Early Look

Tuesday, August 2, 2022

Futures	Up/Down	%	Last
Dow	-205.00	0.63%	32,562
S&P 500	-32.25	0.78%	4,088
Nasdaq	-125.50	0.97%	12,837

 

 

U.S. futures are edging lower, as Treasury yields hit their lowest levels in 4-months (10-yr at 2.53%) in a flight to safety on reports House Speaker Nancy Pelosi is planning to visit Taiwan and meet with government officials this week, defying warnings from Beijing not to do so and setting up the potential for increased tensions between the U.S. and China. Benchmark oil prices drop further after finishing at their lowest level since Feb. 25, down 4.8% below $94 a barrel, as energy investors begin to focus on weakening data coming out of the US and other major economies. In Asian markets, The Nikkei Index declined -398 points to 27,594, the Shanghai Index tumbled -2.26% to 3,196, and the Hang Seng Index slides -476 points or 2.36% to 19,689. In Europe, the German DAX is down nearly 1% or 130 points to 13,350, while the FTSE 100 slips -0.2% to 7,400. Several top headlines this morning in earnings, with several large cap giants reporting including BP in energy and CAT in industrials, but the current focus remains on Pelosi and her potential trip to Taiwan which would upset China.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -11.66 points, or 0.28%, to 4,118.63

·     The Dow Jones Industrial Average fell -46.73 points, or 0.14%, to 32,798.40

·     The Nasdaq Composite dipped -21.71 points, or 0.18%, to 12,368.98

·     The Russell 2000 Index declined -1.92 points, or 0.10% to 1,883.31

 

Economic Calendar for Today

·     7:45 AM ET           ICSC Weekly Retail Sales

·     8:55 AM ET           Johnson/Redbook Weekly Sales

·     10:00 AM ET         JOLTs Job openings for June

·     4:30 PM ET            API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AINV AME AQUA ARNC ASTE ATKR BLD CAT CMI CNP DBD DD DEA DSKE ENTG EOLS ESPR ETN EXPD GEO GLT GPRE HLNE HRMY HSC HSIC HUN IDXX IGT INCY IPGP IT ITW JBLU KBR KKR KOPN LCII LDOS LEA LGIH MAR MPC MYE NAUT NRZ SABR SAGE SEE SGRY SPGI SPWR SWI SXC SYNH TAP TGH UBER USAC UTL VAL VSH WAT WEC WLK WLKP XYL ZBH ZBRA

·     Earnings After the Close: ABNB ADC AHT AIZ AKR AMD ANDE APAM ATEN ATOM AVID AYX BCOV BFAM BGFV BLKB BXC CDLX CGNX CHK CLW CNDT CRUS CSII CTRA CWH CXW CZR DCP DENN EA ELVT EVH EXAS EXR FMC FNF FRSH GHL GILD GPOR GXO HLF HVT INN INSP JJSF KAR KN LFUS LTHM LUNG MCHP MCY MDXG MRCY MSTR MTCH NGVT NMIH NR OI OSH OXY PAYC PEAK POWL PRU PUMP PYPL RNG SBUX SCI SKY SOFI SPNE SPT SRPT STE TCS TEX TRUE TSP UNM VOYA VRAY VRSK WTTR

 

 

Macro	Up/Down	Last
Nymex	-0.78	93.11
Brent	-0.98	99.05
Gold	3.90	1,791.60
EUR/USD	-0.0027	1.0232
JPY/USD	-0.70	130.90
10-Year Note	-0.053	2.552%

 

 

World News

·     President Biden said Monday that Al Qaeda leader Ayman al Zawahiri, one of the key strategists behind an international campaign of terror that culminated in the Sept. 11 attacks on the U.S., was killed in an air strike in Kabul.

·     China vowed an unspecified military response if House Speaker Nancy Pelosi follows thru with her visit to Taiwan and meet with government officials, while Taiwan’s Defense Ministry said in a statement that its military is “determined, confident and capable of ensuring national security.”

