Early Look

Wednesday, October 26, 2022

Futures	Up/Down	%	Last
Dow	-32.00	0.10%	31,845
S&P 500	-25.25	0.67%	3,844
Nasdaq	-183.50	1.56%	11,530

 

 

U.S. futures are pointing to a lower open, with the S&P down about -0.7% to 3,840, but Nasdaq futures falling further, down about -1.7% or 200 points after earnings disappointments from Alphabet (GOOGL) Microsoft (MSFT) and Texas Instruments (TXN) drag down the tech space. The dollar extending losses, as the British Pound topped the $1.16 level (has since pared gains), the euro above parity vs. the dollar and the buck falls vs. the yen. Treasury 10-year yield -5bps to just above 4% while bunds and gilts 10-year yields trim gains. Stocks closed out Tuesday with more than 2% gains for the Nasdaq and Russell 2000 index today as risk appetite improved broadly, helped by falling Treasury yields on rising optimism that the Federal Reserve is closer to paring back the pace of its aggressive monetary tightening. All S&P 500 sectors except energy ended in the green, led by real estate, materials, and communications services, which gained 4.0% and 2.5% and 2.4% respectively. The S&P 500 index moved with a few points of its 50-day moving average of 3,870, rising to best levels in about a month – spurred higher the last week or so on Fed optimism. The U.S. central bank is expected to hike rates by an additional 75 basis points when it meets next week but may indicate that it is likely pare back increases in subsequent meetings, including to an expected 50 basis points in December. In Asian markets, The Nikkei Index rose 181 points to 27,431, the Shanghai Index gained 23 points to 2,999, and the Hang Seng Index advanced 152 points to 15,317. In Europe, the German DAX is up about +0.5% to 13,119, while the FTSE 100 is down -0.4% to 6,985. Markets prepare for another earnings onslaught today!

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 61.77 points, or 1.63%, to 3,859.11

·     The Dow Jones Industrial Average rose 337.12 points, or 1.07%, to 31,836.74

·     The Nasdaq Composite spiked 246.50 points, or 2.25%, to 11,199.12

·     The Russell 2000 Index advanced 47.76 points, or 2.73% to 1,796.16

 

Economic Calendar for Today

·     7:00 AM ET            MBA Mortgage Applications Data

·     8:30 AM ET            Advance Goods Trade Balance for September…prior (-$87.2b)

·     10:00 AM ET          New Home Sales M/M for September…est. (-13.9%) to 585K

·     10:30 AM ET          Weekly DOE Inventory Data

·     1:00 PM ET             US Treasury to sell $44B in 5-year notes

 

Earnings Calendar:

·     Earnings Before the Open: ADP APH AVY BA BCO BG BLFY BMY BOKF BSX BXMT CFFN CHEF CME COOP CTS DRVN EVR EXP GPI HLT HOG IART IQV KBR KHC MAS MHO MNRO MPX NSC NYCB OC ODFL PAG PRG R RES ROP SLAB SLGN STX TDY TKR TMHC TMO USAP VRT VRTS WING WM WNC

·     Earnings After the Close: ALGN ALSN AM AMED AR ASGN ASPN ATNI AVT AZPN BELFA BMRN BOOT CACI CCS CHDN CNMD COUR CYH DLR EHC ESI EQT ESRT ESS EVBN F FBHS FLEX FORM FTV FWRD GD GGG GL GTY HES HESM HT INVH IRT KLAC LC LOB MAA META MMSI MOH MTH MUSA NLY NOVA NOW NTGR OII OLN OMF ORLY ORN OTIS PB PEGA PGRE PI PLXS PPC QS RJF ROL SEIC SLM SNBR STC TDOC TPB TROX TYL UCTT UDR ULCC UPWK URI VFC VKTX VMI VSEC WHG WOLF

 

 

Macro	Up/Down	Last
Nymex	0.40	85.74
Brent	0.16	93.68
Gold	15.10	1,673.10
EUR/USD	0.0051	1.0015
JPY/USD	-0.66	147.26
10-Year Note	-0.037	4.073%

 

 

World News

·     New British Prime Minister Rishi Sunak told his cabinet of ministers on Wednesday the government will delay a fiscal event until Nov. 17 because it is important to get difficult decisions right and consult on them.

