Morning Preview: October 25, 2024

Early Look

Friday, October 25, 2024

Futures

Up/Down

%

Last

Dow

87.00

0.20%

42,692

S&P 500

15.00

0.26%

5,864

Nasdaq

58.75

0.29%

20,439

 

 

U.S. futures are looking higher on this final trading day of the week, with S&P futures (Spuz) at the high end of narrow 20- point trading range overnight (high 5,864.50 and low 5,844.25), but major averages are on track for their first weekly decline in seven weeks, as mixed earnings and rising Treasury yields/US dollar was enough to create a little pullback. In addition to the heavy earnings week (next week is even bigger), and the move in currency and bond markets, the Presidential election is less than 2-weeks away, with both sides continue to position themselves. News out of China overnight indicated that their top legislative body would meet from Nov. 4-8, state news agency Xinhua said on Friday, with no mention on the agenda of highly anticipated debt and other fiscal measures. In Asian markets, The Nikkei Index fell -229 points to 37,913, the Shanghai Index rose 19 points to 3,299, and the Hang Seng Index advanced 100 points to 20,590. In Europe, the German DAX is up 24 points to 19,467, while the FTSE 100 is flat at 8,267. The benchmark 10-year Treasury note yield eased, after rising as high as 4.26% earlier in the week, and was trading around 4.19%. In stocks news, shares of Capri Holdings (CPRI) slumped 46% after a U.S. judge blocked a pending merger between the company and handbag maker Tapestry (TPR). Footwear apparel stocks are bid higher following better earnings results from both Ugg maker DECK and Skechers (SKX). While this week had several high-profile earnings releases, next week brings out the tech heavy weights with AAPL, AMD, MSFT and GOOGL as well as key jobs data for October. Japanese indexes drift lower before Sunday’s election while the yen hovers around 151.80/USD

 

Market Closing Prices Yesterday

  • The S&P 500 Index gained 12.44 points, or 0.21%, to 5,809.86.
  • The Dow Jones Industrial Average fell -140.59 points, or 0.33%, to 42,374.36.
  • The Nasdaq Composite gained 138.83 points, or 0.76%, to 18,415.49.
  • The Russell 2000 Index advanced 5.08 points, or 0.23% to 2,218.92.

Economic Calendar for Today

  • 8:30 AM ET                  Durable Goods Orders for September…est. (-1.0%)
  • 8:30 AM ET                  Durable Goods Orders Ex: Transportation for Sept…est. (-0.1%)
  • 10:00 AM ET                University of Michigan Sentiment, Oct-Final…est. 69.0
  • 10:00 AM ET                University of Michigan 1-yr and 5-yr inflation expectations
  • 1:00 PM ET                   Baker Hughes Weekly rig count data

Earnings Calendar:

  • Earnings Before the Open: AN AON AVTR B BAH BCPC CL CNC FHB GNTX HCA LKFN NWL POR SAIA STEL SXT TNET VRTS WT

 

 

Macro

Up/Down

Last

Nymex

0.49

70.68

Brent

0.47

74.85

Gold

-16.60

2,732.30

EUR/USD

-0.0001

1.0826

JPY/USD

0.12

151.94

10-Year Note

-0.002

4.20%

 

World News

  • Russia’s Central Bank Raises Key Rate by 200 Bps to 21% from 19%, vs est. 20%.
  • Oct UK GFK Consumer Confidence: -21 vs -20 consensus; consumers are in a despondent mood despite falling headline inflation; this month has painted a picture of people holding their breath and waiting to see what’s in store for them in the 30 Oct budget
  • The WSJ reported that Elon Musk has had conversations with Vladimir Putin. Reuters reported the Kremlin on Friday denied a Wall Street Journal report about regular contacts between Elon Musk and President Vladimir Putin. “No, this is not true,” Kremlin spokesman Dmitry Peskov told reporters. Peskov said that Putin had one contact with Musk – the world’s richest man – and it was before 2022. The Journal said Musk had been in regular contact with Putin since late 2022. Peskov said the report was absolutely false – Reuters.