·     Tiger Woods turned down a sum in the region of $700-800 million to join the Saudi-backed LIV Golf Invitational Series, the breakaway circuit’s CEO Greg Norman told Fox News – Reuters

 

Sector News Breakdown

Consumer

·     Avis Budget (CAR) 2Q adj EPS $15.94 vs est. $11.48 on revs $3.244B vs est. $2.297B; adj EBITDA $1.205B vs est. $895M

·     Leggett & Platt (LEG) Q2 EPS $0.70 and revs up 5% y/y to $1.33B, both in-line with estimates; sees FY sales view $5.2B-$5.4B; cuts FY22 EPS view to $2.65-$2.80 from $2.70-$3.00 (est. $2.72) and lowers FY22 revenue view to $5.2B-$5.4B from $5.3B-$5.6B and said volume is expected to be down low-to-mid single digits.

·     The U.S. House Oversight Committee has subpoenaed Smith & Wesson Brands Inc (SWBI) for information on its AR-15 style firearms sales and marketing after the gunmaker’s chief executive refused to appear before lawmakers last month, the Washington Post reported on Tuesday.

·     PepsiCo Inc. (PEP) said it has entered into an agreement with Romanian spring water company Aqua Carpatica through which Pepsi will own a 20% stake in the company and have rights to distribute the company’s bottled water in Romania and Poland with options to expand into other markets.

 

Energy

·     BP Plc (BP) announces further $3.5B share buyback; Q2 net income rose to $8.45 billion in April-June from $6.25 billion in the first quarter, reflecting strong refining margins, exceptional oil trading performance and higher liquids realizations, topping the $6.79B estimate; underlying replacement cost profit before interest and tax rose to $12.77B from $10.21B, also beating the market consensus of $11.89B

·     Comstock Resources (CRK) 2Q adj EPS $1.00 vs est. $0.95 on revs $946.3Mm vs est. $573.5Mm

·     Diamondback Energy (FANG) Q2 EPS $7.07 vs. est. $6.58; Q2 revs $2.77B vs. est. $2.43B; increases share repurchase pact to $4B; raising midpoints of both total and oil net production for year; sees 2022 total net production 374 MBoe/d – 380 MBoe/d; and sees q3 2022 oil production – 218 MBoe/d – 222 MBoe/d

·     Viper Energy (VNOM) Q2 EPS $0.44 vs. est. $0.64; enhances capital return program and increases buyback authorization to $750M; Q2 average production of 19,758 bo/d (33,560 boe/d); initiating average daily production guidance for q3 2022 and q4 2022 of 19,250 to 20,250 bo/d (32,750 to 34,500 boe/d); raises FY22 avg daily production guidance to 19,000 to 19,750 bo/d

·     Williams Co (WMB) 2Q adj EPS $0.40 vs est. $0.37; adj EBITDA $1.496B vs est. $1.508B; raises FY adj EBITDA to $6.1-6.4B vs est. $6.17B

 

Financials

·     Cowen Inc. (COWN) is near a deal to be acquired by Toronto-Dominion Bank (TD) for more than $1 billion, the WSJ reported. TD Bank could announce a deal valuing Cowen at around $39 a share as early as Tuesday, which would represent a roughly 10% premium to Monday’s closing price of $35.49 https://on.mktw.net/3OXcQeS

·     Aflac (AFL) Q2 adjusted EPS $1.46 vs. est. $1.28; Q2 revs $5.4B vs. est. $4.79B; in yen terms, Aflac Japan’s net earned premiums were 313.2B yen for quarter, or 4.2% lower than a year ago

·     Annaly Capital (NLY) announces 100M share Spot Secondary

·     Brixmor Property (BRX) FFO/shr $0.49 vs est. $0.48; total leased occupancy 92.5%, anchor leased occupancy 94.8% and small shop leased occupancy 87.7%; same property NOI +6.7%

·     EverQuote (EVER) Q2 EPS loss (-$0.12) vs. est. loss (-$0.42); Q2 revs $101.92M vs. est. $94.26M; guides Q3 revs $90M-$95M vs. est. $92.3M and year $400M-$410M

·     Essential Properties Realty Trust (EPRT) 7.6M share Spot Secondary priced at $23.00

·     Genworth (GNW) Q2 Non-GAAP EPS $0.34 vs. est. $0.30; Q2 revs down -7% y/y to $1.88B vs. est. $1.94B; retired $48 million of debt, bringing holding company total debt to $1,052 million; cash and liquid assets of $228 million

·     Simon Property Group (SPG) 2Q comparable FFO/shr $2.96 vs est. $2.90; domestic NOI +3.6%, portfolio NOI +4.6%; US malls and premium outlets occupancy 93.9% vs 91.8% yr ago with base min rent/sq ft $54.58; guides FY comparable FFO/shr $11.70-11.77 vs est. $11.71 (raised $0.06/shr at mid-point vs prior); raised dividend to $1.75/qtr

