Early Look

Wednesday, May 10, 2023

Futures	Up/Down	%	Last
Dow	-50.00	0.15%	33,587
S&P 500	-6.25	0.15%	4,127
Nasdaq	-22.50	0.17%	13,242

 

 

U.S. stocks are edging slightly lower, but again in a tight trading range overnight as markets await the April consumer price index (CPI) inflation report at 8:30 AM ET. U.S. stocks slipped on low volumes Tuesday ahead of the report while New York Fed President Williams said changes in lending conditions and their potential effects on economic activity and hiring would be a top focus as officials determine whether they have raised rates enough to bring inflation down. Oil prices edged higher, boosting energy stocks, the best-performing sector in the S&P 500, while market breadth was negative, volumes were light, and interest has waned in recent days leading into the CPI. In Asian markets, The Nikkei Index fell -120 points to 29,122, the Shanghai Index dropped -38 points to 3,319, and the Hang Seng Index declined -105 points to 19,762. In Europe, the German DAX is down -40 points to 15,915, while the FTSE 100 is down -13 points to 7,750. Estimates into the CPI data: Consumer Price Index (CPI) Headline M/M for April estimate to rise +0.4% (up from the cool +0.1% last month) and CPI Headline Y/Y for April est. +5.0% (prior +5.0%). On a core basis or excluding the volatile Food & Energy components M/M for April est. +0.4% (prior +0.4%) and est. to rise +5.5% (prior +5.6%) on a Y/Y basis.

 

In Washington DC, talks on raising the U.S. federal government’s $31.4 trillion debt ceiling enter a new phase on Wednesday, after Democratic President Joe Biden and top congressional Republican Kevin McCarthy’s first negotiating meeting in three months. President Biden signaled an openness to Republicans’ demand to claw back some unused money for COVID relief, which is less than $80 billion. The White House and Republicans in Congress remain at an impasse over the debt limit while a failure to raise the limit would result in a federal debt default. Wall Street has warned that a default could result in millions of jobs lost and a sizable hit to GDP. Congress has lifted the debt limit 78 times since 1960. The debt ceiling was last raised in December 2021 by $2.5 trillion, capping the limit at $31.381 trillion. The last time Congressional Republicans threatened a default in 2011, Standard & Poor’s downgraded the U.S. credit rating for the first time ever to AA+ from AAA.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -18.89 points, or 0.46%, to 4,119.23.

·     The Dow Jones Industrial Average fell -56.55 points, or 0.17%, to 33,562.14.

·     The Nasdaq Composite slumped -77.36 points, or 0.63%, to 12,179.55.

·     The Russell 2000 Index declined -4.80 points, or 0.27% to 1,749.67.

 

Economic Calendar for Today

·     7:00 AM ET           MBA Mortgage Applications Data

·     8:30 AM ET           Consumer Price Index (CPI) Headline M/M for April…est. +0.4% (prior +0.1%)

·     8:30 AM ET           Consumer Price Index (CPI) Headline Y/Y for April…est. +5.0% (prior +5.0%)

·     8:30 AM ET           CPI Core, Ex; Food & Energy M/M for April…est. +0.4% (prior +0.4%)

·     8:30 AM ET           CPI Core, Ex: Food & Energy Y/Y for April…est. +5.5% (prior +5.6%)

·     10:30 AM ET         Weekly DOE Inventory Data

·     1:00 PM ET            U.S. Treasury to sell $32B in 10-year notes.

·     2:00 PM ET            Federal Budget for April…est. $235B

 

Earnings Calendar:

·     Earnings Before the Open: BCO BW CEVA COHR CURO EVRI FCNCA FTCI GDRX HL IEP MCFT MIDD ODP PFGC RBLX RETA REYN RMBL SKIN SYNH TLS VCEL VERX VSH VVV WEN WWW

·     Earnings After the Close: AKA APP APPH AWR BYND CAKE CCAP CDE DHX DIS DM DOX DV EVLV FLEX FRGI G GAIN GDEN HLTH HOOD LAW MGNI ORCC OSUR PAYS PFLT PNNT PRPL SMRT TTD TTEK U

 

Other Key Events:

·     BMO Capital 2023 Real Estate Summit, 5/10-5/12, in New York

·     Data Center World 2023 in ATX, 5/8-5/11

·     EH Hutton Inaugural Global Conference, 5/10-5/11, in New York.

