Early Look

Friday, December 4, 2020

Futures	Up/Down	%	Last
DJ Industrials	117.00	0.39%	30,049
S&P 500	12.50	0.33%	3,676
Nasdaq	49.00	0.39%	12,511

 

 

Stock futures are looking higher, capping off another weekly of big returns for U.S. averages, and back near new all-time highs heading into the monthly nonfarm payroll report. Estimates for nonfarm payrolls is a 469K rise, 589K in private payrolls, 43K adds in manufacturing and unemployment to dip to 6.8% from 6.9% prior. Another “goldilocks” scenario setting up for the report as a stronger reading will likely boost sentiment about the economy while a weak result will likely raise expectations that a stimulus deal could get done sooner. Also helping markets, more clarity on the Pfizer supply chain obstacle comment late day Thursday that pressured markets. Stocks were on track for big gains across the board on Thursday, but the S&P came up short in its attempt to register a 3rd straight record high close after a late day report from the WSJ said Pfizer has slashed its COVID-19 vaccine rollout target after facing supply-chain obstacles taking stocks lower. In actuality, a quote from a November 9, 2020, Pfizer press release showed vaccine delivery plan “cut” news is actually consistent with what was discussed by the company on November 9th: “Based on current projections we expect to produce globally up to 50 million vaccine doses in 2020 and up to 1.3 billion doses in 2021”. U.S. President elect Joe Biden says he wants Fauci to be his chief medical adviser on the Covid team as well as retaining his current job; Biden says he will issue order masks must be worn in federal buildings and in transportation facilities. In Asian markets, The Nikkei Index slips -58 points to 26,751, the Shanghai Index inches higher 2 points to 3,444 and the Hang Seng Index gains 107 points to settle at 26,835 in another strong week of gains. In Europe, the German DAX is down slightly to 13,245, while the FTSE 100 rises about 50 points to 6,540. Brexit talks hit a last-minute bump between the UK and EU heading into the weekend.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -2.29 points, or 0.06%, to 3,666.72

·     he Dow Jones Industrial Average rose 85.73 points, or 0.29%, to 29,96.52

·     The Nasdaq Composite gained 27.82 points, or 0.23%, to 12,377.18

·     The Russell 2000 Index advanced 10.67 points, or 0.58% to 1,848.70

 

Economic Calendar for Today

·     8:30 AM EST      Nonfarm Payrolls for November…est. 469K

·     8:30 AM EST      Private Payrolls for November…est. 589K

·     8:30 AM EST      Manufacturing Payrolls for November…est. 43K

·     8:30 AM EST      Unemployment Rate for November…est. 6.8%

·     8:30 AM EST      Average Hourly Earnings for November…est. 0.1%

·     10:00 AM EST    Durable Goods MoM for October…est.

·     10:00 AM EST    Factory Orders MoM for October…est. 0.8%

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: BIG, GCO

 

Other Key Events:

·     Cowen Energy Conference (virtual), 12/3-12/4

·     Credit Suisse Industrials Conference (virtual), 12/2-12/4

 

 

Macro	Up/Down	Last
WTI Crude	0.69	46.33
Brent	0.73	49.44
Gold	-0.30	1,840.75
EUR/USD	0.0027	1.2171
JPY/USD	0.16	104.00
10-Year Note	+0.01	0.931%

 

 

World News

·     U.S. President elect Joe Biden says he wants Fauci to be his chief medical adviser on the Covid team as well as retaining his current job; Biden says he will issue order masks must be worn in federal buildings and in transportation facilities – in CNN interview

·     The U.S. Department of Defense confirms the addition of China’s top chipmaker SMIC (SMICY) and oil giant CNOOC (CEO) to a blacklist of alleged Chinese military companies.

 

Sector News Breakdown

Consumer

·     DoorDash (DASH) raises its IPO range to $90-$95 from $75-$85 prior

·     LI Auto (LI) 47M secondary priced at $29.00

·     Royal Caribbean (RCL) files to sell $1B shares of common stock at-the-market

·     Big Lots (BIG) Q3 adj EPS 76c vs. est. 66c; Q3 revenue $1.38B vs. est. $1.35B; Q3 comps rose 17.8% vs. est. 15.1% while gross margin rate improved 80 bps to 40.5% vs. consensus of 40.3%.

·     Francesca’s (FRAN) announced that the company, along with its subsidiaries, has voluntarily filed for relief under chapter 11 of the Bankruptcy Code

·     Owens Corning (OC) announces dividend increase, authorization for repurchase of up to 10 million additional shares

·     Ollie’s Bargain Outlet (OLLI) Q3 adj. EPS 65c vs. est. 58c; Q3 revenue $414.38M vs. est. $406.06M; Q3 comparable store sales increased 15.3% vs. est. 14%; opened 19 new stores, including one relocation, ending the quarter with 385 stores in 25 states, a year-over-year increase in store count of 11.6%.

