Early Look

Wednesday, December 6, 2023

Futures	Up/Down	%	Last
Dow	40.00	0.11%	36,229
S&P 500	8.25	0.19%	4,583
Nasdaq	38.50	0.24%	15,947

 

 

U.S. futures are edging higher after stocks finished mostly lower on Tuesday outside of technology and consumer discretionary as markets await key jobs figures (ADP at 8:15 AM). The S&P dipped yesterday with energy, materials and industrial shares leading the way down, as oil prices extended declines to fresh 5-month lows. Data showing U.S. job openings dropped in October to the lowest level since early 2021 suggested that the labor market was easing and underscored the view that the Federal Reserve is likely done raising interest rates and could begin to cut rates by next year. 10-year Treasury yields have completely retraced highs from this fall, back at 4.171% and lowest yield since August. In Asian markets, The Nikkei Index surges 670 points or 2% to 33,445, the Shanghai Index dips -3 points to 2,968, and the Hang Seng Index jumps 135 points to 16,463. In Europe, the German DAX is up 40 points to 16,575, adding to all-time highs while the FTSE 100 gains 30 points to 7,520.

 

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -2.60 points, or 0.06%, to 4,567.18.

·     The Dow Jones Industrial Average fell -79.88 points, or 0.22%, to 36,124.56.

·     The Nasdaq Composite gained 44.42 points, or 0.31%, to 14,229.91.

·     The Russell 2000 Index declined -25.98 points, or 1.38% to 1,856.04.

 

Economic Calendar for Today

·     7:00 AM ET                  MBA Mortgage Applications Data

·     8:15 AM ET                  ADP Private Payrolls for November…est. 130K (prior 115K)

·     8:30 AM ET                  International Trade for October…est. (-$64.2b)

·     8:30 AM ET                  Nonfarm Productivity for Q3…est. +4.9%

·     8:30 AM Et                   Unit Labor Costs for Q3…est. (-0.9%)

·     10:30 AM ET                Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ALOT BF/B BNED CPB KFY LOVE OLLI THO UNFI VNCE VRA

·     Earnings After the Close: AGX AI ASYS BASE BRZE CHPT CHWY CXM DLHC GEF GME LAKE MNR NAPA OXM SPWH SMTC VEEV VRNT

 

Other Key Events:

·     Deutsche Bank 8th Annual Lithium and Battery Supply Chain Conference, in NY

·     Goldman Sachs 15th Annual Industrials Week, 12/4-12/7, in London

·     Goldman Sachs First Annual “Year-Ahead” Catalyst Clinic, 12/4-12/8 (virtual)

·     Goldman Sachs Financial Services Conference, 12/5-12/6, in New York

·     Raymond James TMT Conference, 12/4-12/6, in New York

·     Roth MKM 6th Annual Sustainability Private Capital Event, 12/6-12/7 (virtual)

·     San Antonio Breast Cancer Symposium, 12/5-12/9, in San Antonio, TX

·     China Imports and Exports for November

 

 

Macro	Up/Down	Last
Nymex	-0.89	71.43
Brent	-0.80	76.40
Gold	1.80	2,038.10
EUR/USD	-0.0016	1.0780
JPY/USD	0.33	147.48
10-Year Note	+0.03	4.203%

 

 

World News

·     Japan’s Tankan Survey shows Dec manufacturers’ sentiment index +12 versus +6 in Nov; Service sector index +26 versus Nov’s +27.

·     Latest API figures show a build of 594,000 barrels vs. expectations of 2.267-million-barrel draw; Gasoline inventories rose this week by 2.83 million barrels; Distillate inventories also rose this week, with a gain of 890,000 barrels.

 

Sector News Breakdown

Consumer

·     Delta Airlines (DAL) reaffirms Q4 and Fy23 outlook.

·     Dabe & Busters (PLAY) Q3 EPS loss (-$0.12) vs. est. loss (-$0.12); Q3 revs $466.9 vs. est. $472.25M; Q3 comp sales including Main Event branded stores decreased (-7.8%) compared y/y and increased 8.1% compared with Q3’19.

·     Nio Inc. (NIO) rises after Reuters reports the company is mulling spinning off battery production unit in efforts to turn profitable; says the spin-off could happen as early as end of this year.

·     Rent the Runway (RENT) Q3 EPS ($0.45) vs est. ($0.43) on revs $72.5Mm vs est. $73.14Mm, adj EBITDA $3.5Mm vs est. $3.583Mm; sees Q4 revs at least $74Mm vs est. $73.14Mm and adj EBITDA margin at least 7%; sees FY revs at least $296.4Mm and adj EBITDA mgn 7-8%.

·     Stitch Fix (SFIX) Q1 EPS ($0.30) vs est. ($0.23) on revs $364.8Mm vs est. $362.42Mm; sees Q2 revs $325-335Mm vs est. $334.68Mm and adj EBITDA $2-7Mm vs est. $1.11Mm; sees FY revs $1.30-1.37B vs est. $1.347B.

·     Toll Brothers (TOL) Q4 EPS $4.11 vs. est. $3.72; Q4 revs fell -19% y/y to $3.02B vs. est. $2.78B; Q4 net signed contracts 2,038 units, +72% y/y, said backlog fell -22% y/y to $6.95B vs. est. $6.98B; Q4 adj. home sales gross margin 29.1% vs. 29% y/y.

·     Tobacco stocks Phillip Morris (PM) and Altria (MO) shares trading lower after British American Tobacco (BTI) said it will take a hit of around $31.5B as it writes down the value of some U.S. cigarette brands such as Newport, Camel, Pall Mall, and Natural American Spirit.

