Early Look
Tuesday, August 1, 2023
|
Futures |
Up/Down |
% |
Last |
|
Dow |
-71.00 |
0.19% |
35,626 |
|
S&P 500 |
-9.25 |
0.21% |
4,604 |
|
Nasdaq |
-39.50 |
0.25% |
15,818 |
US stocks are edging lower on the first day of August, small profit taking overnight amid weakness in Europe and as investors prepare for the barrage of quarterly earnings, with over 170 S&P 500 companies reporting this week alone, including CAT, MRK, PFE this morning. For the month of July, the S&P 500 added 3.12%, the Dow climbed 3.35%, the Nasdaq gained 4.05%, marking the 5th straight month of gains for the S&P. In Asian markets, The Nikkei Index rose 304 points to 33,476, the Shanghai Index was little changed at 3,290, and the Hang Seng Index dropped -67 points to 20,011. In Europe, the German DAX is down -150 points to 16,297, while the FTSE 100 is down -30 points to 7,669. A busy day of economic data on tap in the US (see below), after disappointing results in Europe overnight as losses accelerated across euro zone markets after a survey showed manufacturing activity contracted in July at the fastest pace since May 2020 as demand slumped despite factories cutting their prices sharply.
Market Closing Prices Yesterday
· The S&P 500 Index edged higher 6.92 points, or 0.15%, to 4,589.15.
· The Dow Jones Industrial Average rose 100.90 points, or 0.28%, to 35,560.19.
· The Nasdaq Composite gained 29.37 points, or 0.21%, to 14,346.02.
· The Russell 2000 Index advanced 21.64 points, or 1.09% to 2,003.17.
Economic Calendar for Today
· 7:45 AM ET ICSC Weekly Retail Sales
· 8:55 AM ET Johnson/Redbook Weekly Sales
· 9:45 AM ET S&P Global Manufacturing PMI, July-F
· 10:00 AM ET Construction Spending for June…est. +0.6%
· 10:00 AM ET ISM Manufacturing PMI for July…est. 46.8
· 10:00 AM ET JOLTs Job Openings for June…est. 9.61Mm
· 4:30 PM ET API Weekly Inventory Data
Earnings Calendar:
· Earnings Before the Open: ALGM AME ARES BLMN CAT CEQP CVLT DORM ECL EPD ESPR ETN ETRN FNMA FWRG GLDD GPK GPN HRMY HWM IDXX IGT INCY IPGP IQV IT ITW JBLU KMT LDOS LEA LGIH MAR MO MPC MRK NBIX NCLH NSP OMCL OSK OWL PEG PFE PRTS ROK SGRY SIRI SPWR SSTK SWK SXC SYY TAP TGH TRN UBER UTL WEC WSO ZBH ZBRA
· Earnings After the Close: ACT ADC AFL AHT AIZ AKR ALL AMD ANDE APAM AXTA AZPN BFAM BGFV BLKB BXP CACC CHK CLW CMBM COLM CWH CZR DEI DENN DVN EA EHC ELF EXAS EXEL FCPT FE FLS FRSH GNW GPOR HMN HPP HRZN HVT JBT KWR LFUS LUMN MATX MOS MSTR MTCH NR NUS NVRO OI PAYC PEN PINS POWL PRU PXD RCKY RIGL SAFE SBUX SFM SHLS SKY SPCE STE TCS TEX UIS UNM VFC VMEO VOYA VREX VRTX WTI
|
Macro |
Up/Down |
Last |
|
Nymex |
-0.47 |
81.33 |
|
Brent |
-0.44 |
84.99 |
|
Gold |
-16.50 |
1,992.70 |
|
EUR/USD |
-0.0021 |
1.0972 |
|
JPY/USD |
0.44 |
142.72 |
|
10-Year Note |
+0.016 |
3.973% |
World News
· China’s factory activity swung to contraction in July, a private sector survey showed as the Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 49.2 in July from 50.5 in June, missing analysts’ forecasts of 50.3 and marking the first decline in activity since April.