 

Sector News Breakdown

Consumer

·     Chipotle Mexican Grill (CMG) Q3 adj EPS $9.51 vs. est. $9.21; Q3 revs rose 13.7% y/y to $2.22B vs. est. $2.24B; Q4 comp store sales increased 7.6%; benefit of menu price increases was partially offset by inflation across menu in qtr; sees Q4 comparable restaurant sales growth in mid to high-single digits; Q3 Operating margin 15.1% vs. 12.3% y/y, estimate 15.4%

·     Mattel (MAT) Q3 EPS $0.82 vs. est. $0.74; Q3 revs $1.76B vs. est. $1.78B; qtrly worldwide gross billings for dolls were $697 mln, down 3% as reported; qtrly worldwide gross billings for vehicles were $438 mln, up 12% as reported; cuts FY22 EPS view to $1.32-$1.42 from $1.42-$1.48 (est. $1.49) while backs FY22 revenue growth view of up 8%-10%

·     Mercedes-Benz (DDAIF) raised its full-year profit forecast as strong demand for luxury cars and cost savings offset the supply chain bottlenecks; said it now expected group earnings to rise at least 15% this year, compared with a previous forecast of 5%-15% growth

·     Skecher’s (SKX) shares fall -13%; 3Q EPS 0.55 vs est. $0.70 on sales $1.88B vs est. $1.79B; guides 4Q sales $1.725-$1.775B vs est. $1.79B and EPS $0.30-0.40 vs est. $0.51 (guidance weak); Q3 inventory up 45% YoY vs revenue up only 21%

·     Hilton (HLT) Q3 adj EPS $1.31 vs. est. $1.24; Q3 revs $2.37B vs. est. $2.45B; Q3 system-wide comparable RevPAR increased 5.0%, on a currency neutral basis, for the third quarter compared to the same period in 2019; sees FY22 system-wide comparable RevPAR is to increase between 40% and 43%, on a currency neutral basis, vs 2021; raises FY22 adjusted EPS view to $4.46-$4.54 from $4.21-$4.46

·     Wyndham Hotels (WH) 3Q adj EBITDA $191Mm vs est. $175.3Mm, adj EPS $1.21 vs est. $1.04; global REVPAR +12% constant currency; guides FY adj EPS $3.84-3.89 vs est. $3.61

·     Boyd Gaming (BYD) 3Q adj EPS $1.48 vs est. $1.35 on revs $877.3Mm vs est. $865.6Mm

·     Bunge (BG) Q3 adj EPS $3.45 vs. est. $2.43; Q3 revs $16.76B vs. est. $16.43B; raises FY22 adjusted EPS view to at least $13.50 from at least $12.00

 

Energy

·     The American Petroleum Institute said weekly crude inventories rose +4.520M barrels in latest week with Cushing rising 740K barrels, gasoline fell -2.278M barrels and Distillates +635K

·     Avangrid (AGR) 3Q adj EPS $0.31 vs est. $0.34; reaffirms FY EPS guide $2.20-2.38 vs est. $2.33

·     Enphase (ENPH) 3Q adj EPS $1.25 vs est. $1.08 on revs $634.7Mm vs est. $614.8Mm, adj gross margin 42.9%; guides 4Q revs $680-720Mm vs est. $662.1Mm, adj gross margin 40-43%, adj op exp $87-91Mm

·     First Energy (FE) 3Q adj EPS $0.79 vs est. $0.78 on revs $3.1B vs est. $3.1B; guides FY GAAP EPS $2.01-2.21, affirms operating guidance with expected performance in upper half of range

·     Matador Resources (MTDR) Q3 adj EPS $2.68 vs. est. $2.49; Q3 revs $840.9M vs. est. $765.75M; Q3 achieved better than expected average oil and natural gas equivalent production of over 105,000 barrels of oil and natural gas equivalent per day, which was 4% better than our expectations of approximately 101,000 BOE per day; increasing midpoints of 2022 total oil and natural gas production guidance from 21.7 mln barrels to 21.85 mln barrels for oil

