Early Look

Tuesday, July 25, 2023

Futures	Up/Down	%	Last
Dow	5.00	0.01%	35,586
S&P 500	3.25	0.08%	4,587
Nasdaq	40.00	0.26%	15,601

 

 

U.S. futures looking flat to up slightly, European shares also modest gains, but big advances in Asia on more stimulus optimism. The Nikkei Index dropped -18 points to 32,682, the Shanghai Index jumped 67 points to 3,231, and the Hang Seng Index surged 766 points to 19,434. In Europe, the German DAX is up 13 points to 16,204, while the FTSE 100 rises a few points to 7,685. A pledge from China’s Politburo to inject a fresh dose of stimulus triggered buying optimism in Asia. Attention turns to earnings today, with a big dose of large cap movers this morning including GE, MMM, GM, and others with the FOMC rate policy meeting tomorrow afternoon. Stocks and crude oil rose on Monday as disappointing economic figures ahead of likely rate hikes from the Federal Reserve and the European Central Bank this week added to speculation policymakers are close to ending their tightening cycles. In an interesting turn of events yesterday, Morgan Stanley strategist Mike Wilson admitted he was wrong in his bearish call in 2023, noting he underestimated valuation expansions, and missed the AI boom but said he does remain bearish saying he still sees cool inflation posing a threat to corporate earnings. His forecast for the S&P 500 remains 3,900, a level that has been left behind in the index’s 19% jump to around 4,560. His team has recently shifted the focus to June 2024, for which the price target is set at 4,200, about 8% below its current level. Oil, gold, and the dollar are all little changed early.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 18.33 points, or 0.40%, to 4,554.67.

·     The Dow Jones Industrial Average rose 184.01 points, or 0.52%, to 35,411.70.

·     The Nasdaq Composite gained 26.06 points, or 0.19%, to 14,058.87.

·     The Russell 2000 Index gained 5.42 points, or 0.28% to 1,965.68.

 

Economic Calendar for Today

·     7:45 AM ET           ICSC Weekly Retail Sales

·     8:55 AM ET           Johnson/Redbook Weekly Sales

·     9:00 AM ET           Monthly Home Prices M/M for May

·     9:00 AM ET           CaseShiller 20-City M/M for May

·     10:00 AM ET         Consumer Confidence for July

·     10:00 AM ET         Richmond Fed Manufacturing for July

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

·     4:30 PM ET            API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABG ACI ADM ALK ARCC AUB AVY AWI BIIB BKU CTS CHR DOV DOW FELE GATX GE GEHC GLW GM HRI IRDM IVZ KMB LTH LW MCO MMM MSCI NEE NEP NUE NVR ONB PCAR PEBO PHM PII PJT RTX SBSI SFNC SHW SITC SPOT ST TRU VZ XRX

·     Earnings After the Close: AAT ASH ATRC BANC BDN CALM CR CSGP EGP ENVA EQT EVR FCF FFIC GOOGL HA HAFC HIW HUBB KALU LOB MANH MMSI MSFT MTRD NBR NEX PACW PFC PRO RHI RNST ROIC RUSHA SNAP TDOC TENB TRMK TXN UHS USNA V WFRD WIRE WM WSBC

 

 

Macro	Up/Down	Last
Nymex	0.13	78.87
Brent	0.14	82.88
Gold	-0.10	1,962.10
EUR/USD	-0.0019	1.1043
JPY/USD	0.00	141.44
10-Year Note	+0.037	3.894%

 

 

Sector News Breakdown

Consumer

·     General Motors Co. (GM) Q2 adjusted EPS $1.91 vs. est. $1.85; Q2 revs $44.7B vs. est. $42.64B; raised its guidance for the full year after showing strong second quarter sales, hiking its net income forecast to a range of $9.3B-$10.7B; Raises FY23 adjusted EBITDA view to $12B-$14B from $11B-$13B.

·     Whirlpool (WHR) Q2 adj EPS $4.21 vs. est. $3.76; Q2 revs $4.79B vs. est. $4.82B; Q2 adj Ebit margin 7.3%; backs FY23 adjusted EPS view $16.00-$18.00 and backs FY23 free cash flow approximately $800M; said continue to build on our momentum with sequentially improved margins in Q2.

·     Mastercraft Boat Holdings, Inc. (MCFT) announces a new $50 million share repurchase authorization.

·     TrueBlue (TBI) 2Q adj EPS $0.17 vs est. $0.23 on revs $475.588Mm vs est. $496.11Mm; says results reflect environment of softening demand; guides 3Q revs $484-509Mm vs est. $516.88Mm, gr mgn +0-40bps y/y.

·     Walmart (WMT) upgraded to Overweight from Neutral at Piper Sandler.

