Early Look

Friday, May 31, 2024

U.S. futures are looking lower following another round of weaker-than-expected earnings results in the technology sector, with shares of DELL, MongoDB (MDB), Marvel (MRVL), and Sentinel (S) all pointing to losses ahead of key inflation data later this morning at 8:30 AM. Retailers seeing good reactions to earnings results last night with GPS, ULTA moving higher. At 8:30 AM, the April PCE Price Index M/M for April is expected to rise +0.3% and on a Y/Y basis rise +2.7%, both in line with the prior month’s readings. The core PCE Price Index M/M for April is also expected to rise +0.3% and on a Y/Y basis rise +2.8% (again both in-line with prior month readings). The core PCE report is the preferred measure of inflation by the Fed, so today’s numbers could bounce markets on a “cooler” number or extend market declines/lift Treasury yields with a surprise “hotter” number. The main U.S. stock indexes fell on Thursday, as shares of Dow component Salesforce (CRM) plunged over -20%, while data showing the economy had grown slower than previously expected in the first quarter (GDP) supported bets of rate cuts from the Federal Reserve this year. After pushing to a four-week high on Wednesday, at 4.638%, the 10-year benchmark Treasury yield has now retreated to the 4.55% area. In Asian markets, The Nikkei Index advanced 433 points to 38,487, the Shanghai Index dipped -4 points to 3,086, and the Hang Seng Index dropped -150 points to 18,079. In Europe, the German DAX is down -35 points to 18,460, while the FTSE 100 is up 22 points to 8,253.

• The Dow Jones Industrial Average fell -330.06 points, or 0.86%, to 38,111.48.
• The Nasdaq Composite dropped -183.50 points, or 1.08%, to 16,737.08.
• The Russell 2000 Index advanced -20.41 points, or 1.00% to 2,056.60.

• 8:30 AM ET                  Personal Spending M/M for April
• 8:30 AM ET                  PCE Price Index M/M for April…est. +0.3%
• 8:30 AM ET                  PCE Price Index Y/Y for April…est. +2.7%
• 8:30 AM ET                  Core PCE Price Index M/M for April…est. +0.3%
• 8:30 AM ET                  Core PCE Price Index Y/Y for April…est. +2.8%
• 9:45 AM ET                  Chicago PMI for May…est. 41.0 (prior 37.9)
• 1:00 PM ET                   Baker Hughes Weekly rig count data
• 6:15 PM ET                   Fed’s Bostic Gives Commencement Speech

• OPEC+ Meeting this weekend.

• Japan spent a record ¥9.8 trillion ($62.2 billion) in the past month to prop up the yen after it fell to a 34-year low against the dollar, surpassing the amount it used in 2022 to defend the currency. The finance ministry disclosed figures Friday for the period between April 26 and May 29.
• OPEC+ is pressing on with informal talks aimed at finalizing an agreement on oil-output cuts this weekend. Saudi Arabia and its partners are discussing whether to prolong roughly 2 million barrels a day of production curbs into the second half of the year, while also considering the possibility of extending some restraints into 2025 – Bloomberg.
• A New York jury found Donald Trump guilty of falsifying documents to cover up a payment ahead of the 2016 election. After deliberations over two days, the 12-member jury announced it had found Trump guilty on all 34 counts he faced. Unanimity was required for any verdict. Trump, 77, has denied wrongdoing and was expected to appeal. He faces a maximum sentence of four years in prison, though others convicted of that crime often receive shorter sentences, fines, or probation. Incarceration would not prevent him from campaigning, or taking office if he were to win.