·     Vornado Realty (VNO) Q2 Non-GAAP FFO $0.80 vs. est. $0.78; Q2 revs +20% y/y to $453.5M vs. est. $437.6M

 

Healthcare

·     Axcella Health’s (AXLA) said its long COVID-19 treatment helps some patients in a small trial of 41 patients; Physical fatigue scores returned to normal levels after 28 days of treatment for 3 of 21 patients who received the drug, AXA1125; However, mid-stage trial fails main goal

·     DaVita (DVA) 2Q EPS $2.30 vs est. $2.09 on revs $1.927B vs est. $2.935B; guides FY adj EPS $7.50-8.50 vs est. $7.87 and FCF $850Mm – 1.1B

·     Emergent BioSolutions (EBS) 2Q adj EPS ($0.86) vs est. $0.38 on revs $242.7mm vs est. $270.9Mm; adj EBITDA ($28.8Mm) vs est. $42.2Mm; guides FY adj EBITDA $80-120Mm vs est. $207Mm

·     Halozyme (HALO) announced that Roche’s (RHHBY) Phase III IMscin001 study evaluating a subcutaneous formulation of Tecentriq with Halozyme’s Enhanze technology met its co-primary endpoints

·     Omega Healthcare (OHI) 2Q AFFO/shr $0.76 vs est. $0.73 on revs $244.65Mm vs est. $243.1Mm

·     Teladoc (TDOC) downgraded to Market Perform from Outperform at Cowen

·     TransMedics Group (TMDX) 2Q EPS ($0.41) vs est. ($0.35) on revs $20.5Mm vs est. $16.3Mm; sees FY revs $67-75Mm vs est. $67Mm

 

Industrials & Materials

·     Caterpillar (CAT) Q2 adjusted EPS $3.18 vs. est. $3.01; Q2 revs $14.25B vs. est. $14.35B; says world machines retail sales for q2 down 4%; Asia/pacific machines retail sales for q2 down 14%; Latin America machines retail sales for q2 up 18% and N.A. machines retail sales for q2 down 3%

·     Eaton (ETN) Q2 adj EPS $1.87 vs. est. $1.82; Q2 revs $5.2B vs. est. $5.21B; raises FY22 adjusted EPS view to $7.36-$7.76 from $7.32-$7.72; for Q3, company anticipates organic growth of 13-15%

·     Boise Cascade (BCC) Q2 EPS $5.49 vs. est. $4.70; Q2 revs $2.278B vs. est. $2.14B; said in Q2, total U.S. housing starts increased 3% driven by an increase in multi-family housing starts compared to the same period in 2021. However, single-family housing starts decreased 3% vs. y/y

·     CF Industries (CF) Q2 EPS $5.58 vs. est. $6.12; Q2 revs $3.38B vs. est. $3.45B; gross ammonia production for first half and Q2 of 2022 was approximately 5.1M tons and 2.5M tons, respectively; Q3 gross ammonia production will be lower than each of first two quarters of year

·     DuPont (DD) Q2 adj EPS $0.88 vs. est. $0.85; Q2 sales $3.32B vs. est. $3.25B; narrows FY Adj EPS $3.27-3.43 from prior rev $3.20-3.50 and sees Q3 Adj EPS about $0.81 vs. est. $0.90

·     Kennametal (KMT) Q4 EPS $0.50 vs. est. $0.46; Q4 revs rose 3% y/y to $530M vs. est. $513.55M; sees Q1 revenue $480M-$500M vs. est. $485.44M; sees 2023 CAPEX $100M to $120M; sees Q1 adj. operating income at least $45M vs. est. $54.5M

·     Mosaic Inc. (MOS) Q2 adj EPS $3.64 vs. est. $4.03; Q2 revs $5.4B vs. est. $5.65B; approves a new $2.0 billion share repurchase authorization; qtrly net sales in the potash segment totaled $1.6B, Q2 net sales in the phosphate segment were $1.8 billion; tight grain and oilseed markets are expected to persist through the remainder of 2022 and into 2023

·     Woodward Inc. (WWD) Q3 EPS $0.64 vs. est. $0.91; Q3 revs rose 10% y/y to $614M vs. est. $623.3M; sees FY22 EPS $2.55-$2.75, below consensus $3.25 and FY22 revenue $2.35B-$2.4B also below consensus $2.41B; said Aerospace sales growth is expected to be between 8%-10% and Industrial sales are expected to be approximately flat.

