Early Look

Friday, August 2, 2024

S&P futures (Spuz) down -1.1% to 5,420 (low 5,409) and Nasdaq futures -1.6% or 300 points to 18,720 adding to yesterday’s rout, as market selling accelerates ahead of the Nonfarm payroll report at 8:30 AM. Wall Street tumbled on Thursday, with chip stocks suffering their most punishing day since 2020 (falling over -7% and erasing Wednesdays 7% advance) after data signaled a cooling economy and disappointing earnings/guidance results (ARM, QCOM). Selling accelerated overnight as Japanese markets enter correction territory with the Nikkei Index plunging 2,216 points or 5.81% to settle at 35,909, the Shanghai Index fell -27 points to 2,905, and the Hang Seng Index tumbled -359 points or over 2% to 16,495. In Europe, the German DAX is down -277 points to 17,805, while the FTSE 100 is down -46 points to 8,237. Swaps now show a 50% chance that one of Fed’s 2024 cuts is 50-bps (up from 27% late yesterday for September) as the Thursday ISM Manufacturing data raised concerns that the Fed is not moving quickly enough to help the economy. Stocks sank after the ISM data dropped to an eight-month low in July at 46.8, signifying contraction, while prices paid rose (inflationary). After that, it appeared overnight we went from celebrating the fact that the Fed is finally going to cut rates in September to being concerned that they’re cutting rates because the economy is slowing down rapidly and not cutting quick enough. Haven assets such as Treasuries and gold are rising given the stampede out of stocks the last two trading days. Apple (AAPL) shares are flat after earnings results last night, but Amazon (AMZN) shares are down -8% after its results and a 20% decline in Intel (INTC) after a cost plan included suspending its dividend along with weak guidance. Also, big losses in tech after earnings/guidance from SNAP, TEAM, BKNG and MCHP trading lower overnight.

• The Dow Jones Industrial Average fell -494.82 points, or 1.21%, to 40,347.97.
• The Nasdaq Composite tumbled -405.26 points, or 2.30%, to 17,194.15.
• The Russell 2000 Index declined -68.32 points, or 3.03% to 2,186.16.

• 8:30 AM ET                  Private Payrolls for July…est. +148K (prior 136K)
• 8:30 AM ET                  Unemployment Rate for July…est. -1K (prior -8K)
• 8:30 AM ET                  Average Hourly Earnings M/M for July…est. +0.3%
• 10:00 AM ET                Durable Goods Orders M/M for June
• 10:00 AM ET                Factory Orders M/M for June…est. (-2.95)
• 1:00 PM ET                   Baker Hughes Weekly rig count data

• Clorox (CLX) Q4 adj EPS $1.82 vs. consensus $1.56; Q4 revs $1.9B vs. consensus $1.95B; FY25 adj EPS $6.55-$6.80 vs estimates $6.45 and FY sales seen flat to down 2% vs prior year; sees FY25 organic sales up 3%-5% excluding about 2 points of negative impact from divestiture of business in Argentina.
• Floor & Décor Holdings (FND) Q2 EPS $0.52 vs est. $0.51 on sales $1.133B vs est. $1.15B; sees FY net sales approx $4.4-4.49B vs est. $4.566B, comps (8.5)%-(6.5)%, adj EBITDA approx $480-505Mm vs est. $505.04Mm, EPS approx $1.55-1.75 vs est. $1.79; guides FY24 EPS below consensus, revs below consensus.
• Fox Factory (FOXF) Q2 adj EPS $0.38 vs est. $0.35 on sales $348.491Mm vs est. $346.9Mm; sees Q3 sales $355-385Mm vs est. $415.98Mm and adj EPS $0.35-0.50 vs est. $0.81; sees FY sales $1.407-1.477B vs est. $1.542B and adj EPS $1.40-1.72 vs est. $2.40.
• Xponential Fitness (XPOF) Q2 adj EPS $0.03 vs est. $0.23, adj EBITDA $25.4Mm vs est. $33.04Mm; sees FY revs $310-320Mm vs est. $346.62Mm, adj EBITDA $120.124Mm vs est. $137.23Mm.

