Early Look

Wednesday, April 26, 2023

Futures	Up/Down	%	Last
Dow	-30.00	0.09%	33,622
S&P 500	7.25	0.18%	4,100
Nasdaq	137.50	1.07%	12,947

 

 

After closing Tuesday at lows and posting the worst daily returns since mid-March, Nasdaq futures are looking sharply higher, rising 150 points or 1.15% after results from MSFT, GOOGL, and TXN last night lift technology stocks. Financials also get to breathe a sigh of relief as West Coast bank PACW reported better earnings and a rise in deposits in its quarterly results a day after FRC posted a 40% plunge in deposits. S&P futures are modestly higher while Dow futures are flat heading into another busy day of earnings results. Boeing, Meta, and eBay are among the companies reporting results today. Major U.S. stock indexes tumbled on Tuesday, as a combination of soft earnings from package delivery giant UPS hit transports (DJ Transports fell -3.6%, worst day since September) and renewed concerns about a recession while a plunge in quarterly deposits from regional bank FRC pressured the entire sector (shares fell -49%). Economic data showed consumer confidence dropped to a nine-month low as the effects of the Federal Reserve’s aggressive interest rate hikes may be starting to take hold. The central bank is still largely expected to raise rates by 25 basis points at its May 2-3 policy meeting. The Nasdaq fell roughly -2% and the Russell 2000 dropped -2.4% amid energy and banking weakness. In Asian markets, The Nikkei Index fell -203 points to 28,416, the Shanghai Index was flat at 3,264, and the Hang Seng Index rose 139 points to 19,757. In Europe, the German DAX is down -85 points to 15,787, while the FTSE 100 slips -17 points to 7,873. In Washington, the House Rules Committee approved terms of debate for the bill on a partisan vote, a last step before sending it to the full House chamber, which could debate it either later in the day or later this week.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -65.41 points, or 1.58%, to 4,071.63.

·     The Dow Jones Industrial Average fell -344.57 points, or 1.02%, to 33,530.83.

·     The Nasdaq Composite slumped -238.05 points, or 1.98%, to 11,799.16.

·     The Russell 2000 Index declined -42.92 points, or 2.40% to 1,745.95.

 

Economic Calendar for Today

·     7:00 AM ET            MBA Mortgage Applications Data

·     8:30 AM ET             Durable Goods Orders M/M for March

·     8:30 AM ET             Durable Goods Ex Transports for March

·     8:30 AM ET             Advance Goods Trade Balance for March

·     10:30 AM ET           Weekly DOE Inventory Data

·     1:00 PM ET              U.S. Treasury to sell $43B in 5-year notes.

 

Earnings Calendar:

·     Earnings Before the Open: ADP AMT APH AVY BA BBGI BLFY BOXK BSX CFFN CME COOP DOV ETR EVR EXTR FTV GD GPI HES HESM HLT HUM IART MAS MHO MKTX MPX NAVI NSC NURO OC ODFL OTIS PAG PB PERF PRG R RES SAVE SF SLAB SLGN SRDX TDY TEL TMHC TMO TNL USAP WAB WNC

·     Earnings After the Close: AB ACHC AFL ALGN AM AMSF AR ARAY ARI ASGN AVB AWK AZPN BELFA BMRN BRKL CACI CASH CCS CHDN CHRW CNMB COLB EBAY ENVX EPR EQT ESI ESRT EW FBIN FIBK FISI GGG GSHD HELE HP INBK IEX IRT KALU KLAC KRC LC LSTR MAA MAT MC META MMSI MOH MTH MXL NEU NLY NOV NOVA NOW NTGR NVRO OII ORLY PEGA PI PLXS PPC PTC PTEN PXD RBBN RHI RJF ROKU SGMO SLM SNBR STAG SUI TDOC TER TNET TROX TYL UCTT UDR URI WH WM WOLF WSC

 

Other Key Events:

·     American Academy of Neurology, 4/24-4/27, in Boston, MA

·     RSA Conference 2023, 4/24-4/27, in San Francisco, CA

 

 

Macro	Up/Down	Last
Nymex	0.13	77.20
Brent	0.01	80.78
Gold	5.40	2,009.90
EUR/USD	0.0081	1.1053
JPY/USD	-0.36	133.36
10-Year Note	+0.011	3.409%

 

 

World News

·     Germany’s institute’s consumer sentiment index improved to -25.7 heading into May from a slightly upwardly revised -29.3 in April, the seventh increase in a row and above expectations of a reading of -27.9., as per Reuters.

 

Sector News Breakdown

Consumer

·     Chipotle Mexican Grill (CMG) Q1 EPS $10.50 vs. est. $8.92; Q1 revs $2.365B vs. est. $2.339B; Q1 comp restaurant sales increased 10.9%; Q1 in-restaurant sales increased 22.9%, while digital sales represented 39.3% of food and beverage revs; operating margin was 15.5%, an increase from 9.4%; restaurant level operating margin was 25.6% up 490 basis points; sees Q2 and full year comparable restaurant sales growth in mid to high-single digit range.