 

Energy

·     Range Resources (RRC) Q2 EPS $0.30 vs. est. $0.24; Q2 revs $589.83M vs. est. $562.21M; Capital spending was $175 million, approximately 30% of the 2023 budget; Q2 Production averaged 2.1 Bcfe per day, approximately 68% natural gas.

·     Zurn Elkay Water (ZWS) 2Q adj EPS $0.24 vs est. $0.22 on revs $403Mm vs est. $392.85Mm, adj EBITDA $87Mm vs est. $83.96Mm, adj EBITDA mgn 21.6%; guides FY sales $1.525-1.55B vs est. $1.52B and adj EBITDA $335-345Mm vs est. $332.06Mm.

 

Financials

·     AGNC Investment (AGNC) 2Q EPS $0.43 vs est. $0.63; $9.39 tangible net BV/shr, 3.6% economic return on tangible common equity.

·     Alexandria Realty (ARE) 2Q AFFO/shr $2.24 vs est. $2.19.

·     Cadence Bank (CADE) Q2 adj EPS $0.64 vs est. $0.67; credit loss provision $15Mm.

·     Enterprise Financial (EFSC) 2Q EPS $1.29 vs est. $1.29 on NII $140.7Mm vs est. $139.91Mm, credit loss provision -6.3Mm, total deposits $11.6B at qtr-end.

·     Goldman Sachs Group Inc. (GS) downgraded to neutral from buy at Citigroup, saying that the company’s targets are achievable, but it will take time and a better investment banking environment to attain them.

·     Washington Trust (WASH) Q2 EPS $0.66 vs est. $0.63 on NII $33.5Mm, credit loss provision $0.7Mm.

·     WSFS Financial (WSFS) 2Q EPS $1.12 vs est. $1.10 on NII $181.8Mm vs est. $175.91Mm, fee revs $66.9Mm, ROE 11.8%.

 

Healthcare

·     GE Healthcare (GEHC) Q2, ADJ EPS 92c vs, est. 88c; Q2 revs $4.82B vs. est. $4.81B; Q2 adj Ebit $711M vs. est. $689.4M; sees ADJ EPS $3.70-$3.85 vs. est. $3.75 and sees organic revenue +6% to +8%, saw +5% to +7%.

·     Medpace Holdings (MEDP) 2Q EPS $1.93 vs est. $1.91 on revs $460.9Mm vs est. $433.69Mm, EBITDA $83.6Mm vs est. $82.52Mm; net new business awards $574.8Mm +27.6% y/y; guides FY revs $1.84-1.88B vs est. $1.776B, EBITDA $340-358Mm vs est. $350.11Mm, EPS $8.04-8.50 vs est. $8.23 with FY tax rt 17.5-18.5%.

·     NextGen Healthcare (NXGN) 1Q adj EPS $0.24 vs $0.22 on revs $178.207Mm vs est. $173.5Mm; guides FY revs $714-722Mm vs est. $717.95Mm, adj EBITDA $125-131Mm vs est. $123.5Mm and adj EPS $1.04-1.11 vs est. $1.09.

 

Industrials & Materials

·     3M (MMM) Q2 EPS $2.17 vs. est. $1.72; Q2 revs $8.3B vs. est. $7.87B; raises year outlook for EPS to $8.60-$9.10 from prior $8.50-$9.00 and still sees 2023 sale down -1%-5% and organic sales flat to down -3% after Q2 organic sales fell -2.2%.

·     ChampionX Corp. (CHX) Q2 adj EPS $0.48 vs. est. $0.44; Q2 revs $926.6M vs. est. $980.39M; Q2 FCF $88.8M, adj Ebitda $186.2M and guides Q3 Ebitda $199M-$207M.

·     Cleveland Cliffs (CLF) Q2 EPS $0.67 vs. est. $0.70; Q2 revs $5.98B vs. est. $5.66B; Q2 adjusted EBITDA -31% y/y to was $775M but up from $243M in Q2; posted total steel shipments of more than 4.2M net tons in Q2; said total liquidity of $3.8B, highest in Company history.

·     Dow Chemical (DOW) Q2 Operating EPS $0.75 vs. est. $0.69; Q2 revs down -27% y/y to $11.42B vs. est. $11.34B; Performance Materials Unit net sales $2.20 billion, -27% y/y, Industrial Intermediates & Infrastructure net sales $3.18 billion, -27% y/y, and Packaging & Specialty Plastics net sales $5.94 billion, -28% y/y.

·     Crown Holdings (CCK) Q2 adj EPS $1.68 vs. est. $1.64; Q2 revs $3.11B vs. est. $3.45B; guides Q3 EPS $1.70-$1.80 vs. est. $1.81 and sees FY23 adjusted EPS $6.10-$6.30 vs. est. $6.29; affirms 2023 adj EBITDA growth between 8%-12% and tax rate between 24% and 25%.

