Early Look

Friday, June 9, 2023

U.S. futures are edging slightly lower a day after a massive Wall Street rally allowed the S&P to close +20% from its bear market closing low on Oct. 12, 2022, and as the Nasdaq and technology-related shares recovered from losses in the previous session. The technology sector was up 1.2%, while consumer discretionary gained 1.6% led by Tesla (TSLA) which rose 4.6% for its 10^th consecutive win. A quiet day ahead anticipated with no major economic data, no Fed speakers, and no earnings, with all eyes awaiting the FOMC policy meeting next Wednesday. Consumer prices (CPI) data on Tuesday will be key to shaping expectations around further moves by the Fed, with traders anticipating a 50% chance of a 25-basis-point-rate hike in July. Treasury yields eased as Thursday investors digested data that showed the number of Americans filing new claims for unemployment benefits surged last week, which suggests the tight labor market was loosening. Absolutely no fear as the CBOE Volatility index (VIX) hit a pre-pandemic low of 13.53 on Thursday. The yuan weakens after Chinese producer prices fall the most since 2016. In Asian markets, The Nikkei Index surged 623 points or 1.97% to settle at 32,265, the Shanghai Index rose 17 points to 3,231, and the Hang Seng Index advanced 90 points to 19,389. In Europe, the German DAX is down about -50 points to 15,936, while the FTSE 100 slips -30 points to 7,569.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 26.41 points, or 0.62%, to 4,293.93.

·     The Dow Jones Industrial Average rose 168.59 points, or 0.50%, to 33,833.61.

·     The Nasdaq Composite surged 133.63 points, or 1.02%, to 13,238.52.

·     The Russell 2000 Index declined -7.67 points, or 0.41% to 1,880.78.

Economic Calendar for Today

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

World News

·     China May Annual CPI +0.2% vs. est. +0.3% (prior +0.1%); Monthly CPI fell (-0.2%) vs. est. (-0.1%) and prior fell (-0.1%); the annual PPI fell (-4.6%) vs. est. (-4.3); the decline in food prices narrowed by 0.3 PPs to 0.7% m/m due to seasonal factors, contributing to a decrease of approximately 0.12 percentage points in m/m CPI. Food prices drop results in an approximately -0.13 PPs decrease.

Sector News Breakdown

Consumer

·     General Motors (GM) announces collaboration with Tesla (TSLA) to integrate North American charging standard connector design into its EVs beginning 2025; collaboration to expand access to charging for gm EV drivers at 12,000 Tesla superchargers, and growing, throughout N.A.

·     Duckhorn Portfolio (NAPA) Q3 adj EPS $0.16 vs. est. $0.12; Q3 revs $91.2M vs. est. $89.79M; raises FY23 EPS view by 1c on top and bottom line and raises FY23 revenue view to $400M-$404M from $398M-$401M vs. est. $402.56M.

·     Mission Produce (AVO) Q2 adj EPS $0.01 vs. est. loss (-$0.01); Q2 revs $221.1M vs. est. $218.11M; Adjusted EBITDA was $7.6 million for Q2, a 17% decrease compared to the same period last year; expects volumes to be 20% higher in Q3.

·     Nio Inc. (NIO) Q1 revenue rose 7.77% y/y to RMB 10.68B vs. RMB 9.91B last year; Q1 vehicle deliveries were 31,041, consisting of 10,430 premium smart electric SUVs and 20,611 premium smart electric sedans, representing an increase of 20.5% y/y but down -22.5% q/q.

·     Vail Resorts (MTN) Q3 EPS $8.18 vs. est. $8.84; Q3 revs $1.24B vs. est. $1.27B; lowers FY23 net income view to $251M-$283M from $321M-$396M; said Q3 pass product sales through May 30 for N.A. ski season increased approximately 6% in units and approximately 11% in sales dollars compared to period in prior year.

·     Target (TGT) was downgraded at Citigroup to Neutral from Buy on a deceleration in foot traffic and tough competition.

Energy, Industrials and Materials

·     Argan Inc. (AGX) 1Q EPS $0.16 vs est. $0.36 on revs $103.675Mm vs est. $116.90Mm, EBITDA $3.6Mm vs est. $8.1Mm.

·     Concrete Pumping (BBCP) 2Q EPS $0.09 vs est. $0.10 on revs $107.791Mm vs est. $104.72Mm, adj EBITDA $28.8Mm vs est. $30.37Mm; guides FY revs $420-445Mm vs est. $435.51Mm, adj EBITDA $125-135Mm vs est. $130.08Mm, FCF $65-75Mm.