• DoorDash (DASH) Q2 revenue of $2.63B tops est. of $2.54B; Total orders jumped 19% to 635M in Q2 y/y; said consumer demand on the platform is stronger than it’s ever been; expects gross order value to be between $19.4B-$19.8B vs. $16.75B y/y; sees Q3 Ebitda $470M-$540M vs. ests $453.3M.
• DraftKings (DKNG) Q2 adj EPS $0.22 vs. est. loss (-$0.01); Q2 revs $1.1B, in-line with consensus $1.11B; Q2 monthly unique payers increased to 3.1M and the average revenue per monthly unique player was $117; announces $1B share repurchase program; raises FY24 revenue view to $5.05B-$5.25B from $4.8B-$5B but cuts FY24 adjusted EBITDA view to $340M-$420M from $460M-$540M but backs Fy25 adj Ebitda.

• Coterra Energy (CTRA) Q2 adj EPS $0.37 vs. est. $0.39; Q2 revs $1.27B vs. consensus $1.33B.; backs FY24 CapEx view $1.75B-$1.95B while raises 2024 oil production guidance to 105.5 to 108.5 Mboepd, up 2.4% at the mid-point versus prior guidance; maintained 2024 natural gas production guidance at the mid-point, tightened range to 2,675 to 2,775 MMcfpd; raises 2024 BOE production guidance to 645 to 675, up 1% at the mid-point versus prior guidance.
• EOG Resources (EOG) Q2 adj EPS $3.16 vs. consensus $2.96; Q2 revs $6.03B vs. est. $5.64B; Q2 total oil production of 490,700 Boepd was above the midpoint of the guidance range and up 1% from 1Q; updated full-year guidance to reflect higher volumes and lower per-unit cash operating costs.
• Southwest Energy (SWN) Q2 adj EPS $0.10 vs est. $0.11, adj EBITDA $413Mm vs est. $432.7Mm on revs $1.08B vs est. $1.09B.

• Coinbase (COIN) Q2 adj EBITDA $596M vs $189M last year and revs $1.4B vs. $662.5M y/y but in-line with consensus; sees Q3 subscription and services revenue $530M-$600M.
• Prudential (PRU) Q2 EPS $3.39 vs. est. $3.45; 2Q adjusted book value per common share; Q2 assets under management $1.482T and Q2 book value per common share $77.51.
• Warren Buffett’s Berkshire Hathaway sells BofA’s (BAC) stock for 12th straight trading day according to filing, but Berkshire still owns a $37.2B stake after recent sales.

• Tandem Diabetes (TNDM) Q2 EPS ($0.47) vs est. ($0.54), adj op Inc ($30.9)Mm vs est. ($34.9)Mm on sales $221.9Mm vs es.t $204.91Mm; guides Q3 sales $222-225Mm vs est. $220.7Mm and FY sales $885-892Mm vs est. $869.84Mm.
• Vertex Pharmaceuticals (VRTX) Q2 revs $2.64B vs. est. $2.66B; guides product revenue $10.65B-$10.85B, above prior $10.55B-$10.75B (est. $10.77B); top-selling CF drug Trikafta rose 9% to $2.45B for the quarter ended June 30, beating analysts’ estimate of $2.26B.
• Zoetis (ZTS) announces authorization of multi-year $6B share repurchase program; said shares are expected to be repurchased over a period of up to four years.