·     Smith & Wesson Brands (SWBI) Q2 adj EPS 93c vs. est. 63c and Q2 revenue $249M vs. est. $222.99M; Q2 gross margin 40.6% vs. 28.4% last year

·     Ulta Beauty (ULTA) 3Q adj EPS $1.64 vs. est. $1.49 on sales $1.6B vs. est. $1.56B, Q3 comps fell-8.9%; raises sales expectations for 4Q, now sees comps -12% to -14%, says encouraged by early holidays sales trends in November

·     Zumiez (ZUMZ) Q3 $1.16 vs. est. $0.76 on sales $271Mm vs. est. $246.2Mm, 3Q comps +8.1%, approved repurchase of up to $100Mm; says comps for 31 days ended Dec 1, 2020, were -1.7%, says 4Q-to-date total sales approx -3.9%

 

Energy, Industrials and Materials

·     Boeing (BA) and United Airlines (UAL) both downgraded to Underperform from Peer Perform at Wolfe Research

·     Ecolab (ECL) raises quarterly dividend by 2% to 48c per share

·     Nucor (NUE) raises quarterly dividend to 40.5c per share

 

Healthcare

·     Pfizer Inc (PFE) and German partner BioNTech SE (BNTX) shares fell late day after the WSJ reported the company is facing supply chain issues for its COVID-19 vaccine.

·     Important to note that a quote from a November 9, 2020, Pfizer press release along with a link to the release showing today’s vaccine delivery plan “cut” news is actually consistent with what was discussed by the company on November 9th: Based on current projections we expect to produce globally up to 50 million vaccine doses in 2020 and up to 1.3 billion doses in 2021. https://www.pfizer.com/news/press-release/press-release-detail/pfizer-and-biontech-announce-vaccine-candidate-against

·     BioCryst (BCRX) shares rise 14% after saying the FDA had approved its once-daily oral drug, ORLADEYO, for prevention of hereditary angioedema (HAE) attacks

·     Burning Rock Biotech (BNR) 2.2M share Secondary priced at $25.75

·     Sigilon Therapeutics (SGTX) 7M share IPO priced at $18.00

·     Silverback Therapeutics (SBTX) 11.5M share IPO priced at $21.00

·     Seer (SEER) 9.21M share IPO priced at $19.00

·     Cooper Companies (COO) 4Q adj EPS $3.16 vs. est. $3.09 on revs $681.6Mm vs. est. $672.6Mm; guides 1Q adj EPS $2.66-2.86 incl items vs. est. $2.88, sees 1Q revs $642-670Mm vs. est. $661.8Mm

·     Moderna (MRNA) still sees having 20M COVID-19 vaccine doses in U.S. by end of 2020; Moderna study shows COVID vaccine has potential for durable immunity; sees 100M-125M COVID vaccine doses available globally in 1Q21

·     Sutro Biopharma (STRO) shares rose 23% after it posted “encouraging” interim data on a study of its ovarian cancer drug. The company offered a clinical update from its ongoing dose-escalation Phase 1 study of STRO-002, a folate receptor alpha that targets antibody-drug conjugate for those patients with ovarian cancer

 

Technology, Media & Telecom

·     Cloudera (CLDR) Q3 adj EPS 15c vs. est. 9c; Q3 revenue $217.9M vs. est. $209.1M; Q3 subscription revenue was $197.4M, an increase of 18% as compared to the third quarter of fiscal 2020 and ARR grew 12% year-over-year; announces additional $500M share repurchase program; sees FY21 adj EPS 40c-42c vs. est. 33c; sees year revs $862M-$865M vs. est. $849.8M

·     DocuSign (DOCU) 3Q adj EPS $0.22 vs. est. $0.13 on revs $382.9Mm vs. est. $361.2Mm; guides 4Q revs $404-408Mm vs. est. $387.3Mm, sees 4Q billings $512-522Mm; sees 4Q adj gr margin 78-80%; Q3 Subscription revenue was up 54% to $366.6M and Professional services sales increased 43% to $16.3M.

·     Marvell (MRVL) Q3 adjusted EPS 25c on revs $750M both in-line with consensus; sees Q4 adjusted EPS 25c-33c vs. est. 29c and sees Q4 revenue $785M +/- 5%, vs. est. $787.41M; FY21 GAAP gross margin is expected to be approximately 52.8% and Non-GAAP gross margin is expected to be approximately 64%.

·     PagerDuty (PD) Q3 adjusted EPS loss (9c) on revs $53.8M vs. est. loss 910c) and $52.54M; sees Q4 adjusted EPS (12c)-(11c) vs. est. loss (10c) and sees Q4 revenue $57M-$58M vs. est. $55.59M; Raises FY21 revenue view to $211M-$212M from $206M-$211M and narrows EPS loss view; over 13,500 customers now using PagerDuty to power digital transformations

·     Yext (YEXT) 3Q adj EPS ($0.02) vs. est. ($0.08) on revs $89.1Mm vs. est. $87.2Mm; sees 4Q adj EPS ($0.08) to ($0.10) vs. est. ($0.08), sees 4Q revs $97-89Mm vs. est. $94Mm

·     Zuora (ZUO) Q3 adj EPS loss (1c) vs. est. loss (6c); revs $77.2M vs. est. $75M; 3Q cash and cash equivalents $104.0 million, +61% y/y; customer usage of Zuora solutions grew, with $14.6 bln in transaction volume through Zuora’s billing platform during third quarter; guides Q4 revs $75M-$77M vs. est. $74.2M

·     Cambium Networks (CMBM) 2.5M share Secondary priced at $28.00

·     The SIA said global semiconductor sales increase 6 % year-to-year in oct; annual sales projected to increase 5.1% in 2020 – industry forecast revised upward, now projects moderate growth in 2020 followed by stronger growth in 2021 – SIA says world-wide sales of semiconductors reached $39.0b for October, increase of 6.0% compared to October 2019 total of $36.8b, and 3.1% more than Sept 2020 total of $37.9b – new world semiconductor trade statistics industry forecast projects annual global sales will increase 5.1% in 2020, followed by increase of 8.4% in 2021