Early Look

Wednesday, July 31, 2024

U.S. futures surging early, led by strength in technology as Nasdaq futures jump +1.5% or 285 points to 19,221, helped by boost in semis after AMD rises 9% premarket on results/guidance and ASML jumps 8% following a Reuters report that implied the Co will be spared the brunt of new U.S.-China export restrictions under consideration. MSFT shares dropped overnight after results for the quarter beat but noted higher spending and slowing Azure software rev growth. While earnings are in full swing, lots of central bank action today with the FOMC rate decision at 2:00 PM and Fed Chairman Powell press conference following where no changes are expected, but investors await clarity if a September rate cut is in the cards. Meanwhile in Japan, its central bank raised rates by 25bps to the highest level since 2008 and unveiled a detailed plan to slow its massive bond buying, boosting the yen as well as stock markets. Oil prices jump with WTI crude +2.58% to $76.66 per barrel and Brent back above $80 after Hamas said Israel killed its political leader in an airstrike on Tehran.

Stocks were mixed again on Tuesday, with gains for the Dow Jones Industrials and Russell 2000, rising +0.5% and +0.35% respectively, while the tech heavy Nasdaq slumped -1.28% (Nasdaq 100 QQQ fell below 100-day moving average support of $455.41 before recovering) and the S&P 500 index (SPX) slipped -0.5% below its 50-day moving average support of 5,442. Large cap tech, specifically chip stocks, saw the heaviest selling while energy and financials saw the biggest upside moves. With Tuesday’s selloff, the Nasdaq has fallen about 8% from its record high close on July 10.

In Asian markets, The Bank of Japan raised rates to 0.25% and unveiled a detailed plan to slow its massive bond buying, sending the Japanese yen rallying 1.5% to 150.45 against the U.S. dollar. Meanwhile, China’s manufacturing activity slipped to a five-month low as the National Bureau of Statistics (NBS) purchasing managers’ index (PMI) contracted for a third month, raising stimulus hopes. The Nikkei Index surged 575 points to 39,101, the Shanghai Index gained 59 points to 2,938, and the Hang Seng Index jumped 341 points to 17,344. In Europe, the German DAX is up 70 points to 18,482, while the FTSE 100 is up 116 points to 8,390.

• The Dow Jones Industrial Average rose 203.40 points, or 0.50%, to 40,743.33.
• The Nasdaq Composite dropped -222.78 points, or 1.28%, to 17,147.42.
• The Russell 2000 Index advanced 7.81 points, or 0.35% to 2,243.14.

• 8:15 AM ET ADP Private Payrolls for July…est. +150K
• 8:30 AM ET                  Employment Cost Index Q/Q for Q2…est. +1.0% (prior +1.2%)
• 9:45 AM ET                  Chicago PMI for July…est. 45.0 (prior 47.4)
• 10:00 AM ET                Pending Home Sales M/M for June…est. +1.5%
• 10:30 AM ET                Weekly DOE Inventory Data
• 2:00 PM ET FOMC Rate Policy Meeting – no change expected

• Earnings After the Close: ACHC ACLS AFL AIG ALB ALKT ALL AM AMWL ANSS APA AR ATEC BALY BKH BV CAKE CCRN CDNA CFLT CGNX CHRW CNMD CNXN COHU COKE COMP CTSH CTVA CWAN CWH DLX EBAY ENVX EOLS EPR ERII ES ETSY EXAS FCPT FICO FMC FORM GKOS GNW GRBK GT HLF HST HVT IEX IR IRT JAZZ KD KN KRC LRCX LUNG MAA MCW MET META MGM MTG MUSA NE NGVT NOVA NTGR PAYC PAYS PK PPC PTC QCOM QDEL QTWO RDN RELY RGR RIG RIOT RRX RSI RUHSA SCI SNBR SON TDOC TENB TTEK UDMY VAC VICI WDC WHD ZETA

