Early Look

Wednesday, April 27, 2022

Futures	Up/Down	%	Last
Dow	380.00	1.15%	33,540
S&P 500	40.75	0.98%	4,211
Nasdaq	125.00	0.96%	13,141

 

 

Global stock markets recover with U.S. stock futures rebounding over 1% as S&P futures around 4,215 (off overnight lows of 4,149) as investors look to step in following the latest market pullback. Given the near 4% drubbing for the Nasdaq yesterday, the Composite comes into the day down 20%, “bear-market” territory ahead of key earnings season. U.S. equities tumbled for a 3^rd day in the last 4 amid another shellacking for technology, communication services and consumer discretionary/travel names, but shares of Microsoft (MSFT) are looking higher 5% after results last night, though Alphabet (GOOGL) is down about -2% after its EPS miss (well off overnight lows). Dow component Visa (V) is also looking higher by 5% after its results. Markets are looking to recover after a sharp downturn as investors come to grips with cuts in gas supplies from Russia, China’s Covid challenges, softer earnings outlooks amid rising costs, and aggressive Federal Reserve monetary tightening (ahead of the FOMC meeting next week). In Asian markets, The Nikkei Index fell -313 points or 1.17% to 26,386, the Shanghai Index jumps 71 points or 2.49% to 2,958, and the Hang Seng Index edges higher 11 points to 19,946. In Europe, the German DAX is higher by +0.45% above 13,800, while the FTSE 100 rises +0.8% to 7,445. Bitcoin bounces over 2% back above the $39,000 level. European gas advances after Russia blocked flows to Poland and Bulgaria. The euro fell to its lowest against the dollar since April 2017 amid growth concerns and Russia’s threat to energy supplies. The fun continues today with another heavy dose of earnings results. Treasury yields are flattish but have pulled back roughly 20 bps in the last few days after more than 3-year highs, with the 10-yr below 2.8% and the 2-yr below 2.6%.

Market Closing Prices Yesterday

·     The S&P 500 Index tumbled -120.92 points, or 2.81%, to 4,175.20

·     The Dow Jones Industrial Average fell -809.28 points, or 2.38%, to 33,240.18

·     The Nasdaq Composite plunged -514.11 points, or 3.95%, to 12,490.74

·     The Russell 2000 Index tanked -63.73 points, or 1.86% to 1,890.47

 

Economic Calendar for Today

·     7:00 AM ET          MBA Mortgage Applications Data

·     8:30 AMET           Advance Goods Trade Balance for March

·     10:00 AM ET        Pending Home Sales m/m for March

·     10:30 AM ET       Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ADP AMT APH BA BG BOKF BSX CHEF CME DAN DRVN DX EEFT ETR EVR EXTR FISV GD GPI HEES HELE HES HOG HUM IART IQV KHC MAS MHO MPX NSC NYCB OC ODFL OSK PAG PB R ROL SHOO SLAB SLGN SRDX STX TEL TMHC TMUS VRT WAB WNC

·     Earnings After the Close: AFL ALGN ALSN AM AMED AMGN AR ARAY ASGN AVB AVT AWK AZPN BCOV BMRN CACI CAKE CCS CHDN CHRW CYH DFS DRE EHC EPRT EQIX ESI F FB FICO FORM FWRD GGG GHL HOLX HP HPP HTZ INFA INVH LC LVS MAA MAT MC MMSI MOH MTH MXL NBR NDLS NLY NOW NTGR ORLY PI PINS PLXS PPC PYPL QCOM RJF SLM TDOC TYL UCTT UIS UPWK URI VKTX WHG WRE WSC

 

 

Macro	Up/Down	Last
Nymex	0.74	102.43
Brent	0.70	105.69
Gold	-7.40	1,896.70
EUR/USD	-0.0003	1.0606
JPY/USD	0.72	127.95
10-Year Note	+0.002	2.774%

 

 

World News

·     Russia has given notice to Poland and Bulgaria that gas supplies would be suspended effective Wednesday April 27th (today) due to these countries refusing to pay in rubles. This suspension is seen as a warning shot to the rest of Europe

·     Australia Q1 CPI YoY rose to 5.1%, which was well above the 4.6% forecast and 3.5% for the previous quarter. Headline CPI hit its highest level since the 1990’s

 

