Early Look

Wednesday, February 22, 2023

Futures	Up/Down	%	Last
Dow	-40.00	0.12%	33,122
S&P 500	-6.25	0.16%	3,999
Nasdaq	-18.50	0.15%	12,078

 

 

U.S. futures are looking slightly lower after trading in a narrow range overnight, while Asian and European stocks extended a selloff ahead of the FOMC Minutes from the Feb meeting later today. It was a rough day returning from the three-day holiday weekend on Tuesday as Wall Street posted its worst performance of the year with the S&P 500 and Nasdaq Composite dropping their third session in a row closing lower, while the decline in the Dow Jones Industrial wiped out its gains for 2023. Another strong economic data point in the form of S&P Global Purchasing Manufacturer’s index, returning to expansion for the first time in eight months in February again painted a picture of a resilient economy, which continues to perform against a backdrop of multiple rate-rises by the central bank in 2022 aimed at tamping down inflation. “Higher for longer” remains the new mantra pertaining to interest rates by the Fed as Treasury yields and the dollar climb. Fed speak schedule this week: today at 2:00 PM we get the Fed minutes from the Feb 1 FOMC policy meeting then NY Fed President Williams speaking at night. On Thursday, Fed’s Bostic (10:50 AM), Daly (2:00 PM) to speak and then Friday, Fed’s Mester, Jefferson (10:15 AM) speak, Bullard (11:30 AM), Collins and Waller (1:30 PM) to round out the speaking schedule., while US futures were little changed. In Asian markets, The Nikkei Index tumbled -368 points to 27,104, the Shanghai Index fell -15 points to 3,291, and the Hang Seng Index declined -105 points to 20,423. In Europe, the German DAX is down -123 points or -0.8% at 15,275, the FTSE 100 is down -1.2% at 7,881.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -81.75 points, or 2.00%, to 3,997.34.

·     The Dow Jones Industrial Average fell -697.10 points, or 2.06%, to 33,129.59.

·     The Nasdaq Composite tumbled -294.97 points, or 2.50%, to 11,492.30.

·     The Russell 2000 Index declined -58.14 points, or 2.99% to 1,888.21.

 

Economic Calendar for Today

·     7:00 AM ET           MBA Mortgage Applications Data

·     10:30 AM ET         Weekly DOE Inventory Data

·     1:00 PM ET            U.S. Treasury to sell $43B in 5-year notes.

·     2:00 PM ET            FOMC Minutes from the February meeting

 

Earnings Calendar:

·     Earnings Before the Open: AVA BCO BIDU BRY CERE CRL CRMT DOC DRVN EDIT EVBG FDP GEL HEES IART IBP IONS NI OSTK PGTI PLAB RGEN ROCK SBGI SHEN SHO THRM TJX TRGP UTHR VRT WING WWW

·     Earnings After the Close: ACVA AINC AMK AMWL ANSS APA ATUS BELFA BMBL BNL BROS CAKE CCRN CDE CHDN CIVI COKE CPK CTRA DOOR DVA EBAY ENVX EPR ERII ETSY EVH FIVN FNF GKOS GNK GSHD GTY KALU LCID LGND LMND LUNG LXU MGNI MGRC MMSI MOS MTTR NTAP NUVA NVDA NYMT OGS OPAD ORA ORCC OUT PARR PDCE PK PXD RELY RGR ROOT RUN RYI SCKT SJW SM SNBR SOI SSTI STRA SUI TDOC TMDX TNDM TPIC TRUE U UCTT UIS USPH VAC VMI WAS WHD

 

Other Key Events:

·     Barclay’s Industrials Conference, 2/22-2/23, in Miami, FL

·     Stephens West Coast Bank Trip, 2/21-2/23, in Denver

·     Truist Texas Bank Summit, 2/21-2/22, (virtual)

 

 

Macro	Up/Down	Last
Nymex	-0.88	75.48
Brent	-0.88	82.17
Gold	3.50	1,846.00
EUR/USD	-0.0014	1.0635
JPY/USD	-0.22	134.77
10-Year Note	0.014	3.939%

 

 

Sector News Breakdown

Consumer

·     Caesar’s Entertainment (CZR) 4Q EPS ($0.70) vs est. ($0.30) on revs $2.82BN vs est. $2.80B; Caesars Las Vegas and regional properties each set a new fourth quarter record for Adjusted EBITDA, per $CZR Q4 earnings; Las Vegas properties also set a new Adjusted EBITDA full-year record for FY 2022

·     Camping World Holdings (CWH) 4Q adj EPS ($0.20) vs est. ($0.01) on revs $1.28B vs est. $1.25B, adj EBITDA $20.2Mm vs est. $39.8Mm, gr mgn 30.6%.

·     IAA Inc. (IAA) Q4 adj EPS $0.61 vs. est. $0.54; Q4 revs fell -4.5% y/y to $523.5M vs. est. $533.53M; Q4 SG&A expenses increased by 7.0% to $59.3M from $55.4M y/y.

