Early Look

Tuesday, May 2, 2023

Futures	Up/Down	%	Last
Dow	-74.00	0.22%	34,078
S&P 500	-7.25	0.17%	4,178
Nasdaq	-1.50	0.01%	13,306

 

 

U.S. futures are flat to down slightly, trading in another tight range overnight (high 4,191.50 and low 4,175.75) after holding in a roughly 25-point range on Monday as markets await results from tomorrow’s FOMC rate meeting. Earnings continue to pour in this week, with roughly another 150 S&P companies expected this week, including Apple (AAPL) on Thursday night – but the Federal Reserve monetary policy meeting on Wednesday afternoon could be the catalyst that breaks major averages out of their recent trading ranges. In Asian markets, The Nikkei Index rose 34 points to 29,157, the Shanghai Index remained closed for holiday, and the Hang Seng Index gained 39 points to 19,933. In Europe, the German DAX is down -33 points to 15,889, while the FTSE 100 is down a few points at 7,865. While markets await more earnings, the FOMC, and more data, the debt ceiling deadline for the U.S. also remains a factor, with Treasury Secretary Yellen warning yesterday that the U.S. will default by June 1st if the debt ceiling is not raised. Since January, the US Treasury has been taking “special accounting maneuvers” to avoid default she said. The growing “AI” space starting to have greater impact in markets as CHGG shares tumble -40% after lower guidance due to emergence of ChatGPT, and IBM said to pause hiring in plan to replace 7,800 jobs with AI.

 

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -1.61 points, or 0.04%, to 4,167.87.

·     The Dow Jones Industrial Average slid -46.46 points, or 0.14%, to 34,051.70.

·     The Nasdaq Composite dipped -13.99 points, or 0.11%, to 12,212.60.

·     The Russell 2000 Index little changed up 0.01% to 1,769.21.

 

Economic Calendar for Today

·     7:45 AM ET             ICSC Weekly Retail Sales

·     8:55 AM ET             Johnson/Redbook Weekly Sales

·     10:00 AM ET           Durable Goods Orders M/M for March

·     10:00 AM ET           Factory Orders M/M for March…est. +1.1%

·     10:00 AM ET           JOLTs Job Openings for March…est. 9.775M

·     4:30 PM ET              API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABC ADT AGCO AME AQUA ARLP BR CEIX CMI CNSL CVLT DD DEA DORM DTM ECL EPD ETN EXPD FELE FNMA FSS GLDD GPK GVA HRMY HWM IDXX IHRT INCY IPGP IT ITW LDOS LGIH LNG MAR MD MDC MPC MPLX NNN NSIT PEG PFE PIPR RGEN SAGE SEE SUN SYY TAP TGH TREE TROW UBER USAC VAL ZBH ZBRA

·     Earnings After the Close: AFG AINC AIZ AKR AMD ANDE APAM APLE ASH AXTA BAND BFAM BGFV BXC CCCS CHK CLW CLX CRK CWH CZR DEI DENN DVAX EIX ENLC ET EXR F FANG FRSH FSP GLAD GPOR HLF HMN HURN HVT INSP JKHY KAMN KAR LBRDA LFUS LOPE LSI LTHM LUMN LUNG LXU MCW MDXG MLNK MRCY MTCH MTW MUSA NR OHI OKE OMCL PAYC PEN POWL PRO PRTS PRU RCKY SAR SBUC SMCI SPG SPT SRPT THG UIS UNM VIAV VOYA VREX WELL WU XHR

 

 

Macro	Up/Down	Last
Nymex	-0.50	75.16
Brent	-0.42	78.89
Gold	3.80	1,996.00
EUR/USD	-0.0027	1.0948
JPY/USD	0.03	137.51
10-Year Note	-0.038	3.536%

 

 

World News

·     The Reserve Bank of Australia (RBA) raised interest rates by a surprise 25-bps to 3.85%

·     Treasury Secretary Yellen warns that the US will default by June 1st if the debt ceiling is not raised. Since January, the US Treasury has been taking “special accounting maneuvers” to avoid default.

·     Euro zone inflation accelerated last month but underlying price growth eased unexpectedly. Overall prices picked up to 7.0% in April from 6.9% a month earlier, Eurostat said, in line with expectations in a Reuters poll of economists.

·     UK April Food Price rose +15.7%, highest since records began in 2005; overall inflation fell to 8.8% vs 8.9% in March.