Sector News Breakdown

Consumer

·     Mattel (MAT) has held ‘informal talks” with private equity firms that include Apollo Global Management (APO) and L Catterton about a potential sale, The Wall Street Journal reported, citing people familiar with discussions https://on.wsj.com/3Mzw61a

·     General Motors (GM) 1Q adj EPS $2.09 vs est. $1.67 on revs $35.98B vs est. $37B; guides FY adj EPS $6.50-7.50 vs est. $6.68; says EVs accelerating volumes, growing to 1Mm units of EV capacity in NA by end 2025

·     Chipotle Mexican Grill (CMG) Q1 EPS $5.70 vs. est. $5.64; Q1 revs rose 16% to $2.0B vs. est. $2.01B; opened 51 new restaurants during q1 with 42 locations including a Chipotlane; Q1 operating margin was 20.7%, a decrease from 22.3% in q1 of 2021; Q12 costs were 31.0% of total revenue, an increase of 100 basis points; approves $300M in added repurchases; sees Q2 comp store sales up 10%-12% and 235-250 new restaurants in 2022

·     Boyd Gaming (BYD) 1Q adj EPS $1.40 vs est. $1.23 on revs $860.7Mm vs est. $841.3Mm; Total Adjusted EBITDA was $338.8 million in the first quarter of 2022, increasing 15.8% from $292.6 million in the first quarter of 2021

·     Mondelez (MDLZ) 1Q adj EPS $0.84 vs est. $0.71 on revs $7.76B vs est. $7.39B; guides FY organic net revs +4%+ vs est. +3.5%, sees adj EPS +mid-high-single % vs est. +6.9%

·     Skecher’s (SKX) Q1 EPS $0.77 vs. est. $0.72; Q1 revs rose 26.8% to $1.82B vs. est. $1.69B; sees Q2 EPS 50c-55c below consensus 75c and revs $1.75B-$1.8B vs. est. $1.74B; Wholesale sales grew 32.7%; Direct-to-Consumer sales grew 15.7%

·     Usana (USNA) Q1 EPS $1.15 vs. est. $1.14; Q1 revs $272.9M vs. est. $267.31M; lowers FY22 EPS view to $5.00-$5.70 from $5.25-$6.00 (est. $5.46) and cuts FY revenue view to $1.1B-$1.2B from $1.125B-$1.225B

·     Wyndham Hotels (WH) Q1 adj EPS $0.95 vs. est. $0.64; Q1 revs $371M vs. est. $342.5M; sees year EPS $3.39-$3.51 vs. est. $3.44 and above prior $3.28-$3.40; 1Q Global RevPAR Rose 39% vs 1Q 2021 in Constant Currency

 

Energy

·     The American Petroleum Institute (API) said weekly crude inventories rose 4.78M barrels, gasoline fell -3.91M barrels and distillates rose 43K barrels

·     Enphase (ENPH) Q1 adj EPS $0.79 vs. est. $0.66; Q1 revs $441.3M vs. est. $432.28M; said it shipped approximately 2,838,693 microinverters, or 1,029 megawatts DC, and 120.4 megawatt hours of Enphase IQ Batteries; guides Q2 revs $490M-$520M vs. est. $474.5M

·     Hess (HES) announces three new discoveries and increase in resource estimate for Stabroek Block, Offshore Guyana. Gross discovered recoverable resource estimate for Stabroek Block increased to approximately 11 billion barrels of oil equivalent. Discoveries at Barreleye, Lukanani and Patwa further underpin the development potential of the block

·     Matador Resources (MTDR) Q1 adj EPS $2.32 vs. est. $1.97; Q1 revs $626.5M vs. est. $550.21M; no changes to its full-year 2022 guidance estimates for oil, natural gas or total oil equivalent production or capital expenditures

·     Range Resources (RRC) Q1 adj EPS $1.18 and revs $987M vs. est. $1.14 and $884M; qtrly production averaged 2,071 mmcfe per day, approximately 70% natural gas

 

Financials

·     Visa Inc. (V) Q2 EPS $1.79 vs. est. $1.65; Q2 revs $7.2B vs. est. $6.8B; total processed transactions, for the three months ended March 31, 2022, were 44.8 billion, a 19% increase over the prior year; total cross-border volume on a constant-dollar basis increased 38% in the quarter; payments volume for the three months ended March 31, 2022, increased 17% y/y