·     Overstock.com (OSTK) Q4 adjusted EPS loss (-$0.04) vs. est. $0.02; Q4 revs $405M vs. est. $448.67M.

·     Toll Brothers (TOL) Q1 EPS $1.70 vs. est. $1.38; Q1 revs slip to $1.78B but above $1.74B estimate; Net signed contract value was $1.5 billion, down 51% y/y; contracted homes were 1,461, down 50%; backlog value was $8.6 billion, down 21% y/y; homes in backlog were 7,733, down 32%; gross margin was 25.6%, compared to FY 2022’s first quarter home sales gross margin of 23.6%.

 

Energy

·     Chesapeake Energy (CHK) Q4 adj EPS $4.22 vs. est. $2.99; announced that it has executed an agreement to sell a portion of its remaining Eagle Ford asset to INEOS Energy for $1.4B 9confirming prior reports during trading session); sees FY23 CapEx $1.765B-$1.835B.

·     Diamondback Energy (FANG) Q4 adj EPS $5.29 vs. est. $5.22; Q4 revs $2.03B vs. est. $2.09B; Q4 average production of 226.1 MBO/d; said total average unhedged realized prices were at $55.76 per barrel of oil equivalent (boe) in the fourth quarter, 1.3% lower compared with a year earlier.

·     Matador Resources (MTDR) Q4 adj EPS $2.11 vs. est. $1.95; Q4 revs $635M vs. est. $644.24M; sees FY23 oil production 26.4M-27.3M barrels and nat gas production 107.7B-113.7B cubic feet; Q4 Record quarterly average production of 111,700 BOE per day (62,300 barrels of oil per day).

·     ProPetro (PUMP) 4Q adj EBITDA $84Mm vs est. $98.8Mm on revs $349Mm vs 347.9Mm; says FY23 demand for services expected to remain robust, says believe January performance is strong baseline expect to build upon that momentum.

·     Transocean (RIG) Q4 adj EPS loss (-$0.49) vs. est. loss (-$0.21); qtrly total contract drilling revenues were $606 mln, compared to $691 mln in q3 of 2022.

 

Financials

·     CoinDesk (COIN) Q4 EPS loss (-$2.46) vs. est. loss (-$2.55); Q4 revs $604.9M, down from $2.49B a year earlier; reported a net loss of $557 million in the three months ended Dec. 31, compared with a profit of $840 million a year earlier; expects 2023 to be significant year for crypto policy.

·     CoStar Group (CSGP) Q4 EPS $0.31 vs. est. $0.36; Q4 revs $573M vs. est. $575.96M; sees Q1 adjusted EPS $0.25-$0.26 vs. est. $0.36 and revs $575M-$580M vs. est. $585.62M; sees FY23 adj EPS $1.06-$1.09 vs. est. $1.47 and revs $2.46B-$2.48B vs. est. $2.5B.

·     Public Storage (PSA) core FFO/shr $4.16 vs est. $3.98, same-store direct net op Inc +17.1% on same-store revs +14.8%; see FY23 same-store revs +2.5-5.0%, net op Inc +1.2-5.1%, core FFO/shr $16.10-16.80 vs est. $16.73.

·     Realty Income (O) Q4 AFFO $1.00 vs. est. $0.99; Q4 revs $888.7M vs. est. $855.77M; raises dividend.

·     ZipRecruiter (ZIP) Q4 EPS $0.17 vs. est. $0.09; Q4 revs $210.5M vs. est. $206.28M; sees FY23 revenue $770M-$790M vs. est. $934.04M and FY23 adjusted EBITDA $178M-$192M.

·     JPMorgan (JPM) clamps down on staff’s use of AI-powered ChatGPT – Bloomberg News

 

Healthcare

·     The Federal Trade Commission (FTC) won’t challenge Amazon.com Inc.’s (AMZN) $3.49 billion acquisition of One Medical parent 1Life Healthcare Inc. (ONEM), according to people familiar with the decision, a move that will allow the deal to close later this week. Bloomberg reported https://bloom.bg/3Z3WNla

·     AtriCure (ATRC) 4Q adj EPS ($0.09) vs est. ($0.18), adj EBITDA $6Mm vs est. $3.85Mm; sees FY revs $$380-387Mm vs est. $381.7Mm and adj EBITDA break-even with improvement annually thereafter.

·     Exact Sciences (EXAS) Q4 EPS loss (-$0.72) vs. est. loss (-$0.84); Q4 revs $553M vs. est. $528.2M; sees FY23 revenue $2.265B-$2.315B vs. est. $2.29B; guides FY23 screening revenue $1.660B-$1.690B, Precision Oncology revenue $600M-$620M, and COVID-19 testing revenue $5M.

