Early Look

Thursday, August 4, 2022

Futures	Up/Down	%	Last
Dow	71.00	0.22%	32,841
S&P 500	13.25	0.32%	4,169
Nasdaq	73.50	0.55%	13,344

 

 

Stocks looking higher as the S&P trades in a narrow 20-point range overnight, currently sitting at overnight highs above 4,170 as a test of the June highs (4,202.25) seems inevitable after this massive market rally over the last month. The Nasdaq hit 3-month highs on Wednesday, and S&P 500 approaching those June highs, paring YTD losses to -12%. Stocks have risen notably since the end of 1H’22 as rising interest rate hikes, mixed earnings/outlooks, geopolitical tensions with China, and several warnings from Fed members that they will continue to fight inflation has failed to dent market enthusiasm. The CBOE volatility index (VIX) tumbled over 8% on Wednesday, dropping below the 22 level, Treasury yields rose along with the dollar and gold slid as investors bailed on haven assets. JP Morgan noted this morning reasons they think markets have been rallying which included a 1) short covering as investors reassess the macro environment feeling if growth disappoints it will end the rate hike cycle earlier; 2) better earnings in Mega Cap tech where it feels like Q2 will be the worst quarter; 3) retail bid appears to have returned; 4) lots of money on the sideline so low volume and liquidity – though says many think this is a bear market rally and many institutional investors have not chased this rally; 5) firm feels at some point money on the sidelines will be “pulled” in, but may see new lows first as they see a day with VIX at 40 and SPX down 4%-5% as part of forming the bottom. JPM also thins we have seen the high in yields of 3.47% on June 14^th. In Asian markets, The Nikkei Index gained 190 points to 27,932, the Shanghai Index rose 25 points to 3,189, and the Hang Seng Index jumped 406-points or over 2% to 20,174. In Europe, the German DAX is surging 175 points to 1.3% to 13,763, while the FTSE 100 rises 13 points to 7,460. Meanwhile overnight, China fired 11 missiles into the sea around Taiwan on Thursday in response to US House Speaker Nancy Pelosi’s visit, even as Taipei played down the impact on flights and shipping.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 63.98 points, or 1.56%, to 4,155.17

·     The Dow Jones Industrial Average rose 416.33 points, or 1.29%, to 32,812.50

·     The Nasdaq Composite surged 319.40 points, or 2.59%, to 12,668.16

·     The Russell 2000 Index advanced 26.48 points, or 1.41% to 1,908.93

 

Economic Calendar for Today

·     7:30 AM ET            Challenger Layoffs for July

·     8:30 AM ET            Weekly Jobless Claims

·     8:30 AM EST          Continuing Claims

·     8:30 AM ET            International Trade for June

·     10:30 AM ET          Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABMD ACIW AGIO APD APO ARW AZEK BABA BALL BALY BDX CBRE CEG CEIX CHH CI CNSL COMM COP CRC DDOG DEN DGII DK DNB DOC DUK EPAM EPC EVRG FA FIS FOUR FTDR GOLF HII HWM ICE ICD IDCC IOVA IRWD ITRI ITT JCI K KNBE KOP KTB LAUR LNG LXP MD MDU MPLN MUR NKLA NS NTLA NXST OWL PARA PBH PENN PH PKI PNM PWR PZZA RIDE RPRX SEAS SHAK SR SRE STWD TECH TRGP TTGT USPH VMC W WD WE WHD WMS WRK YETI ZTS

·     Earnings After the Close: AAOI AEE AES AGL AKBA ALTR AMC AMH AMGN AMN AMWL APPN ATEC ATSG AX BECN BHF BIGC BL BOOM BRBR BYND CABO CASA CCCS CCOI CDXS CHGG CHUY CLNE CMP COLD CRSR CTMX CTVA CUBE CVNA CWK CYTK DASH DBX DCPH DIOD DOCS DRRX DUOL DVAX ECOR EGLE ENV EOG EWCZ EXPE FDUS FIGS FND FNKO FOXF FTHM FUBO G GDEN GDOT GH GMED GPRO GRWG HASI HRTG HUBS IHRT INGN IPI IRTC ITI IVR JAMF JYNT KAMN KTOS KWR LASR LGF/A LOCO LPRO LYFT LYV MDRX MNRL MP MSI MTW MTZ MWA NBIX NET NEWR NGVC NKTR NLOK NSTG NUS NVEE OLED OMCL OPEN OPK OUST PBPB PCTY PEN PLYA PODD POST POWI PSA QDEL QMCO RAMP RDFN REG RKT RSG RSI SEM SMLPP SPCE SQ SWKS SWN SYNA TDC TRIP TWLO VEL VRTX VTR VVI WBD WMC XPO Y YELP ZEUS ZG

 

 

