Early Look

Thursday, February 9, 2023

Futures	Up/Down	%	Last
Dow	215.00	0.63%	34,209
S&P 500	31.25	0.75%	4,161
Nasdaq	139.50	1.11%	12,685

 

 

U.S. futures are looking at a strong rebound overnight, with S&P +0.75% at 4,160 (the same point it was 24-hours ago), led by shares of Dow component Disney (DIS) up 6% announcing 7k job cuts and $5.5B of cost savings in new restructuring plans and ahead of weekly jobless claims data. Share prices of stocks continue to get rewarded by investors this quarter amid job cuts, as cost cutting measures have overshadowed in some cases generally weaker results (DIS EPS beat but Disney+ subs were lower than prior qtr.). Markets also closely watching for signs of any weakness in the jobs sector, a key focus of the Fed and possible direction of future rates. On Wednesday, stocks reversed the prior session’s rally, as investors focused on what recent remarks by Fed Chair Jerome Powell mean for the trajectory of interest rates. The Dow industrials lost 208 points, while the Nasdaq dropped 1.7%. The S&P 500 retreated 46.14 points, or 1.1%, to 4117.86, a day after the benchmark index jumped 1.3% in a volatile session. One focus for investors this week has been comments from Fed officials. Following Mr. Powell’s remarks Tuesday, Fed governor Christopher Waller said in an appearance Wednesday that the central bank will need to keep monetary policy sufficiently restrictive for a few years to tamp down inflation. He added that the quarter-percentage point increase the Fed approved last month “seems like the right size to adjust policy.” Futures-market pricing indicates traders haven’t drastically shifted interest-rate expectations in recent days but are looking for a higher terminal rate above 5%, different than when Fed Chairman Powell spoke last week. Yields on Treasury bonds retreated this morning with the 10-year back below 3.6% after highs of 3.69% yesterday. In Asian markets, The Nikkei Index slipped -22 points to 27,584, the Shanghai Index rose 38 points to 3,270, and the Hang Seng Index jumped 340 points to 21,624. In Europe, the German DAX is up around 200 points to 15,609, while the FTSE 100 rises 50 points to 7,938.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -46.14 points, or 1.11%, to 4,117.86.

·     The Dow Jones Industrial Average slid -207.68 points, or 0.61%, to 33,949.01.

·     The Nasdaq Composite dropped -203.27 points, or 1.68%, to 11,910.52.

·     The Russell 2000 Index declined -30.01 points, or 1.52% to 1,942.60.

 

Economic Calendar for Today

·     8:30 AM ET            Weekly Jobless Claims…est. 190K

·     8:30 AM ET            Continuing Claims…est. 1.658M

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

·     1:00 PM ET             US Treasury to sell $18B in 30-yr notes.

 

Earnings Calendar:

·     Earnings Before the Open: ABBV APO ARES BAX BRKR BWA CSII DBD DUK DYNT ESMT FAF GTES HII HLT IPG ITT K KIM LITE MAS MDU NNN NSIT NSP PATK PEP PM RL SEE SPGI SSTK SWI THC TPR TPX TTGT VERU WEX WMG

·     Earnings After the Close: AIRC ATEX AYX BARK BE BHF CBT CC CLSK CNXN COUR CRSR CUZ DOCS DXCM EQR EXPE FLO G GNSS KN LGF/A LYFT MESA MHK MODG MSI MTD NET NGL NLS NWSA OSCR PECO PINE PRO PYPL QLYS RBC REG ROAD SPSC STEP TEX ULH USX VCTR VRSN VTR YELL YELP

 

Other Key Events:

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

·     Piper Immuno-Oncology & Cell Therapy Conference & KOL/Corporate Private Dinner

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

·     China PPI, CPI for January.

 

 

Macro	Up/Down	Last
Nymex	0.15	78.62
Brent	0.23	85.32
Gold	3.40	1,894.10
EUR/USD	0.0052	1.0761
JPY/USD	-0.36	131.02
10-Year Note	-0.042	3.594%

 

 

World News

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 12.5 vs -4.7 last week. Bulls rise to 37.5% from 29.9%, Neutrals rise to 37.5% from 35.5%, Bears fall to 25% from 34.6%.

