Morning Preview: February 07, 2023

Early Look

Tuesday, February 7, 2023

Futures

Up/Down

%

Last

Dow

-43.00

0.13%

33,891

S&P 500

-0.25

0.02%

4,122

Nasdaq

14.50

0.11%

12,529

 

 

U.S. futures are flat to little changed ahead of several key speeches later today that could shake up stock and bond markets. US stocks slid for a second day on Monday, while Treasury yields and the dollar rose, in continued reaction from Friday’s nonfarm payroll report that nearly tripled estimates while unemployment fell as wages rose in-line with expectation. Coming up today, we will hear from Fed Chair Jerome Powell, interviewed by David Rubenstein at the Economic Club of Washington (12:00 PM); followed by Vice Chair for Supervision Barr on financial inclusion (2:00 PM). These will be the first comments by Powell since his press conference last week came which had ease market sentiment about higher rates, as equity markets have staged a strong rally to start the year. Later tonight, President Biden set to hold his State of the Union address at 9:00 AM. This morning in a CNBC interview at 6:30 AM, Minneapolis Fed President Fed’s Kashkari said nobody should overreact to one report, but underlying strength in services sector; said hard to imagine strong jobs growth can occur with wage growth moderating; 12-month PCE inflation is their goal. In Asian markets, The Nikkei Index slipped -8 points to 27,685, the Shanghai Index rose 9 points to 3,248, and the Hang Seng Index gained 76 points to 21,298. In Europe, the German DAX is down -23 points to 15,322, while the FTSE 100 is up 50 points to 7,888. Treasury yield and the dollar rise a 3rd day, with oil bouncing ahead of big earnings.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -25.40 points, or 0.61%, to 4,111.08.

·     The Dow Jones Industrial Average slid -34.99 points, or 0.10%, to 33,891.02.

·     The Nasdaq Composite slipped -119.51 points, or 1.00%, to 11,887.45.

·     The Russell 2000 Index declined -27.82 points, or 1.40% to 1,957.72.

 

Economic Calendar for Today

·     7:45 AM ET          ICSC Weekly Retail Sales

·     8:30 AM ET          International Trade for December

·     8:55 AM ET          Johnson/Redbook Weekly Sales

·     1:00 PM ET          US Treasury to sell $40B in 3-year notes.

·     3:00 PM ET          Consumer Credit for December

·     4:30 PM ET          API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ADNT AGCO AKTS ARCC ARMK AVXL BV CARR CEIX CG CNC CTLT CTS DCPH DD FISV GPK HAE HAIN HTZ INCY IT J KKR MAC MBUU MSGS OMF PINC PJT RCL SCSC SLQT SPR TDG VVV XYL

·     Earnings After the Close: AAT AIZ ATEN ATO BKH CCK CMG CMP CNO CSL DEI DHX EGP EHC ENPH ENTA EPM ESS EXEL FMC FRSH FTNT HIW HMN HRB ICHR ILMN INSP JKHY KD KREF LUMN MODN MTRX NBR NCR NEWR OMC PAYC PEAK PLUS PRU RAMP RRR RXO SSNC TCX TENB USNA VFC VOYA VRTX VSAT WERN WU YUM ZWS

 

Other Key Events:

·     President Biden State of the Union address at 9:00 PM ET.

·     Oppenheimer Healthcare Winter CEO & Investor Summit, 2/7-2/9, in Vail, CO

·     Stephens Regional Banks Investor Trip, 2/7-2/9, in Dallas, TX

·     Stifel Transportation & Logistics Conference, 2/7-2/8, in FL

 

 

Macro

Up/Down

Last

Nymex

1.18

75.29

Brent

1.32

82.31

Gold

0.90

1,880.40

EUR/USD

-0.0022

1.0704

JPY/USD

-0.42

132.22

10-Year Note

+0.006

3.638%

 

 

World News

·     Joe Biden to revive plan for billionaire tax in State of the Union address ‘; During the State of the Union Biden to revive his plan for a tax on billionaires and calling on Congress to quadruple the levy on share buybacks – Financial Times

·     The Reserve Bank of Australia (RBA) raised the cash rate by +25bp to 3.35%, as expected; Inflation is expected to decline this year due to both global factors and slower growth in domestic demand; Board expects further increases in interest rates; Board resolute in its determination to return inflation to target; more hawkish than markets anticipated.