·     Capital One Financial (COF) Q1 EPS $5.62 vs. est. $5.44; Q1 revs $8.2B vs. est. $8.02B; Q1 net interest margin 6.49%, down 11 bps sequentially; qtrly provision for credit losses increased $296 mln to $677 mln vs q4 2021; common equity tier 1 capital ratio under Basel iii standardized approach of 12.7 percent at March 31, 2022

·     Chubb Inc. (CB) Q1 core EPS $3.82 vs. est. $3.47; qtrly book and tangible book value per share stand at $133.82 and $87.93, respectively; qtrly P&C combined ratio of 84.3%, compared with 91.8% prior year; qtrly global P&C net premiums written, which exclude agriculture, were up 8.8%, or 10.7% in constant dollars

·     CoStar Group (CSGP) 1Q EPS $0.23 vs est. $0.27 on revs $516Mm vs est. $512.5Mm; sees 2Q adj EPS $0.20-0.21 vs est. $0.21; sees FY revs $2.15-2.17B vs est. $2.16B

·     NCR Corp. (NCR) Q1 adj EPS $0.33 below the $0.63 est.; Q1 revs $1.86B vs. est. $1.93B; cuts year adjusted EPS view to $2.70-$3.20 from $3.25-$3.55 (est. $3.39) and lowers FY22 revenue view to ~$8B from $8B-$8.2B (est. $8.11B); results were negatively impacted by the unprecedented confluence of another virus wave disruption, a war in Eastern Europe and dramatic cost inflation

·     Essex Property (ESS) 1Q core FFO/shr $3.37 vs est. $3.34, same-property revs +6.5%; guides FY core FFO/shr $13.77-14.13 (raised $0.25 at midpoint) vs est. $13.92

·     Equity Residential (EQR) 1Q FFO/shr $0.77 vs est. $0.80; sees 2Q adj FFO/shr $0.84 vs est. $0.86

·     Robinhood (HOOD) said it plans to cut about 9% of full-time employees; has over $6B in cash on balance sheet; Robinhood says it’s scrutinizing headcount growth targets

 

Healthcare

·     AstraZeneca PLC (AZN) and Daiichi Sankyo said its Enhertu drug has been granted a breakthrough therapy designation in the U.S. for the treatment of an unresectable or metastatic breast cancer.

·     Boston Scientific (BSX) Q1 adj EPS in-line at $0.39 on revs $3.03B vs. est. $2.95B; now sees year EPS view $1.74-$1.79 vs. est. $1.77

·     Exact Sciences (EXAS) 1Q EPS ($1.04) vs est. ($1.07) on revs $486.6Mm vs est. $461.7Mm; guides FY revs $1.985-2.032B vs est. $2.009B

·     Edwards LifeSciences (EW) 1Q adj EPS $0.60 vs est. $0.57 on revs $1.34B vs est. $1.31B, TAVR sales +11%; guides 2Q total sales $1.36-1.44B vs est. $1.46B and adj EPS $0.61-0.69 vs est. $0.65; sees FY sales $5.5-6.0B vs est. $5.76B and adj EPS $2.50-2.65 vs est. $2.55

·     Humana (HUM) Q1 adj EPS $8.04 vs. est. $6.78; Q1 revs $24.08B vs. est. $23.5B; raises FY22 adjusted EPS view to approximately $24.50 from prior view of at least $24.00 and reaffirms FY 2022 expected individual Medicare Advantage membership growth range of approximately 150,000 to 200,000

·     Chemed Corp. (CHE) Q1 adj EPS $4.79 vs. est. $4.47; Q1 revs $531M vs. est. $538.57M

·     Canopy Growth (CGC) said it will carry out a series of initiatives to reduce costs and drive efficiency to accelerate its path to profitability.

 

Industrials & Materials

·     Ashland (ASH) 2Q adj EPS $1.50 vs est. $1.36 on sales $604Mm vs est. $591.6Mm; guides FY sales $2.25-2.35B vs est. $2.33B

·     Bunge (BG) Q1 adj EPS $4.26 vs. est. $2.79; Q1 revs $15.88B vs. est. 13.28B; raises FY22 adjusted EPS view to at least $11.50 from at least $9.50 (est. $11.04) as it benefited from higher demand for essential crops since the Ukraine crisis.