· China’s State Council on Monday announced measures to restore and expand consumption in the automobile, real estate, and services sector, aiming to give full play to the “fundamental role” of consumption in economic development.
Sector News Breakdown
Consumer
· Avis Rental Car (CAR) Q2 EPS $11.01 vs. est. $9.44; Q2 revs $3.12B vs. est. $3.21B; Utilization was up 50 basis points compared to second quarter 2022, at 70.5%, as our fleet continues to be well positioned to meet growing demand.
· Kforce Inc. (KFRC) Q2 EPS $0.95 vs est. $0.97 on revs $389.2Mm vs est. $395.87Mm; guides Q3 revs $359-367Mm vs est. $399.07Mm, op mgn 4.7-5.1% and EPS $0.60-0.68 (incl $0.22 charge) vs est. $0.98.
· Legget & Platt (LEG) Q2 adj EPS $0.38 vs est. $0.39 on revs $1.22B vs est. $1.243B; sees FY sales $4.75-7.95B vs est. $4.935B and EPS $1.50-1.70 vs est. $1.63; says lowering FY guidance to reflect continued volatility in macroeconomic environment and low visibility in several end markets.
· Trex Company (TREX) Q2 EPS $0.71 vs est. $0.54 on revs $356.538Mm vs est. $318.47Mm, EBITDA $117.05Mm vs est. $92.15Mm; sees Q3 revs $280-290Mm vs est. $264.22Mm; guides FY revs $1.04-1.06B vs est. $1.045B and EBITDA mgn 28-29%.
· Yum China (YUMC) Q2 adj EPS $0.47 vs. est. $0.46; Q2 revs rose 25% y/y to $2.65B vs. est. $2.68B; Q2 overall comp sales +15% (est. +14.4%), KFC comp. sales +15% (est. +14.7%) and Pizza Hut comps +13% (est. +15.2%); opened 422 net new stores during the quarter; total store count reached 13,602; Restaurant margin was 16.1%, compared with 12.1% in the prior year.
· Wynn Resorts (WYNN), Melco (MLCO): Macau’s gaming bureau reported July gross revenue from games of fortune in the region was up 4082.9% year-over-year to 16.662B patacas.
Energy
· Comstock Resources (CRK) Q2 EPS loss (-$0.17) vs. est. $0.08; Q2 revs $288.21M below consensus $330.76M; said weak natural gas prices have weighed heavily on Q2 results; natural gas and oil sales in Q2 of 2023 totaled $285.2M.
· Diamondback Energy (FANG) Q2 EPS $3.68 vs. est. $3.98; Q2 revs $1.92B vs. est. $1.97B; had consolidated total debt and net debt, in each case of approximately $6.7B, down from about $7.1B as of March 31; Q2 production averaged 449,900 barrels of oil equivalent per day; said drilled 86 gross wells in the Midland Basin and 12 gross wells in the Delaware Basin in Q2.
Financials
· AvalonBay (AVB) Q2 AFFO/shr $2.66 vs est. $2.61, same-store total revs +6.2%, same-store residential revs +6.3%; sees Q3 core FFO/shr $2.55-2.65 vs est. $2.63 and FY core FFO/shr $10.46-10.66 vs est. $10.48; sees FY same-store residential revs +5.5-6.5%, residential opex +6.0-7.0%, residential NOI +5.25-6.75%.
· Brixmor Property (BRX) Q2 Nareit FFO/shr $0.52 vs est. $0.50, same-property NOI 2.7%, increased total leased occupancy to 94.1%.
· Genworth Financial (GNW) said its board has authorized a $350 million increase to the company’s existing share buyback plan.
· Vornado Realty (VNO) Q2 AFFO/shr $0.72 vs est. $0.63 on revs $472.36Mm vs est. $441.76Mm; same-store NOI +6.7%.
Healthcare
· Merck (MRK) Q2 adj EPS loss (-$2.06) vs. est. loss (-$1.97); Q2 revenue $15B vs. est. $13.09B; Now expects year adj EPS $2.95- $3.05, incl negative impact of FOREX of about 5 percentage points; outlook reflects negative impact from one-time charge of $10.2b or $4.02 per share, for Prometheus deal.