 

Sector News Breakdown

Consumer

·     Mattel Inc. (MAT) Q4 adj EPS $0.18 misses $0.29 consensus and revs fell -22% y/y to $1.4B, below Street consensus $1.68B; guides FY23 adjusted EPS $1.10-$1.20 vs. est. $1.66 and sees FY23 net sales “comparable” to FY22 vs. est. $5.91B; Q4 gross margin fell 630 basis points to 43%.

·     MGM Resorts (MGM) approves additional $2B for share buybacks; Q4 adj EPS loss (-$1.53) vs. est. loss (-$1.36); Q4 revs rose 18% y/y to $3.6B vs. est. $3.35B; Las Vegas Adjusted Property EBITDA of $877M rises 26% y/y from $699M.

·     O’Reilly Automotive (ORLY) 4Q EPS $8.37 vs est. $7.75 on revs $3.64B vs est. $3.51B, comps +9%; guides FY revs $15.2-15.5B vs est. $15.1B, net new stores +180-190, comps +4-6%, EPS $35.75-36.25 vs est. $37.10, FCF 1.8-2.1B.

·     PepsiCo (PEP) Q4 core EPS $1.67 vs. est. $1.65; Q4 revs $27.996B vs. est. $26.84B; raises annualized dividend 10% to $5.06 per shar; sees fiscal 2023 core constant-currency EPS of $7.20 vs estimates of $7.28.

·     Wynn Resorts (WYNN) 4Q adj EPS ($1.23) vs est. ($0.91) on revs $1.0B, adj EBITDA $195.1Mm vs est. $188.9Mm; improved its WynnBet online sports betting and iCasino losses from ($79.4m) in AEBITDAR for Q4 2021 to ($28.3m) for Q4 2022.

·     Goodyear Tire (GT) Q4 adj EPS $0.07 vs. est. $0.06; Q4 revs $5.374B vs. est. $5.16B; Q1 to be impacted negatively by effects of softer industry volume, effects of inflation, partly offset by continued benefits of price/mix; sees 2023 capex about $1B.

·     J.M. Smucker Co. (SJM) entered into a definitive agreement to sell several pet food brands to Post Holdings (POST) headquartered in St. Louis, Missouri in deal valued at approximately $1.2B, consisting of $700M in cash and approximately 5.39M shares of common stock.

·     Tractor Supply (TSCO) raises quarterly dividend 12% to $1.03 from 92c.

·     Purple Innovation (PRPL) 13.4M share Spot Secondary priced at $4.50.

 

Energy

·     Advanced Energy (AEIS) Q4 adj EPS $1.70 vs. est. $1.60; Q4 revs $491M vs. est. $476.88M; sees Q1 adjusted EPS $1.10, plus or minus 25c vs. est. $1.27; sees Q1 revenue $415M, plus or minus $20M vs. consensus $429.39M

·     Range Resources (RRC) said Year-end 2022 proved reserves were 18.1 Tcfe, a 2% increase y/yr. By volume, proved reserves were 65.3% natural gas, 33.3% natural gas liquids and 1.4% crude oil and condensate. Proved developed reserves represent 60% of the Company’s reserves.

 

Financials

·     Affirm Holdings (AFRM) shares fall -17%; Q2 EPS loss (-$1.10) vs. est. loss (-$0.98); Q2 revs $399.6M vs. est. $416.3M; said to cut workforce by 19%; Q2 GMV grew 27% y/y to $5.7B, or 35% excluding Peloton; active merchant count grew 45% y/y to over 243,000 merchants, but declined sequentially on a quarterly basis; sees Q3 revs $360M-$380M vs. est. $418M.

·     Avalon Bay (AVB) Q4 core FFO $2.59 vs. est. $2.58; sees Q1 core FFO $2.47-$2.57 vs. est. $2.59; sees FY23 core FFO $10.07-$10.56 vs. est. $10.51; Same Store total revenue increased $53,664,000, or 10.2%, to $578,448,000.

·     Credit Suisse (CS) posts $1.4B Q4 loss, its fifth consecutive and warned its investment bank and wealth management businesses will continue to suffer; For the full year of 2022, the bank reported a loss of 7.3 billion Swiss francs ($8 billion), roughly in line with expectations.