·     General Electric (GE) Q2 adj EPS $0.68 vs. est. $0.46; Q2 revs $16.7B vs. est. $15B; Q2 total orders $22B, up 59%; raises FY23 adjusted EPS view to $2.10-$2.30 from $1.70-$2.00; raises organic revenue growth in the low-double-digit range, up from the high-single-digit range and free cash flow of $4.1B-$4.6B, up from $3.6B-$4.2B.

·     Hexcel (HXL) Q2 adj EPS $0.50 vs. est. $0.48; Q2 revs $454.3M vs. est. $448.36M; Commercial Aerospace Sales $264.3 million, +16% y/y, and Space & Defense Sales $137.5 million, +23% y/y; raises FY23 adjusted EPS view to $1.80-$1.94 from $1.70-$1.90 (est. $1.97) and boosts FY23 sales view $1.765B-$1.835B vs. prior $1.725B-$1.825B (est. $1.81B)

·     Nucor (NUE) Q2 EPS $5.81 vs. est. $5.53; Q2 revs $9.52B vs. est. $9.62B; average sales price per ton in Q2 rose 7% q/q; sees earnings in Q3 to fall vs. Q2; sees earnings for steel mills segment to decline in q/q; said earnings for raw materials segment are expected to decrease in Q3 vs. Q2.

·     Packaging Corp. (PKG) Q2 adj EPS $2.31 vs. est. $1.93; Q2 revs $1.95B vs. est. $1.99B; sees Q3 EPS $1.88 vs. est. $1.75.

·     Simpson Manufacturing (SSD) Q2 EPS $2.50 vs. est. $2.05; Q2 revs $597.6M vs. est. $554.27M; FY operating margin is now estimated to be in a range of 20.5% to 21.5%; FY capital expenditures are estimated to be in range of $105M-$115M.

 

Technology, Media & Telecom

·     Agilysys (AGYS) 1Q adj EPS $0.18 vs est. $0.14 on revs $56.1Mm vs est. $55.2Mm, gr mgn 59%, adj EBITDA $6.3Mm; guides FY revs $230-235Mm vs est. $233.48Mm, adj EBITDA mgn 13%; says expect 2H to be significantly higher than first couple qtrs., remain confident of achieving revenue, profitability, and subscription growth guidance levels for FY.

·     Cadence Design Systems (CDNS) 2Q adj EPS $1.08 vs est. $1.18 on revs $977Mm vs est. $974.9Mm, adj EBIT mgn 42%; guides 2H revs $2.052-2.092B vs est. $2.057B; sees FY revs $4.05-4.09B vs est. $4.055B, sees FY GAAP EPS $3.35-3.41 and GAAP op mgn 30.2-31.2%.

·     Crown Castle Inc. (CCI) initiated a restructuring plan as part of the company’s efforts to reduce costs; includes reducing the company’s total employee headcount by approximately 15%, discontinuing installation services as a product offering within the Towers segment; estimates it will incur aggregate restructuring and related charges of approximately $120 million.

·     F5 Networks (FFIV) Q3 EPS $3.21 vs. est. $2.86; Q3 revs $703M vs. est. $699.4M; guides Q4 EPS $3.15-$3.27 vs. consensus $3.22 and revs $690M-$710M vs. consensus $701.9M.

·     Liberty Global (LBTYA) Q2 adjusted EBITDA $601.4M vs $649.8M last year; Q2 revs $1.85B vs $1.754B last year; said are well positioned to achieve all the 2023 full-year guidance metrics at our operating companies.

·     Logitech (LOGI) Q1 EPS $0.65 vs. est. $0.46; Q1 revs $974.5M vs. est. $919.7M; raises 1H’24 outlook to $1.875B-$1.975B from $1.8B-$1.9B.

·     NXP Semiconductors (NXPI) Q2 EPS $2.67 vs. est. $2.51; Q2 revs $3.3B vs. est. $3.21B; sees Q3 EPS $2.68-$3.10 vs. est. $2.64 and revs $3.30B-$3.5B vs. est. $3.31B; said Q2 adj gross margin 58.4% vs. 57.8% y/y, adj operating margin 35% and FCF $556M.

·     Spotify (SPOT) Q2 Revenue EU3.18 billion, +11% y/y vs est. EU3.21 billion; Q2 Premium revenue EU2.77 billion, +11% y/y, vs. est. EU2.79 billion; Q2 Monthly active users 551.0 million, +27% y/y, vs. estimate 529.9M and total premium subscribers 220.0M, +17% y/y, vs. est. 217.1M.