·     Oppenheimer 18th Annual Industrial Growth Conference, 5/8-5/10 (virtual)

·     China CPI, PPI data for April

 

 

Macro	Up/Down	Last
Nymex	-0.86	72.85
Brent	-0.79	76.65
Gold	-4.20	2,038.70
EUR/USD	-0.0006	1.0954
JPY/USD	-0.05	135.16
10-Year Note	-0.019	3.503%

 

 

Sector News Breakdown

Consumer

·     AirBnB (ABNB) 1Q EPS $0.18 vs est. $0.09 on revs $1.8B vs est. $1.79B, adj EBITDA $262Mm vs est. $259.3Mm; guides 2Q revs $2.35-2.45B vs est. $2.42B, adj EBITDA like prior year but lower on margin basis.

·     Wynn Resorts (WYNN) Q1 revs $1.42B vs. est. $1.38B; said resumes dividend with qtr cash div of $0.25; Q1 adj. property EBITDRA $429.7M vs. est. $327.5M; Q1 adj EPS loss (-$0.02) vs. est. loss (-$0.01).

·     Blink Charging (BLNK) Q1 adj EPS loss (-$0.49) vs. est. loss (-$0.46); Q1 revs $21.7M vs. est. $21.92M; had 6,461 charging stations contracted, deployed, or sold in Q1; 72,939 charging stations contracted, sold, or deployed to date; backs FY23 revs $100M-$110M.

·     Celsius Holdings (CELH) Q1 EPS $0.20 vs. est. $0.20; Q1 revs $260M vs. est. $218.81M; North America revenue increased 101% to $249 million, up from $124 million in Q1 2022.

·     Darlington Ingredients (DAR) Q1 EPS $1.14 vs. est. $0.99; Q1 revs $1.8B vs. est. $1.62B; Combined adjusted EBITDA of $418.4 million; Global ingredients business EBITDA of $289.1 million.

·     Duolingo (DUOL) 1Q EPS ($0.06) vs est. ($0.23) on revs $115.7Mm vs est. $112.95Mm; guides 2Q revs $122-125Mm vs est. $119.75Mm, adj EBITDA $13.4-15Mm vs est. $11.35Mm; sees FY revs $500-509Mm vs est. $493.89Mm and adj EBITDA $55-61Mm vs est. $53.64Mm.

·     Dutch Bros (BROS) Q1 revs rose 29.6% to $197.3M vs. est. $209M; Q1 comp store sales fell (-2.0%); reaffirms 2023 guidance.

·     Rivian (RIVN) Q1 adj EPS loss (-$1.43) vs. est. loss (-$1.59); Q1 revs $661M vs. est. $652.05M, revs driven by the delivery of 7,946 vehicles; said produced 9,395 vehicles during Q1; backs annual guidance for 50,000 units produce.

·     Topgolf Callaway Brands Corp. (MODG) topped expectations for Q1 as revs rose 12% to $1.17B above the $1.14B estimate but guided year EPS $0.63-$0.69 from prior $0.70-$0.78 range.

 

Energy

·     Chevron Corp’s (CVX) renewed oil operations in Venezuela begin a new phase next month that will boost production with the goal of accelerating a plan to recover all the $3 billion of debt owed by the OPEC member by the end of 2025, Reuters reported.

·     Occidental Petroleum (OXY) 1Q adj EPS $1.09 vs est. $1.24 on revs 7.258B vs est. $7.373B; guides up FY production to 1,195MBOED, still sees FY CAPEX $5.4-6.2B; repurchased $752Mm common stock.

·     Array Technologies (ARRY) 1Q adj EPS $0.25 vs est. $0.03 on revs $376.8Mm vs est. $322.2Mm, orders $1.6B, gross margin 26.9%, adj EIBTDA $67Mm vs est. $29.9Mm; guides FY revs $1.8-1.9B vs est. $1.896B.

·     Bloom Energy (BE) Q1 EPS loss (-$0.22) vs. est. loss (-$0.19); Q1 revs $275.2M vs. est. $260.4M; backs FY22 revenue view of $1.4B-$1.5B (est. $1.47B) and backed FY23 Non-GAAP Gross Margin of about 25% after Q1 gross margin of 19.7%.

·     Ovintiv Inc. (OVV) Q1 EPS $1.97 vs. est. $1.83; Q1 average total production volumes were above Company guidance on all products at approximately 511 MBOE/d, including 166 MBbl/d of oil and condensate, 86 MBbl/d of other NGLs and 1,555 Mmcfe/d of natural gas.

 

Financials

·     Affirm (AFRM) Q3 EPS loss (-$0.69) vs. est. loss (-$0.92); Q3 revs $380.978M vs. est. $369.61M; sees Q4 revenue $390M-$415M vs. est. $389.67M.