• The Biden administration plans to unveil a new rule next month that will expand U.S. powers to stop exports of semiconductor manufacturing equipment from some foreign countries to Chinese chipmakers, two sources familiar with the rule said. But shipments from allies that export key chipmaking equipment – including Japan, the Netherlands and South Korea – will be excluded, limiting the impact of the rule – Reuters. So, companies like ASML (ASML) and Tokyo Electron will not be affected.
• China’s manufacturing activity slipped to a five-month low as the National Bureau of Statistics (NBS) purchasing managers’ index (PMI) contracted for a third month, easing to 49.4 from 49.5 in June, below the 50-mark separating growth from contraction, but just ahead of a median forecast of 49.3 in a Reuters poll.
• Euro zone inflation unexpectedly edged up in July, accelerating to 2.6% in July from 2.5% in June according to Eurostat’s flash estimate. A key measure of underlying growth in prices — which excludes energy, food, alcohol and tobacco — failed to show the expected decline and came in unchanged at 2.9%. Eurozone services’ price growth eased to 4.0% from 4.1% in June.
• Australian inflation was softer than expected in Q2, while the headline figures were in line with MoM at 1.0% (est. 1.0%; prev. 1.0%) and YoY at 3.8% (est. 3.8%; prev. 3.6%), the smoothed measures, favored by the RBA, softened unexpectedly.
• Japan’s factory output fell 3.6% in June from the previous month, versus a median market forecast for a 4.8% drop, government data showed on Wednesday.

• Caesars Entertainment (CZR) Q2 EPS (%0.56) vs est. $0.12 on revs $2.83B vs est. $2.876B; adj EBITDA $1B vs est. $966.63Mm.
• Live Nation (LYV) Q2 EPS $1.03 vs. consensus $1.07; Q2 revenue rose 7% y/y to $6.02B, in-line with consensus $6.02B; said continue to see strong demand globally, with a growing variety of shows attracting both casual and diehard fans who are buying tickets at all price points; said sold 153.6M in Q2, up 2% from the same period last year.
• Match Group (MTCH) Q2 EPS $0.48 vs est. $0.48, adj op Inc $306Mm vs est. $206.44Mm; payers -5% y/y to 14.8Mm; guides Q3 revs $895-905Mm vs est. $915.43Mm and adj op Inc $335-340Mm vs est. $244.54Mm.
• Mondelez Int’l (MDLZ) Q2 adj EPS $0.86 vs est. $0.79 on revs $8.34B vs est. $8.45B; sees FY organic net revs high end +3-5% vs est. +2% and adj EPS +high-single vs est. +9.1%; sees FY FCF $3.5B+.
• Starbucks (SBUX) Q3 EPS $0.93 vs. est. $0.92; Q3 sales fell -0.6% to $9.11B vs. est. $9.24B; Q3 total comparable sales fell -3%, vs. est. -2.71% as North America comparable sales -2%, vs. est. -1.62%. International comparable sales fell -7%, vs. est. -5.11% and China comparable sales -14%, vs. est. -10.6%; Operating margin fell 70 basis points on an adjusted basis in the third quarter hurt by increased promotions and higher wages.

• Advanced Energy Systems (AEIS) Q2 adj EPS $0.85 vs. est. $0.71; Q2 revs $364.9M vs. est. $350.06M; sees Q3 adj EPS $0.90 plus/minus $0.25 vs. est. $0.90 and revs $370M, plus/minus $20M vs. consensus $373.04M.
• First Energy (FE) Q2 EPS $0.56, in-line with consensus and revs $3.3B vs. est. $3.38B; guides Q3 EPS $0.85-$0.95; Affirms targeted 6-8% long-term annual operating earnings per share growth and full-year 2024 operating (non-GAAP) earnings guidance of $2.61 to $2.81 per share.
• Vistra (VST) and Constellation energy (CEG) shares both jumped after PJM power auction results yielded sharply higher prices. An annual power market auction by the largest U.S. electrical grid operator resulted in prices more than 800% higher than last year as supply dwindled and demand increased. Separately, the Nuclear Regulatory Commission (NRC) approved Vistra’s request to extend the operation of Comanche Peak Nuclear Power Plant through 2053, an additional 20 years beyond its original licenses.