·     Planet Labs (PL) 1Q EPS ($0.13) vs est. ($0.14) on revs $52.703Mm vs est. $52.91Mm, adj gr mgn 56%; guides 2Q revs $53-55Mm vs est. $60.17Mm, adj gr mgn 48-49%, adj EBITDA ($20)Mm-($17)Mm vs est. ($13.1)Mm; sees FY revs $225-235Mm vs est. $257.07Mm, adj gr mgn 52-54%, adj EBITDA ($67)Mm-($58)Mm vs est. ($43.88)Mm.

·     Raytheon Technologies (RTX) unit Raytheon Intelligence & Space bagged a $372.1 million US Navy contract, according to a Thursday notice posted on the US Defense Department’s website.

Financials

·     Cohen & Steers (CNS) reported preliminary aum of $77.9 bln as of May 31, 2023, a decrease of $3.1 bln from AUM at April 30, 2023.

·     Fed discount-window loans $3.17b in week ended June 7 after $3.97b – Fed bank term funding loans $100.2b in week ended June 7 after $93.6b.

·     Hut 8 Mining (HUT) mined 147 Bitcoin in the period ending May 31. Overall, 179 Bitcoin were sold in May for proceeds totaling $6.8M. Total balance of unencumbered Bitcoin held in reserve as of May 31 is 9,233

Healthcare

·     AngioDynamics (ANGO) to sell dialysis product portfolio, Biosentry Product for $100M to Merit Medical (MMSI); narrows FY23 revenue view to $338M-$339M from $338M-$342M prior; MMSI lowers FY23 EPS view to $2.81-$2.92 from $2.83-$2.93 and raises rev outlook.

·     AstraZeneca (AZN) said it had reached an agreement with Quell Therapeutics to develop, manufacture and commercialize engineered T-regulatory, or Treg, cell therapies for autoimmune diseases. Quell will receive $85 million upfront in the form of a cash payment and an equity investment and is eligible to receive more than $2 billion in milestone/royalties.

·     Genmab (GMAB) said results from phase 1/2 EPCORE(TM) NHL-2 trial investigating epcoritamab in combination with rituximab-lenalidomide (R2) showed a 98% overall response rate (ORR), 87% complete metabolic response (CMR) in patients with relapsed or refractory (R/R) follicular lymphoma.

·     Sientra (SIEN) announced that the FDA has granted a 510k-clearance for the Company’s novel, patented1 AlloX2 Pro Tissue Expander.

Technology, Media & Telecom

·     DocuSign (DOCU) Q1 adj EPS $0.72 vs. est. $0.55; Q1 revs rose 12% y/y to $661.4M vs. est. $642M; Q1 billings rise 10% y/y to $674.8M above ests $625M; Q1 adj gross margin 83% vs. 81% y/y; raises year revs view to $2.713B-$2.725B from $2.7B-$2.71B (est. $2.7B) and guides Q2 revs $675M-$679M vs. est. $670.3M.

·     American Software (AMSWA) Q4 adj EPS $0.12 vs. est. $0.09; Q4 revs fell -14% y/y to $29.9M vs. est. $30.71M; sees FY24 revenue $120M-$126M vs. est. $131.48M; sees FY24 adjusted EBITDA $19M-$21M.

·     Braze Inc. (BRZE) Q1 EPS loss (-$0.13) vs. est. loss (-$0.18); Q1 revs $101.8M vs. est. $100.4M; Q1 subscription revs $97.1M vs. $72.8M y/y; Total customers increased to 1,866 as of April 30, 2023 from 1,503 as of April 30, 2022; raises FY24 revenue view to $442.5M-$446.5M from $433M-$438M (est. $436.4M) and narrows year earnings loss outlook.

·     Comtech Telecom (CMTL) 3Q adj EPS $0.11 vs est. $0.15 on revs $136.3Mm vs est. $135.99Mm, adj EBITDA $12.545Mm vs est. $12.45Mm.

·     Dish Network (DISH) appears increasingly desperate to sell assets and raise money – and continues to battle speculation from insiders that it could face bankruptcy, On The Money has learned – NY Post reported last night. https://tinyurl.com/2etr7zxp

·     Adobe (ADBE) upgraded to overweight at Wells Fargo and lifts its price target to a Street-high, citing greater confidence in tailwinds from artificial intelligence.