·     Cohen & Steers, Inc. (CNS) preliminary assets under management of $87.3 billion as of January 31, 2023, an increase of $6.9 billion from assets under management at December 31, 2022.

·     Equifax (EFX) Q4 adj EPS $1.52 vs. est. $1.49; Q4 revs fell -4% y/y to $1.2B vs. est. $1.18B; remain confident in long-term 8-12% growth framework that will deliver higher margins & free cash flow; sees Q1 adj EPS $1.30-$1.40 vs. est. $1.75; executing broader restructuring to deliver $200 mln of spending reduction in 2023.

·     Fleetcor Holdings (FLT) Q4 adj EPS $4.04 vs. est. $3.93; Q4 revs $883.6M vs. est. $874.01M; sees Q1 adjusted EPS $3.55-$3.75 on revs $875M-$890M vs. est. $3.82/$864.83M

·     Lincoln National (LNC) Q4 operating EPS $0.97 vs. est. $1.80; Q4 revs $4.68B vs est. $4.56B; Q4 book value per share at $18.41; Book Value Per Shr, Excluding AOCI, $63.73 as of Dec 31.

·     Robinhood Markets (HOOD) Q4 EPS loss (-$0.19) vs. est. loss (-$0.14); Q1 revs $380M below consensus $397.1M; Q4 monthly active users, or MAU, decreased 0.8M sequentially to 11.4M; ARPU increased to $66 from $63 in Q3 and assets under custody -4% sequentially to $62B; co-founders canceling nearly $500M of share-based compensation lowers Gaap operating costs by up to $50 mln/qtr starting in Q2.

 

Healthcare

·     Abbott Labs (ABT) to acquire medical-device company Cardiovascular Systems Inc. (CSII) in a deal that will boost Abbott’s vascular disease offerings; CSII holders will receive $20 per common share at a total expected equity value of about $890 million https://on.wsj.com/3RKKIPa

·     Galapagos NV (GLPG) shares slipped -7% after a Phase 3 trial of filgotinib for Crohn’s disease didn’t meet two co-primary endpoints. Galapagos said it decided not to submit a Marketing Authorization Application in Europe based on the data.

·     Molina Health (MOH) Q4 adj EPS $4.10 vs. est. $4.02; Q4 revs $8.22B vs. est. $7.87B; sees FY23 adjusted EPS at least $19.75 vs. est. $19.59 and revs $33B, in-line with consensus.

·     STERIS (STE) 3Q adj EPS $2.02 vs est. $2.19 on revs $1.22B vs est. $1.27B; sees FY revs +6% vs prior +8% and est. +7.8%, sees FY adj EPS $8.00-8.10 vs est. $8.43, sees FY FCF approx $500Mm vs prior $600Mm.

·     Viking Therapeutics (VKTX) 155 million cash catalysts all on track; enrollment completed in Phase 2b VOYAGE Study of VK2809 for NASH and Fibrosis; data expected in 2Q 2023; Phase 1 Study of Dual GLP-1/GIP Agonist VK2735 continues; data expected in 1Q 2023.

 

Industrials & Materials

·     Blue Bird Corp. (BLBD) 1Q adj EPS ($0.30) vs est. ($0.29) on revs $235.7Mm vs est. $211.2Mm; guides FY revs $1.0B vs est. $959.89Mm and adj EBITDA $40-46Mm vs est. $33.8Mm.

·     Hesai (HSAI) 10M share IPO priced at $19.00 (high end of $17-$19 range).

·     Hillenbrand (HI) 1Q adj EPS $1.00 vs est. $0.82 on revs $656Mm vs est. $726.3Mm; sees 2Q adj EPS $0.65-0.73 vs est. $0.97; sees FY adj EPS $3.25-3.55 vs est. $4.02.

·     International Flavors (IFF) Q4 adj EPS $0.97 vs. est. $0.96; Q4 revs $2.8B vs. est. $2.89B; comparable currency neutral sales growth for 2023 is expected to be about 6%; expects forex will have zero impact to sales growth in 2023; sees forex will have about 1% adverse impact to adjusted operating ebitda growth in 2023.

