Morning Preview: October 23, 2020

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Early Look

Friday, October 23, 2020





DJ Industrials




S&P 500










Stock futures are looking mostly higher following a much more civil debate between President Trump and Democratic hopeful Joe Biden last night that focused on a variety of topics including coronavirus shutdowns, oil and solar industries, minimum wage and jobs with the election eleven days away. However, Nasdaq futures are looking flat following weaker Q3 results from Intel (INTC) that showed a surprise decline in Data Center Group revenues as they fell -10% YoY, overshadowing an in-line quarter and raised year guidance. Earnings have been a key focus this week as nearly 100 of the 500 S&P companies having reported thus far, with Refinitiv noting a roughly 84% earnings beat. Markets still await news of a stimulus deal, though markets were boosted again yesterday after U.S. House Speaker Nancy Pelosi reported progress in talks with the Trump administration for another round of financial aid and said legislation could be hammered out “pretty soon.” White House economic adviser Larry Kudlow cautioned “significant policy differences” remained, which were unlikely to be resolved before the election. Value stocks won over growth on Thursday as the Russell 2000 outperformed rising 1.65%, led by energy (up over 4%) and financials (boosted as the 10-year Treasury yield topped 0.85% for the first time since June), while airlines also soared on hopes of a rescue package. In Asian markets, The Nikkei Index rose 42 points to 23,516, the Shanghai Index fell -34 points to 3,278, and the Hang Seng Index gained 132 points to 24,918. In Europe, the German DAX is higher by 125 points to 12,670, while the FTSE 100 gains about 80 points to 5,870. In vaccine news, GILD shares rise 5% announced that the U.S. FDA has approved the antiviral drug Veklury (remdesivir) for the treatment of patients with COVID-19.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 17.93 points, or 0.52%, to 3,453.49

·     The Dow Jones Industrial Average rose 152.84 points, or 0.54%, to 28,363.66

·     The Nasdaq Composite climbed 21.31 points, or 0.19%, to 11,506.01

·     The Russell 2000 Index advanced 26.48 points, or 1.65% to 1,630.25


Economic Calendar for Today

·     9:45 AM EST      Markit Composite Flash PMI, Sept

·     9:45 AM EST      Markit Manufacturing PMI Flash

·     9:45 AM EST      Markit Services Flash PMI, Sept

·     1:00 PM EST       Baker Hughes Weekly Rig Count






WTI Crude















10-Year Note





World News

·     The flash eurozone composite purchasing managers index fell to 49.4 in October from 50.4 in September, falling just below the 50 mark that indicates deteriorating conditions (economists had expected a 49.5 reading). The flash eurozone services PMI fell to 46.2 from 48, while the manufacturing PMI rose to 54.4 from 53.7.

·     Consumer sentiment in the U.K. tumbled in October, erasing gains from the last four months, as market research firm GfK fell to minus 31 in October, six points less compared with the minus 25 registered the prior month


Sector News Breakdown


·     Boston Beer (SAM) Q3 EPS $6.51 on revs $492.8M vs. est. $4.56 and $518.4M; guides year EPS $14.00-$15.00 vs. est. $12.74; sees FY gross margin 46% to 47%, saw 46% to 48%; full-year 2020 shipments and depletions growth is now estimated to be between 37% and 42% and targeting overall volume growth rates in 2021 to be between 35% and 45%

·     Mattel Inc. (MAT) Q3 adj EPS 95c on sales $1.63B vs. est. 39c and $1.46B; qtrly worldwide barbie gross sales $532.2 mln vs $412.8 mln, worldwide hot wheels gross sales $312.8 mln vs $293.3 mln and Fisher-Price and Thomas & Friends gross sales $387.6 mln vs $396.3 mln; expect net sales & gross sales to grow in Q4

·     BJ Restaurants (BJRI) 3Q EPS ($0.30) (includes pre-tax gains for sale-leaseback and settlement with credit card providers) vs. est. ($0.72) on revs $198.9Mm vs. est. $184.3Mm, qtrly comps -30.2%; 3Q restaurant level operating margin 9.5% vs. 13.5% YoY

·     Uber Technologies Inc. (UBER) and Lyft Inc. (LYFT) must classify their drivers in California as employees, a state appeals court ruled Thursday. The two had appealed a San Francisco Superior Court judge’s August decision that called for the ride-hailing services to immediately comply with the law, which led to the companies threatening to stop serving their home state

·     Walmart Inc. (WMT) sued the federal government in an attempt to strike a pre-emptive blow against what it said is an impending opioid-related civil lawsuit from the Justice Department.

·     Clarus Corporation (CLAR) has cancelled its previously announced proposed $85M convertible senior notes due 2026 offering.


