Mid-Morning Look

Tuesday, November 05, 2024

U.S. stocks looking sharply higher to start the trading day as traders await results from the high-stakes U.S. presidential election as today marks the final day to vote! The results are likely to have a significant effect on where stocks end the year, but investors may want to brace for some near-term choppiness. The 10-yr yield pops to highs around 4.35% after the ISM data headline print was 56 (2-year highs), up from 54.9 in September in a morning filled with economic data, ahead of a slate of several central bank policy meetings this week with the FOMC and Bank of England both on Thursday (the RBA kept rates steady overnight). Earnings barrage continues with tons of big movers on results and guidance (recap below of some of the biggest moves). An interesting start to the day with broad market strength into election day! Industrials, Technology, and Consumer Discretionary all up over 1% but currently all eleven S&P sectors in the “green.” Crypto also had a nice rebound off yesterday losses with Bitcoin +3.8% back near $70,000.

• Sept exports -1.2% vs Aug +1.8%, imports +3.0% vs Aug -1.0%; Sept exports $267.95B vs Aug $271.19B, imports $352.31B vs Aug $341.98B; U.S. Sept capital goods imports $86.23B vs Aug imports $83.42B; The U.S.-China Sept trade deficit $31.81B vs Aug deficit $27.88B.
• S&P Global October final composite PMI at 54.1 (vs flash 54.3); U.S. S&P Global October final services PMI at 55.0 (vs flash 55.3).

• In Restaurants: BOWL reported Q125 revenues and AEBITDA of $260M and $63M vs estimates of $247M and $63M as same-store sales remained positive despite a tough start to the quarter and hurricane impacts in September. Management increased the low-end of the FY25 revenue guidance range with AEBITDA guidance unchanged. QSR reported Q3 revs $2.29B, below ests $2.31B on weak demand across Tim Hortons, Burger King and international markets including China and the Middle East and EPS of $0.93 vs. est. $0.95; consolidated comparable sales were 0.3% and net restaurants grew 3.8% versus the prior year. YUM Q3 revenue and profit miss on weak demand and stiff competition, especially for KFC in the U.S., along with choppy international sales; reports surprise drop in Q3 worldwide sales of -2%, vs. market expectations of a 0.23% rise while KFC’s same-store sales in the U.S. tumbled 5%, marking their third straight quarter of declines this year while Q3 Pizza Hut comparable sales -4%, vs. est. loss -1.73%.
• In Semiconductors: CRUS reported better results, primarily on stronger Apple as the top line beat expectation, but guidance was significantly worse ($510M vs Street’s $593M); GFS Q3 net revenue fell -6.1% y/y to $1.74B above est. $1.73B and adj EBITDA -6% y/y to $627M vs. est. $600.6M; guided Q4 EPS and revs above consensus views. LSCC reported in-line 3Q results and guided 4Q lower, as weakness within the Industrials end market continues to persist, partially offset by strength in Comms and Compute, as Telecom has bottomed, while data center is strong. NXPI posted in-line 3Q results and guided 4Q lower. 3Q results reflect in-line demand in Auto, while Industrial & IoT was below, and Mobile & Comms were slightly above. 4Q revenue is expected to be down 5% q/q, lower than consensus; SLAB shares slid as reported in-line 2Q results and guided 3Q flat q/q, meaningfully below consensus expectations for 13% q/q growth, as weakness within Industrial IoT broadened.

• AZPN +2%; after earnings and as EMR made a proposal to acquire the stake it does not already own in AZPN for $240 per share in cash, doubling down on its industrial automation push, which values co at $15.1 billion on an enterprise basis (Emerson already owns about 55% of shares in AspenTech, which it acquired in 2022).
• CMI +8%; posted a top and bottom-line beat ($5.86/$8.45B vs. est. $4.80/$8.3B) citing robust demand for its power generation products from data centers.
• EVER +9%; reported a Q3 beat and guided Q4 above consensus; Revenue/adjusted EBITDA of $144.5M/$18.8M exceeded consensus of $140.3M/$15.4M and guided to 4Q24 revenue/adjusted EBITDA of $133.5M/$15M above consensus of $126.2M/$12.5M.
• LPX +7%; trades all-time highs after Q3 EPS and revs topped consensus as Siding segment set new records for net sales and Adjusted EBITDA, and the OSB (Oriented Strand Board) segment delivered a solid quarter.
• PLTR +13%; shares jumped after results and upbeat guidance as see FY revs $2.805-2.809B vs est. $2.759B and adj op Inc $1.054-1.058B vs est. $971.04Mm.
• QNST +16%; after revenue and adjusted EBITDA exceeded consensus ests by 25% and 39%, respectively, as auto insurance recovery continues to pace ahead of expectations and raised midpoints of FY25 revenue/adjusted EBITDA guidance by 21%/41%.
• TSLA +4%; on track to snap its 6-day losing streak.

• AZN -7%; after Reuters reported, citing financial media firm Yicai, that dozens of senior executives at AstraZeneca China are expected to be implicated in the largest insurance fraud case in the nation’s pharmaceutical sector in years
• BEAM -6%; shares fall after Stat News reported a patient with sickle cell disease died while participating in a clinical trial of a CRISPR-based treatment from Beam Therapeutics, the company said this morning.
• CE -23%; shares tumbled after Q3 net earnings fell about 87% to $120M as adjusted EPS $2.44 missed consensus $2.93 on light revs ($2.6B vs. $2.7B); said intends to reduce dividend by 95% in Q1; 4Q guidance implies 2024 EPS of $8.15, compared to the prior guidance of $10.50.
• MAX -29%; revealed in 8K that on Oct 30, got initial settlement demand from FTC staff that they are prepared to recommend FTC approve filing complaint against co to seek injunctive and monetary relief and civil penalties.
• MQ -41%; shares tumbled after Q3 results and a substantial revision of FY24 revenue/gross profit guidance and an initial look at FY25 growth, which is now expected to be materially below the Company and Street estimates
• TCMD -18%; shares fall, downgraded at BTIG and Oppenheimer following Q3 results as reported revs of ~$73.1M below Street ests. of $76.0M as CMS documentation requirements and DME buying patterns impacted results.
• WYNN -5%; shares declined after Macau and Las Vegas both come in below estimates, and the forward look was somewhat more tempered across the board.