Sector News Breakdown

Consumer

  • Boyd Gaming (BYD) Q3 EPS $1.43 vs. consensus $1.38; Q3 revenue $961.2M vs. consensus $912.95M; said benefited from excellent performances in both our Online and Managed businesses, demonstrating the value of our diversified business model
  • Boston Beer (SAM) Q3 EPS $5.35 vs. est. $4.98; Q3 revs $605.48M vs. est. $601.06M; cuts FY24 adj EPS view to $8.00-$10.00 vs. consensus $9.60 and lowers FY24 capital spending view to $80M-$95M from $90M-$110M; narrows FY24 price increases view to up 2% from up 1%-2%; said continue to believe that there is significant growth opportunity in beyond beer categories; believe distributor inventory as of Sept 28 averaged about 5 1/2 weeks on hand, slightly higher than target level of 4 to 5 weeks.
  • Capri Holdings (CPRI) shares tumbled overnight after a U.S. judge blocked the pending $8.5 billion merger of U.S. handbag and accessories maker Tapestry (TPR), a victory for the U.S. Federal Trade Commission in an industry. The FTC argued at an eight-day trial that the merger would eliminate fierce head-to-head competition between the top two U.S. handbag makers and create a massive company with the power to unfairly raise prices for consumers
  • Comfort Systems (FIX) Q3 EPS $4.09 vs est. $3.97 on revs $1.81B vs est. $1.84B.
  • Deckers Outdoors (DECK) Q2 EPS $1.59 tops consensus $1.24 and revs rose 20.1% y/y to $1.31B beat consensus $1.20B; Q2 Gross margin was 55.9% compared to 53.4%; Q2 HOKA brand net sales increased 34.7% to $570.9 million compared to $424.0 million and UGG brand net sales increased 13.0% to $689.9 million compared to $610.5 million; also raises revenue guidance.
  • Mercedes (MBGYY) will step up cost cuts after earnings halved in the third quarter hit by tepid demand and fierce competition in China, it said on Friday. The luxury carmaker cut its full-year profit margin target twice during the third quarter, joining a growing number of European rivals blaming a weakening Chinese car market for falling profits.
  • Mohawk Industries (MHK) Q3 adj EPS $2.90 vs est. $2.89 on revs $2.7B vs est. $2.7B; says they anticipate recent hurricanes will negatively impact Q4 sales by $25-40Mm; sees Q4adj EPS $1.77-1.87 vs est. $2.24.
  • Skecher’s (SKX) Q3 EPS $1.26 tops consensus $1.15 and revs $2.35B above consensus $2.31B; said Q3 wholesale sales grew 20.6% and direct-to-consumer sales grew 9.6%, achieved 21% Wholesale growth, 10% Direct-to-Consumer growth, as well as 16% internationally and 15% domestically. Guides 2024 EPS $4.20-$4.25 above est. $4.17 and revs $8.925B-$8.975B vs. consensus $8.93B despite lower Q4 views.
  • Texas Roadhouse (TXRH) Q3 EPS $1.26 vs. consensus $1.31 on in-line revs of $1.27B; Q3 comparable restaurant sales increased 8.5% at company restaurants and increased 7.2% at domestic franchise restaurants; sees FY25 comparable restaurant sales growth and sees FY25 capital expenditures $400M.

Energy, Industrials and Materials

  • Joby Aviation (JOBY) announces $200M common stock offering
  • L3Harris Technologies (LHX) Q3 EPS $3.34 vs. est. $3.26; Q3 revs $5.29B vs. est. $5.28B; Q3 book-to-bill of 1.4x, solid organic growth, and while continuing to improve margins as we make progress toward the financial framework; now expect to reach the overall target savings of $1 billion a year early.
  • Olin Corp. (OLN) Q3 EPS ($0.21) vs est. $0.04, adj EBITDA $160.3Mm vs est. $179.5Mm on revs $1.359B vs est. $1.574B; see Q4 adj EBITDA $170-200Mm vs est. $241.62Mm.
  • Weyerhaeuser (WY) Q3 adj EPS $0.05 vs. est. $0.01; Q3 revs $1.7B vs. est. $1.68B; sees Q4 adjusted EPS, EBITDA ‘comparable’ to Q3 (est. for Q4 is $0.07); in West, 3Q fee harvest volumes were moderately below 2Q on higher elevation harvest operations and temporary restrictions due to wildfire risk; in South, fee harvest volumes were lower on wet weather conditions.

