (AAPL) the highlight after the close tonight. In Asian markets, The Nikkei Index rise 34 points to 29,157, the Shanghai Index reopened from holiday, rising 27 points to 3,350, and the Hang Seng Index gained 249 points to 19,948. In Europe, the German DAX is lower by about -90 points or 0.55% to 15,725, while the FTSE 100 is down -0.75% to 7,730.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -28.83 points, or 0.70%, to 4,090.75.

·     The Dow Jones Industrial Average fell -270.29 points, or 0.80%, to 33,414.24.

·     The Nasdaq Composite slumped -55.18 points, or 0.46%, to 12,025.33.

·     The Russell 2000 Index advanced 7.17 points, or 0.41% to 1,739.28.

 

Economic Calendar for Today

·     8:30 AM ET            Weekly Jobless Claims…est. 240K

·     8:30 AM ET            Continuing Claims…est. 1.865M

·     8:30 AM ET            International Trade for March…est. (-$63.3B)

·     8:30 AM ET            Unit Labor Costs for Q1…est. +5.5% (prior +3.2%)

·     8:30 AM ET            Nonfarm Productivity for Q1…est. (-1.8%) vs. prior +1.7%

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

 

Earnings Calendar:

·     Earnings Before the Open: ACIW AEP ALNY ARW BALL BDX BERY BKI BLD BV BWA CAH CARS CCLP CCOI CG CGNX COMM COP DDOG DINO DLX DNB DNOW DOC ENOV FOUR FUN GCI GEL GOLD GOLF GPRE H HAYW HII ICE IDCC IRM ITCI ITRI ITT JLL K KTB LAMR LAUR MAC MDU MLM MMP MPLN MRNA NFE NS OWL PARA PBH PCG PENN PNW PPL PTON PWR PZZA RCM REGN RRR SABR SHAK SPH SRE STWD SWK SXC TFX TRGP UNIT VMC W WCC WD WRK XPO XYL ZTS

·     Earnings After the Close: AAPL AAOI ACCO ADC AIG ALEX ALTR AMN AOSL ATEN BCC BECN BGS BIGC BILL BIO BKNG BL BMBL BOOM CABO CDLX CHUY CNXN COHU COIN COLD CRUS CVNA CYTK DASH DBX DKNG DLB DRH ED EGLE ENV EOG EXPE FIGS FIVNFND FNKO FOXF FTNT GDDY GDOT GSBD HASI HAYN HEAR HTGC INGN IRTC JAMF KE LASR LGND LNT LOCO LYFT LYV MATX MCHP MNTV MP MPWR MRIN MTD MTZ NCR NGVC NOG OPEN PBLA PBPB PCTY PLYA PODD POST POWI QLYS RDFN REG RKT RMAX RYAN SEM SG SQ TDC TMST TRUP TVTX UPLD VVI WLDN WW XPOF YELP ZEUS

 

Other Key Events:

·     China Caixin Services PMI for April

 

 

Macro	Up/Down	Last
Nymex	0.32	68.92
Brent	0.58	72.91
Gold	9.30	2,046.30
EUR/USD	-0.0006	1.1053
JPY/USD	-0.05	134.62
10-Year Note	-0.034	3.369%

 

 

World News

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -20.8 vs -14.4 last week. Bulls remain unchanged at 24.1%, Neutrals fall to 31% from 37.4%, Bears rise to 44.9% from 38.5%.

 

Sector News Breakdown

Consumer

·     Alibaba Group Holding Ltd.’s (BABA) international online shopping unit is exploring a US initial public offering as it weighs options to spur growth for the business that includes major e-commerce brands Lazada and AliExpress. https://bloom.bg/3NFRHck

·     Costco (COST) April total comp sales +1.4%, vs. est. +1.5%; April US comp sales ex-gas, FX +2.9%, vs. est. +3.8%; reported net sales of $17.85 billion for the retail month of April, the four weeks ended April 30, 2023, an increase of 3.0 percent from $17.33 billion last year.

·     Etsy Inc. (ETSY) 1Q EPS $0.53 vs est. $0.49, adj EBITDA $170.3Mm vs est. $166.6Mm, on revs $640.9Mm vs est. $622.1Mm; guides 2Q revs $590-640Mm vs est. $625.4Mm, adj EBITDA mgn approx 26%.

