Early Look

Thursday, February 2, 2023

Futures	Up/Down	%	Last
Dow	-46.00	0.13%	34,103
S&P 500	21.25	0.51%	4,153
Nasdaq	168.50	1.35%	12,583

 

 

The market euphoria continues as the Nasdaq Composite and S&P 500 extends gains further, with S&P futures rising +0.5% above 4,150 while Nasdaq futures surge +1.35% to 12,580 after META jumps 19% as cost cuts and a buyback overshadow an earnings miss. Stocks started February off with a bang, adding to the stellar gains in January as the S&P 500 hit fresh 5-month highs after Fed Chairman Powell failed to deliver sufficient pushback against lower market pricing on the terminal rate, and said that the process of “disinflation” is underway without weakening in the labor market. This certainly got both the stock and bond markets attention as yields plunged along with the dollar, while gold rose, and stocks spiked. The FOMC hiked rates by 25 bps in line with expectations and made few changes to its policy statement, keeping guidance on “ongoing rate” increases, but this was tempered by a subtle dovish adjustment changing the word “pace” to “extent” as regards coming rate rises. He noted that there was uncertainty around the May decision, that the Fed was discussing a couple more hikes and that the Fed was not seeking to pause then restart raises. With the FOMC decision behind us, attention turns to more earnings, with Apple, Amazon, and Alphabet (GOOGL) later tonight and a handful of large cap pharma this morning: MRK, LLY, BMY) and then the monthly nonfarm payroll on Friday. But later this morning, the European Central bank (ECB) and Bank of England (BoE) are both expected to deliver 50-bps rate hikes. In Asian markets, The Nikkei Index rises 55 points 27,402, the Shanghai Index was flat at 3,285, and the Hang Seng Index fell -113 points to 21,958. In Europe, the German DAX is up 234 points or 1.55% to 15,415, while the FTSE 100 rises 50 points to 7,811.

Economic Calendar for Today

·     7:30 AM ET          Challenger Layoffs for January

·     8:30 AM ET          Weekly Jobless Claims…est. 200K

·     8:30 AM ET          Continuing Claims…est. 1.677M

·     8:30 AM ET          Nonfarm Productivity for Q4…est. +2.4%

·     8:30 AM ET          Unit Labor Costs for Q4…est. +1.5%

·     10:00 AM ET        Factory Orders M/M for December…est. +2.2%

·     10:00 AM ET        Durable Goods Orders M/M for December

·     10:30 AM ET        Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABG AME APD ARW ATI AVY BALL BC BDX BERY BMY BR BSIG CAH CMS COP DGII DGX DLX EL FCFS FLWS GWW HBI HOG HON HSY ICE ITW LANC LAZ LEA LLY LQDT MMP MRK MTSI NJR PBH PENN PH SBH SIRI SNA SNDR SPH SWK SXC TW WEC WMS WNC WWE

·     Earnings After the Close: AAPL AMZN ATGE BILL BY CLFD CZH CLX CNMD COLM CPT CRUS CTSH CVCO DECK DLB EVBN EXPO F GEN GILD GOOGL GPRO HAYN HIG HUBG ITI LESL LPLA MAN MTX NGVC OHI PCTY POST QCOM QMCO RGA SBUX SIGI SKX SKYW SYNA VIAV X

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 42.61 points, or 1.05%, to 4,119.21.

·     The Dow Jones Industrial Average rose 6.92 points, or 0.02%, to 34,092.96.

·     The Nasdaq Composite jumped 231.77 points, or 2.00%, to 11,816.32.

·     The Russell 2000 Index advanced 28.87 points, or 1.49% to 1,960.81.

 

 

Macro	Up/Down	Last
Nymex	0.22	76.638
Brent	-0.12	82.72
Gold	28.50	1,971.60
EUR/USD	0.0008	1.0997
JPY/USD	-0.14	128.80
10-Year Note	+0.011	3.409%

 

 

Sector News Breakdown

Consumer

·     Costco (COST) reports January net sales +6.9% y/y to $16.84B; total monthly comparable sales +5.6%, adj comps (ex: gas FX) +7.4%.

·     Elf Beauty (ELF) 3Q adj EPS $0.48 vs est. $0.36 on revs $146.5Mm vs est. $121.8Mm, gr mgn 67%, adj EBITDA $36.6Mm vs est. $21.8Mm; guides FY sales $541-545Mm vs est. $489.8Mm, adj EBITDA $110.5-112Mm vs est. $97.2Mm and adj EPS $1.37-1.40 vs est. $1.12.

