Early Look

Friday, February 26, 2021

Futures	Up/Down	%	Last
Dow	-160.00	0.51%	31,211
S&P 500	-14.25	0.38%	3,813
Nasdaq	-87.50	0.68%	12,745

 

 

U.S. futures are edging lower despite a slowing of rising bond yields, extending losses after stocks suffered their worst day in weeks on Thursday amid rising inflation fears, as the tech sector was hit the hardest as the Nasdaq declined 3.52%, as high-growth stocks are considered more vulnerable to inflation pressures. Tech companies that benefited from the pandemic also were sold off as the outlook for the U.S. economy brightened. Bonds found a footing overnight after the U.S. 10-year Treasury yields spiked above the 1.6% level midday Thursday, now having dropped back below the 1.5% mark at currently 1.477%, down -3.8 bps on the day. Bitcoin prices meanwhile slip, down around 4% at $46,000 in what has been another volatile week for the crypto currency. In vaccine news, a panel of expert advisers to the FDA is expected to recommend authorization of a one-dose COVID-19 vaccine from Johnson & Johnson (JNJ) at some point today, likely prompting the FDA to authorize the vaccine for emergency use within a day or so. Out of Washington, the Democratic-controlled U.S. House of Representatives will aim to pass President Joe Biden’s $1.9 trillion coronavirus aid bill on Friday in what would be the first major legislative victory of his presidency.

 

All three major indexes fell, and the Nasdaq underperformed with a drop of 3.5% for its worst session since October as tech stocks renewed their declines. The S&P 500 sank by 2.5%. The Dow traded lower by more than 1.5%, after the index reached a record closing high a day earlier as cyclical and value stocks maintained their leadership positions. Federal Reserve Chair Jerome Powell has tried to temper market participants’ increasing fears over higher inflation and rates during his semiannual monetary policy testimony before Congress earlier this week. He reaffirmed his view that upward pressure on prices in the coming months would be transitory, and that the U.S. economy still required policy support to emerge from the coronavirus pandemic. In Asian markets, The Nikkei Index plunged over 1,200 points (4%) to drop below the 29,000 level, the Shanghai Index dropped -75 points to 3,509 and the Hang Seng Index was rocked over 1,000 points to 28,980 in a bloodbath overseas. In Europe, the German DAX is down over 70 points to 13,800, while the FTSE 100 is down around -60 points to move below 6,600.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -96.09 points, or 2.45%, to 3,829.34

·     The Dow Jones Industrial Average fell -559.85 points, or 1.75%, to 31,402.01

·     The Nasdaq Composite plunged -478.54 points, or 3.52%, to 13,119.43

·     The Russell 2000 Index declined -84.21 points, or 3.69% to 2,200.17

 

Events Calendar for Today

·     8:30 AM EST      Personal Income MoM for Jan…est. 9.5%

·     8:30 AM EST      Personal Spending Mom for Jan

·     8:30 AM EST      Core PCE Price index MoM for Jan…est. 0.2%

·     8:30 AM EST      Core PCE Price Index YoY for Jan…est. 1.4%

·     8:30 AM EST      PCE Price Index MoM for Jan

·     8:30 AM EST      Advance Goods Trade Balance for Jan

·     9:45 AM EST      Chicago PMI for February…est. 61.1

·     10:00 AM EST    University of Michigan Confidence, Feb-F…est. 76.5

·     1:00 PM EST       Baker Hughes Weekly rig count data

 

Earnings Calendar:

·     Earnings Before the Open: AMCX, BLDR, BLY, CNK, CVEO, DKNG, EVRG, FL, FLR, FWONA, IEP, LAMR, LSXMA, OFIX, PEG, PNM, QRTEA, RHP, SLCA, SMLP, SSP, STRA, VST

 

Other Key Events:

·     Credit Suisse Financial Services Forum (virtual), 2/24-2/26

·     SVB Leerink Global Healthcare Conference (virtual), 2/22-2/26

 

 

Macro	Up/Down	Last
Nymex	-0.93	62.60
Brent	-0.81	66.07
Gold	-11.50	1,759.00
EUR/USD	-0.0063	1.2112
JPY/USD	0.18	106.39
10-Year Note	-0.038	1.477%

 

 

World News

·     Central banks around the globe attempted to stifle the recent surge in Treasury yields:

·     Australia’s central bank launched a surprise bond buying operation to try and slow the bleeding

·     The Bank of Korea promised as much as $6.3 billion in new bond buying before the end of June, but the currency kept crumbling for a two-day fall of more than 1.5%.