· Pfizer (PFE) reports Q2 adj EPS $0.67 vs. est. $0.57; Q2 revs $12.7B vs. est. $13.27B; sees FY revs $67B-$70B from prior $67.0B-$71.0B and backs FY23 adjusted EPS view $3.25-$3.45; said revenues are anticipated to be lower in 2023 than in 2022 due to expected revenue declines for Covid-19 products.
· BioMarin (BMRN) Q2 adj EPS $0.54 vs est. $0.23 on revs $595.3Mm vs est. $595.2Mm; guides FY revs $2.375-2.5B vs est. $2.461B, gr mgn 77.5-79%, adj EPS $1.80-2.05 vs prior $1.85-2.10 and est. $1.02.
· Emergent BioSolutions (EBS) said a wing of the U.S. Department of Health and Human Services has awarded Emergent BioSolutions a 10-year contract worth up to $704 million for the development and production of an Ebola virus treatment.
· Hologic (HOLX) Q3 adj EPS $0.93 vs. est. $0.89; Q3 revs $984.4M vs. est. $962.59M; guides Q4 adj EPS $0.80-$0.87 on revs $910M-$950M, below est. $0.87/$951.07M; narrows FY23 EPS view to $3.87-$3.94 from $3.75-$3.95, boosts FY23 revs to $3.995B-$4.035B from $3.925B-$4.025B.
· Replimune (REPL) and Incyte (INCY) enter into clinical trial collaboration and supply agreement to evaluate RP1 and INCB99280 in patients with cutaneous squamous cell carcinoma. Initial study in the neoadjuvant setting designed to assess RP1 in combo w/the small molecule, oral PD-L1 inhibitor, INCB99280.
· Tenet Healthcare (THC) Q2 adj EPS $1.44 vs est. $1.25 on revs $5.082B vs est. $4.908B; guides Q3 revs $4.9-5.1B vs est. $4.956B, adj EPS $0.94-1.28 vs est. $1.24; guides FY revs $20.1-20.5B vs est. $20.163B, adj EBITDA $3.31-3.46B vs est. $3.332B, adj EPS $5.18-6.03 vs est. $5.75.
· Tarsus Pharmaceuticals (TARS) announces $100M common stock offering.
Industrials & Materials
· Caterpillar (CAT) Q2 adj EPS $5.55 vs. est. $4.58; Q2 revs $17.32B vs. est. $16.49B; sees year CAPEX about $1.5 bln for year and sees restructuring expense of about $700m for year; sees 2023 adjusted operating profit margin close to top end of target range; sees 2H sales, revenue above year-ago levels; sees second-half adjusted operating profit margin above year-ago levels.
· JetBlue (JBLU) reports in-line Q2 results of $0.45 and $2.61B in revs but sees Q3 adjusted EPS (20c)-0c, vs. consensus 40c and sees Q3 revenue down 4%-8% vs. est. $2.62B.
· Boise Cascade (BCC) Q2 EPS $3.67 vs. est. $2.52; Q2 revs $1.82B vs. est. $1.7B; said outlook for back half of 2023 remains uncertain; Wood Products’ sales, including sales to Building Materials Distribution (BMD), decreased $5.7M to $530.3M driven by lower plywood sales prices and lower I-joists sales volumes.
· Hunstman (HUN) Q2 EPS $0.22 vs. est. $0.30; Q2 revs $1.59B vs. est. $1.69B; Q2 adjusted EBITDA of $156M compared to $410M y/y; noted decrease in revenues in Polyurethanes segment, Performance Products segment, and Advanced Materials segment citing lower sales volumes and reduced average selling prices.
· Republic Service Group (RSG) Q2 EPS $1.41 vs. est. $1.32; Q2 revs $3.73B vs. est. $3.73B; said for Q2 delivered double-digit growth in EBITDA and expanded margins; raises FY23 adj EPS view to $5.53-$5.38 from $5.15-$5.23 (est. $5.26) and boosts FY23 revenue view to $14.78B-$14.85B from $14.65B-$14.8B (est. $14.9B).