·     Host Hotels (HST) 1Q AFFO/shr $0.55 vs est. $0.48 on revs $1.38B vs est. $1.31B; guides FY AFFO/shr $1.84-1.95 vs est. $1.75, raises FY REVPAR growth guide to +7.5-10.5%.

·     Tripadvisor (TRIP) 1Q adj EPS $0.05 vs est. $0.07 on revs $371Mm vs est. $359.4Mm, adj EBITDA $33Mm vs est. $39.8Mm.

·     Zillow Group (ZG) Q1 revenue $469M vs. est. $424.08M; Q1 adj EBITDA $104M; said Q1 residential revenue decreased 14% y/y to $361M; traffic to Zillow Group’s mobile apps and websites in Q1 was 212 million average monthly unique users, flat y/y; visits during Q1 were 2.5 billion, down 5% y/y; sees Q2 revenue $451M-$479M vs. est. $456.38M.

 

Energy

·     APA Inc. (APA) 1Q adj EPS $1.19 vs est. $1.03 on revs $2B vs est. $1.8B, adj EBITDAX $1.26B vs est. $1.154B.

·     Callon Petroleum Co (CPE) to acquire Permian basin-based Percussion Petroleum Operating II LLC in a cash-and-stock deal valued at about $47M while also agreed to sell all its Eagle Ford assets to Ridgemar Energy Operating LLC for $655M in cash.

·     Eversource Energy (ES) Q1 EPS $1.41 vs. est. $1.34; Q1 revs $3.796B vs. est. $3.22B; Q1 Ebit $749.5M; reaffirmed its 2023 non-GAAP earnings projection of between $4.25 per share and $4.43 per share.

·     Marathon Oil (MRO) 1Q adj EPS $0.67 vs est. $0.60, on revs $1.68B vs. est. $1.62B, FCF $333Mm; no change to FY production guidance.

·     SolarEdge (SEDG) Q1 EPS $2.90 vs. est. $1.92; Q1 revs $943.9M vs. est. $932.5M; sees Q2 revenue $970M-$1.01B vs. est. $986.4M, sees Q2 gross margin expected to be within the range of 32% to 35% and non-GAAP operating profit in range of $195M-$215M.

·     SunRun (RUN) 1Q EPS ($1.12) vs est. ($0.12) on revs $589.85Mm vs est. $518.13Mm; expects net subscriber value to increase sequentially in 2Q and be materially higher in 2H vs 1H, sees solar energy capacity installed growth 270-290 megawatts in 2Q and +10-15% for FY23.

·     Williams Energy (WMB) 1Q adj EPS $0.56 vs est. $0.46, adj EBITDA $1.795B vs est. $1.633B; guides FY adj EBITDA $6.4-6.8B vs est. $6.5B.

 

Financials

·     AllState (ALL) Q1 EPS adj loss (-$1.30) vs. est. loss (-$1.42); Q1 revs $13.79B vs. est. $11.75B; 1Q Book Value Per Share $58.65; 1Q Catastrophe Loss $1.69B; 1Q Property and Liability Insurance Premiums Earned $11.64B.

·     First Horizon (FHN) shares tumble -39% after mutually agreeing to end their merger agreement with TD Bank (TD). TD informed First Horizon that TD does not have a timetable for regulatory approvals to be obtained for reasons unrelated to First Horizon,” the companies said in a release. TD to make a $200 mln payment to FHN https://on.mktw.net/3nxpzNN

·     Fleetcor Technologies (FLT) Q1 adj EPS $3.80 vs. est. $3.69; Q1 revs $901.3M vs. est. $881.56M; boosts FY23 EPS view to $16.95-$17.35 from prior $16.25-$17.25 and raises FY23 revenue view to $3.82B-$3.86B from $3.8B-$3.85B (est. $3.81B).

·     MetLife (MET) announces new $3B share buyback authorization; Q1 adj EPS $1.52 vs. est. $1.81; Q1 revs $16.13B vs. est. $17.06B; Q1 book value per share $36.89, and book value per common share, excluding AOCI $53.83; return on equity 0.2%, estimate 13%.

·     PacWest (PACW) said to weigh strategic options, including sale, Bloomberg reported.