·     NexTier Oilfield (NEX) Q3 adj EPS $0.52 vs. est. $0.47; Q3 revs $896M vs. est. $924.63M; sees Q4 revenue down 2%-4% sequentially (est. $874M); announces $250M share repurchase plan

 

Financials

·     Ameriprise (AMP) 3Q adj EPS $6.43 vs est. $5.85, adj ROE ex AOCI 47.9%

·     Chubb (CB) Q3 operating EPS $3.17 vs. est. $2.43; Net premiums written $12.02 billion, +14% y/y and net premiums earned $11.54 billion, +15% y/y; Q3 operating ROE +9.4%

·     Discover (DFS) upgraded to Overweight on buyback restart at Morgan Stanley

·     Invesco (IVZ) downgraded to Underperform at Credit Suisse

·     Equity Residential (EQR) 3Q normalized FFO/shr $0.92 vs est. $0.92; guides FY normalized FFO/shr $3.52-3.54 vs est. $3.53

·     NCR Corp. (NCR) Q3 adj EPS $0.80 vs. est. $0.77; Q3 revs rose 4% y/y to $1.97B vs. est. $2B; moving forward with previously announced plan to separate into two companies

·     Visa Inc. (V) boosts quarterly dividend to 45c from 37.5c; authorized a new $12.0b share buyback program; Q4 EPS $1.93 vs. est. $1.86; Q4 revs $7.8B vs. est. $7.55B; 4Q payments volume and processed transaction growth remained strong, while cross-border volume continued to recover; payments volume for the three months ended september 30, 2022 increased 10% over the prior year on a constant-dollar basis

·     CoStar Group (CSGP) 3Q adj EPS $0.30 vs est. $0.24 on revs $557Mm vs est. $555.7Mm; guides 4Q adj EPS $0.35-0.36 vs est. $0.27 and adj EBITDA $176-181Mm vs est. $150Mm

·     Silvergate Capital (SI) downgraded to Neutral from Buy at Goldman Sachs

 

Healthcare

·     Bristol-Myers (BMY) Q3 EPS $1.99 vs. est. $1.83; Q3 revs $11.2B vs. est. $11.14B; Q3 Eliquis sales $2.66B, up 10% y/y and Q3 Opdivo sales $2.05B, up 7% y/y; affirms FY22 EPS view of $7.44 – $7.74 (est. $7.51) and affirms FY22 revenue view of $46.0B (in-line with ests)

·     Universal Health (UHS) Q3 adj EPS $2.54 vs. est. $2.43; Q3 revs rose 5.7% y/y to $3.34B vs. est. $3.28B; Q3 acute care hospitals owned during both periods (“same facility basis”), adjusted admissions (adjusted for outpatient activity) increased by 1.9% while adjusted patient days decreased by 5.0%, as compared to the third quarter of 2021

·     HCA Healthcare (HCA) announced an organizational change that includes the creation of a third operating group. The change, which will be effective January 1, 2023, is designed to enhance alignment with the company’s strategy, streamline areas that can improve long-term performance

·     Thermo Fisher (TMO) Q3 adj EPS $5.08 vs. est. $4.81; Q3 revs rose 14%% y/y to $10.68B vs. est. $9.91B; Core organic revenue growth was 14%

·     Regeneron (REGN) downgraded to Underperform from Market Perform at Raymond James

·     Vaxcyte (PCVX) 15M share Secondary priced at $32.00

 

Industrials & Materials

·     Axalta Coating (AXTA) Q3 adj EPS $0.39 vs. est. $0.39; Q3 sales rose 13.8% y/y to $1.24B; Volume increased 8.8% driven largely by market recovery in both Refinish and Mobility; Performance Coatings third quarter net sales were $838.0 million, an increase of 7.5% y/y; Refinish net sales increased 12.5% to $498.7 million; guides Q4 EPS $0.31-$0.39 vs. est. $0.42