·     AllianceBernstein L.P. (AB) preliminary assets under management ended April at $676 billion, unchanged versus the March month-end.

·     Flywire Corp. (FLYW) 1Q adj EBITDA $7M vs est. $4.286M on revs $94.4Mm vs est. $83.87Mm; guides 2Q revs $76-81Mm vs est. $71Mm, sees FY revs $380-398Mm vs est. $366.26Mm.

·     Franklin Resources, Inc. (BEN) preliminary month-end assets under management (AUM) of $1,420.7 billion at April 30, 2023, compared to $1,422.1 billion at March 31, 2023. This month’s AUM reflected the positive impact of markets and flat long-term net inflows.

·     H&R Block (HRB) 3Q adj EPS $4.20 vs est. $4.46 on revs $2.1B vs est. $2.1B; guides FY revs $3.44-3.465B vs est. $3.536B, adj EBITDA $895-910Mm vs est. $923.46Mm and adj EPS $3.65-3.80 vs est. $3.83.

·     Invesco Ltd. (IVZ) preliminary month-end assets under management (AUM) of $1,484.3 billion, an increase of 0.1% versus the previous month-end. The firm experienced net long-term outflows of $2.2 billion in the month. Non-management fee earnings were $2.1 billion.

·     LegalZoom (LZ) 1Q adj EPS $0.07 on revs $165.9Mm, gr mgn 64%; guides 2Q revs $166-168Mm vs est. $161.82Mm and adj EBITDA $27-29Mm vs est. $27.83Mm; sees FY revs $630-650Mm vs est. $631.05Mm and adj EBITDA $105Mm vs est. $100.05Mm.

·     Lincoln National (LNC) Q1 adj EPS $1.52 vs. est. $1.63; Q1 revs $3.81B vs. est. $4.58B; Q1 Annuities deposits of $3.2 billion, up 17% y/y; shifting and reducing Life Insurance sales, driven by a more capital-efficient mix with sales down 16%; Group Protection operating margin of 5.6%.

·     Upstart Holdings (UPST) share surge 40%; 1Q adj EPS ($0.47) vs est. ($0.81) on revs $102.9Mm vs est. $108.96Mm; guides 2Q revs approx $135Mm vs est. $133.15Mm, adj EBITDA approx $0.

 

Healthcare

·     CTI BioPharma (CTIC) rises 80% after agreeing to be acquired for about $1.7 billion by Swedish Orphan Biovitrum, which said it would pay $9.10 a share in cash for CTI, a roughly 89% premium to Tuesday’s closing price for the Seattle company. https://on.mktw.net/3B9VBmh

·     Bluebird Bio (BLUE) files $350M mixed securities shelf.

·     Exact Sciences (EXAS) 1Q EPS ($0.42) vs est. ($0.75) on revs $602.45Mm vs est. $543.46Mm; guides FY revs $2.38-2.42B vs prior $2.265-2.315 and est. $2.299B.

·     Guardant Health (GH) Q1 adj EPS loss (-$1.06) vs. est. loss (-$1.31); Q1 revs $128.7M vs est. $117.87M; raises FY23 revenue view to $535M-$545M from $525M-$540M prior.

·     Masimo Corp. (MASI) 1Q adj EPS $0.87 vs est. $0.83 on revs $565Mm vs est. $557.85Mm; guides FY revs $2.415-2.460B vs est. $2.435B, adj EPS $4.70-4.80 vs est. $4.76.

·     Natera Inc. (NTRA) 1Q EPS ($1.23) vs est. ($1.15) on revs $241.8Mm vs est. $227.67Mm; guides FY revs $995Mm-1.015B vs prior $980Mm-1.0B and est. $990.72MM, continues to see gr mgn approx $41-44%, SG&A approx $510-540Mm, R&D costs $325-345Mm and net cash consumption approx $300-325Mm.

·     Protalix (PLX) rises 16% after the FDA approved it and partner Chiesi Global Rare Diseases’ experimental therapy to treat adult patients with Fabry disease.

·     Syneos Health Inc.’s (SYNH) shares rise 19% on a Bloomberg report that a consortium of Elliott Investment Management, Patient Square Capital and Veritas Capital is in advanced talks to acquire the drug-research services company. https://on.mktw.net/3B83XLb

·     SmileDirectClub (SDC) 1Q EPS ($0.16) vs est. ($0.13) on revs $120Mm vs est. $107.25Mm; reaffirmed FY guidance and underlying assumptions.