 

Sector News Breakdown

Consumer

·     Bed Bath & Beyond (BBBY) shares plunged after hours after rallying 92% during Monday’s trading day after saying it will attempt to sell convertible preferred stock as well as warrants to purchase common shares and convertible preferred stock. The company expects to raise at least $225 million in the sale but hopes for more than $1 billion.

·     Chegg Inc. (CHGG) 4Q adj EBITDA $74Mm vs est. $72.6Mm on revs $205.2Mm vs est. $202.1Mm; guides FY revs $745-760Mm vs est. $817.5Mm, gross margin 71-73% and adj EBITDA$240-250Mm vs est. $275.6Mm.

·     Leggett & Platt (LEG) 4Q EPS $0.39 vs est. $0.48 on sales $1.2B vs est. $1.24B; guides 1Q EPS down meaningfully vs 4Q22; sees FY sales $4.8-5.2B vs est. $5.1B and EPS $1.50-1.90 vs est. $2.06.

·     Spirit Airlines (SAVE) Q4 adj EPS $0.12 vs. est. $0.02; Q4 revs $1.39B vs. est. $1.38B; Q4 load factor 81%; sees Q1 TRASM up 23%-24.5%, sees FY23 ASM up 19%-22%.

·     Skyline Champion (SKY) Q3 EPS $1.44 vs. est. $0.92; Q3 revs $582.3M vs. est. $533.1M; Q3 EBITDA margin expanded by 60 basis points to 18.7%; U.S. homes sold decreased 1.4% to 5,749; total backlog decreased 34.6% to $532M from Q2; average selling price per U.S. home sold increased 13.5% to $94,200; gross profit margin expanded by 50 basis points to 29.9%.

·     23andme holding Co. (ME) files for mixed shelf of up to $500M.

·     Blink Charging (BLNK) announces $75M common stock offering; said it sees Q4 revs $21M-$23M vs. consensus of $18.7M and adj EBITDA ($18M) to ($15M) vs. ($9M) last year.

 

Energy, Industrials and Materials

·     AECOM (ACM) Q1 adj EPS $0.86 vs. est. $0.81; Q1 revs $3.38B vs. est. $3.34B; reiterates financial guidance for 2023; Design backlog increased by 9% to a record high, driven by a 1.3 book-to-burn ratio and continued near-record win rate.

·     DuPont (DD) Q4 adj EPS $0.89 vs. est. $0.78; Q4 revs $3.1B vs. est. $3.09B; Sees 2023 earnings between $3-$4.50, midpoint falling below street estimate of $3.86 and sees 2023 sales between $12.3B-$12.9B, midpoint also falling below street estimate of $12.9B; raises dividend.

·     Lithium Americas Corp. (LAC) said it received a favorable ruling from the US District Court, District of Nevada on February 6, 2023, for the appeal filed against the Bureau of Land Management for the issuance of the Record of Decision relating to the Company’s 100%-owned Thacker Pass project located in Humboldt Country, Nevada.

·     Lockheed Martin (LMT) upgraded to Outperform from Underperform at Credit Suisse.

·     NOV Inc. (NOV) Q4 EPS $0.26 vs. est. $0.24; Q4 revs $2.07B vs. est. $1.95B.

 

Financials

·     Apollo Global (APO) is among a group of financial firms in talks to take a stake in Credit Suisse’s (CS) revamped investment bank – WSJ.

·     Cincinnati Financial (CINF) Q4 adj EPS $1.27 vs. est. $1.31; Q4 revs $3.11B, in-line with consensus); had $67.01 book value per share at Dec 31, down $14.71 or 18.0% since year-end 2021; Negative 14.6% value creation ratio for FY22, compared with positive 25.7% for 2021.

·     Genworth Financial (GNW) 4Q adj EPS $0.33 vs est. $0.20 on adj op Inc $167Mm.

·     Simon Property Group (SPG) 4Q AFFO/shr $3.15 vs est. $3.13; guides FY FFO/shr $11.70-11.95 vs est. $12.14, EPS $6.35-6.60 vs est. $6.26.

·     UDR inc. (UDR) 4Q FFO/shr $0.61 vs est. $0.61 on revs $399.7Mm vs est. $399Mm; sees FY AFFO/shr $2.20-2.30 vs est. $2.51.