Energy, Industrials & Materials

·     DMC Global (BOOM) files prospectus supplement related to offering of common stock of up to $75M; Q3 EPS 8c on revs $55.3M beating ests $46.5M; gross margin was 25%, up from 15% in Q2 2020 and down from 36% in Q3 2019; sees Q4 revs $50M-$55M vs. est. $49.4M

·     Leidos (LDOS) awarded a ~$149.24M IDIQ contract containing cost-plus-fixed-fee, cost reimbursement and firm-fixed-price provisions.

·     US Xpress (USX) 3Q adj EPS $0.20 vs. est. $0.23 on revs $431.5Mm vs. est. $445.4Mm, had $154.9Mm liquidity end of qtr; guides FY net CAPEX about $100-120Mm



·     Capital One (COF) Q3 adj EPS $5.05 on revs $7.4B well above est. $2.01 and $6.7B; qtrly provision for credit losses decreased 92% to $331 million; net interest margin of 5.68%, decreased 10 bps; qtrly net interest income $5,555 mln vs $5,737 mln and common equity tier 1 capital ratio under Basel iii standardized approach of 13% at September 30

·     Everest Re (RE) said it expects Q3 pre-tax net catastrophe losses of $300M, net of reinsurance and reinstatement premiums which includes the impact of Hurricanes Laura, Isaias and Sally, wildfires in California and Oregon, and other events including the Midwest United States Derecho windstorm

·     SVB Financial (SIVB) Q3 EPS $8.47 vs. est. $5.34; 3Q net interest margin 2.80% vs. 3.34% YoY and 3Q net interest income $516.8 million, -1.3% YoY

·     Bank OZK (OZK) Q3 EPS 84c on revs $145.7M vs. est. 58c and $244.3M



·     eHealth (EHTH) 3Q adj EPS ($0.36) vs. est. ($0.58) on revs $94.3Mm vs. est. $86.4Mm; guides FY GAAP EPS $2.91-$3.47 vs. est. $3.33, sees FY revs $630-$670Mm vs. est. $655Mm; 3Q total estimated membership 1.14 million, +15% YoY

·     Gilead Sciences (GILD) announced that the U.S. FDA has approved the antiviral drug Veklury (remdesivir) for the treatment of patients with COVID-19 requiring hospitalization

·     NextGen Healthcare (NXGN) 2Q adj EPS $0.30 vs. est. $0.20 on revs $140Mm vs. est. $133Mm; guides FY revs $535-551Mm vs. est. $540Mm, sees FY adj EPS $0.83-0.93 vs. est. $0.79


Technology, Media & Telecom

·     Intel Corp. (INTC) 3Q adj EPS $1.11 vs. est. $1.11 on revs $18.3B vs. est. $18.25B; guides FY revs $75.3B vs. est. $75.2B, sees FY adj EPS $4.90 vs. est. $4.85, sees FY CAPEX about $14.2-14.5B; – third 10nm manufacturing facility now fully operational and now expects to ship 30% higher 10nm product volumes in 2020 vs. Jan expectations – shares fell after saying data centric revenue was down -10% Y/Y overall with DCG down -7% Y/Y to $5.9B, below the $6.22B consensus. Within DCG, cloud revenue was up 15%, while the Enterprise & Government market was down 47% after two quarters of 30%+ growth

·     Limelight Networks (LLNW) cuts FY20 EPS view to (2c) to 8c from 0c-10c and backs FY20 revenue view $230M-$240M vs. est. $236.6M; sees FY adj Ebitda $28M to $30M, saw $28M to $35M

·     Manhattan Associates (MANH) Q3 adj. EPS 51c on revs $149.76M vs. est. 39c/$138.87M; Q3 cloud subscription revenue was $21.1M vs. $14.2M YoY and license revenue was $13.2M vs. $15.5M YoY with service revenue was $73.5M for Q3, compared to $91.6M YoY; raises FY20 adj. EPS view to $1.62-$1.66 from $1.53-$1.59 and up year revs view to $574M-$579M from $554M-$570M

·     Seagate (STX) Q2 adj EPS 93c on revs $2.31B vs. est. 88c and $2.34B; 1q adjusted gross margin 26.5% vs. 26.7% YoY; sees Q2 adjusted EPS $1.10, plus/minus 15c vs. est. $1.08 and revs $2.55B, plus/minus $200M vs. est. $2.48B; approved a $3 bln increase to share repurchase authorization

·     Verisign (VRSN) 3Q EPS $1.49 vs. est. $1.26 on revs $318Mm vs. est. $316Mm, processed 10.9Mm new domain name registrations for .com and .net during; ended Q3 w/ 163.7M domain name registrations


Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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