Morning Preview: February 21, 2024

Early Look

Wednesday, February 21, 2024

Futures

Up/Down

%

Last

Dow

-71.00

0.18%

38,571

S&P 500

-11.75

0.24%

4,979

Nasdaq

-83.50

0.47%

17,524

 

 

U.S. futures are looking lower ahead of big earnings results tonight from semi-chip giant NVDA, as well as ahead of the release of the latest Fed minutes from the January meeting at 2:00 PM. Stocks declined on Tuesday as investors returned from the 3-day holiday weekend, dragged down by technology and discretionary stocks with the Nasdaq falling -0.92%. The only advancing sector was consumer staples thanks in part to better earnings results from Dow component WMT which touched all-time highs. Overnight, it was announced that AMZN would be the newest member to the Dow Jones Industrial Average, replacing Walgreens (WBA) effective Monday Feb 26th. Semiconductors slumped on Tuesday with the Philly SOX index falling -1.56%, led by a drop in NVDA (-4.35%) ahead of earnings Wednesday night, the poster child for the “AI” growth story. Overnight, cyber security stocks sunk after PANW reported better Q2 results, but shares sunk as Q3 and FY24 revs and billing guidance fell short of consensus expectations. In Asian markets, The Nikkei Index declined -101 points to 38,262, the Shanghai Index jumped about 1% or 28 points to 2,950, and the Hang Seng Index advanced 255 points to 16,503. In Europe, the German DAX is up 70 points to 17,138, while the FTSE 100 is down -60 points to 7,658.

 

Market Closing Prices Yesterday

  • The S&P 500 Index slumped -30.06 points, or 0.60%, to 4,975.51.
  • The Dow Jones Industrial Average fell -64.19 points, or 0.17%, to 38,563.80.
  • The Nasdaq Composite dropped -144.87 points, or 0.92%, to 15,630.78.
  • The Russell 2000 Index declined -28.60 points, or 1.41% to 2,004.14.

Economic Calendar for Today

  • 7:00 AM ET                  MBA Mortgage Applications Data
  • 8:00 AM ET                  Fed’s Bostic Gives Welcoming Remarks
  • 1:00 PM ET                   US Treasury to sell $13B in 20-year notes.
  • 2:00 PM ET                   FOMC Meeting Minutes from January Fed Meeting
  • 4:30 PM ET                    API Weekly inventory Data

Earnings Calendar:

  • Earnings Before the Open: ADI ALIT BRSP CLH DINO EXC IONS KRP MPW NI OGE PLAB PUMP RGEN ROCK SSTK THRM TNL UIS UTHR VRSK VRT WING WWW XPRO
  • Earnings After the Close: ACVA AGR ANSS APA ATNI AWR BALY BCC BELFA BROS CAKE CCRN CDE CENX CHDN CHRD CLW COKE CWH DOCN ERII ETSY EXAS FIVN FNF FWRD GKOS GNK GNW GOOD GSHD HST HUN JACK JOBY KALU KW LCID LUNG MGRC MOS MRO NDSN NOVA NVDA NVRO NYMT OGS OM ORA OUT PEB QTWO RCUS RELY RGR RIVN ROG ROOT RRC RUN RYI SM SNPS TNDM TPL UCTT VAC VMEO VMI VNOM VTLE WEAV WES ZD

Other Key Events:

  • DA Davidson Midwestern Bank Summit, 2/21-2/22 (virtual)
  • Goldman Sachs 3rd European Technology Conference, 2/21-2/22 in London

 

 

Macro

Up/Down

Last

Nymex

-0.51

76.53

Brent

-0.62

81.72

Gold

-1.20

2,038.60

EUR/USD

-0.0007

1.0796

JPY/USD

0.04

150.03

10-Year Note

-0.011

4.264%

 

Sector News Breakdown

Consumer

  • Amazon (AMZN) to replace Walgreens (WBA) in the Dow Jones Industrial Average. The index change was prompted by DJIA constituent Walmart Inc.’s (WMT) decision to split its stock 3:1, which will reduce Walmart’s index weight due to the price weighted construction.
  • Caesars Entertainment (CZR) Q4 adj EBITDA $930M vs. $949M last year; Q4 revenue $2.83B vs. est. $2.85B; Same-store Adjusted EBITDA of $930 million versus $949 million for the comparable prior-year period.
  • La-Z-Boy (LZB) Q3 adj EPS $0.67 vs est. $0.72, adj op mgn 6.6% on revs $500Mm vs est. $523.09Mm; sees Q4 delivered sales $505-535Mm vs est. $544.39Mm, adj op mgn 7-8% vs est. 8.51%.
  • Toll Brothers (TOL) Q1 EPS $2.25 vs. est. $1.78; Q1 revs rose 9.4% y/y to $1.95B vs. est. $1.87B; Q1 net signed contracts 2,042 units, +40% y/y, Q1 backlog fell -18% y/y to $7.08B vs. est. $6.91B; guides adj. home sales gross margin 28%, saw 27.9%, and deliveries 10,000 to 10,500, vs. prior 9,850 to 10,350.
  • Uber (UBER) to replace JetBlue (JBLU) in the Dow Transportation Index.