• Flutter (FLUT) named Rob Coldrake as its new group CFO and said current group finance head Paul Edgecliffe-Johnson would be stepping down from his role as group CFO and executive director. Separately, Flutter also said it completed shifting its primary listing to the New York Stock Exchange on Friday.
• Gap Stores (GPS) Q1 EPS $0.41 vs est. $0.14 o revs $3.4B vs est. $3.29B, comps +3%, gr mgn 41.2%; guides Q2 sales +low-single vs est. +0.7%, gr mgn approx +300bps, op exp approx +5%; sees FY net sales up slightly on 52wk basis, gr mgn at least +150bps, op Inc +mid-40% range.
• Guess Inc. (GES) Q1 adj EPS ($0.27) vs est. ($0.40), adj EBIT ($7.7Mm) vs est. ($17Mm) on revs $592Mm vs est. $574.64Mm; sees Q2 revs +9-11% vs est. +14.6%, adj op mgn 5.3-6.1% and adj EPS $0.38-0.47 vs est. $0.66; sees FY revs +10.7-12.7% vs est. +12.06%, adj op mgn 7.7-8.5% and adj EPS $2.62-3.00 vs est. $2.81.
• Nordstrom (JWN) Q1 adj EPS loss (-$0.24) vs. est. loss (-$0.07); Q1 revs rose 4.8% y/y to $3.34B vs. est. $3.2B; Q1 total Company comparable sales increased 3.8%, gross merchandise value increased 4.9%, Discount banner Rack’s sales rose 13.8%; reaffirmed its 2024 comp sales view of 1% drop to a 2% rise and annual profit per share of $1.65-$2.05.
• Tesla (TSLA) is recalling certain 2012-2024 Model S 2015-2024 Model X 2017-2023 Model 3 and 2020-2023 Model Y vehicles. In the event of an unbelted driver the seat belt warning light and audible chime May not activate as intended.
• Ulta Beauty (ULTA) Q1 EPS $6.47 vs. est. $6.24; Q1 revs rose 3.5% y/y to $2.73B vs. est. $2.72B; Q1 comp store sales +1.6% vs. est. 1.4% (but down from +9.3% y/y); cuts FY24 EPS view to $25.20-$26.00 from $26.20-$27.00 (est. $26.33), cuts FY24 revenue view to $11.5B-$11.6B from $11.7B-$11.8B (est. $11.7B), lowers FY24 SSS growth to 2%-3% from 4%-5% and operating margin to 13.7%-14.0% from 14.0%-14.3%.
• VF Corp. (VFC) shares rose after announced that Michelle (“Sun”) Choe has been appointed Global Brand President, Vans®, beginning in late July. Sun is a highly accomplished apparel industry executive with nearly three decades of experience leading design and merchandising for renowned global brands, including lululemon, Marc Jacobs, West Elm, Madewell, Urban Outfitters, Levi’s, and the Gap.

• Veeva Systems (VEEV) Q1 adj EPS $1.50 vs est. $1.43 on revs $650.3Mm vs est. $642.02Mm; sees Q2 revs $666-669Mm vs est. $675.29Mm and adj EPS $1.53-1.54 vs est. $1.52; sees FY revs $2.7-2.71B vs est. $2.732B and adj EPS approx $6.16 vs est. $6.15.

• Gilead Sciences (GILD) said topline results from the confirmatory Phase 3 TROPiCS-04 study in locally advanced or metastatic urothelial cancer (mUC) did not meet the primary endpoint of overall survival (OS) in the intention-to-treat (ITT) population.
• Karyopharm Therapeutics Inc (KPTI) files for shelf of up to 45.8M shares of common stock by selling stockholders.
• Phreesia (PHR) Q1 EPS ($0.35) vs est. ($0.48), adj EBITDA $4.1Mm vs est. $(0.97Mm) on revs $101.217Mm vs est. $100.97Mm; guides FY25 revs $416-426Mm vs est. $427.87Mm and prior $424-434Mm, adj EBITDA $21-26Mm vs est. $14.71Mm and prior $12-20Mm.
• Ultragenyx Pharmaceutical (RARE) said its potential treatment for glycogen storage disease type 1a, DTX401, had resulted in a statistically significant and clinically meaningful reduction in daily cornstarch intake after 48 weeks, which was the study’s primary endpoint; said the Phase 3 trial also reached its key secondary endpoints.