 

Healthcare

·     CVS Health (CVS) is near an agreement to acquire Oak Street Health (OSH) for approximately $10.5B including debt, the WSJ reported as the companies are discussing a price of about $39 a share https://on.wsj.com/3I3QvfE

·     Centene (CNC) Q4 EPS $0.86 vs. est. $0.85; Q4 revs $35.56B vs. est. $35.41B; reaffirms year EPS view; Q4 benefits ratio, which measures medical costs in relation to premiums collected, stood at 88.7%, better than estimates of 88.8%.

·     Pet Express (PETS) 3Q adj EBITDA $2.7Mm vs est. $6.6Mm on revs $58.9Mm vs est. $62Mm

 

Technology, Media & Telecom

·     Baidu (BIDU) shares jump +14% after in a statement to Bloomberg, Baidu confirmed earlier press report that it will complete internal testing and launch its ChatGPT-like bot next month.

·     Skyworks Solutions (SWKS) announces new $2 billion stock repurchase program; Q1 adj EPS $2.59 vs. est. $2.61 and Q1 revs $1.33B, in-line with consensus; sees Q2 adj EPS $2.02 vs. est. $2.24 and revs $1.125B-$1.175B vs. est. $1.19B.

·     Pinterest (PINS) Q4 revs $877.2M vs. est. $887.2M; Q4 EPS $0.29 vs. est. $0.27; announces new $500M buyback; announced that Todd Morgenfeld, CFO, and Head of Business Operations will step down; sees Q1 revenue up low single digits; misses on revs, MAUs, Q1 guide 2-3% vs. 7%.

·     Activison (ATVI) Q4 adj EPS $1.09 vs. est. $1.51; Q4 net bookings $3.57B vs. est. $3.16B; ended Q4 with net cash positions of about $8.4B; 4Q monthly active users (MAUs) were 389M; said co working with MSFT toward closing acquisition ending June 30; expects at least high-teens year-over-year growth for GAAP revenue for FY23.

·     Alpha and Omega Semi (AOSL) 2Q adj EPS $0.67 vs est. $0.88 on revs $188.8Mm vs est. $196.7Mm; sees 3Q revs $125-135Mm vs est. $193.8Mm.

·     Diodes (DIOD) 4Q adj EPS $1.73 vs est. $1.61 on sales $496.2Mm vs est. $492.7Mm; guides 1Q revs $467Mm vs est. $467Mm.

·     Fabrinet (FN) Q2 adj EPS $1.90 vs. est. $1.87; Q2 revs $668.7M vs. est. $652.47M; guides Q3 adj EPS $1.86-$1.93 vs. est. $1.84 and revs $640M-$660M vs. est. $657.59M.

·     Power Integrations (POWI) 4Q adj EPS $0.48 vs est. $0.46 on revs $124.8Mm vs est. $125.6Mm; guides 1Q revs $100-110Mm vs est. $127Mm, adj gr mgn about 53.5%, op exp $49-49.5Mm.

·     Rambus Inc. (RMBS) Q1 EPS $0.14 with op income $16.2M, op income margin 13%, Q4 revs $122.4M and license billings $64.3M; sees Q1 GAAP licensing billings $61M-$67M.

·     Take-Two Interactive (TTWO) Q3 GAAP EPS loss (-$0.91) vs. est. $0.87; Q3 net bookings $1.38B vs. est. $1.45B; cuts FY23 net bookings view to $5.2B-$5.25B from $5.4B-$5.5B and lower FY23 GAAP EPS view to ($4.50)-($4.40) from ($4.22)-($3.95).

·     Varonis Systems (VRNS) Q4 EPS $0.24 vs. est. $0.17; Q4 revs $142.6M vs. est. $140.69M; guides FY23 EPS $0.33-$0.35 vs. est. $0.26; sees FY23 revenue $519M-$529M vs. est. $525.48M; sees FY23 operating income $36M-$41M and sees FY23 ARR $513M-$523M.

·     ZoomInfo Technologies (ZI) Q4 adj EPS $0.26 vs. est. $0.22; Q4 revs rose 36% y/y to $301.7M vs. est. $298.88M; guides FY23 adj EPS $0.98-$1.00 vs. est. $0.95; sees FY23 revenue $1.275B-$1.285B vs. est. $1.31B; Closed the quarter with 1,926 customers with $100,000 or greater in annual contract value.

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.