Early Look

Tuesday, April 25, 2023

Futures	Up/Down	%	Last
Dow	-141.00	0.41%	33,860
S&P 500	-21.25	0.51%	4,138
Nasdaq	-51.50	0.39%	13,005

 

 

U.S. futures are looking lower ahead of a flood of earnings reports later today from some of the biggest companies including Microsoft, and Alphabet. This morning in the industrial sector, UPS misses and guides down and expects volume to remain under pressure due to macro conditions, important earnings this morning while GE reports a beat and raise quarter as well. In the consumer space, Pepsi (PEP) with a beat and raise following good results from Coke Monday. Bank stocks are leading the broader market lower in Europe after updates from UBS and Santander prompted sharp declines in their share prices while in the U.S. First Republic (FRC) shares slid -20% following a sharp drop in Q1 deposits. Other earnings this morning include MMM, GM, PHM, and SPOT. Treasuries extended gains ahead of US new home sales and consumer confidence data as the 10-year yield at morning lows of 3.44% (down over 7-bps). The S&P 500 finished little changed on Monday ahead of a busy earnings week as a weaker Dallas Fed April manufacturing gauge pressured the dollar and Treasury yields ahead of housing data, GDP, and PCE inflation results late this week. The earnings barrage begins today with more than 1/3 of the S&P 500 index reporting the remainder of the week. In Asian markets, The Nikkei Index rises 26 points to 28,620, the Shanghai Index dipped -10 points to 3,264, and the Hang Seng Index tumbles -342 points to 19,617. In Europe, the German DAX is down -22 points to 15,842, while the FTSE 100 slides -25 points to 7,886.

 

Economic Calendar for Today

·     7:45 AM ET             ICSC Weekly Retail Sales

·     8:55 AM ET             Johnson/Redbook Weekly Sales

·     9:00 AM ET             Monthly Home Prices M/M for February

·     9:00 AM ET             CaseShiller 20-City Index for Feb…est. (-0.4%)

·     10:00 AM ET           Consumer Confidence for April…est. 104.0

·     10:00 AM ET           New Home Sales M/M for March…est. 630K

·     10:00 AM ET           Richmond Fed Index for April…prior (-5)

·     1:00 PM ET              U.S. Treasury to sell $42B in 2-year notes.

·     4:30 PM ET              API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABG ADM ARCC AUB AWI BIIB BKU CBU CNC DHR DOW FCF FISV GATX GE GEHC GEO GLW GM HAL HBIO HUB IVZ JBLU KMB LH LTH MCD MCO MMM MSCI NEE NEP NTRS NVR OMF ONB PCAR PEBO PEP PHM PII RTX SBSI SFNC SHW SITC SSTK ST THC TRU UPS VZ XRX

·     Earnings After the Close: AAT AGR AIN AZZ BUSE BXP BYD CMG CSGP, EGP ENPH ENVA EQR FFIC GOOGL GORO HA HAFC HIW ILMN JBT JNPR LRN MANH MSFT MTDR NEX OI PACW RNST ROIC RUSHA TRMK TXN UHS USNA V VBTX WIRE ZWS

 

Other Key Events:

·     American Academy of Neurology, 4/24-4/27, in Boston, MA

·     RSA Conference 2023, 4/24-4/27, in San Francisco, CA

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -3.52 points, or 0.09%, to 4,137.04.

·     The Dow Jones Industrial Average rose 66.44 points, or 0.20%, to 33,875.40.

·     The Nasdaq Composite slipped -35.45 points, or 0.29%, to 12,037.20.

·     The Russell 2000 Index slipped -2.63 points, or 0.15% to 1,788.87.

 

 

Macro	Up/Down	Last
Nymex	-0.39	78.37
Brent	-0.41	82.32
Gold	-4.80	1,995.00
EUR/USD	-0.0014	1.1027
JPY/USD	-0.27	133.94
10-Year Note	-0.074	3.441%

 

 

World News

·     President Joe Biden announced his re-election campaign for 2024; He would be 82 at the start of his second presidential term.

·     Note 1-month T-bills are yielding 1.6 percentage points less than what interest-rate swaps show investors expect the fed funds rate to be over the next month.

·      

 

Sector News Breakdown

Consumer

·     Aarons Company (AAN) Q1 adj EPS $0.66 vs. est. $0.27; Q1 revs $554.4M vs. est. $564.91M; FY lowers FY revs view to $2.15B-$2.25 from prior $2.2B-$2.3B while raises year EPS view to $1.00-$1.40 from prior $0.70-$1.10 and FY adj Ebitda $140M-$160M.