·     Halozyme Therapeutics (HALO) 4Q adj EPS $0.48 vs est. $0.47 on revs $181.5Mm vs est. $192.1Mm; guides FY23 revs $815-845Mm vs est. $868.1Mm, EBITDA $415-440Mm vs est. $496.5Mm and adj EPS $2.50-2.65 vs est. $2.78.

·     PTC Therapeutics (PTCT) 4Q EPS ($2.35) vs est. ($1.69) on revs $167.4Mm vs est. $189.1Mm; reaffirms FY23 guidance.

·     STAAR Surgical (STAA) 4Q adj EPS $0.14 vs est. $0.05 on revs $64Mm vs est. $64.2Mm, gr mgn 77.7%.

 

Industrials & Materials

·     Alcoa (AA) upgraded to Buy from Neutral at Citigroup with a price target of $65, up from $55, citing an upgraded and bullish view on aluminum from the firm’s global commodity team.

·     Boise Cascade (BCC) Q4 EPS $2.95 vs. est. $2.96; Q4 revs $1.63B vs. est. $1.78B; Wood Products’ sales, including sales to Building Materials Distribution (BMD), decreased $21.0 million, or 5%, to $425.6 million, driven primarily by lower sales volumes for I-joists and LVL.

·     Curtiss-Wright (CW) Q4 adj EPS $2.92 vs. est. $2.91; Q4 revs $758M vs. est. $752.23; sees FY23 EPS $8.65-$8.90 vs. est. $8.76 and sees FY23 revs $2.655B-$2.71B vs est. $2.7B and sees FY adj operating margin 17.4%-17.6% and FCF $36M-$400M.

·     Flowserve Corp. (FLS) 4Q adj EPS $0.63 vs est. $0.53 on revs $1.04B vs est. $1.01B; year-end backlog $2.74B +36.5%; guides FY23 revs +9.0-11.0% vs est. +10.0%, adj EPS $1.50-1.75 vs est. $1.68.

·     Matson (MATX) Q4 EPS $2.10 vs. est. $1.96; Q4 revs fell -37% y/y to $633.0M vs. est. $801.22M.

·     Univar Solutions (UNVR) 4Q adj EPS $0.47 vs est. $0.54 on revs $2.59B vs est. $2.66B; guides 1Q adj EBITDA $200-220Mm vs est. $239Mm and FY adj EBITDA $900-930Mm vs est. $922Mm.

 

Technology, Media & Telecom

·     Baidu (BIDU) Q4 EPS $2.21 vs. est. $2.00; Q4 revs $4.8B vs. est. $4.65B; announces $5B share repurchase program; Revenue from Baidu Core, which includes search-based ad sales, cloud offerings and its autonomous driving initiatives, fell 1% to 25.7 billion yuan; non-online marketing revenue rose 11% to 7.6 billion yuan, driven by AI and cloud businesses.

·     Palo Alto Networks (PANW) Q2 adj EPS $1.05 vs. est. $0.78; Q2 revs $1.7B vs. est. $1.65B; raises FY23 adjusted EPS view to $3.97-$4.03 from $3.37-$3.44 (est. $3.42) and backs FY23 revenue $6.85B-$6.91B (est. $6.89B); boosts FY23 billings view to $9.1B-$9.2B from $8.95B-$9.1B.

·     Keysight technologies (KEYS) 1Q adj EPS $2.02 vs est. $1.85 on revs $1.38B vs est. $1.37B; guides 2Q revs $1.37-1.39B vs est. $1.4B and adj EPS $1.91-1.97 vs est. $1.94.

·     Q2 Holdings (QTWO) 4Q adj EBITDA $8.4Mm vs est. $11.66Mm on adj revs $146.7Mm, adj gr mgn 51.5%; guides 1Q adj revs $149-152Mm vs est. $152.4Mm and adj EBITDA $10.0-12.5Mm vs est. $12.05Mm; sees FY adj revs $632-640Mm vs est. $646.5Mm and adj EBITDA $62-66Mm vs est. $58.3Mm.

·     SBA Communications (SBAC) Q4 AFFO $3.12 vs. est. $3.13; Q4 revs $686.1M vs. est. $680.57M; announced that Jeff Stoops will retire from his positions as President and Chief Executive Officer on December 31, 2023; sees FY23 AFFO $12.46-$12.83 vs. est. $12.79.

·     Sprout Social (SPT) 4Q adj EPS $0.03 vs est. ($0.02) on revs $69.7Mm vs est. $69.9Mm; sees 1Q revs $75.0-75.1Mm vs est. $74.9Mm, adj EPS ($0.01) vs est. ($0.01); sees FY revs $332-333Mm vs est. $328.5Mm and adj EPS $0.03-0.04 vs est. ($0.03).

·     WillScot Mobile (WSC) Q4 EPS $0.46 vs est. $0.44 on revs $590.6Mm vs est. $589.6Mm; sees FY23 revs $2.325-2.475B vs est. $2.389B and adj EBITDA $1.0-1.05B vs est. $1.0B.