·     The U.S. military launched an airstrike in Syria targeting groups affiliated with an Iran-backed militia in response to deadly rocket attacks in northern Iraq earlier this month, U.S. officials said. https://www.wsj.com/articles/u-s-airstrike-in-syria-targets-iran-backed-militia-11614299547

 

Sector News Breakdown

Consumer

·     ADT Inc. (ADT) 4Q revs $1.32B vs. est. $1.29B, adj EPS ($0.12) vs. est. $0.31; guides FY21 revs $5.05-5.25B vs. est. $5.32B, sees FY adj EBITDA $2.1-2.2B vs. est. $2.25B

·     Armstrong Flooring (AFI) shares rose 30% after selling its production facility, warehouse and real estate property located in South Gate, California to an affiliate of Overton Moore Properties, an industrial developer for $76.7M in cash

·     Beyond Meat (BYND) Q4 adj EPS loss (34c) vs. est. loss (12c); Q4 revenue $101.9M vs. est. $104.8M; adjusted Ebitda loss $9.5 million; gross margin 24.9%, below estimate 31.0%; does not issue year guidance; shares jumped as announces global partnership with YUM and signs three-year agreement to be McPlant supplier for MCD

·     Caesar’s Entertainment (CZR) Q4 EPS loss ($1.91) vs. est. loss ($1.97); Q4 revenue $1.5B vs. est. $1.72B; Q4 comp store sales fell (-37.5%); announced a minority strategic investment in the daily fantasy sports platform SuperDraft, Inc; William Hill and Caesars sports betting joint venture currently operational in fifteen states and Washington D.C.

·     Extended Stay (STAY) 4Q adj EPS $0.16 vs. est. $0.02 on revs $259.3Mm vs. est. $250Mm; guides 1Q adj EBITDA $78-84Mm vs. est. $91Mm

·     Monster Beverage (MNST) Q4 adj EPS 62c vs. est. 60c; Q4 revenue $1.2B vs. est. $1.13B; Gross profit as a percentage of net sales, for the 2020 fourth quarter was 57.7 percent, compared with 60.0 percent in the 2019 fourth quarter; Operating expenses for the 2020 fourth quarter were $288.4 million, compared with $293.7 million in the 2019 fourth quarter

·     Nikola (NKLA) Q4 adj EPS loss (17c) vs. est. loss (24c); believe co is now well-positioned to execute on its business plan; expect delivery of the first Nikola Tre Bevs to customers during q4 of 2021 and expect to begin trial production of it at Coolidge facility in q3 2021; expect to break ground on co’s first commercial hydrogen station(s) infrastructure in 2021

·     Shake Shack (SHAK) Q4 EPS loss (3c) vs. est. loss (11c); Q4 revenue $157.5M vs. est. $157.26M; sales continued to sequentially improve every month since fiscal April 2020, down 17.4% in Q4 versus the same period last year, compared to down 31.7% in Q3

·     Sprouts Farmers Market (SFM) Q4 adj EPS 49c vs. est. 39c; Q4 revenue $1.6B vs. est. $1.58B; Q4 comp store sales growth of 3.7%; sees FY21 adjusted EPS $1.78-$1.91 vs. est. $1.75; sees FY21 revenue flat to up slightly and FY21 effective tax rate 26%

·     WW International (WW) Q4 adj EPS 18c vs. est. 32c; Q4 revenue $323.4M vs. est. $312.2M; FY 2020 End of Period Subscribers up 4% year-over-year to 4.4 million, an all-time year-end high; FY 2020 End of Period Digital Subscribers up 24% year-over-year to an all-time year-end high; Q4 2020 Gross Margin of 56.3%

 

Energy

·     Edison international (EIX) Q4 adj EPS $1.19 vs. est. $1.20; Q4 revenue $3.16B vs. est. $3.37B

·     First Solar (FSLR) Q4 EPS $1.08 vs. est. $1.23; Q4 revenue $609.23M vs. est. $720.48M; sees FY21 EPS $4.05-$4.75 vs. est. $3.63; sees FY21 revenue $2.85B-$3B vs. est. $3B and sees FY21 net cash balance $1.8B to $1.9B; 5.5 GWDC of 2020 net bookings; 3.3 GWDC since Q3 earnings call

·     Sunrun (RUN) 4Q revs $320.4Mm vs. est. $303.5Mm, 4Q reported EPS ($0.88) vs est $0.12; expects solar energy capacity installed growth to be +20-25% for FY pro-forma for Vivint Solar

 

Financials

·     CubeSmart (CUBE) 4Q adj FFO/shares $0.47 vs. est. $0.42; guides FY adj FFO/share $1.77-1.83 vs. est. $1.77

·     Mastercard (MA) switched volume continues to be relatively steady so far in q1, with yoy growth rates modestly improving through first half of Feb; in Q1, switched transactions remain steady and are tracking the trends we see in switched volume; Q1 cross-border volume growth rates have shown modest improvement as we begin to lap start of pandemic, mainly in Asia-pacific & Europe