·     Boyd Gaming (BYD) Q1 adj EPS $1.71 vs. est. $1.49; Q1 revs $964M vs. est. $887.9M; total adjusted EBITDA was $367.1M in Q1, up 8.4% y/y.

·     Hilton (HLT) Q1 adj EPS $1.24 vs. est. $1.13; Q1 revs $2.29B vs. est. $2.2B; raises FY23 adj EPS view to $5.68-$5.88 from $5.42-$5.68 (est. $5.70) and boosts FY23 system-wide comparable RevPAR view, on a currency neutral basis, to 8%-11% from 4%-8% y/y.

·     Churchill Downs (CHDN) announces a 2 for 1 stock split.

·     Tesla (TSLA) downgraded to Hold from Buy at Jefferies.

 

Energy

·     Enphase (ENPH) shares slide -15% on guidance; 1Q adj EPS $1.37 vs est. $1.21 on revs $726Mm vs est. $732.5Mm, adj gr mgn 45.7%, adj op Inc $233.56Mm; guides 2Q revs $700-750Mm vs est. $772.8Mm, adj gr mgn 42-45%, adj op exp $98-102Mm.

·     Matador Resources (MTDR) Q1 EPS $1.50 vs. est. $1.29; Q1 revs $560.3M vs. est. $530.5M; average daily oil equivalent production to increase 19% from 106,654 boe per day in Q1 2023 to about 126,500 boe per day in Q2; sees Q2 capex to be about $358M and midstream capital expenditures to be about $41M.

·     NexTier Oilfield (NEX) Q1 adj EPS $0.66 vs. est. $0.61; Q1 revs $935.7M vs. est. $926.69M; said for Q2 expect moderate sequential revenue growth, with adjusted ebitda expected to improve once again; said 2023 capex remains within our guide at 8-9% of revenue.

·     Weatherford (WFRD) Q1 EPS $0.97 vs. est. $0.85; Q1 revs $1.19B vs. est. $1.12B; said expect overall revenue to grow by mid-teens year-over-year in 2023; sees 2023 adj ebitda margins to expand by at least 250-bps y/y; sees some potential softness in North America market.

·     Zurn Elkay Water (ZWS) 1Q adj EPS $0.18 vs est. $0.15 on revs $372.1Mm vs est. $347.3Mm, adj EBITDA $72M vs est. $67.8M; guides 2Q sales $385-395Mm vs est. $400.1M, adj EBITDA mgn 21.0-21.5%; sees FY sales 1.5-1.55B vs est. $1.51B, adj EBITDA $325-345M vs est. $335.7M.

 

Financials

·     Visa Inc. (V) 2Q adj EPS $2.09 vs est. $1.99 on revs $8.0B vs est. $7.798B; total processed transactions $50.1B vs est. $49.78B; Q2 Payment volumes rose 10%, while cross-border volume excluding Europe increased 32% – that is a decline from 17% jump in payment volumes and 47% growth in cross-border volume, excluding Europe, from a year ago.

·     PacWest Bancorp (PACW) Q1 EPS $0.66 vs. est. $0.61; total deposits increased $1.1B to $28.2B on March 31, vs company’s most recent update of $27.1B as of March 20, 2023; said deposits have stabilized with total insured deposits up from 48% of total deposits at year-end to 71%; said expect our total assets will be closer to $35 bln within next few months.

·     Chubb inc. (CB) Q1 core EPS $4.41 vs. est. $4.45; Net premiums written rose 16% y/y to $10.71B and net premiums earned also +16% y/y to $10.14B; P&C underwriting income was $1.21 billion with a combined ratio of 86.3% compared with 84.3% prior year; Annualized return on equity (ROE) was 14.6%.

·     CoStar Group (CSGP) 1Q adj EPS $0.29 vs est. $0.25 on revs $584Mm vs est. $579.4Mm; guides 2Q revs $603-608Mm vs est. $604.4Mm, adj EBITDA $118-123Mm vs est. $120.75Mm and adj EPS $0.29-0.30 vs est. $0.26; guides FY revs $2.465-2.48B vs est. $2.47B, adj EBITDA $505-520Mm vs est. $515.74Mm and adj EPS $1.21-1.24 vs est. $1.09.

·     Boston Properties (BXP) 1Q FFO $1.73 vs est. $1.68 on revs $803.2Mm vs est. $773.9Mm; guides 2Q FFO/shr $1.79-1.81 vs est. $1.80; sees FY FFO/shr $7.14-7.20 vs est. $7.14.

·     Equity Residential (EQR) 1Q normalized FFO/shr $0.87 vs est. $0.88 on revs $705.9Mm vs est. $700.4Mm; guides 2Q normalized FFO/shr $0.91-0.95 vs est. $0.94.

·     Synchrony Financial (SYF) approved an incremental share repurchase program of up to $1.0 bln, commencing this quarter through June 30, 2024.

·     UMB Financial (UMBF) 1Q EPS $1.90 vs est. $1.86 on NII $241.7Mm vs est. $242.3Mm; avg loans +19.3% on linked-qtr annualized basis; avg deposits +2.4% on linked-qtr annualized basis.