·     Public Storage (PSA) 1Q core FFO/shr $4.08 vs est. $4.01 on revs $848.7Mm vs est. $1.09B; guides FY same-store revs +2.75-5.0%, same-store expense growth +4.75-6.75%, same-store op Inc +1.5-5.1%, core FFO/shr $16.15-16.80 vs est. $16.75.

·     Realty income (O) 1Q FFO/shr $1.04 vs est. $1.01 on revs $944.39Mm vs est. $907.67Mm; guides FY AFFO/shr $3.94-4.03 vs prior $3.93-4.03 and est. $4.12.

 

Healthcare

·     Option Care Health Inc (OPCH) said late Wednesday it is acquiring Amedisys Inc (AMED) in an all-stock deal valued at $3.6 billion, including debt; AMED stockholders will receive 3.0213 shares of OPCH common stock for each share held (values AMED around $97.38).

·     Kenvue (KVUE), the JNJ big consumer-healthcare business priced its initial public offering at $22 a share in the biggest new-stock listing of the year; 172.8M share IPO priced at $22.00.

·     QuidelOrtho (QDEL) Q1 adj EPS $1.80 vs. est. $1.49; Q1 revs $846.1M vs. est. $794.05M; raises FY23 adjusted EPS view to $5.15-$5.70 from $5.00-$5.60 vs. est. $5.23.

·     Qiagen (QGEN) Q1 EPS $0.51 vs. est. $0.47; Q1 revs fell -23% y/y to $485M vs. est. $480.54M; affirmed both year EPS and revenue outlooks.

·     STERIS (STE) announces a new $500M share buyback program.

·     Vertex Pharma (VRTX) announces U.S. FDA Approval for KALYDECO(R) (ivacaftor) to treat eligible infants with CF ages 1 month and older.

·     Zynex (ZYXI) announces offering of $50M of convertible senior notes; announces offering of 2M shares of common stock for holders.

 

Industrials & Materials

·     Apollo Global Management (APO) is nearing a deal to buy industrial-parts manufacturer Arconic (ARNC) in a deal is set to value the co at $30 a share, or roughly $3 billion, according to the people. https://on.wsj.com/42iNsXW

·     Albemarle (ALB) Q1 ad EPS $10.32 vs. est. $7.03; Q1 revs $2.6B vs. est. $2.73B; Q1 adj Ebitda $1.5B; cuts FY23 adjusted EPS view to $20.75-$25.75 from $26.00-$33.00 (est. $25.74) and lowers FY23 revenue view to $9.8B-$11.5B from $11.3B-$12.9B (est. $11B) to reflect current lithium market pricing; said expects to maintain positive free cash flow.

·     Corteva Inc. (CTVA) raises FY net sales view to $18.6B-$18.9B from prior $18.1B-$18.4B; Q1 adjusted EPS $1.16 tops est. $0.93 and revs $4.88B vs. est. $4.76B; raises FY23 operating EPS view to $2.80-$3.00 from $2.70-$2.90.

·     Ingersoll Rand (IR) 1Q adj EPS $0.65 vs est. $0.52 on revs $1.629B vs est. $1.483B; raises FY organic revs guide by 300bps to +6-8%, raises total revs growth guide to +10-12% vs est. +8.5%, raises FY adj EBITDA guide to $1.66-1.71B vs est. $1.614B.

·     Kratos Defense (KTOS) 1Q adj EPS $0.06 vs est. $0.05 on revs $231.8Mm vs est. $223Mm; guides 2Q revs $230-240Mm vs est. $241.27Mm, adj EBITDA $14-18Mm vs est. $20.15Mm; affirms FY forecast.

·     Mosaic Company (MOS) Q1 adj EPS $1.14 vs. est. $1.24; Q1 sales fell -8.1% y/y to $3.60B vs. est. $3.23B; Q1 adj EBITDA fell -46% y/y to $777M below ests; potash sales volume 1.90 million tonnes, +5.6% y/y, and phosphates volumes 1.80 million tonnes.

·     Werner Enterprise (WERN) Q1 EPS $0.60 vs. est. $0.71; Q1 revs $832.7M vs. est. $851.5M; Q1 Operating margin of 6.4%, down 450 basis points; Truckload Logistics revenues (78% of Logistics revenues) increased 41%, driven by an increase in shipments.