Macro	Up/Down	Last
Nymex	0.85	91.51
Brent	0.58	97.36
Gold	20.90	1,797.30
EUR/USD	0.0028	1.0192
JPY/USD	0.30	134.16
10-Year Note	-0.014	2.734%

 

 

World News

·     China fired 11 missiles into the sea around Taiwan on Thursday in response to US House Speaker Nancy Pelosi’s visit, even as Taipei played down the impact on flights and shipping. China tested the Dongfeng ballistic missiles in Taiwan’s north, south and east waters between 13:56 p.m. and 16:00 p.m. local time, the island’s Defense Ministry said in a statement. Sun Li-fang, a ministry spokesman, earlier said missiles were fired from land. – Bloomberg

·     Saudi Arabia, the world’s top oil exporter, raised September crude oil prices for Asian buyers to record high levels despite falling refining margins. The official selling price for September-loading Arab Light to Asia was raised by 50c a barrel from August to $9.80 a barrel

 

Sector News Breakdown

Consumer

·     Booking Holdings (BKNG) Q2 adj EPS $19.08 vs. est. $17.56; Q2 revs $4.3B vs. est. $4.32B; Q2 gross travel bookings rose 57% y/y to $34.5B; Q2 room nights booked increased 56% from the prior-year quarter; says room nights surpassed 2019 levels for first time in Q2

·     Clorox (CLX) shares fall -6%; Q4 adj EPS $0.93, in-line with ests and revs $1.8B vs. est. $1.86B; Sees FY23 adj EPS $3.85-$4.22 below estimate $5.26, sees net sales -4% to +2% and guides FY organic sales -3% to +3%, vs. estimate +3.1%; announces streamlined operating model to create a simpler, faster company which will begin implementing new operating model in 1Q 2023

·     Costco (COST) reported net sales of $16.85B for retail month of July, an increase of 10.8% from $15.21B last year; for forty-eight weeks ended July 31, 2022, reported net sales of $205.19 bln, an increase of 16.4 percent from $176.30 bln; July us comp sales ex-gas, FX +5.8%, vs. est. +6.8%

·     Elf Beauty (ELF) 1Q adj EPS $0.39 vs est. $0.23 on revs $122.6Mm vs est. $108.6Mm; guides FY adj EPS $0.84-0.87 vs prior $0.78-0.81 and est. $0.83, revs $448-456Mm vs prior $432-440Mm and est. $441.5Mm, adj EBITDA $83.5-85Mm vs prior $80.5-82Mm and est. $82Mm

·     Fisker (FSR) 2Q EPS ($0.36) vs est. ($0.41), cash and cash equivalent $851.9Mm end qtr, sees FY CAPEX $280-290Mm

·     Lucid Group (LCID) 2Q EPS ($0.33) vs est. ($0.36) on revs $97.3Mm vs est. $145.5Mm; 1H production 1,405 vehicles, ended qtr with $4.6B cash, equivalent and investments expected to fund company well into 2023; revises production volume outlook for 2022 to 6,000-7,000

·     MGM Resorts (MGM) Q2 adj EPS $0.03 vs. est. $0.23; Q2 revs rose 44% y/y to $3.3B vs. est. $3.04B; MGM China net revenues of $143M vs. $311M y/y, down -54%; said Q2 casino revenue at $499M at co’s Las Vegas strip resorts, up 41% cy/y; Q2 RevPAR in Vegas $208M vs. $115M

·     Allegiant Travel (ALGT) Q2 adj EPS $0.62 vs est. $0.59; Q2 revs +28.1% over three years vs. est. $629.6M

·     Host Hotels (HST) 2Q AFFO/shr $0.58 vs est. $0.48 on revs $1.38B vs est. $1.26B; 2Q all owned hotel REVPAR $219 +3.7%, avg room rate $296.91; guides FY revs $4.78-4.89B vs est. $4.69B, adj EBITDA $1.45-1.51B vs est. $1.36B, AFFO/shr $1.71-1.80 vs est. $1.64

·     Rent-A-Center (RCII) 2Q adj EPS $1.15 vs est. $0.99 on revs $1.1B vs est. $1.06B; sees 3Q revs $1.0-1.055B vs est. $1.11B and adj EPS $1.05-1.25 vs est. $1.25; sees FY revs $4.265-4.385B vs est. $4.48B and adj EPS $4.00-4.50 vs est. $4.49

·     Revolve Group (RVLV) Q2 EPS $0.22 vs. est. $0.31; Q2 revs rose 27% y/y to $290.05M vs. est. $293.13M; Continued strong growth in active customers was a key driver of our results, highlighted by quarterly growth of approximately 124,000 active customers during the second quarter of 2022, the highest ever for a second quarter. Total active customers grew to 2.2 million, an increase of 39% year-over-year.