·     Meritage Homes (MTH) Q4 EPS $7.09 vs. est. $7.00; Q4 revs $1.98B, in-line with consensus; Q4 new orders 1,808 and home closings 4,540.

·     Modine Manufacturing (MOD) 3Q adj EPS $0.48 vs est. $0.43 on sales $560Mm vs est. $562.3Mm; guides FY net sales +6-12% vs est. +11.2%.

·     TrueBlue Inc. (TBI) Q4 EPS $0.43 vs. est. $0.38; Q4 revs fell -10% y/y to $558M vs. est. $562.9M; guides Q1 revs $455M-$480M below consensus $492.18M.

·     In gun and ammo stocks (RGR VSTO SWBI) U.S. unadjusted criminal background checks fell 12% to 2.67 million in January, according to data from the FBI’s National Instant Criminal Background Check System (NICS). Compared to a year earlier, background checks increased 3.2% from 2.59M.

·     Bed Bath & Beyond (BBBY) misses interest payments ahead of possible Chapter 11, the WSJ reported.

 

Energy

·     ChampionX Corp. (CHX) Q4 adj EPS $0.43 vs. est. $0.41; Q4 revs +20% y/y to $985.9M vs. est. $1.01B; guides Q1 revs $952M-$982M vs. est. $1.0B; Q4 adjusted EBITDA rose 34% y/y to $178.8M and FCF $168.6M vs. $71.0M y/y.

·     Murphy USA (MUSA) Q4 EPS $5.21 vs. est. $6.25; Q4 revs $5.37B vs. est. $5.38B; Total retail gallons increased 7.8% to 1.2 billion gallons in Q4 2022 compared to 1.1 billion gallons in Q4 2021, while volumes on a same store sales basis increased 4.0%.

·     First Solar (FSLR) downgraded to Neutral from Buy at Bank America.

 

Financials

·     Aflac Inc. (AFL) Q4 adj EPS $1.29 vs. est. $1.21; Q4 revs $4B vs. est. $4.49B; average yen/dollar exchange rate in the fourth quarter of 2022 was 141.87, or 19.9% weaker than the average rate of 113.70 y/y.

·     Allstate (ALL) 4Q adj EPS ($1.36) vs est. ($1.36) on revs $13.6B vs est. $11.4B, net premiums written $11.48B vs est. $10.8B.

·     MetLife (MET) Q4 adj EPS $1.55 vs. est. $1.64; Q4 revs fell -22% y/y to $15.84B vs. est. $17.37B; Premium, fees and other revs -25% y/y to $11.34B, and Net investment income down -15% y/y to $4.46B; book value per share $29.81 vs. $77.12 y/y.

·     MGIC Investment (MTG) Q4 adj EPS $0.64 vs. est. $0.53; Q4 revs $292.3M vs. est. $295.44M; The loss ratio for the fourth quarter of 2022 was (12.8%), compared with (41.7%) Q3; underwriting expense ratio associated with our insurance operations for the fourth quarter of 2022 was 31.3%, compared with 24.6% in Q3.

·     SLM Corp. (SLM) Q4 Net interest margin 5.37% vs. 5.13% y/y and net interest income $381.4 million, +3.8% y/y; sees FY23 adjusted EPS $2.50-$2.70 vs. consensus $2.58.

 

Healthcare

·     Merck (MRK) Q4 adj EPS $1.62 vs. est. $1.54; Q4 revs $13.8B vs. est. $13.67B; sees FY23 adjusted EPS $6.80-$6.95 below consensus $7.36 and sees FY23 revenue $57.2B-$58.7B vs. est. $58.07B.

·     Align Technologies (ALGN) board authorizes $1B buyback to succeed current program; 4Q adj EPS $1.73 vs est. $1.56 on revs $901.5Mm vs est. $892.8Mm; guides 1Q revs about flat sequentially, adj op mgn flattish sequentially; sees FY adj op mgn slightly above 20%.

·     Hologic (HOLX) 1Q adj EPS $1.07 vs est. $0.91 on revs $1.07B vs est. $1.0B, adj gr mgn 72.1%; guides 2Q revs $930-980Mm vs est. $926Mm and adj EPS $0.80-0.90 vs est. $0.82; sees FY revs $3,85-4.0B vs est. $3.88B and prior guide 3.7-3.9B, sees FY adj EPS $3.55-3.85 vs est. $3.53 and prior guide $3.30-3.60

·     McKesson (MCK) Q3 adj EPS $6.90 vs. est. $6.35; Q3 revs rose 2.7% y/y to $70.49B vs. est. $70.8B; raises adjusted EPS view to $25.75-$26.15, from prior $24.45-$24.95 and vs. estimate $24.76.