·     Focus Financial (FOCS) 7M share Spot Secondary priced at $48.00

·     Rocket Companies (RKT) Q4 adj EPS $1.14 vs. est. 87c; Q4 revenue $4.78B vs. est. $3.92B; Generated record closed loan origination volume of $107.2 billion and net rate lock volume of $96.0 billion in Q4; Increased gain on sale margin by 100 basis points year-over-year to 4.41%; Rocket Auto facilitated the sale of 9,400 auto units, up more than 2,000 units YoY

 

Healthcare

·     BioMarin (BMRN) Q4 EPS 12c vs. est. loss (19c); Q4 revenue $452.1M vs. est. $440.2M; Q4 net product revenues were essentially flat as compared to the fourth quarter of 2019; sees FY21 revenue $1.75B-$1.85B vs. est. $1.91B; sees FY21 GAAP net loss of ($130M)-($80M) and non-GAAP income of $170M-$220M

·     Codexis (CDXS) 4Q EPS ($0.06) vs. est. ($0.12) on revs $21Mm vs. est. $20.9Mm; guides FY21 revs $82-85Mm vs. est. $80.5Mm

·     Evolent Health (EVH) Q4 adj EPS loss (1c) vs. est. loss (5c); Q4 revenue $271.9M vs. est. $261.55M; sees Q1 revenue $205M-$215M vs. est. $229.29M and adjusted EBITDA is expected to be $10M-$14M.

·     NuVasive (NUVA) Q4 adjusted EPS 59c vs. est. 55c; Q4 revenue $291.8M vs. est. $298.36M; Free cash flow for the quarter ended Dec. 31, 2020, was $44.8 million compared to $46.3 million in the prior year period

·     Universal Health (UHS) Q4 adj EPS $3.59 vs. est. $2.78; Q4 revenue $3.09B vs. est. $2.99B; sees FY21 adj EPS $10.05-$11.05 vs. est. $10.75; sees FY21 revenue $12.125B-$12.361B vs. est. $11.94B

 

Industrials & Materials

·     Australia said on Friday it would lift a near two-year ban on flights involving Boeing Co (BA) 737 MAX planes, becoming among the first in the Asia-Pacific region to do so.

·     Freeport McMoRan (FCX) is set to approve expansions at several of its U.S. copper mines to capitalize on surging demand, CEO tells Reuters

·     W. R. Grace (GRA) said it has agreed to acquire the fine chemistry services business of Albemarle (ALB) for about $570 million, significantly strengthening and expanding its pharmaceutical portfolio.

·     Gates Industrial (GTES) 22M share Secondary priced at $15.00

·     Kratos Defense (KTOS) 4Q adj EPS $0.08 vs. est. $0.10 on revs $206.4Mm vs. est. $217.1Mm; guides 1Q revs $185-195Mm vs. est. $189.3Mm, sees FY revs $810-850Mm vs. est. $843.9Mm

·     MasTec Inc. (MTZ) 4Q EPS $1.54 vs. est. $1.67 on revs $1.6B vs. est. $1.8B; guides 1Q adj EPS $0.80 vs. est. $0.66, sees 1Q revs about $1.65B vs. est. $1.56B; guides FY 21 EPS $5.00 vs. est. $4.91

·     Virgin Galactic (SPCE) Q4 EPS loss (31c), in line with ests; rollout of second spaceship scheduled to take place on March 30; announced expected timing of revenue-generating flight with Italian air force; cash and cash equivalents of $666 mln as of December 31, 2020; next rocket-powered spaceflight from spaceport America, targeted for May 2021; continuing to experience ongoing delays to its business and operations due to covid-19

 

Internet:

·     AirBnB (ABNB) Q4 revenue $859M vs. est. $747.59M; reported a $3.9 billion loss in Q4, which included a charge of $2.8 billion for stock compensation tied to its initial public offering during the quarter – compared with a loss of $351 million in the same period a year earlier; sees Q1 revenue down year-over-year and sees adjusted EBITDA margins lower in first half than second

·     Carvana (CVNA) 4Q revs $1.826B vs. est. $1.6B, qtrly retail units sold 72.172 +43% yr/yr

·     DoorDash (DASH) 4Q EPS ($2.67) on revs $970Mm vs est $938Mm, qtrly total orders +233% to 273Mm, saw strong growth in both restaurant and non-restaurant merchants, believe still have substantial room to increase penetration in restaurant vertical; says estimate 4Q price controls had net negative impact of $36Mm on reported revs, gr profit and EBITDA; expect gross impact from price controls to almost double in 1Q vs 4Q

·     Etsy Inc. (ETSY) Q4 EPS $1.08 vs. est. 59c; Q4 revenue $617.36M vs. est. $515.65M; Q4 GMS excluding mask sales for the Etsy marketplace was $3.3B, up 118% year-over-year, and 4% of the Etsy marketplace’s overall GMS was from mask sales; sees Q1 revenue $513M-$536M vs. est. $380.45M; sees Q1 GMS of $2.9B-$3.1B, or GMS growth of 115%-125%