·     General Motors (GM) Q1 adj EPS $2.21 vs. est. $1.72; Q1 revs $39.99B vs. est. $39.23B; sees FY net income to $8.4B-$9.9B from prior $8.7B-$10.1B ; raises FY FCF view to $5.5B-$7.5B from prior $5B-$7B; sees FY adj Ebit $11B-$13B from prior $10.5B-$12.5B; raises FY23 adjusted EPS view to $6.35-$7.35 from $6.00-$7.00.

·     Heidrick & Struggles (HSII) 1Q EPS $0.76 vs est. $0.64 on revs $242.12Mm vs est. $245.14Mm; sees 2Q revs $260-280Mm vs est. $253Mm.

·     PulteGroup (PHM) Q1 adj EPS $2.35 vs. est. $1.81; Q1 revs $3.58B vs. est. $3.27B; Q1 closings increased 6% to 6,394 homes; average sales price increased 9% to $545,000; Q1 gross new orders higher by 1% to 8,898 homes; net new orders decreased 8% to 7,354 homes; Q1 unit backlog of 13,129 homes with a value of $8.0B.

·     PepsiCo (PEP) Q1 core EPS $1.50 vs. est. $1.39; Q1 revs $17.85B vs. est. $17.22B; Q1 Organic Rev +14.3% (vs. est. +9.47%) and now expects year 2023 organic rev to boost 8%; raises FY23 core EPS view to $7.27 from $7.20.

·     Whirlpool Corp. (WHR) 1Q EPS $2.66 vs est. $2.28 on sales $4.65B vs est. $4.5B; adj EBIT mgn 5.4%; reaffirms FY net sales approx $19.4B vs est. $19.0B and ongoing EPS guide $16.00-18.00 vs est. $15.82; sees cash from operating activities about $1.4B and FCF about $800Mm for FY (no change from prior).

 

Energy

·     ChampionX Corp. (CHX) 1Q adj EBITDA $175.6Mm vs est. $169.4Mm on revs $948.3Mm vs est. $968.7Mm.

·     Nabors Industries (NBR) 1Q adj EBITDA $240Mm vs est. $241.7Mm on operating revs $779.14Mm vs est. $773.58Mm; sees FY adj FCF approx $400Mm.

·     Range Resources (RRC) Q1 adj EPS $0.99 vs. est. $0.82; guides FY 2023 exploration expense $22M-$28M; capex for 2023 $570M-$615M; targeting a maintenance program in 2023, resulting in about flat production at 2.12 – 2.16 bcfe per day.

 

Financials

·     AGNC Investment (AGNC) 1Q adj EPS $0.70 vs est. $0.65 on NII ($98M); tangible net book value $9.41; return on tangible common equity -0.7%.

·     Alexandria Real Estate (ARE) 1Q AFFO/shr $2.19 vs est. $2.17 on revs $700.8Mm vs est. $642Mm; sees FY AFFO/shr $8.91-9.01 vs est. $8.97.

·     Ameriprise Financial (AMP) Q1 EPS $7.25 vs. est. $7.21; Q1 revs $3.74B vs. est. $3.71B; raises quarterly dividend by 8%; Assets under management and administration were $1.2 trillion, down 8 percent, reflecting strong client net inflows.

·     Cadence Bank (CADE) Q1 adj EPS $0.68 vs. est. $0.66; Q1 credit loss provision $10M, total deposit growth of $449.8 million, or 4.7% on an annualized basis, and a loan-to-deposit ratio of 79.4%; net interest margin at 3.29%, down 4 basis points from the prior quarter.

·     First Republic (FRC) Q1 EPS $1.23 vs. est. $0.85; Q1 revs fell -13% y/y to $1.20B vs. est. $1.15B; said profit fell 33% to $269M from $401M y/y; Q1 net interest income $923M, credit loss provisions $16M; deposits tumbled 40% to $104.5 billion in Q1 but have stabilized since; bank to cut 20-25% of its workforce and explore strategic options.

·     UBS Group AG (UBS) reported it booked a $1.03 billion net profit in the first quarter of the year, which marked a drop of 52% year-on-year. During the same period, the company’s operating profit decreased to $1.49 billion, from last year’s $2.72 billion, while its diluted earnings per share for the three-month period stood at $0.32.

·     WSFS Financial (WSFS) 1Q EPS $1.01 vs est. $1.28 on NII $182.5Mm vs est. $187.7Mm; ROA 1.27%, ROE 11.2%.

 

Healthcare

·     Centene (CNC) Q1 adj EPS $2.11 vs. est. $2.09; Q1 revs $38.89B vs est. $35.95B; raises FY23 adjusted EPS view to at least $6.40 from $6.25-$6.40 and sees FY23 revenue $144.5B-$146.5B, above consensus $140.7B; sees FY23 effective tax rate 24.1%-25.1%; on adj basis, now expects 2024 profit of more than $6.60 per share, compared with its previous forecast of at least $7.15.