 

Sector News Breakdown

Consumer

·     Chegg Inc. (CHGG) Q1 adj EPS $0.27 vs. est. $0.26; Q1 revs $187.6M vs. est. $185.18M; sees Q2 revenue $175M-$178M below consensus $193.64M; sees Q2 adjusted EBITDA $53M-$55M; 1q Subscription Services Rev Declined 3% y/y to $168.4M, or 90% of Total Net Rev and Q1 had 5.1 M Subscription Services Subscribers, a Decrease of 5% y/y.

·     Leggett & Platt (LEG) Q1 EPS $0.39 vs. est. $0.26; Q1 revs $1.21B vs. est. $1.19B; backs FY23 EPS view $1.50-$1.90 vs. est. $1.59 and reaffirms FY23 revenue view $4.8B-$5.2B vs. est. $4.91B.

·     MGM Resorts (MGM) Q1 adj EPS $0.44 vs. est. $0.10; Q1 revs $3.9B vs. est. $3.59B; Q1 adjusted property Ebitda for Las Vegas strip resorts up 41% yoy; seventh consecutive quarterly record; MGM China adj property Ebitda of $169 million, 88% recovery vs 1q19.

·     Rivian Motors (RIVN) said 2023 prod guidance of 50,000 vehicles remains on track.

·     Service Corp. (SCI) 1Q adj EPS $0.93 vs est. $0.91 on revs $1.03B vs est. $1.03B; guides FY EPS $3.45-3.75 vs est. $3.54.

·     Sprout Farmers Market (SFM) Q1 EPS $0.73 vs. est. $0.85; Q1 revs $1.73B vs. est. $1.72B; guides Q2 EPS $0.61-$0.65 vs. est. $0.59 and for the year $2.58-$2.68 vs. est. $2.48, revs up 5%=6% and comp sales up 2%-3% with adj Ebitda $370M-$385M.

 

Energy

·     BP (BP) Q1 profit was $5B but shares slipped after saying it would repurchase $1.75 billion worth of shares over the next three months, down from $2.75 billion in the previous three. Q1 underlying replacement cost profit reached $4.96B, up from $4.8B in Q4.

·     Diamondback Energy (FANG) Q1 adj EPS $4.10 vs. est. $4.33; Q1 revs $1.93B vs. est. $1.97B; Q1 capex $657M; guiding to second quarter production of 258 – 261 MBO/d, and remain confident in our full year production projection of 256 – 262 MBO/d.

·     Transocean (RIG) Q1 EPS loss (-$0.38) vs. est. loss (-$0.22); Q1 revs $649M vs. est. $641.5M; Q1 adjusted EBITDA was $217M, vs. $140M q/q and contract backlog was $8.6B end of April.

 

Financials

·     Coinbase (COIN) downgraded to Neutral from Buy at Citigroup and tgt cut to $65 from $80 saying the regulatory uncertainty surrounding Coinbase in the sector is reason for the d/g.

·     Credit Acceptance Corp. (CACC) Q1 Non-GAAP EPS of $9.71 vs. est. $8.81 and revenue of $453.8M misses $458.2M.

·     Everest Re Group (RE) 1Q adj EPS $11.31 vs est. $12.51 on revs $3.29B vs est. $3.21B, gross written premiums $2.64B vs est. $3.53B.

·     Invitation Homes (INVH) 1Q AFFO/shr $0.44 vs est. $0.44 on revs $590Mm vs est. $580Mm; guides FY adj revs +5.25-6.25% vs est. $5.85% and AFFO/shr $1.73-1.81 vs est. $1.78.

·     Vornado Realty (VNO) 1Q AFFO/shr $0.60 vs est. $0.62 on revs $445.9Mm vs est. $451.6Mm.

 

Healthcare

·     Pfizer (PFE) Q1 adj EPS $1.23 vs. est. $0.98; Q1 revs $18.28B vs. est. $16.59B; said revenues are anticipated to be lower in 2023 than in 2022 due entirely to expected revenue declines for Pfizer’s Covid-19 products; backs FY23 adjusted EPS view $3.25-$3.45.

·     Community Health (CYH) Q1 adj EPS loss (-$0.43) vs. est. loss (-$0.16); Q1 revs $3.1B vs. est. $3.09B; reaffirmed annual earnings guidance for 2023, as provided in February.