 

Technology, Media & Telecom

·     Autodesk (ADSK) Q4 adjusted EPS $1.18 vs. est. $1.07; Q4 revenue $1.04B vs. est. $1.01B; Total billings decreased 1% to $1.47B; sees Q1 adj EPS 91c-96c vs. est. $1.11; sees Q1 revenue $955M-$970M vs. est. $998.1M; sees FY22 adj EPS $4.78-$5.08 vs. est. $5.17; sees FY22 revenue $4.265B-$4.345B vs. est. $4.3B

·     Bandwidth (BAND) 4Q adj EPS $0.13 vs est $0.24 on revs $113Mm vs est $96.7Mm; guides 1Q revs $108-109Mm vs est $103.6Mm, sees 1Q adj EPS $0.00-0.02 vs est $0.02; guides FY revs $460.4-464.4Mm vs est $451.8Mm, sees FY adj EPS $0.02-0.12 vs est $0.35

·     Dell Inc. (DELL) Q4 adj EPS $2.70 vs. est. $2.14; Q4 revenue $26.1B vs. est. $24.49B; ended the year with total deferred rev of $30.8 bln, up $3 bln yoy; qtrly recurring rev about $6 bln, up 8%; qtrly client solutions group rev of $13.8 bln, up 17%; projected mid-single digits growth in it spending in 2021

·     Eventbrite (EB) 4Q EPS ($0.22) vs. est. ($0.37) on revs $26.7Mm vs. est. $28.2Mm; sees 1Q cash costs, excluding processing fees of between $31-33Mm

·     Lamar Advertising (LAMR) Q4 EPS $1.08 vs. est. 78c; Q4 revenue $428.5M vs. est. $413.89M; sees 2021 EPS $2.76-$3.02 vs. est. $2.94

·     Hewlett Packard (HPQ) 1Q adj EPS $0.92 vs. est. $0.61 on revs $15.6B vs. est. $14.96B; sees 2Q adj EPS $0.84-0.90 vs. est. $0.65, sees FY adj EPS $3.15-3.25 vs. est. $2.65 (earnings releases was late day trading hours on Thursday)

·     SailPoint (SAIL) 4Q adj EPS $0.10 vs. est. $0.00 on revs $103.3Mm vs. est. $94.5Mm; guides 1Q revs $90.5-92Mm vs. est. $86.8Mm, sees FY revs $404-412Mm vs. est. $399.9Mm

·     Salesforce.com (CRM) Q4 adj EPS $1.04 vs. est. 75c; Q4 revenue $5.82B vs. est. $5.68B; sees Q1 adj EPS 88c-89c vs. est. 76c; sees Q1 revenue $6.875B-$5.885B vs. est. $5.72B; Operating Margin: Fourth quarter GAAP operating margin was 3.3%. Fourth quarter non-GAAP operating margin was 17.5%

·     Workday Inc. (WDAY) 4Q adj EPS $0.73 vs. est. $0.55 on revs $1.13B vs. est. $1.12B, qtrly subscription revs $1.01B +19.8%; sees FY22 subscription revs $4.38-4.40B

·     Velodyne Lidar (VLDR) 4Q adj EPS ($0.12) vs. est. ($0.11) on revs $17.8Mm vs. est. $16.1Mm; company estimates opportunity for over $1B of revenue from signed and awarded projects from 2021-2025 plus a pipeline of projects from $2021-2025 that are not yet signed and awarded of $4.4B

·     VMWare (VMW) Q4 EPS $2.21 vs. est. $2.05; Q4 revenue $3.3B vs. est. $3.23B; Q4 subscription and SaaS revenue was $707M, an increase of 27% year-over-year; Q4 RPO totaled $11.3B, up 10% year-over-year; qtrly combination of subscription and saas and license revenue was $1.7 bln, an increase of 8%

·     Zscaler (ZS) 2Q adj EPS $0.10 vs. est. $0.08 on revs $157Mm vs. est. $147.3Mm; guides 3Q revs $162-164Mm vs. est. $153.7Mm, sees 3Q adj EPS $0.07 vs. est. $0.08; guides FY revs $634-638Mm vs. est. $612.4Mm, sees FY adj EPS $0.39-0.40 vs. est. $0.38

·     Zix Corp. (ZIXI) 4Q adj EPS $0.16 vs. est. $0.16 on revs $57.9Mm vs. est. $56.9Mm; guides 1Q revs $58.7-59.8Mm vs est $58.1Mm, sees 1Q adj EPS $0.15-0.16 vs. est. $0.14; guides FY revs $244-248.5Mm vs est $243.1Mm