• Boston Properties (BXP) Q2 FFO per share $1.77 vs. $1.86 y/y, and est. $1.73, revenue rose 4.1% y/y to $850.5M vs. est. $820.1M and occupancy 87.1% vs. 88.3% y/y.
• Extra Space Storage (EXR) Q2 FFO/shr $2.06 vs est. $2.00 on revs $810.7Mm vs est. $728.75Mm; sees F core FFO/shr $7.95-8.15 vs est. $8.06.
• HSBC Holdings (HSBC) pledged to buy back $3B in shares, after reporting stable first-half profit on growth in wealth management and narrowing loss in Chinese real estate; sets a new goal for its return on average tangible equity – a key performance target – to be in the mid-teens in 2025, matching its estimate for 2024.
• LegalZoom (LZ) upgraded to Buy from Hold at Jefferies.
• Lemonade Inc. (LMND) Q2 EPS loss (-$0.81) vs. est. loss (-$0.88); Q2 revs $122M vs. consensus $121.77M; sees Q3 revenue $124M-$126M vs. consensus $134.3M.
• Unum (UNM) announces $1B share buyback; Q2 adj EPS $2.16 vs est. $2.02 on revs $3.23B vs est. $3.23B, BV/shr $55.63; guides FY after-tax adj op EPS +10-15%.
• Voya Inc. (VOYA) Q2 adjusted EPS $2.18 vs. est. $2.14 and revs $2.03B vs. est. $1.87B; Total client assets as of June 30, 2024, were $581B, up 12% compared with June 30, 2023, primarily due to higher equity market levels; Adj operating margin for the TTM ended June 30, 2024, was 37.1% compared with 31.9% in the prior-year TTM period.
• Western Union (WU) Q2 adj EPS $0.44 vs. est. $0.45; Q2 revs $1.07B vs. est. $1.06B; sees FY24 adj EPS $1.70-$1.80, vs. est. $1.77 and sees FY24 revenue $4.15B-$4.225B vs. consensus $4.19B; sees FY24 operating margin 19%-21%; Q2 Consumer Money Transfer transactions grew 4% in Q2 led by 13% growth in Branded Digital transactions.

• GlaxoSmithKline (GSK) posted Q2 results above consensus, and raised its full-year sales and profit estimates; now expects 2024 core EPS to increase between 10% and 12%, from an earlier forecast of 8% to 10% growth; forecast 2024 sales to rise between 7% and 9%, from a previous range of 5% to 7% growth; cut its forecast for 2024 vaccine sales to grow by a low to mid-single digit % from prior view of high single-digit to low double-digit % growth.
• Inari Medical (NARI) Q2 EPS loss (-$0.54) vs. est. loss (-$0.15); Q2 revenue $145.82M vs. consensus $143.75M; raises full year 2024 revenue guidance to $594.5M-$604.5M, an increase of $2M at the midpoint from prior guidance range; announced that Mitch Hill, CFO, will retire effective October 1 and will be succeeded by Kevin Strange in house.
• MacroGenics (MGNX) announced the achievement of $100M in milestones from Incyte (INCY) related to development progress of Zynyz, following an agreement on July 24, pursuant to which certain milestones were deemed to have been met.
• Penumbra Inc. (PEN) Q2 adj EPS $0.64 vs. est. $0.56; Q2 revs rose 14% y/y to $299.4M vs. consensus $298.36; cuts FY24 revenue view to $1.18B-$1.2B from $1.213B-$1.27B (est. $1.24B).
• Stryker (SYK) Q2 adj EPS $2.81 vs est. $2.79, adj EBIT mgn 24.6% on revs $5.4B vs est. $5.406B; sees FY organic net sales +9-10% vs est. +8.8% and adj EPS $11.90-12.10 vs est. $11.95.

• Generac (GNRC) Q2 adj EPS $1.35 tops consensus $1.18; Q2 revenue $998M vs. est. $999.97M; Q2 adj Ebitda $165M vs. est. $150.3M; raises 2024 revenue growth view to 4%-8% from 3%-7% and guides FY adj Ebitda margin 17%-18%. Wallbox (WBX) said it had received a $45M investment, which includes $35M from lead investor, Generac.
• Landstar Systems (LSTR) Q2 EPS $1.48 vs. consensus $1.45; Q2 revs $1.23B vs. consensus $1.25B; Q2 number of loads hauled via truck declined 8.9% as compared to the 2023 second quarter, at the low end of the Company’s guidance; Q2 Truck revenue per load declined 2.6% y/y, slightly below the mid-point of guidance.
• Modine Manufacturing (MOD) Q1 adj EPS $1.04 vs est. $0.87, adj EBITDA $100.9Mm vs est. $83.7Mm on revs $661.5Mm vs est. $633.6Mm; guides FY net sales +6-11% vs est. +7.3%, adj EBITDA $375-395Mm vs est. $351.51Mm and adj EPS $3.65-3.95 vs est. $3.71.
• Powell Industries (POWL) Q3 EPS $3.79 vs est. $2.16 on revs $288.2Mm vs est. $222.18Mm.
• Smurfit Westrock (SW) Q2 EPS 51c vs $1.03 last year and Q2 revenue $2.969B vs $3.076B last year.
• Terex Corp. (TEX) Q2 adj EPS $2.16 vs. consensus $2.06; Q2 revenue $1.4B vs. est. $1.43B; raises FY24 EPS view to $7.15-$7.45 from $6.95-$7.35 (est. $7.10) but lowers FY24 revenue view to $5.1B-$5.3B from $5.2B-$5.4B.
• Veolia (VEOEY) said it had agreed to sell its sulfuric acid regeneration business in North America to private equity firm American Industrial Partners for an enterprise value of $620 million.
• Werner Enterprises (WERN) Q2 adj EPS $0.17 vs. est. $0.20; Q2 revs $760.79M vs. est. $770.8M; Q2 adj operating income $21.2M vs. est. $23.8M and adj operating margin 2.8%; said Q2 revs fell due to a $33.1M, or 6%, decrease in Truckload Transportation Services revenues and a decline in Logistics revenues of $15.6M, or 7%.