·     Hologic (HOLX) 2Q adj EPS $1.06 vs est. $0.88 on revs $1.02B vs est. $958.8M; guides 3Q revs $930-980M vs est. $959.5M and adj EPS $0.83-0.93 vs est. $0.88; guides FY revs $3.925-4.025B vs prior $3.85-4.0B and est. $3.966B, adj EPS $3.75-3.95 vs prior $3.55-3.85 and est. $3.75.

·     Masimo (MASI) shares slipped -5% after a judge declared a mistrial in trade secrets trial against Apple (AAPL) over the Apple Watch. U.S. District Judge James Selna declared a mistrial late Monday after a jury failed to reach a unanimous decision.

·     Medifast (MED) 1Q EPS $3.67 vs est. $2.40 on revs $349Mm vs est. $319.5Mm; guides 2Q revs $250-270Mm vs est. $313.2Mm and EPS $1.32-1.44 vs est. $2.82.

·     SI-BONE (SIBN) 1Q EPS ($0.32) vs est. ($0.41) on revs $32.7Mm vs est. $29.2Mm, gr mgn 82%; guides FY revs $128-131Mm vs est. $125.45Mm, maintains gr mgn guide approx 80% and improving adj EBITDA loss.

·     Stryker Corp. (SYK) Q1 EPS $2.14 vs. est. $2.00; Q1 sales $4.78B vs. est. $4.55B; Q1 organic net sales increased 13.6%; sees FY23 organic net sales growth to be in range of 8.0% to 9.0%; said Q1 Orthopaedics and spine net sales of $2.1B increased 12.7% in quarter; guides FY23 adj EPS $10.05-$10.25 vs. Est. $10.03.

·     TransMedics (TMDX) 1Q EPS ($0.08) vs est. ($0.25) on revs $41.6Mm vs est. $37.9Mm, gr mgn 69%; guides FY revs $160-170Mm vs prior $138-145Mm and est.$163.9Mm.

·     Travere Therapeutics (TVTX) shares -24%; announces topline results from two-year primary efficacy endpoint in pivotal phase 3 DUPLEX study of Sparsentan; said the DUPLEX Study did not achieve the primary efficacy eGFR slope endpoint over 108 weeks of treatment.

·     Vertex Pharma (VRTX) Q1 EPS declined -13% y/y to $3.095 but topped est. $3.00; Q1 revs rose 13% y/y to $2.37B vs. est. $2.34B; reaffirms FY23 revenue view of $9.55B-$9.7B vs. est. $9.71B

 

Industrials & Materials

·     Avis Budget (CAR) Q1 EPS $7.72 vs. est. $3.07; Q1 revs $2.6B vs. est. $2.54B; Q1 Net income was $312M and our Adjusted EBITDA was $535M; liquidity position at the end of the quarter was approximately $1.4 billion, with an additional $2.3 billion of fleet funding capacity.

·     CF Industries (CF) Q1 EPS $2.85 vs. est. $2.51; Q1 revs $2.01B vs. est. $1.84B; management projects FY23 capital expenditures in range of $500-$550M after capex in Q1 was $69M; said expects that gross ammonia production for 2023 will be approximately 9.5 mln tons.

·     Eaton Cor. (ETN) Q1 adj EPS $1.88 vs. est. $1.78; Q1 revs $5.4B vs. est. $5.22B; sees Q2 Adj EPS $2.04 to $2.14 (est. $2.04); sees FY Adj EPS $8.30 To $8.50, saw $8.04 to $8.44.

·     Flowserve (FLS) 1Q adj EPS $0.40 vs est. $0.25 on revs $980.3Mm vs est. $898.9Mm, adj gr mgn 30.4%, adj op mgn 8.3%; guides FY rev growth +10-12% vs prior +9-11% and est. +10.4%, adj EPS $1.65-1.85 vs prior $1.50-1.75 and est. $1.69.

·     FMC Corp. (FMC) Q1 adj EPS $1.77 vs. est. $1.75; Q1 revs $1.34B vs. est. $1.43B; sees 2q adj EPS $1.66 to $1.86, vs. est. $1.93 and revs $1.42B-$1.48B vs. est. $1.53B.

·     Forward Air (FWRD) 1Q operating revs $427.07Mm vs est. $460.7Mm, EBITDA $64.14Mm vs est. $60.66Mm, op mgn 11.8%; guides 2Q revs -17% to -7% vs est. $-6.2% and EPS $1.28-1.32 vs est. $1.67; sees FY EPS $6.20-6.60 vs est. $6.36.