·     IDEX Corp. (IEX) 1Q adj EPS $1.96 vs est. $1.74 on revs $751.1Mm vs est. $716.8Mm; guides 2Q adj EPS $1.85-1.90 vs est. $1.88 on FY adj EPS $7.50-7.63 vs est. $7.52

·     RUSHA Enterprises (RUSHA) 1Q EPS $1.43 ex items vs est. $1.02 on revs $1.6B vs est. $1.38B

·     Zurn Water Solutions (ZWS) Q1 adj EPS $0.24 vs. est. $0.22; Q1 revs $240M vs. est. $242.03M; says expect Q2 total sales to increase year over year by a low to mid-teens percentage, Adjusted EBITDA margin, excluding corporate costs, to range between 24.5% and 25.0%

 

Semiconductors

·     MKS Instruments (MKSI) 1Q adj EPS $2.71 vs est. $2.61 on revs $742Mm vs est. $753.9Mm; guides 2Q adj EPS about $2.28 vs est. $2.79 and revs about $730Mm vs est. $784.4Mm

·     Texas Instruments (TXN) 1Q EPS $2.35 vs est. $2.17 on revs $4.91B vs est. $4.74B; guides 2Q EPS $1.84-2.26 vs est. $2.27 and revs $4.2-4.8B vs est. $4.94B; says inventory rose, still too low

·     Teradyne (TER) 1Q adj EPS $0.98 vs est. $0.88 on revs $755Mm vs est. $741.3Mm; guides 2Q revs $780-870Mm vs est. $820.6Mm and adj EPS $1.00-1.29 vs est. $1.06

 

Technology

·     Microsoft Corp. (MSFT) Q3 adj EPS $2.22 vs. est. $2.18; Q3 revs $49.36B from $41.7B a year ago and vs. est. $49B; revenue in intelligent cloud was $19.1 billion and increased 26%; qtrly revenue in productivity and business processes was $15.8 billion and increased 17%; qtrly revenue in more personal computing was $14.5 billion and increased 11%; qtrly server products and cloud services revenue increased 29% driven by azure and other cloud services revenue growth of 46%

·     Alphabet (GOOGL) 1Q EPS $24.62 vs est. $25.91 on revs $68.1B vs est. $68.1B, ad revs $54.66B vs est. $54.88B; board authorized additional repurchase $70B Class A and Class C; net income dropping y/y with mostly in-line revs though YouTube growth (of 14.4% to $6.9 billion) raised concerns

·     F5 Networks (FFIV) Q2 EPS $2.13 vs. est. $2.01; Q2 revs $634.224M vs. est. $634.08M; guides Q3 revs $660M-$680M vs. est. $693.1M and cuts FY revenue growth view to 1.5%-4% from 4.5%-8%

·     Juniper Networks (JNPR) 1Q adj EPS $0.31 vs est. $0.32 on revs $1.17B vs est. $1.16B, adj op mgn 11.8%; guides 2Q revs $1.2-1.3B vs est. $1.25B, adj gr mgn 57-59%, adj op mgn 15.4% at mid-point, adj tax rt 20%, adj EPS $0.40-0.50 vs est. $0.46

·     Manhattan Associates (MANH) Q1 EPS $0.60 vs. est. $0.45; Q1 revs $179M vs. est. $169.12M; sees 2022 adj EPS $2.14-$2.22 vs. est. $2.05; sees 2022 revs $720M-$727M vs. est. $710.3M

·     Spotify (SPOT) Reports total monthly active users rose 19% to 422 million in Q1; posts 24% increase in Q1 revenue to 2.66 bln euros ($2.82 bln), above est. of 2.62 bln euros; said it sees total monthly active users of 428 million in Q2 after closure of its Russian operations; sees Q2 revenue of 2.8 bln euros, below est. 2.81 bln euros

·     Tenable (TENB) 1Q adj EPS $0.06 vs est. $0.05 on revs $159.4Mm vs est. $153.5Mm; guides 2Q adj EPS $0.01-0.02 vs est. $0.04 and revs $162-164Mm vs est. $160.7Mm; guides FY adj EPS $0.16-0.20 vs est. $0.18 and revs $673-679Mm vs est. $667.7Mm