Mid-Morning Look

Tuesday, August 06, 2024

U.S. stocks look to stop the bleeding, as major averages bounce following three straight days of losses to kick off August as macro pressures, currencies, interest rates and economic data have weighed on sentiment. Both the S&P 500 and Nasdaq fell at least 3% each on Monday (SPX worst day in about 2-years) but all looking higher early as treasury yields bounce, the CBOE Volatility index (VIX) tumbles back to 27 after 65 handles on Monday and the Japanese yen pulls back after recent strength vs. dollar. Bitcoin prices bounce while gold slips. Lots of earnings-related movers with details below. Weakness in Apple (AAPL) keeping market gains in check as stock falls on prior day GOOGL DOJ headlines.

• In Utilities & Solar: SPWR shares tumbled after the solar company filed for U.S. Chapter 11 bankruptcy and entered a ‘stalking horse’ agreement with Complete Solaria (CSLR) to sell some of its business for $45M in cash; SPWR listed its assets and liabilities in the range of $1B-$10B, in a filing with the bankruptcy court in Delaware. In utilities, DUK reported a better-than-expected quarterly profit helped by higher electricity demand during summer months and favorable tariffs. CEG boosted its year EPS view to $7.60-$8.40 from prior view $7.23-$8.03 (above midpoint of ests of $7.81); SRE reported Q2 EPS and revenue miss but reaffirmed adj EPS guide for the year. MWA reported Q3 EBITDA of $85M, easily beating consensus $66M on better EPS, driven by Water Flow Solutions’ outperformance.
• In Restaurants: CBRL was downgraded to Hold from Buy at Argus citing concern about the declining traffic patterns and notes the company’s average unit volume has decreased over the last several quarters. BLMN posted weaker-than-expected Q2 earnings and lowered its full-year guidance to $2.10-$2.30 from $2.51-$2.66 (est. $2.41) and lowers FY24 U.S. comp restaurant sales view to down 1% to flat from flat to up 2%. DAVE reports surprise Q2 beat on better revs and narrowed year outlook. YUM reported a bigger-than-expected fall in Q2 same-store sales as overall comps fell -1% vs. est. -0.4% and same-store sales at the company’s KFC division fell 5% in the U.S. compared with a 7% decline in the prior quarter. Overall revs grew 4.5% to $1.76B but below consensus of $1.80B. YUMC was double upgraded ay Macquarie to Outperform after earnings saying despite a comp store sales decline of -4% y/y, Q2 net profit grew by 7.6% y/y to $212M, beating ests on stronger-than-expected cost efficiency; Q2 revenue $2.68B vs. consensus $2.77B; said Yeung will step down as CFO 9/30 and serve as senior adviser to CEO to Feb ’25.

• CAT +3%; Q2 adj EPS $5.99, tops consensus $5.53 while Q2 revs fell to $16.7B from $17.3B y/y but was in-line with ests; said anticipate lower machine sales to end users in Q3 compared to strong 3Q 2023; anticipates its annual profit will be higher than previously expected, despite seeing slightly lower sales for the full year.
• CELH +4%; rises as Q2 EPS $0.28 tops est. $0.24; Q2 revs $402.0M vs. consensus $393.16M; said continued to lead the energy drink category, contributing 47% of all Q2 growth.
• EVER +5%; as Q2 results came in well above expectations, with revenue, VMM, and adj. EBITDA all significantly above consensus as a recovery in auto insurance spending gains additional momentum with Q2 Auto revenue of over $100M, which is the highest quarterly level in company history.
• LCID +11%; announced that it has entered into an agreement with Ayar Third Investment Company, an affiliate of the PIF (LCID‘s largest shareholder with ~60% stake) for up to $1.5B.
• LUMN +41%; as secures $5B in new business driven by major demand for connectivity fueled by AI.
• PLTR +11%; after the company raised its annual outlook, citing continuing demand for its artificial intelligence software.
• TGTX +17%; after jump in Q2 revs to $73.47M from $16M y/y, establishes a new five-year $250 mln credit facility to repay existing debt and raised 2024 net product sales forecast for its multiple sclerosis drug, Briumvi, to about $290M-$300M from prior view $270M-$290M.
• UBER +8%; posted Q2 revenue of $10.70B topping ests $10.57B as gross bookings in Q2 increased 19% to $39.95B vs. est. $39.68B and EPS of $0.47 topping $0.31 estimate.
• ZTS +6%; after raises 2024 adj EPS forecast to between $5.78-$5.88 from its previous outlook range of $5.71-$5.81 and boosts FY sales to between $9.1B-$9.25B from prior $9.05B-$9.2B it previously forecasted.

• CHGG -25%; tumbles after the education technology company forecast Q3 adjusted Ebitda missed consensus estimates.
• ELEV -53%; after reporting that 3 out of 15, or 20% of patients with cancers of the esophagus and stomach who were administered its experimental cancer therapy had a reduction or disappearance of tumors in an early-stage study.
• HSIC -7%; as Q2 results were mostly in-line but cut its full-year profit forecast to $4.70-$4.82from prior view of $5.00-$5.16 citing a challenging economic environment in certain markets and a delay in recovery from a cyber incident that occurred in October and lowered year sales growth view to about 4%-6% from 8%-10% prior.
• JMIA -47%; shares tumbled on results as Q2 revenue $36.5M below $44M last year, while GMV of $170.1M fell -5% y/y and Q2 operating loss of $20.2M compared to $22.1M y/y or 8%.
• SPWR -26%; filed for U.S. Chapter 11 bankruptcy and entered a ‘stalking horse’ agreement with Complete Solaria (CSLR) to sell some of its business for $45M in cash.
• TDC -13%; delivered weak results with total ARR, cloud ARR, and revenue below consensus expectations while recurring revenue was in line; this flowed through to lower CY/24 guidance.
• TPX -3%; Q2 EPS and revs fall just short of ests while cuts FY24 adjusted EPS view to $2.45-$2.65 from $2.60-$2.90.
• ZI -16%; disappointing quarter and lowered guidance as headwinds were mostly attributable to elevated write-offs related to SMB customers in June; full-year guidance was notably cut.