 

Industrials & Materials

·     Livent Corp (LTHM) shares -2% after Australian lithium miner Allkem Ltd signs a deal to buy the company in a deal that will create a $10.6B entity; Allkem will own 56% of the new firm, as LTHM holders to get 2.406 shares of the new company for each existing Livent share.

·     Axon Enterprises (AXON) Q1 EPS $0.88 vs. est. $0.53; Q1 revs $343M vs. est. $319.83M; raises FY23 revenue view to $1.44B-$1.46B from ‘at least’ $1.43B as reflects y/y growth of 22%; maintains FY adjusted EBITDA margin of 20% in 2023.

·     Celanese (CE) Q1 adj EPS $2.01 vs. est. $1.64; Q1 revs $2.85B vs. est. $2.86B; posted Q1 operating profit and operating EBITDA of 70 percent and 34 percent, respectively; sees Q2 EPS $2.50 inclusive of approximately $0.30 per share of M&M transaction amortization (est. $2.97).

·     Virgin Galactic (SPCE) Q1 cash outflow of $139M, within the range of an earlier forecast, and reiterates that its commercial space flight service is on track to debut in the current quarter; sees Q1 cash outflow of at least $130M.

 

Technology, Media & Telecom

·     Akami Technologies (AKAM) Q1 adj EPS $1.40 vs. est. $1.32; Q1 revs $916M vs. est. $910.52M; guides Q2 above estimates and raises FY23 adjusted EPS view to $5.69-$5.84 from $5.40-$5.60 (est. $5.47) and boosts FY23 revenue view to $3.74B-$3.785B from $3.7B-$3.78B.

·     Appian Corp. (APPN) 1Q adj EPS ($0.27) vs est. ($0.29) on revs $135.235Mm vs est. $131.41Mm, adj EBITDA ($15.8)Mm vs est. ($18.84)Mm; guides 2Q revs $123-125Mm vs est. $124.2Mm, adj EBITDA ($30)Mm-($26)Mm vs est. ($26.34)Mm, adj EPS ($0.46)-($0.40) vs est. ($0.40); sees FY revs $533-538Mm vs est. $532.79Mm.

·     Coherent (COHR) shares slipped -11%; Q3 adj EPS $0.58 well below the $0.82 estimate and revs $1.24B misses consensus $1.34B; guides Q4 EPS $0.33-$0.43 vs. est. $0.87 and revs $1.125B-$1.175B vs. est. $1.34B and guides year revs $5.08B-$5.15B, consensus $5.4B.

·     EA Inc. (EA) Q4 EPS loss (-$0.04) and net bookings rose 11% y/y to $1.946B vs. est. $1.76B; sees 1Q net bookings in the range of $1.5B-$1.6B and EPS $0.85-$1.05 vs. est. $1.56B in net bookings and $0.89; for FY24 sees booking $7.3B-$7.7B vs. est. $7.53B.

·     Rapid7, Inc. (RPD) 1Q adj EPS $0.16 vs est. $0.09 on revs $183.174Mm vs est. $181.25Mm, adj gr mgn 73%, adj EBITDA $16.821Mm vs est. $15.09Mm; guides 2Q revs $187-189Mm vs est. $188.65Mm, adj EPS $0.09-0.12 vs est. $0.18; sees FY revs $773-779Mm, adj EPS $0.83-0.89 vs est. $0.84.

·     RingCentral (RNG) Q1 adj EPS $0.76 vs. est. $0.69; Q1 revs rose 14% y/y to $534M vs. est. $527.94M; Q1 Subscriptions revenue increased 16% y/y to $508M and annualized exit Monthly Recurring Subscriptions (ARR) increased 14% y/y to $2.16B; raises FY23 EPS view to $3.19-$3.25 from $3.04-$3.10 and raises FY23 revenue view to $2.187B-$2.205B from $2.18B-$2.2B.

·     Toast inc. (TOST) Q1 adj EPS loss (-$0.16) vs. est. loss (-$0.17); Q1 revs rose 53% y/y to $819M vs. est. $764M; Q1 ARR was $987 million, up 55% y/y; Gross Payment Volume (GPV) increased 50% y/y to $26.7 billion; total locations increased nearly 40% y/y to approximately 85,000; raised year revenue and Ebitda outlooks above prior.

·     Twilio (TWLO) shares slide -12%; 1Q adj EPS $0.47 vs est. $0.21 on revs $1.01B vs est. $1.004B; guides 2Q revs $980-990Mm vs est. $1.048B and adj EPS $0.27-0.31 vs est. $0.29.