Technology, Media & Telecom
· Amkor Technology (AMKR) Q2 EPS $0.26 vs. est. $0.21; Q2 revs $1.46B vs. est. $1.48B; sees Q3 EPS $0.36-$0.53 below consensus $0.59 and revs $1.73B-$1.83B vs. est. $1.78B.
· Arista Networks (ANET) Q2 EPS $1.58 tops consensus $1.44; Q2 revs $1.46B vs. est. $1.38B; sees Q3 revenue $1.45B-$1.50B vs. est. $1.39B; sees Q3 adjusted gross margin around 62% and operating margin around 41%; Q3 GAAP gross margin of 60.6%, vs. gross margin of 59.5%.
· DoubleVerify Holdings (DV) Q2 adj EBITDA $40Mm vs est. $37.94Mm on revs $133.7Mm vs est. $133.44; sees Q3 revs $135-141Mm vs est. $138.35Mm, adj EBITDA $39-41Mm vs est. $39.74Mm; sees FY revs $557-569Mm vs est. $563.66Mm.
· Harmonic (HLIT) Q2 adj EPS $0.12 vs. est. $0.13; Q2 revs $156M vs. est. $167.28M; cuts year EPS outlook to $0.38-$0.52 vs. prior $0.63-$0.74 (est. $0.70) and revs $620M-$660M vs. $723M.
· Lattice Semiconductor (LSCC) Q2 adj EPS $0.52 vs est. $0.51 on revs $190.079Mm vs est. $188.15, adj gr mgn 70.5%; guides Q3 revs $187-197Mm vs est. $192.18, adj gross mgn 69.5-71.5%, total adj op exp $58-60Mm.
· Monolithic Power Systems (MPWR) Q2 adj EPS $2.82 vs. est. $2.80; Q2 revs $441.13M vs. est. $440.33M; sees Q3 revenue $464M-$484M vs. est. $473.47M and margins 55.7%-56.3%.
· Pixie Dust (PXDT) 1.667M share IPO priced at $9.00.
· Rambus (RMBS) Q2 EPS $1.51 vs est. $0.39 on revs $119.8Mm vs est. $115.59Mm; guides Q3 licensing billings $59-65Mm, product revs $47-53Mm, contract and other revs $17-23Mm, adj total op exp $71-75Mm.
· Sanmina (SANM) Q3 adj EPS $1.55 vs. est. $1.54; Q3 revs $2.21B vs. est. $2.25B; sees Q4 adjusted EPS $1.47-$1.57 on revs $2.1B-$2.2B vs. est. $1.51/$2.23B.
· SBA Communications (SBAC) Q2 AFFO EPS $3.24 vs. est. $3.14; Q2 revs $678.5M vs. est. $677.3M; raises 2023 AFFO view to $12.80-$13.16 from $12.55-$12.91 and upped 2023 revenue view to $2.7B-$2.8B, consensus $2.71B; entered into a new long-term master lease agreement with AT&T (T).
· Western Digital (WDC) Q4 adjusted EPS loss (-$1.98) vs. est. loss (-$2.01); Q4 revs $2.7B vs. est. $2.53B; sees Q3 adjusted EPS loss ($2.10)-($1.80) vs. est. loss (-$1.40); sees Q3 revenue $2.55B-$2.75B vs. est. $2.75B.
· ZoomInfo (ZI) Q2 adj EPS $0.26 vs est. $0.23 on revs $308.6Mm vs est. $310.9Mm, adj op mgn 41%; guides Q3 revs $309-312Mm vs est. $325.79Mm, adj EPS $0.24-0.25 vs est. $0.25; guides FY revs $1.225-1.235B vs prior $1.275-.1285B and est. $1.279B, adj EPS $0.99-1.00 vs prior $0.99-1.01 and est. $1.00; board approves new buyback for up to $500M.
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.