·     Chemours (CC) Q3 adj EPS $1.24 vs. est. $1.04; Q3 revs rose 6% y/y to $1.8B vs. est. $1.67B; lowers FY adjusted EPS $4.74-$5.00, from prior $5.09-$5.59 (est. $5.12); FY22 adj Ebitda is expected to be between $1.4B-$1.45B; FY free cash flow is expected to be greater than $575M

·     Idex Corp. (IEX) Q3 adj EPS $2.14 vs. est. $1.99; Q3 revs $824M vs. est. $780.59M; raises FY22 adjusted EPS view to $8.04-$8.09 from $7.88-$7.98 (est. $7.92) and raises FY22 revenue growth view to roughly 12% from 10%

 

Semiconductors

·     Teradyne (TER) Q3 EPS $1/15 vs. rest. $1.04; Q3 revs $827M vs. est. $800.5M; sees Q4 EPS $0.62-$0.86 vs. est. $0.27 and revs $670M-$750M vs. est. $691.6M

·     Texas Instruments (TXN) 3Q EPS $2.47 vs est. $2.39 on revs $5.24B vs est. $5.14B; guides 4Q EPS $1.83-2.11 vs est. $2.21 and revs $4.4-4.8B vs est. $4.9B

·     SK Hynix Inc. plans to more than halve its investments next year after posting a sharp drop in third-quarter net profit on weak semiconductor demand and prices. In response to the sluggish demand and prices, the South Korean memory-chip maker pledged to cut investments by more than 50% in 2023.

·     MaxLinear (MXL) Q3 EPS $1.05 vs. est. $1.04; Q3 revs $285.7M vs. est. $284.96M; sees Q4 revenue $285M-$295M vs. est. $285.5M

 

Technology, Media & Telecom

·     Alphabet (GOOGL) shares fell -5%; Q3 EPS $1.06 below consensus $1.25; Q3 revs $69.09B vs. est. $70.61B; Q3 Google advertising revenue $54.48B vs. $53.13B a year ago; Q3 Google Cloud revenue $6.87B vs. $6.75B a year ago; Q3 operating margin 25%, operating income $17.14B; YouTube ads revenue $7.07B down -2% y/y (disappoints) and Search grew 4% y/y but missed estimates by 4% and was down compared to 14% growth last quarter

·     Microsoft Corp. (MSFT) shares fell -6%; 1Q EPS $2.35 vs est. $2.30 on revs $50.1B vs est. $49.6B; says continue to see healthy demand across our commercial businesses including another quarter of solid bookings; says Q1 PC sales was worse than expected

·     F5 Networks (FFIV) 4Q EPS $2.62 vs est. $2.52 on revs $700Mm vs est. $692Mm; guides FY revs +9-11% vs est. +7.85% and adj EPS +double-digit vs est. +13.4%

·     Juniper Networks (JNPR) 3Q adj EPS $0.58 vs est. $0.50 on revs $1.415B vs est. $1.35B, adj op margin 17.2%; sees 4Q adj EPS $0.59-0.69 vs est. $0.62 and revs $1.425B-1.525B vs est. $1.421B

·     Mobileye (MBLY) priced its 41M share IPO at $21.00 per share

·     Spotify (SPOT) Q3 operating revs EU3.04B vs. EU2.5B; qtr-end total monthly active users 456M, up 5% sequentially; qtr-end premium subscribers 195M, 4% sequentially; gross margin came in below co’s expectations, mainly due to an unfavorable adjustment to prior period estimate; Q3 ad-supported revenue growth of 19% y/y (or 3% y/y constant currency), led by podcasting; qtrly premium revenue growth of 22% y/y (or 13% y/y constant currency), led by subscriber gain

·     Tenable (TENB) 3Q adj EPS $0.15 vs est. $0.03 on revs $174.9Mm vs est. $170.25Mm; guides 4Q revs $180-182Mm vs est. $182.5Mm and adj EPS $0.06-0.07 vs est. $0.05