 

Energy

·     APA Inc. (APA) Q2 EPS $2.37 vs. est. $2.33; Q2 revs $3.047B vs. est. $2.61B; qtrly reported production of 385,000 barrels of oil equivalent (boe) per day; full-year capex guidance, excluding acquisitions, is unchanged at $1.725B; said Q2 production, which excludes Egypt noncontrolling interest and tax barrels, was 305,000 boe per day; lowers 2022 adj production guidance by 2%

·     Atmos Energy (ATO) 3Q EPS $0.92 vs est. $0.85, sees FY EPS $5.50-5.60 vs est. $5.55, sees FY CAPEX $2.4-2.5B

·     Callon Petroleum (CPE) Q2 adj EPS $3.68 vs. est. $4.29; Q2 adj revs $575.7M vs. est. $709.64M; Avg production 100,685 BOE/d, +13% y/y, estimate 101,413; oil production 5,589 MBbl, +9.5% y/y and natural gas production 10,312 Mmcfe, +16% y/y

·     Marathon oil (MRO) Q2 adj EPS $1.32 vs. est. $1.26; Q2 revs $2.3B vs. est. $2.07B; U.S. production averaged 283,000 net barrels of oil equivalent per day (boed) for Q2; unit production costs averaged $5.80 per boe

·     SunRun (RUN) Q2 EPS loss (-$0.06) vs. est. loss (-$0.10); Q2 revs $584.58M vs. est. $501.51M; said in Q2, customer additions of 34,403 in q2, bringing total customers to 724,177, 21% y/y growth in customers; reiterated for full year, including rapid growth, and expanding net subscriber values

 

Financials

·     Allstate (ALL) Q2 adj EPS loss (-$0.76) vs. est. loss ($1.27); Q2 revs $12.22B vs est. $11.11B; Property-Liability earned premium of $10.9B increased 8.6% in Q2 compared to the prior year quarter, driven primarily by higher average premiums and policies in force growth.

·     Fair Isaac Corp. (FICO) 3Q adj EPS $4.47 vs est. $3.98 on revs $349Mm vs est. $342.5Mm; reiterates FY guide

·     Fleetcor Technologies (FLT) Q2 adj EPS $4.17 vs. est. $3.82; Q2 revs $861.3M vs. est. $820.49M; sees Q3 adjusted EPS $4.15-$4.25 vs. est. $3.99 and revs $870M-$890M vs. est. $864.06M; raises FY22 adj EPS view to $15.85-$16.05 from $15.45-$15.75 and raises FY22 revenue view to $3.38B-$3.42B from $3.335B-$3.385B (est. $3.36B)

·     Lincoln National (LNC) Q2 adj op EPS $2.23 vs. est. $2.21; Q2 book value per share $53.97; BVPS, including AOCI, of $53.97, down 53% primarily driven by higher interest rates; BVPS, excluding AOCI, of $79.49, up 5%

·     MetLife (MET) Q2 adj EPS $2.00 vs. est. $1.45; Q2 revs $15.56B vs. est. $16.11B; Q2 Book value of $41.73 per share, down 45% from $75.86 per share at June 30, 2021; book value, excluding accumulated other comprehensive income (AOCI) other than foreign currency translation adjustments (FCTA), of $55.54 per share, down 1%

·     Verra Mobility (VRRM) 2Q adj EPS $0.29 vs est. $0.25 on revs $187.5Mm vs est. $179.8Mm; guides FY revs $720-740Mm vs est. $729.8Mm and adj EBITDA $325-335Mm vs est. $329.8Mm

·     Western Union (WU) Q2 adj EPS $0.51 vs. est. $0.41; Q2 revs $1.1B vs. est. $1.13B; sees FY22 adjusted EPS $1.75-$1.85 vs. consensus $1.79 and lowers FY22 GAAP revenue down approximately 11% to 13%, from previously down approximately 9% to 11%.

 

Healthcare

·     AstraZeneca PLC (AZN) said its Lynparza treatment has been approved in the European Union for patients with early breast cancer; said the treatment is the first PARP inhibitor–a type of targeted cancer drug–to improve overall survival in early-stage, high-risk breast cancer.