Energy,

  • Chesapeake Energy (CHK) Q4 adj EPS $1.31 vs. est. $0.73; Q4 production 3.43 bcfe per day, approximately 98% natural gas and 2% total liquids; Lowers prior capital expenditure guidance approximately 20% to $1.25B-$1.35B through rig count reductions and deferring completions and turn-in-lines.
  • Diamondback Energy (FANG) Q4 EPS $4.74 vs. est. $4.70; Q4 revs $2.32B vs. est. $2.17B; Sees Q1 2024 oil production guidance of 270 – 274 MBO/d or 458 – 464 MBOE/d and sees FY 24 oil production guidance of 270-275 MBO/d or 458-466 MBOE/d and sees full year 2024 cash capital expenditures guidance of $2.30-$2.55B.
  • Matador (MTDR) Q4 adj EPS $1.99 vs. est. $1.78; Q4 revs $836.132M vs. est. $800.91M; Q4 average daily production of 154,300 barrels of oil and natural gas equivalent per day significantly exceeded firm expectations of 145,250 BOE per day; anticipates another record year in 2024 with an 18% increase in our expected total average production of 156,000 BOE per day in full-year 2024.
  • SolarEdge (SEDG) Q4 adj EPS loss (-$0.92) vs. est. loss (-$1.33); Q4 revs fell -65% y/y to $316.04M vs. est. $323.3M; Q4 GAAP gross margin of negative 17.9% and Q4 Non-GAAP gross margin1 of 3.3%; guides Q1 revs $175M-$215M well below the $373.44M consensus.

Financials

  • CoStar Group (CSGP) Q4 adj EPS $033 vs. est. $0.32; Q4 revs $640M vs. est. $634.25M; sees FY24 adj EPS $0.57-$0.60 vs. est. $1.29 and FY24 revenue $2.75B-$2.77B vs. est. $2.78B.
  • HSBC (HSBC) lost $153 million in Q4 of last year, after writing down the value of its stake in a large Chinese bank; quarterly revenue was $13 billion, down around 11% from the same period in 2022 vs. est. $15.4B; said it would buy back up to $2 billion in shares; slashed its exposure to commercial real estate in both the US and UK last year.
  • Public Storage (PSA) Q4 core FFO per share $4.20 vs. est. $4.13 and revs $1.16B vs. est. $1.15B; Q4 same-store net operating income $653.5M, +2.5% y/y, and occupancy 92.7% vs. 93.4% y/y.
  • Realty Income (O) AFFO $1.01/shr on revs $1.08B vs est. $1.02B; sees FY AFFO/shr $4.13-4.21 vs est. $4.27.
  • WillScot Mobile Mini (WSC) Q4 EPS $0.44 vs. est. $0.52; Q4 revs $612.4M vs. est. $619.90M; Q4 adj EBITDA Margin of 44.9% expanded 360 basis points y/y and generated Free Cash Flow of $577M rose 75% y/y; sees FY24 adjusted EBITDA $1.125B -$1.2B or growth of 6%-13% y/y.

Healthcare

  • Community Health (CYH) Q4 adj EPS loss (-$0.41) vs. est. $0.06; Q4 revs $3.18B vs. est. $3.16B; on a same-store basis, admissions increased 1.9% and adjusted admissions increased 3.6% compared to the same period in 2022; sees 2024 EPS loss (65c)-(5c) vs. est. $0.07 and revs $12.3B-$12.7B vs. est. $12.7B.
  • Globus Medical (GMED) Q4 adj EPS $0.60 vs est. $0.61 on revs $616.5Mm vs est. $608.04Mm, adj EBITDA $170Mm vs est. $157.42Mm; sees FY revs $2.45-2.475B and adj EPS $2.68-2.70 vs est. $2.69.
  • Halozyme Therapeutics (HALO) Q4 adj EPS $0.82 vs est. $0.83 on revs $230Mm vs est. $231.14Mm; guides FY revs $915-985Mm vs est. $961.09Mm, adj EBITDA $535-585Mm vs est. $552.6Mm and adj EPS $3.55-3.90 vs est. $3.51
  • Medifast Inc. (MED) Q4 adj EPS $1.09 vs $3.70 last year and revs $191.015M vs $337.245M last year; Independent active earning OPTAVIA Coaches of 41,100; Gross profit decreased 39.5% to $141.4M.
  • NeoGenomics (NEO) Q4 adj EBITDA $9Mm vs est. $3.15Mm on revs $156Mm vs est. $152.54Mm, adj gr mgn 46.7%; guides FY revs $650-660Mm vs est. $632.43Mm, adj EBITDA $21-24Mm vs est. $16.92Mm.
  • Teladoc (TDOC) Q4 EPS ($0.17) vs est. ($0.21) on revs $660.53Mm vs est. $671.43Mm, adj EBITDA $114.443Mm vs est. $108.8Mm; sees Q1 revs $630-645Mm vs est. $672.87Mm, adj EBITDA $52-62Mm vs est. $65.34Mm, EPS ($0.55)-($0.45) vs est. ($0.43); sees FY revs $2.635-2.735B vs est. $2.77B, adj EBITDA $350-390Mm vs est. $358.98Mm.
  • Vir Biotechnology (VIR) announced that Executive Vice President, and Chief Medical Officer, Phil Pang, M.D., Ph.D., has decided to leave the company at the end of March 2024.