·     Danaher (DHR) Q1 adjusted EPS $2.36 vs. est. $2.25; Q1 revs $7.17B vs. est. $7.02B; sees FY23 base business core revenue up mid-single digits and sees Q2 base business core revenue up mid-single digits.

·     Johnson & Johnson’s (JNJ) consumer health unit Kenvue Inc (KVUE), brands including Band-Aid and Tylenol, said it plans to sell ~151.2M shares in range of $20-$23, raising about $3.5 bln if priced at upper end.

·     Medpace Holdings (MEDP) Q1 EPS $2.27 vs. est. $1.80; Q1 revs $434.1M vs. est. $401.8M; sees FY23 EPS $7.81-$8.40 vs. est. $7.76; raises FY23 revenue view to $1.745B-$1.805B from $1.69B-$1.75B, and above consensus $1.71B; guides FY Ebitda $335M-$355M.

·     Ideaya Biosciences (IDYA) 7.44M share Spot Secondary priced at $18.50.

·     HealthStream (HSTM) 1Q adj EBITDA $13.7Mm vs est. $13.7Mm on revs $68.9Mm vs est. $68.3Mm; reaffirms FY guide, sees FY adj EBITDA $57.5Mm vs est. $58.4Mm.

 

Industrials & Materials

·     Honeywell (HON) to buy back shares up to $10B.

·     3M (MMM) Q1 adj EPS $1.97 vs. est. $1.57; Q1 revs $8.0B vs. est. $7.48B; reports restructuring actions saying will cut costs at corporate center; restructuring to impact about 6,000 jobs globally; reports senior management team changes; affirms FY expectations.

·     General Electric (GE) Q1 adj EPS $0.27 vs. est. $0.14; Q1 revs $14.5B vs. est. $13.36B; raises FY23 adjusted EPS $1.70-$2.00 vs. prior $1.60-$2.00 view (est. $1.98); raises FY free cash flow to $3.6B-$4.2B from prior $3.4B-$4.2B previously; continues to expect high-single-digit revenue growth for 2023.

·     Canadian National (CNI) Q1 EPS C$1.82 vs. C$1.32 last year; Q1 revenue C$4.31B vs. C$3.71B last year; raises FY23 adj EPS view to up mid-single digits from up low single digits; continues to assume negative North American industrial production in 2023.

·     Cleveland Cliffs (CLF) Q1 EPS loss (-$0.11) vs. est. loss (-$0.19); Q1 revs 45.3B vs. est. $5.21B; cuts FY23 CapEx view to $675M-$725M from $700M-$750M.

·     Crown Holdings (CCK) 1Q adj EPS $1.20 vs est. $1.05 on sales $2.97B vs est. $3.09B; sees 2Q adj EPS $1.60-1.70 vs est. $1.76; affirm FY adj EBITDA +8-12% and adj EPS $6.20-6.40 vs est. $6.28.

·     Hexcel Corp. (HXL) Q1 EPS $0.50 vs. est. $0.38; Q1 revs rose 17.2% y/y to $457.7M vs. est. $430.0M; reiterates sees FY FC greater than $140M, EPS $1.70-$1.90 (est. $1.85) and revs view of $1.725B-$1.825B vs. est. $1.78B.

·     Packaging Corp. (PKG) Q1 adj EPS $2.20 vs. est. $2.27; Q1 revs fell -7.5% y/y to $1.98B vs. est. $2.07B; sees Q2 EPS $1.96 below consensus $2.55 (watch other paper stocks IP, WRK following Q1 miss and lower guide).

·     Simpson Manufacturing (SSD) 1Q EPS $2.05 vs est. $1.40 on sales $534.4Mm vs est. $483.6Mm; guides FY op mgn 19-21%, tax rt 25-26%.

·     UPS (UPS) shares slip as reports Q1 adj EPS $2.20 vs. est. $2.21; Q1 revs $22.9B vs. est. $23.01B; lowers FY23 revenue view to about $97B from $97B-$99.4B (est. $98.13B); sees FY23 consolidated adjusted operating margin at low end of around 12.8%.

 

Technology, Media & Telecom

·     Cadence Design (CDNS) Q1 EPS $1.29 vs. est. $1.25; Q1 revs $1.02B vs. est. $1.01B; raises FY23 EPS view to $4.96-$5.04, from $4.90-$5.00 (est. $4.98) on revs $4.00B-$4.06B; Q1 adj Ebitda margin 42%.

·     Tenable Holdings (TENB) 1Q adj EPS $0.11 vs est. $0.03 on revs $188.84Mm vs est. $187.1Mm; sees 2Q revs $189-191Mm vs est. $193.8Mm and adj EPS $0.12-0.13 vs est. $0.10; sees FY revs $775-785Mm vs est. $805.4Mm and adj EPS $0.57-0.61 vs est. $0.53.

·     PDD Holdings (PDD) downgraded to Neutral at Goldman Sachs amid ad growth moderation.