·     XPO Inc. (XPO) 4Q adj EPS $0.98 vs est. $0.85 on revs $1.83B vs est. $1.84B.

 

Technology, Media & Telecom

·     Disney Inc. (DIS) Q1 EPS $0.99 vs. est. $0.78; Q1 revs rose 7.8% y/y to $23.51B vs. est. $23.37B; total Disney+ paid subscribers 161.8M vs. 164.2M at Oct. 1, 2022; ​total ESPN+ paid subscribers 24.9M vs. 24.3M prior qtr; Disney parks, experiences and products rev $8.74B vs. $7.23B y/y; total Hulu paid subscribers 48M vs. 47.2M last qtr; says to seek $5.5B in cost savings.

·     AppLovin (APP) Q4 revenue $702.3M vs. est. $689.9M; Q4 EPS loss (-$0.21); sees Q1 revs $685M-$705M vs. est. $682M and sees Q1 adjusted ebitda $250M-$270M.

·     Axcelis Technologies (ACLS) 4Q adj EPS $1.71 vs est. $1.38 on revs $266.1Mm vs est. $248.6Mm; guides 1Q revs approx $240Mm vs est. $235Mm and EPS around $1.25 vs est. $1.25; sees FY revs greater than $1B vs est. $952.9Mm.

·     Ceridian HCM Holding (CDAY) 4Q adj EPS $0.23 vs est. $0.12 on revs $336.1Mm vs est. $325.2Mm; guides 1Q revs $359-363Mm vs est. $345.3Mm, adj EBITDA $92-95Mm vs est. $77.8Mm; sees FY revs $1.48-1.5B vs est. $1.44B and adj EBITDA $360-375Mm vs est. $298.4Mm.

·     Formfactor (FORM) 4Q adj EPS $0.05 vs est. $0.03 on revs $166Mm vs est. $155.3Mm, adj gr mgn 31.7%; guides 1Q revs $157-167Mm vs est. $151.4Mm, adj gr mgn 35.5-38.5% and adj EPS $0.09-0.17 vs est. $0.07.

·     Impinj Inc. (PI) 4Q adj EPS $0.41 vs est. $0.41 on revs $76.6Mm vs est. $75.2Mm, adj gr mgn 53.8%, adj EBITDA $11.8Mm vs est. $12.4Mm; sees 1Q revs $82-85Mm vs est. $77.4Mm, adj EBITDA $9.2-10.7Mm vs est. $11Mm and adj EPS $0.30-0.36 vs est. $0.34.

·     Informatica (INFA) 4Q adj op Inc $113.7Mm vs est. $97.6Mm on revs $398.8Mm vs est. $404.2Mm, sees 1Q revs $352-362Mm vs est. $385.4Mm and adj op Inc $74-84Mm vs est. $92.4Mm; sees FY revs $1.57-1.59B vs est. $1.61B and adj op Inc $400-420Mm vs est. $387.6Mm.

·     Monolithic Power (MPWR) 4Q adj EPS $3.17 vs est. $3.15 on revs $460Mm vs est. $460.7Mm, ad gr mgn 58.5%; sees 1Q revs $440-460Mm vs est. $448.5Mm, adj gr mgn 57.7-58.3%.

·     Rapid7 Inc. (RPD) 4Q adj EBITDA $24.7Mm vs es.t $22.9Mm on revs $184.5Mm vs est. $179.5Mm; guides 1Q revs $180-182Mm vs est. $185.7Mm and adj EPS $0.07-0.10 vs est. $0.07; sees FY revs $771-778Mm vs est. $789.8Mm and adj EPS $0.81-0.88 vs est. $0.49.

·     Sonos (SONO) 1Q adj EPS $0.79 vs est. $0.40 on revs $672.6Mm vs est. $580.3Mm; guides FY revs $1.7-1.8B vs est. $1.73B and adj EBITDA $145-180Mm vs est. $160Mm

·     Sumo Logic Inc. (SUMO) is nearing a deal to be sold to private-equity firm Francisco Partners for roughly $1.7 billion, WSJ reported last night https://on.mktw.net/3XfTl5p

·     Dan Loeb’s Third Point has built a stake in Salesforce (CRM), the fifth known activist investor with an interest in the software company’s stock, the WSJ reported last night.