• MasTec (MTZ) Q2 adj EPS $0.96 vs. est. $0.87; Q2 revs $2.96B vs. consensus $3.09B; sees Q3 adj EPS $1.24 vs. consensus $1.22 and sees Q3 revenue approximately $3.45B vs. est. $3.44B; 18-month Backlog as of June 30, 2024 of $13.3B increased $501 million sequentially from Q1.
• U.S. Steel (X) Q2 adj EPS $0.84 vs. est. $0.76; Q2 revs $4.19B vs. consensus $4.02B; said Q2 adjusted EBITDA of $443M improved sequentially despite pricing headwinds that grew in the quarter across our operating segments; said continue to make progress on regulatory processes ahead of anticipated closing of deal with Nippon steel later this year; expects 3Q adjusted EBITDA in range of $275m-$325m as pricing dynamics impact business.

• Atlassian Corp. (TEAM) Q4 adj EPS $0.66 vs est. $0.60 on revs $1.132B vs est. $1.13B; sees Q1 revs $1.149-1.157B vs est. $1.161B, adj gr mgn approx 83.5%, adj op mgn approx 19%; sees FY revs approx +16%, adj gr mgn approx 83.5%, adj op mgn approx 21.5%.
• Cloudflare (NET) Q2 adj EPS $0.20 vs est. $0.14 on revs $400.996Mm vs est. $394.7Mm; guides Q3 revs $423-424Mm vs est. $423.61Mm, adj op Inc 50-51Mm vs est. $41.71Mm and adj EPS $0.18 vs est. $0.15; sees FY revs $1.657-1.659B vs est. $1.653B, adj op Inc $196-198Mm vs est. $162.39 and adj EPS $0.70-0.71 vs est. $0.63.
• GoDaddy (GDDY) Q2 EPS $1.01 vs est. $1.07 on revs $1.12B vs est. $1.114B, total bookings $1.262B; guides Q3 revs $1.13-1.15B vs est. $1.139B and FY revs $4.525-4.565B vs est. $4.534B; sees FY unlevered FCF at least $1.45B.
• Intel Corp. (INTC) announces $10B cost reduction plan to increase efficiency; suspending dividend starting Q4; to reduce headcount by greater than 15%, sees majority completed by YE; Q2 adj EPS $0.02 vs est. $0.10 on revs $12.83B vs es.t $12.944B; sees Q3 revs $12.5-13.5B vs est. $14.353B and adj EPS ($0.03) vs est. $0.31.
• Microchip (MCHP) Q1 EPS $0.53 vs. est. $0.52; Q1 revs $1.24B in-line with consensus $1.24B; raises quarterly cash dividend to 45.4c per share up from 41c; guides Q2 EPS $0.40-$0.46 vs. est. $0.59 and revs $1.12B-$1.18B below consensus $1.31B.
• MicroStrategy (MSTR) Q2 adj EPS ($7.62) vs est. ($0.11) on revs $111.442Mm vs est. $122.6Mm.
• Monolithic Power Systems (MPWR) Q2 adj EPS $3.17 vs est. $3.07; sees Q3 revs $590-610Mm vs est. $549.81Mm and adj gr mgn 55.5-56.1%.
• Motorola Solutions (MSI) Q2 adj EPS $3.24 vs est. $3.01 on sales $2.268B vs est. $2.586B; sees Q3 revs +7-8% vs est. +6.28% and adj EPS $3.32-3.37 vs est. $3.32; sees FY revs +8% vs est. +7.16%.
• Roku Inc. (ROKU) Q2 EPS loss (-$0.24) vs. est. loss (-$0.43); Q2 revs $968M above consensus $937.9M; Q2 platform revenue rose 11% y/y to $824M, gross profit rose 12% y/y to $425M; said Q2 streaming Households were 83.6M, a net increase of 2.0M from Q1; sees Q3 net revenue of $1.010B (in-line with ests) growing 11% YoY, with Platform revenue growing 9% YoY and Devices revenue growing 24% YoY.
• Snap Inc. (SNAP) Q2 revs $1.24B vs. est. $1.25B while guides Q3 revs $1.335B-$1.375B vs. est. $1.36B; said expects daily active users (DAUs) to grow to about 441 mln in Q3 compared with est. of 439.3 mln; sees Q3 adjusted Ebitda between $70M-$100M below expectations of $110.8M.