 

Healthcare

·     Boston Scientific (BSX) Q1 adj EPS $0.47 vs. est. $0.43; Q1 revs $3.39B vs. est. $3.16B; raises FY23 adjusted EPS view to $1.90-$1.96 from $1.86-$1.93 (est. $1.91) and boosts FY23 revenue view to up 8.5%-10.5% from up 5%-7% (est. $13.55B).

·     Humana (HUM) Q1 adj EPS $9.38 vs. est. $9.27; Q1 revs $26.74B vs. est. $26.44B; raises FY23 adjusted EPS view to ‘at least’ $28.25 from $28 prior and vs. consensus $28.11; affirms strong 2023 individual Medicare advantage membership growth of ‘at least 775,000’, or 17.0 % growth over FY22.

·     Illumina (ILMN) 1Q adj EPS $0.08 vs est. $0.03 on revs $1.09B vs est. $1.07BN, adj gr mgn 64.7%, adj EBIT mgn 1.9%; reit FY guide revs +7-10% vs est. +7.6%, core Illumina revs +6-9%, GRAIL revs $90-110Mm; reit adj EPS $1.25-1.50 vs est. $1.41.

·     Medtronic (MDT) said the U.S. FDA lifted the warning letter received at the company’s Diabetes headquarters in Northridge, California, in December 2021.

·     United Health Services (UHS) Q1 adj EPS $2.34 vs. est. $2.19; Q1 revs $3.47B vs. est. $3.45B; Q1 pretax profit $214.1M and Q1 adj net income $167.6M; Q1 behavioral health care facilities on a same facility basis, adjusted admissions +7.5% while adj patient days increased by 4.7% y/y.

·     Thermo Fisher (TMO) Q1 adj EPS $5.03, in-line with consensus on revs $10.71B vs. est. $10.67B; Q1 organic revenue was 8% lower, core organic revenue growth was 6%, and covid-19 testing revenue was $0.14 bln in qtr.

 

Industrials & Materials

·     OI Glass (OI) Q1 EPS $1.29 vs. est. $0.85; Q1 revs rose to $1.8B vs. est. $1.77B; sees Q2 EPS $0.80-$0.85 vs. est. $0.76; Increased FY23 Guidance for adj eps, free cash flow, adj free cash flow.

·     Otis Worldwide (OTIS) Q1 EPS $0.80 vs. est. $0.73; Q1 revs $3.35B vs. est. $3.53B; raises FY23 adjusted EPS view to $3.40-$3.50 from $3.35-$3.50 (est. $3.25) and raises FY23 revenue view to $13.9B-$14.2B from $13.8B-$14.1B (est. $14.8B).

·     Carrier Global (CARR) confirms Monday reports to acquire Viessmann Climate Solutions for €12 billion in cash and stock issued directly to Viessmann Group with a long-term ownership commitment; reports Q1 adj EPS $0.52 vs. est. $0.48 on revs $5.3B vs est. $5.05B; guides FY sales about $22B vs est. $22B, organic revs +LSD-MSD, adj op mgn about 14%.

·     Carpenter Technology Corporation (CRS) said it will increase base prices by an average of seven percent (7%) to twelve percent (12%) on new, non-contract orders across most of its premium products.

 

Technology, Media & Telecom

·     Microsoft Corp. (MSFT) 3Q EPS $2.45 vs est. $2.23 on revs $52.9B vs est. $51.02B, cloud revs $28.5B, intelligent cloud revs $22.1B, productivity and business process revs $17.5B.

·     Alphabet (GOOGL) Q1 EPS $1.17 vs. est. $1.07; Q1 revs $69.79B vs. est. $68.9B; board authorized co to repurchase up to additional $70.0 billion of its class a and class C shares; Google search & other rev $40B vs. $39.6B y/y; Google advertising revs $54.54B vs. $54.6B y/y and Google Cloud revs $7.45B vs. $5.82B y/y.

·     Texas Instruments (TXN) 1Q EPS $1.85 vs est. $1.78 on revs $4.38B vs est. $4.38B; sees 2Q revs $4.17-4.53B vs est. $4.44B and EPS $1.62-1.88 vs est. $1.82; said a part of the weaker demand in q1 was customer inventory reductions, which is expected to continue in Q2.

·     Juniper Networks (JNPR) Q1 EPS $0.48 vs. est. $0.43; Q1 revs $1.37B vs. est. $1.34B; sees Q2 EPS $0.49-$0.59 vs. est. $0.53 and revs $1.36B-$1.46B vs. est. $1.4B; sees Q2 gross margin 57%-59% and operating margin at approximately 16.2% at the mid-point of revenue guidance.

·     Manhattan Associates (MANH) Q1 adj EPS $0.80 vs. est. $0.64; Q1 revs $221M vs. est. $200.51M; guides FY23 adj EPS $2.85-$2.91 vs. est. $2.68 and revs $856M-$864M vs. est. $829.83M.

·     Getty Images (GETY) slips after saying in a statement the Trillium $10 a share offer doesn’t warrant engagement. “Trillium Capital LLC has not provided the Board of Getty Images or its advisors with any evidence that it, its managing partner or its non-binding, highly conditional proposal are sufficiently credible to warrant engagement.”