 

Technology, Media & Telecom

·     Qualcomm inc. (QCOM) 2Q adj EPS $2.15 vs est. $2.15 on revs $9.28B vs est. $9.1B; guides 3Q revs $8.1-8.9B vs est. $9.1B and adj EPS $1.70-1.90 vs est. $2.16, sees larger-than-normal sequential decline in qtr revs, continued impact of macro headwinds, weaker global handset channel inventory drawdown.

·     Ansys (ANSS) 1Q revs $509.4Mm vs est. $492.6Mm, adj EPS $1.85 vs est. $1.61; guides 2Q revs $473-498Mm vs est. $521.15Mm, adj EPS $1.35-1.53 vs est. $1.88; sees FY revs $2.242-2.322B vs est. $2.307B, adj EPS $8.39-8.91 vs est. $8.65.

·     Ceridian HCM Holding (CDAY) Q1 adj EPS $0.31, in-line with ests and revs $370.6M vs. est. $361M; sees Q2 revenue $356M-$360M vs. est. $362.54M; sees Q2 adjusted EBITDA of $87M-$90M; sees FY23 adjusted EBITDA of $366M-$379M.

·     Cognizant technology (CTSH) Q1 adj EPS $1.11 vs. est. $1.04; Q1 revs $4.8B vs. est. $4.73B; sees FY23 adjusted EPS $4.11-$4.34 vs. est. $4.43 and revs $19.2B-$19.6B vs. est. $19.56B.

·     Confluent (CFLT) 1Q adj EPS ($0.09) vs est. ($0.14) on revs $174.3Mm vs est. $167.3Mm; guides 2Q revs $181-183Mm vs est. $181.4Mm, adj EPS ($0.08) – ($0.06); sees FY revs $760-765Mm vs est. $761.8Mm, adj op mgn -14% to -13% and adj EPS ($0.20) – ($0.14) vs est. ($0.26).

·     Equinix (EQIX) Q1 AFFO $8.59 vs. est. $7.92; Q1 revs $2.0B vs. est. $1.98B; Customer deployments across multiple regions increased to 76% of total recurring revenue, an increase of 1% quarter over quarter.

·     Fastly (FSLY) Q1 EPS loss (-$0.09) vs. est. loss (-$0.10); Q1 revs $117.56M vs. est. $116.09M; said trailing 12-month net retention rate decreased to 116% in Q1 from 119% in Q4; sees 2023 EPS loss (27c)-(21c) vs. est. loss (-$0.26) and revs $495M-$505M vs. est. $501.2M.

·     HubSpot (HUBS) 1Q adj EPS $1.25 vs est. $0.83, adj EBIT $67.7Mm vs est. $46.3Mm on revs $501.6Mm vs est. $474.8Mm; guides 2Q revs $503-505Mm vs est. $497.9Mm, adj op Inc $54-56Mm vs est. $50.4, adj EPS $0.98-1.00 vs est. $0.88; sees FY revs $2.08-2.088B vs est. $2.058B, adj op Inc $275-279Mm vs est. $247Mm, adj EPS $4.80-4.85 vs est. $4.27.

·     Infinera (INFN) 1Q adj EPS $0.02 vs est. ($0.02) on revs $392.1Mm vs est. $381.4Mm, adj gr mgn 38.8%; guides 2Q revs $355-395Mm vs est. $400.5Mm, adj gr mgn 37-40%, adj op exp $140-144Mm, adj EPS ($0.08) – $0.02 vs est. $0.02.

·     MercadoLibre (MELI) Q1 EPS $3.97 vs. est. $3.08; Q1 revs $3B vs. est. $2.87B; Q1 total payment volume $37B, up 96.1% y/y, with GMV of $9.4B up 43.3% y/y; added 3.9 million new users across its verticals, bringing its total active use base to 100.5 million; Q1 operating income rose 145% in dollar terms, to reach $340 million, while its operating margin was at 11.2%.

·     Qorvo inc. (QRVO) 4Q adj EPS $0.26 vs est. $0.13 on revs $632.7Mm vs est. $621.2Mm; guides 1Q revs $620-660Mm vs est. $626.9Mm, adj gr mgn about 41.5% and adj EPS about $0.15 vs est. $0.18.

·     Synaptics (SYNA) Q3 EPS $1.89 vs. est. $1.86; Q3 revs $326.6M vs. est. $325.47M; sees Q4 revenue $210M-$240M, below consensus $330.39M – said expect our June quarter revenue to decline sequentially, and we have begun to implement spending controls.