·     Thor Industries (THO) Q1 EPS $0.99 vs. est. $0.97; Q1 revs $2.5B vs. est. $2.5B; backs FY24 EPS view $6.25-$7.25 vs. est. $6.71 and backs FY24 revenue view $10.5B-$11B vs. est. $10.62B.

 

Energy, Industrials and Materials

·     AeroVironment (AVAV) Q2 adj EPS $0.97 vs est. $0.62 on revs $180.8Mm vs est. $170.91Mm; guides FY revs $685-705Mm vs est. $676.6Mm, adj EBITDA $119-127Mm vs est. $128.14Mm and adj EPS $2.46-2.70 vs est. $2.72.

·     ExxonMobil (XOM) said it plans to raise share buybacks as the oil giant accelerates crude production in the US Permian Basin, boosted by its $60 billion acquisition of Pioneer Natural Resources Co. Exxon will repurchase $20 billion of stock next year.

·     Powell Industries (POWL) Q4 EPS $1.95 (ex-items) vs est. $1.21 on revs $209Mm vs est. $196.79Mm, net new orders $171Mm; says we anticipate continued strength commercially across our core end markets throughout Fiscal 2024, sees FY24 margins like 2023.

·     Suncor Energy (SU) released its 2024 corporate guidance, which includes annual upstream production of 770,000 – 810,000 barrels per day, approximately 7% higher than 2023, and refining utilization of 92% to 96%.

 

Financials

·     Mastercard (MA) announces $11B share buyback and raises dividend by 16%.

·     PayPal (PYPL) downgraded to Neutral from Buy at Bank America with a price target of $66, down from $77 calling 2024 a transition year.

 

Healthcare

·     Danaher (DHR) cuts the quarterly dividend to $0.24 from $0.27.

·     HealthEquity (HQY) Q3 adj EPS $0.60 vs est. $0.50, adj EBITDA $95.6M vs est. $85.48M on revs $249.219M vs est. $243.61M; sees FY24 revs $985-995M vs est. $989M and adj EPS $2.08-2.16 vs est. $2.03; sees FY25 revs $1.14-1.16B vs est. $1.129B and adj EBITDA mgn approx 38-39%.

·     Neurocrine Biosciences (NBIX) received breakthrough therapy designation for its treatment for congenital adrenal hyperplasia from the FDA and said is on track to submit a new drug application for crinecerfont in the treatment of congenital adrenal hyperplasia.

·     Novavax (NVAX) announced that Health Canada has granted expanded authorization for Nuvaxovid XBB.1.5 Vaccine for active immunization to prevent COVID-19 caused by SARS-CoV-2 in individuals aged 12 and older.

·     Phreesia (PHR) Q3 EPS loss (-$0.58) vs. est. loss (-$0.36); Q3 revs $91.6M vs est. $89.7M; expect 2025 revenue to be in range of $424M-$434M; raises FY24 adj ebitda outlook to approximately negative $39M and expect to achieve $500M annualized revenue in a quarter in FY26.

 

Technology, Media & Telecom

·     Asana Inc. (ASAN) Q3 adj EPS loss (-$0.04) vs. est. loss (-$0.11); Q3 revs $166.5M vs. est. $164.14M; boosts FY24 adjusted EPS loss view to (27c)-(26c) from (42c)-(39c) and raises FY24 revenue view to $648.5M-$649.5M from $642M-$648M.

·     Box Inc. (BOX) Q3 EPS $0.36 vs. est. $0.38; Q3 revs $261.5M vs. est. $263.7M; Q3 RPO up 7% from last year at $1.13B; guides Q4 EPS/revs below consensus and cuts FY24 EPS view to $1.42-$1.43 from $1.46-$1.50 and lowers FY24 revenue view to $1.037B-$1.039B from $1.04B-$1.044B.

·     MongoDB Inc. (MDB) Q3 adj EPS $0.96 vs est. $0.50 on revs $432.9Mm vs est. $403.65Mm, adj gr mgn 77%; guides Q4 revs $429-433Mm vs est. $413.94Mm, adj EPS $0.44-0.46 vs est. $0.37.

·     NVDA (NVDA) CEO said the company is working closely with the U.S. govt to ensure new chips for Chinese market are compliant with export curbs. Reuters last month reported NVDA plans to delay export of AI-chips to China to comply with U.S govt export restrictions.

·     Ooma Inc. (OOMA) Q3 adj EPS $0.15 vs est. $0.15, adj EBITDA $5Mm vs est. $5.3Mm on revs $59.9Mm vs est. $60.78Mm; sees Q4 revs $61.2-61.8Mm vs est. $62.34Mm and adj EBIT $0.12-0.13 vs est. $0.14; sees FY revs $236.3-236.9Mm vs est. $236.99Mm.

·     SentinelOne (S) Q3 adj EPS ($0.03) vs est. ($0.08) on revs $164.2Mm vs est. $156.09Mm; guides Q4 revs $169Mm vs est. $166.46Mm, adj gr mgn 77.5% and adj op mgn -14%; sees FY revs $616Mm vs est. $605.66Mm, adj gr mgn 77% and adj op mgn -20%.

·     Yext Inc. (YEXT) Q3 adj EPS $0.09 vs. est. $0.07; Q3 revs $101.2M vs. est. $102.2M; raises FY24 adj EPS view to $0.31-$0.32 from $0.29-$0.30 (est. $0.28) though cuts FY24 revenue view to $403.2M-$403.7M from $405M-$407M (est. $406.38M).

·     Credo Technology Group (CRDO) files $300M mixed securities shelf.