Financials

  • Morgan Stanley (MS) said James Gorman will step down as Chairman to retire end of year (as expected)
  • Arthur Gallagher (AJG) Q3 adjusted EPS $2.26 vs. est. $2.27; Q3 revs $2.81B vs. est. $2.78B
  • Capital One Financial (COF) Q3 adj EPS $4.51 vs est. $3.70 on revs $10.0B vs est. $9.87B.
  • Digital Realty (DLR) Q3 AFFO/shr $1.67 vs est. $1.66, adj EBITDA $758Mm vs est. $709.8Mm; guides FY core FFO/SHR $6.65-6.75 vs est. $6.69 and adj EBITDA $2.925-2.975B vs est. $2.848B.
  • Hartford Financial (HIG) Q3 core EPS $2.53 vs. est. $2.54; Q3 revs $6.75B vs. est. $6.69B; Q3 Property & Casualty written premiums rose 10%, driven by Commercial Lines and Personal Lines premium growth of 9% and 12%, respectively; raises quarterly dividend 11% to 52c per share.
  • McGrath RentCorp. (MGRC) Q3 adj EPS $1.87 on sales $266.76Mm vs est. $227.76Mm, adj EBITDA $104Mm; sees FY revs $910-920Mm vs est. $858.64Mm and adj EBITDA $345-351Mm vs est. $335.24Mm.
  • Principal Financial Group (PFG) Q3 adjusted EPS $1.78 vs. consensus $2.02; raises dividend; Assets under management (AUM) of $741 billion, which is included in assets under administration (AUA) of $1.7 trillion Strong financial position with $1.6 billion of excess and available capital.

Healthcare

  • Dexcom (DXCM) shares fall; Q3 adj EPS $0.45 vs. est. $0.43; Q3 revs $994.2M vs. est. $990.71M; Sees FY24 revenue of approximately $4.00B-$4.05B (11%-13% Organic Growth) and sees FY24 non-Gaap gross profit margin of approximately 63%.
  • Edwards Lifesciences (EW) Q3 adj EPS $0.67 vs. est. $0.64; Q3 revs $1.35B vs. est. $1.52B; sees Q4 EPS $0.53-$0.57 vs. est. $0.62 and revs $1.33B-$1.39B below consensus $1.52B; backs FY24 revenue growth view 8%-10%; Q3 TAVR sales grew 6%; constant currency1 sales grew 7%; TMTT sales grew 73%; PASCAL and EVOQUE commercial launches continue to progress well.
  • ResMed (RMD) Q1 adj EPS $2.20 vs est. $2.04 on revs $1.2B vs est. $1.18B.
  • United Health Systems (UHS) Q3 adj EPS $3.71 vs est. $3.70 on revs $3.963B vs est. $3.902B.

Technology, Media & Telecom

  • Apple (AAPL) was downgraded to Underweight from Sector Weight at Keybanc with a $200 price target saying the firm’s consumer survey disproves one major bull case that the iPhone SE is not purely additive to iPhone sales. In addition, the analyst cites data points surrounding U.S. iPhone upgrades for the downgrade. They were 3% in Q3, down 9% year-over-year for Verizon, T-Mobile and AT&T. Expectations call for Apple’s highest growth in three years and a major inflection in all geographies and products, which has rarely occurred throughout its history, contends KeyBanc. As such, the firm feels Apple shares are expensive relative to its history and peers.
  • AppFolio Inc. (APPF) Q3 EPS $1.29 vs. consensus $1.03; Q3 revs rose 24% y/y to $205.7M vs. est. $199.1M; sees FY24 revenue $786M-$790M, vs. consensus $778.84M; Q2 Total units under management grew 9% y/y to 8.5M.
  • Coursera Inc. (COUR) Q3 adj EPS $0.10 vs est. $0.02 on revs $176Mm vs est. $173.98Mm; sees Q4 revs $174-178Mm vs est. $186.61Mm, plans to reduce global workforce by approx 10%, expects expense reduction initiative to generate at least $30Mm annualized structural cost savings.
  • Rogers Corp. (ROG) Q3 adj EPS $0.98 vs est. $0.85, adj EBITDA $35.2Mm vs es.t $32.2Mm on revs $210.3Mm vs est. $220.1Mm; guides Q4 sales $185-200Mm vs est. $211.75Mm and adj EPS $0.30-0.60 vs est. $0.84.
  • SS&C Technologies (SSNC) Q3 adj EPS $1.29 vs est. $1.26 on revs $1.467B vs est. $1.442B; guides Q4 revs $1.46-1.50B vs est. $1.424B and EPS $1.29-1.35 vs est. $1.35; sees FY revs $5.815-5.855B vs est. $5.804B and EPS $5.12-5.18 vs est. $5.16.
  • Western Digital (WDC) shares jump; Q1 adj EPS $1.78 vs est. $1.72on revs $4.095B vs est. $4.12B; sees Q2 revs $4.2-4.4B vs est. $4.336B and adj EPS $1.75-2.05 vs est. $1.93.

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.