Industrials and Materials

  • Boise Cascade (BCC) Q4 EPS $2.44 vs est. $2.58 on sales $1.644B vs est. $1.639B, adj EBITDA $160.582Mm vs est. $163.61Mm.
  • Celanese (CE) Q4 adj EPS $2.24 vs. est. $2.31 and revs $2.57B vs. est. $2.59B; said reflective of sequential volume and pricing conditions that are not expected to materially improve to start 2024, the timing of major value creation projects, and significant first quarter costs related to planned outages, sees Q1 EPS $1.75-$2.00 vs. est. $2.53.
  • Element Solutions (ESI) Q4 adj EPS $0.32 vs est. $0.33, adj EBITDA $120Mm vs est. $124.48Mm on net sales $573Mm vs est. $590.63Mm; guides Q1 adj EBITDA $120-125Mm vs est. $127.06Mm; sees FY adj EBITDA $510-530Mm vs est. $541.98Mm.
  • Enovix (ENVX) Q4 EPS ($0.28) vs est. ($0.27) on revs $7.4Mm vs est. $3.088Mm, guides Q1 revs $3.5-4.5Mm vs est. $4.146Mm and adj EPS ($0.35)-($0.29) vs est. ($0.24); said Revenue strength was driven by strong performance from Routejade, along with continued volume shipments of BrakeFlowTM-enabled batteries for the U.S. Army.
  • Flowserve Corp. (FLS) raises quarterly dividend 5%, replenishes buyback to $300M; Q4 adj EPS $0.68 vs. est. $0.60; Q4 revs $1.17B vs. est. $1.14B; sees FY24 adj EPS $2.40-$2.60 vs. est. $2.53 and sees FY24 revenue growth 4%-6%.
  • Graphic Packaging (GPK) Q4 adj EPS $0.75 vs est. $0.70, adj EBITDA $444Mm vs est. $462.21Mm on sales $2.249B vs est. $2.404B; guides FY24 adj EBITDA $1.75-1.95B vs est. $1.857B and adj EPS $2.50-3.00 vs est. $2.75.
  • International Flavors (IFF) Q4 adj EPS $0.72 vs est. $0.75, adj EBITDA $461Mm vs est. $452.79Mm on sales $2.7B vs est. $2.699B; sees FY sales $10.8-11.1B vs est. $11.414B, adj EBITDA $1.9-2.1B vs est. $2.155B.
  • Matson Inc. (MATX) Q4 EPS $1.78 vs. est. $1.51; Q4 revs $788.9M vs. est. $733.6M; says Q1 operating income expected to be lower than 1Q23 level and 2024 operating income expected to approximate 2023 level; expects average freight rates in 2024 to be modestly higher than levels achieved in 2023.
  •  

Technology, Media & Telecom

  • Palo Alto Networks (PANW) Q2 adj EPS $1.46 vs est. $1.30 on revs $1.975B vs est. $1.971B; guides Q3 revs $1.95-1.98B vs est. $2.039B, adj EPS $1.24-1.26 vs est. $1.29; sees FY revs $7.95-8.0B vs est. $8.193B and adj EPS $5.45-5.55 vs est. $5.51.
  • Keysight Technologies (KEYS) Q1 EPS $1.63 vs. est. $1.59; Q1 revs $1.26B vs. est. $1.25B; sees Q2 EPS $1.34-$1.40, below consensus $1.61 and revs $1.19B-$1.21B vs. est. $1.25B.
  • RingCentral Inc. (RNG) Q4 adj EPS $0.86 vs est. $0.82, adj EBITDA $138Mm vs est. $133.29Mm on revs $571Mm vs est. $570.42Mm; guides Q1 revs $575-580Mm vs est. $581.49Mm, adj op mgn 19.5%, adj EPS $0.79-0.80 vs est. $0.82; sees FY revs $2.37-2.395B vs est. $2.4B, adj op mgn 21% and adj EPS $3.50-3.58 vs est. $3.51.
  • Sprout Social (SPT) Q4 EPS ($0.36) vs est. ($0.33) on revs $93.584Mm vs est. $90.74M, ARR $385.2M; guides Q1 revs $97.2-97.3M vs est. $97.04M, adj op Inc $0.6-0.7M vs est. $2.06M, adj EPS $0.00-0.01 vs est. $0.03; sees FY revs $425.3-425.5M vs est. $425.45M, adj op Inc $15-16M vs est. $14.12M and adj EPS $0.22-0.23 vs est. $0.19.
  • Vertiv Holdings (VRT) Q4 adj EPS $0.56 vs. est. $0.53; Q4 revs $1.87B vs. est. $1.88B; guides Q1 EPS/revs below consensus and sees FY24 adj EPS $2.20-$2.26 vs. est. $2.24 and revs $7.52B-$7.66B vs. est. $7.54B.

_________________________________________________________________

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.