 

Technology, Media & Telecom

·     Activision (ATVI) Q2 adj EPS $0.47 vs. est. $0.48; Q2 revs $1.64B vs. est. $1.6B; the co, which agreed to be acquired by Microsoft Corp. for $75 billion, recorded $1.64 billion in sales, a roughly 28% decrease from $2.3 billion in sales in 2021; Monthly active users 361 million, -12% y/y, King monthly active users 240 million, -5.9% y/y

·     Arista Networks (ANET) Q2 EPS $1.08 vs. est. $0.91; Q2 revs $1.05B vs. est. $975.9M; sees Q3 revs $1.025B-$1.075B vs. est. $1.00B; GAAP gross margin of 61.2%, compared to GAAP gross margin of 63.1% in the first quarter of 2022 and 64.2% in the second quarter of 2021.

·     Consolidated Communications Holdings, Inc. (CNSL) said that Clio Subsidiary, LLC, a subsidiary of the Company, has entered into an agreement to sell its limited partnership interests in five wireless partnerships managed by Cellco Partnership, d/b/a Verizon Wireless, to Cellco for an aggregate purchase price of $490 million.

·     Lattice Semiconductor (LSCC) 2Q adj EPS $0.42 vs est. $0.40 on revs $161.4Mm vs est. $158Mm; sees 3Q revs $161-171Mm vs est. $161.4Mm with adj gross margin 68-70%

·     Monolithic Power (MPWR) Q2 EPS $3.25 vs. est. $2.94; Q2 revs $461M vs. est. $430.64M; Q2 non-GAAP gross margin was 59.0%, ex impact of $1.2M for stock-based compensation expense, compared with 56.3% y/y; sees Q3 revenue $480M-$500M vs. est. $466.06M

·     Nutanix (NTNX) announced the appointment of Andrew Brinded as Chief Revenue Officer, effective immediately; sees FY22 revenue at or above high end of $1.535B-$1.555B; sees non-GAAP gross margin to be at or above the high end of the respective prior ranges and non-GAAP operating expenses are expected to be in line with the prior ranges

·     Pinterest (PINS) 2Q adj EPS $0.11 vs est. $0.18 on revs $666Mm vs est. $667Mm, global monthly MAUs -5% y/y to 433Mm, qtrly global ARPU $1.54 +17%; sees 3Q revs +mid-single digits; sees FY no change to previous expense outlook of adj op exp growth +35-40% y/y; shares rise after Elliott Management says in statement Pinterest has ‘significant potential for growth”

·     Sanmina (SANM) 3Q adj EPS $1.30 vs est. $1.11 on revs $2.02B vs est. $1.88B; sees 4Q revs $1.95-2.05B vs est. $1.91B and adj EPS $1.27-1.37 vs est. $1.15; sees FY revs approx +14% vs est. +10.2%

·     SBA Communications (SBAC) Q2 AFFO $3.07 vs. est. $2.98; Q2 revs $652M vs. est. $626.45M; sees FY22 AFFO $11.87-$12.24 vs. est. $11.98; sees FY22 revs $2.557B-$2.597B vs. est. $2.51B

·     SS&C (SSNC) announces $1B share repurchase program

·     ZoomInfo Tech (ZI) Q2 EPS $0.21 vs. est. $0.17; Q2 revs rose 54% y/y to $267.1M vs. est. $252.4M; Q2 operating income of $39.5M and Adjusted Operating Income of $106.9M; Q2 GAAP operating income margin of 15% and Adjusted Operating Income Margin of 40%; raises FY22 EPS view to 78c-80c from 75c-77c, and revs to $1.08B-$1.09B from $1.06B-$1.07B

·     Zebra technology (ZBRA) Q2 adj EPS $4.61 vs est. $4.21 on revs $1.468B vs est. $1.443B; guides 3Q adj net sales +2-4% vs est. +5%adj EPS $4.35-4.65 vs est. $5.08; maintains FY sales outlook and adjusts EBITDA mgn to low end of previous forecast

·     Snowflake (SNOW) downgraded to neutral from buy at BTIG, citing field checks that show a potential slowdown in product revenue growth in the coming quarters.