• Advanced Micro Devices (AMD) Q2 EPS $0.69 vs. est. $0.68; Q2 revs $5.84B vs. est. $5.72B; expects Q3 revenue to be approximately $6.7B, plus/minus $300M vs. est. $6.61B; sees Q2 non-GAAP gross margin is expected to be approximately 53.5%; Q2 record Data Center segment revenue of $2.8 billion was up 115% y/y.
• Arista Networks (ANET) Q2 adj EPS $2.10 vs est. $1.95 on revs $1.69B vs est. $1.652B, adj gr mgn 65.4%; guides Q3 revs $1.72-1.75B vs est. $1.729B, adj gr mgn 63-64% and adj op mgn approx 44%.
• EA Inc. (EA) Q1 EPS $1.04 vs. $1.47 y/y and Q1 bookings $1.26B missed est. $1.29B; guides Q2 bookings in a range of $1.95B-$2.05B as midpoint tops estimate of $1.95B citing robust sales of its popular titles such as “EA FC 24″.
• Freshworks (FRSH) Q2 EPS $0.08 vs. est. $0.06; Q2 revs $174.1M vs. est. $169.01M; Q2 Free cash flow was $32.8M, compared to $18.1M y/y; Number of customers contributing more than $5,000 in ARR was 21,744, an increase of 14% y/y and 14% adjusting for constant currency; guides FY24 revenue $707M-$713M vs. est. $699.35M.
• Groupon (GRPN) Q2 adj EPS loss (-$0.02) vs. consensus $0.02; Q2 revenue $124.62M vs. est. $121.74M; sees Q3 revenue $114M-$120M, below consensus $131.43M and narrows FY24 revenue view to $495M-$515M from $489M-$515M; Lowers FY24 adjusted EBITDA view to $65M-$80M from $80M-$100M.
• Intel (INTC) intends to announce staff cuts for thousands of positions to reduce costs and drive a recovery from market share losses – Bloomberg.
• Pinterest (PINS) Q2 adj EPS $0.29 vs est. $0.28, adj EBITDA $179.912Mm vs est. $176.4Mm on revs $853.66Mm vs est. $847.79Mm; guides Q3 revs $885-900Mm vs est. $906.57Mm, adj op exp $485-500Mm.
• Qorvo Inc. (QRVO) Q1 adj EPS $0.87 vs est. $0.71 on revs $887Mm vs est. $851.88Mm, adj gr mgn 40.9%; sees Q2 revs $1.0-1.05B vs est. $1.025B and adj EPS $1.75-1.95 vs est. $1.83.
• Skyworks Solutions (SWKS) Q3 EPS $1.21, in-line with consensus $1.21 on revs $906M vs. est. $900.4M; raises quarterly dividend by 3% to 70c per share; sees Q4 EPS 1.52 vs. est. $1.51 and revs $1.00B-$1.04B vs. est. $1.01B.
• Samsung Electronics (SSNLF) forecasted strong artificial intelligence (AI)-driven demand for chips in the second half of this year, as it reported a more than 15-fold rise in Q2 operating profit; operating profit rose to 10.4 trillion won ($7.52 billion) in April-June, up from 670 billion won a year earlier; Q2 revenue rose 23% to 74 trillion won.