• Asana Inc. (ASAN) Q1 adj EPS ($0.06) vs est. ($0.08), adj op Inc ($15.8)Mm vs est. ($21.7)Mm on revs $172.4Mm vs est. $168.7Mm; guides Q2 revs $177-178Mm vs est. $177.2Mm, adj op Inc ($23)-($21)Mm vs est. ($13.37)Mm and adj EPS ($0.09)-($0.08) vs est. ($0.05); sees FY revs $719-724Mm vs est. $722.06Mm, adj op Inc ($59)-($55)Mm vs est. (57.44)Mm and adj EPS ($0.21)-($0.19) vs est. ($0.20).
• Dell Inc. (DELL) Q1 adj EPS $1.27 vs. est. $1.26; Q1 revs $22.24B vs. est. $21.62B; Q1 adj operating income $1.474B vs. est. $1.485B; Infrastructure Solutions Group (ISG) revenue of $9.2B, up 22% y/y with record servers and networking revenue of $5.5B, up 42% and Client Solutions Group (CSG) revenue of $12.0 billion, flat y/y.
• Elastic NV (ESTC) Q4 adj EPS $0.21 vs est. $0.20, adj op Inc $29Mm vs est. $25.3Mm on revs $335Mm vs est. $329.48Mm; guides Q1 revs $343-345Mm vs est. $344.95Mm, adj op mgn 9.2-9.4% and adj ESP $0.24-0.26 vs est. $0.24; sees FY revs $1.468-1.48B vs est. $1.482B, adj op mgn 11.7-12.3% and adj EPS $1.35-1.47 vs est. $1.40.
• HashiCorp. (HCP) Q1 EPS $0.06 vs. est. loss (-$0.01); Q1 revs $160.6M vs. est. $153.2M; Q1 total RPO $748.5M vs. $635.3M last year; Q1 adj operating income (-$4.8M) vs. est. (-$17.2M).
• Marvell Technologies (MRVL) Q1 adj EPS $0.24 vs est. $0.25 on revs $1.161B vs est. $1.171B, gr mgn 45.5%; guides Q2 revs $1.25B +/- 5% vs est. $1.245B, adj gr mgn approx 62%, adj EPS $0.24-0.34 vs est. $0.30.
• MongoDB Inc. (MDB) shares tumble; Q1 EPS $0.51 vs. est. $0.40; Q1 revs $450.6M vs. est. $439.64M; said Q1 highlighted by 32% Atlas revenue growth; sees Q2 EPS $0.46-$0.49 below est. $0.58 and revs $460.0M-$464.0M, vs. consensus $470.43M; guides year EPS $2.15-$2.30 vs. est. $2.50 and FY25 revenue $1.88B-$1.90B vs. est. $1.93B.
• NetApp Inc. (NTAP) Q4 adj EPS $1.80 vs est. $1.79 on revs $1.67B vs est. $1.655B; sees Q1 revs $1.455-1.605B vs est. $1.522B and adj EPS $1.40-1.50 vs est. $1.44; guides FY revs $6.45-6.65B vs est. $6.526B, adj gr mgn 71-72%, adj op mgn $27-28% and adj EPS $6.80-7.00 vs est. $6.74; increases dividend, $1 bln share repurchase auth.
• PagerDuty (PD) Q1 adj EPS $0.17 vs est. $0.13 on revs $111.2Mm vs est. $111.45Mm; sees Q2 revs $115.5-117.5Mm vs est. $116.33Mm and adj EPS $0.16-0.17 vs est. $0.15; sees FY revs $471-477Mm vs est. $474.27Mm and adj EPS $0.66-0.71 vs est. $0.67; announces $100Mm shr repurchase program.
• Sentinel One (S) Q1 adj EPS loss (-$0.23) vs. est. loss (-$0.05); Q1 revs rose 40% y/y to $186.4M vs. est. $181.09M; Q1 ARR rose 35% y/y to $762M; sees Q2 revenue $197M, vs. consensus $197.76M and guides FY25 revenue $808M-$815M, vs. consensus $816.82M.
• Zscaler (ZS) Q3 EPS $0.88 vs. est. $0.65; Q3 revs $553.2M vs. est. $535.91M; Q3 calculated billings grew 30% y/y to $628M; guides Q4 EPS $0.69-$0.70 vs. est. $0.68 and revs $565M-$567M vs. est. $565.06M; sees 2024 calculated billings of $2.603B-$2.606B.
• TikTok has put on hold plans to launch its fast-growing e-commerce business across major European markets, focusing instead on growth in the US where it’s fighting a divest-or-ban law. ByteDance Ltd.’s social media startup has put on hold a rollout of its shopping platform across Spain, Germany, Italy, France and Ireland.