·     Vera Therapeutics (VERA) 14.286M share Spot Secondary priced at $7.00.

 

Industrials & Materials

·     Air Products (APD) Q1 adjusted EPS $2.64 vs. est. $2.70; Q1 revs $3.17B vs. est. $3.29B; backs FY23 adjusted EPS view $11.20-$11.50 vs. est. $11.39; sees FY23 capex $5B-$5.5B.

·     CH Robinson Worldwide (CHRW) Q4 adj EPS $1.03 vs. est. $1.38; Q4 revs fell -22.1% y/y to $5.1B vs. est. $5.68B; Operating expenses increased 6.2% to $604.1M; Adjusted operating margin decreased 1,220 basis points to 21.4%.

·     Landstar System (LSTR) Q4 EPS $2.60 vs. est. $2.62; Q4 revs $1.67B vs. est. $1.77B; Revenue hauled by rail, air and ocean cargo carriers was $115.1M in Q4 vs. $174.6M y/y.

·     Regal Rexnord (RRX) Q4 adj EPS $2.64 vs. est. $2.39; Q4 revs $1.24B vs. est. $1.26B; expects organic revenue to be slightly down at mid-point of its range for 2023.

·     Tetra Tech (TTEK) 1Q adj EPS $1.34 vs est. $1.21 on revs $895Mm vs est. $717.7Mm; guides 2Q revs $685-735Mm vs est. $732.8Mm and EPS $1.03-1.08 ex RPS vs est. $1.08; sees FY revs $3.0-3.15B vs est. $3.0B and EPS $4.90-5.05 vs est. $4.92.

 

Technology, Media & Telecom

·     Meta Platforms (META) Q4 revs $32.17B vs. est. $31.53B; announces $40B boost in share buyback authorization; guides Q1 revs $26B-$28.5B vs. est. $27.25B; Q4 daily active users (DAUs) 2.00B vs. est. 1.98B; posted a 55% drop in quarterly profit, hurt by charges; guides CAPEX $30-33B (vs. prior view of $34-37B).

·     Comcast (CMCSA) disclosed in an SEC filing that it sold 5,726,385 shares of Buzzfeed (BZFD) in the open market between Jan. 30 and Feb. 1.

·     DXC Technology (DXC) 3Q adj EPS $0.95 vs est. $0.83 on revs $3.57B vs est. $3.57B; guides 4Q adj EPS $1.00-1.05 vs est. $1.16; says to utilized excess cash to further delever, execute repurchases of $400Mm ton complete $1B repurchase program.

·     NetGear (NTGR) 4Q adj EPS ($0.03) vs est. ($0.08) on revs $249.1Mm vs est. $243.5Mm; guides 1Q revs $185-200Mm vs est. $221Mm.

·     PTC Inc. (PTC) Q1 adj EPS $0.99 vs. est. $1.03; Q1 revs $466M vs. est. $472.5M; Q1 op margin 23%; raises FY23 revenue view to $2.070B-$2.150B from $2.050B-$2.130B (est. $2.04B).

·     Qorvo Inc. (QRVO) 3Q adj EPS $0.75 vs est. $0.64 on revs $743Mm vs est. $725.8Mm, adj gr mgn 40.9%; sees 4Q revs $600-640Mm vs est. $728Mm, adj gr mgn approx 41% and adj EPS $0.10-0.15 vs est. $0.64.

·     Avnet (AVT) 3Q adj EPS $2.00 vs est. $1.85 on sales $6.7B vs est. $6.53B

·     CSG Systems (CSGS) Q4 EPS $0.84 vs. est. $0.93; Q4 revs $289.9M vs. est. $269.1M; sees FY23 EPS $3.35-$3.65 vs. est. $3.79 and sees FY23 revenue $1.13B-$1.17B vs. est. $1.08B.

·     Sony Group (SONY) announced that it has appointed Hiroki Totoki, the company’s executive deputy president and CFO, as president and chief operating officer, effective April 1. Nikkei.

·     Fortinet (FTNT) downgraded to Market Perform from Outperform at BMO Capital.