·     Kennametal (KMT) 1Q EPS $0.39 vs est. $0.34 on revs $536.04Mm vs est. $529.6Mm; guides FY sales $2.07-2.1B incl currency headwind of $100Mm vs est. $2.069Mm, adj EPS $1.50-1.70 vs est. $1.43, free op cash flow of 100% of adj net Inc., CAPEX approx $100Mm.

·     Terex Inc. (TEX) 1Q EPS $1.60 vs est. $1.04 on revs $1.2B vs est. $1.13B; guides FY net sales $4.8-5.0B vs prior $4.6-4.8B and est. $4.7B, SG&A 10.7% sales 10.7% vs prior 10.5%, op mgn 11.4%-11.8% vs prior 10.0-10.4%, EPS $5.60-6.00 vs prior $4.60-5.00 and est. $4.91.

·     Woodward Inc. (WWD) Q2 EPS $1.01 vs. est. $0.72; Q2 revs $718M vs. est. $649.53M; sees FY23 EPS $3.50-$3.75 vs. est. $3.18 and sees FY23 revenue $2.7B-$2.8B vs. est. $2.64B.

 

Technology, Media & Telecom

·     Arista Networks (ANET) Q1 adj EPS $1.43 vs. est. $1.34; Q1 revs $1.35B vs. est. $1.31B; sees Q2 revenue $1.35B-$1.4B vs. est. $1.35B; sees Q2 adjusted gross margin roughly 61%.

·     E2open Parent (ETWO) 4Q adj EPS $0.07 vs est. $0.08 on revs $166.3Mm vs est. $171.3Mm, adj EBITDA $61.2Mm vs est. $61.7Mm, adj EBITDA mgn 36.8%; guides 1Q subscription revs $131-134Mm; sees FY24 revs $655-670Mm vs est. $708.6Mm, adj gr mgn 68-70%, adj EBITDA $218-228Mm vs est. $244.3M.

·     Gartner (IT) raises FY23 adjusted EPS view to at least $9.50 from at least $8.80 (est. $9.41) and raises FY23 revenue view to at least $5.9B from at least $5.865B (est. $5.8B).

·     IBM (IBM) to pause hiring in plan to replace 7,800 jobs with AI. – Bloomberg

·     Lattice Semiconductor (LSCC) Q1 adj EPS $0.51 vs est. $0.50; Q1 revs $184.3M vs. est. $180.01M; guides Q2 revenue $183M-$193M vs. est. $183.87M; sees Q2 adjusted gross margin 70%, plus or minus 1%

·     MicroStrategy (MSTR) Q1 EPS $31.79 on revs $121.9M, up 2.2% y/y; Operating expenses for the first quarter of 2023 were $114.3 million, a 56.6% decrease y/y; carrying value of MicroStrategy’s digital assets (comprised of approximately 140,000 bitcoins) was $2.000 billion, which reflects cumulative impairment losses of $2.172 billion since acquisition.

·     NXP Semiconductors (NXPI) Q1 EPS $3.19 vs. est. $3.02; Q1 revs $3.12B vs. est. $3B; guides Q2 EPS $3.07-$3.49 above consensus $2.98; sees Q2 revenue $3.1B-$3.3B vs. est. $3.04B; Q1 adj Ebitda margin 34.8% and adj gross margin 58.2%.

·     Rambus Inc, (RMBS) 1Q EPS $0.03 vs est. $0.17 on revs $113.8Mm vs est. $146Mm; guides 2Q revs $129-147Mm vs est. $139Mm.

·     SBA Communications (SBAC) Q1 AFFO $3.13 vs. est. $3.11; increased full year outlook for site leasing revenue, adjusted ebitda, and AFFP; said may spend additional capital in 2023 on acquiring revenue producing assets not yet identified or under contract.

·     Varonis Systems (VRNS) Q1 EPS loss (-$0.35) vs. est. loss (-$0.05); guides Q2 EPS $0.01-$0.02 on revs $118M-$120M below est. $0.05 and $122.9M; guides year revs $510M- $520M below consensus $524.69M and sees ARR of $520M-$528M or y/y growth of 12% to 14%.

·     ZoomInfo (ZI) 1Q adj EPS $0.24 vs est. $0.22 on revs $300.7Mm vs est. $300.3Mm; guides 2Q revs $310-312Mm vs est. $311Mm and adj EPS $0.22-0.23 vs est. $0.23; sees FY revs $1.275-1.285B vs prior $1.275-1.285B and est. $1.281B and adj EPS $0.99-1.01 vs prior $0.98-1.00 and est. $0.98.