·     BioMarin (BMRN) Q2 EPS $0.15 vs. est. $0.11; Q2 revs $533.8M vs. est. $521.7M; raises FY22 revenue view to $2.06B-$2.16B from $2.05B-$2.15B (est. $2.11B)

·     Cigna (CI) Q2 adj EPS $6.22 vs. est. $5.48; Q2 revs $45.48B vs. est. $44.41B; raises FY22 adjusted EPS view to at least $22.90 from at least $22.60 and ups FY22 revenue view to at least $178B from at least $177B; now expects 2022 MCR between 81.5% and 82.5%, compared with its prior forecast of 82% to 83.5%

·     Eli Lilly (LLY) Q2 EPS $1.25 vs. est. $1.68; Q2 revs $6.48B vs. est. $6.67B; cuts FY22 EPS view to $7.90-$8.05 from $8.15-$8.30 (est. $8.08) and reaffirms FY22 revenue view $28.8B-$29.3B; reports fall in Q2 profit due to lower prices of diabetes drug Humalog and Insulin Lispro injection

·     Global Blood Therapeutics Inc’s (GBT) rises 17% after Bloomberg News reported last night the company is attracting takeover interest, citing people familiar with the matter. Said some large pharmaceutical companies are exploring a potential deal

·     McKesson (MCK) 1Q adj EPS $5.83 vs est. $5.28 no revs $67.2B vs est. $65.1B; guides FY adj EPS $23.95-24.65 vs prior $22.90-23.60 and est. $23.35; says has settled, reached agreements to settle, opioid-related claims of 50 stats, DC, and all eligible territories

·     Tandem Diabetes (TNDM) shares fall -9%; 2Q EPS loss ($0.24) vs est. $0.02 on revs $200.3Mm vs est. $205.2Mm; sees FY sales $835-845Mm vs est. $857Mm down from prior $850M-$865M

 

Industrials & Materials

·     Albemarle (ALB) 2Q adj EPS $3.45 vs est. $3.26 on sales $1.48B vs est. $1.5B; sees FY net sales $7.1-7.5B vs est. $6.0B, adj EBITDA $3.2-3.5B vs est. $2.27B and adj EPS $19.25-22.25 vs est. $13.65; expects to be free cash flow positive in 2022

·     Allison Transmission (ALSN) 2Q ESP $1.26 vs est. $1.35 on revs $664Mm vs est. $691.7Mm; sees FY net sales $2.65-2.75B vs est. $2.71B

·     Ingersoll Rand (IR) Q2 adj EPS $0.54 vs. est. $0.52; Q2 revs $1.44B vs. est. $1.39B; raising full-year 2022 organic revenue growth expectation by 300 bps to 11% to 13%; re-affirming total revenue growth of 11% to 13% for full year 2022

·     US Xpress (USX) 2Q adj EPS ($0.05) vs est. $0.05 on revs $553.7Mm vs est. $547.9Mm

·     Wesco (WCC) raises FY22 adjusted EPS view to $15.60-$16.40 from $14.00-$15.00 and ups its FY22 sales view to up 12%-14% vs. prior 9%-11% view; sees FY adjusted EBITDA margin 7.8%-8% vs. prior 7.3%-7.6% view

 

Internet, Media & Telecom

·     Alibaba (BABA) Q1 adj EPS $1.75 vs. est. $1.53; Q1 revs $30.69B vs. est. $29.97B; $25B share buyback program is effective through March 2024; Q1 China commerce revenue $21.19b, down 1%; Q1 cloud revenue $2.64b, up 10%; saw signs of recovery across businesses in June after slow April, and May; Q1 adjusted Ebitda $5.14b

·     Altice (ATUS) Q2 EPS $0.23 vs. est. $0.32; Q2 revs fell -2.1% y/y to $2.46B vs. est. $2.44B; Q2 net cash flows from operating activities were $676.3M in Q2 2022, compared to $729.5M y/y; Q2 adjusted EBITDA declined -8.8% YoY in Q2 2022 to $1.01 billion with a margin of 40.9%.

·     Lumen Technologies (LUMN) 2Q adj EPS $0.35 vs est. $0.46 on revs $4.61B vs est. $4.58B; reiterates FY outlook

·     Skillz Inc. (SKLZ) 2Q EPS ($0.15) vs est. ($0.16) on revs $73.3Mm vs est. $92.7Mm, adj EBITDA ($31.6Mm) vs est. ($37.4Mm); ARPU $10.94 -12%, total marketplace GMV $432Mm -29%; sees FY adj EBITDA margin -56%

 

Technology

·     ANSYS (ANSS) 2Q adj EPS $1.77 vs est. $1.60 on revs $473.9Mm vs est. $467.1Mm, op profit mgn 40.7%; guides 3Q adj revs $455-475Mm vs est. $458.5Mm and adj EPS $1.56-1.70 vs est. $1.66; sees FY adj revs 2.0-2.06B vs est. $2.05B and adj EPS $7.50-7.88 vs est. $7.79

·     Confluent (CFLT) 2Q adj EPS ($0.16) vs est. ($0.19) on revs $139Mm vs est. $131.9Mm; guides 3Q revs $143-145Mm vs est. $142Mm and adj EPS ($0.19)-($0.17) vs est. ($0.19); sees FY revs $567-571Mm vs est. $559.2Mm and adj EPS ($0.73)-($0.69) vs est. ($0.75)

·     DXC Technology (DXC) Q1 EPS $0.75 vs. est. $0.82; Q1 revs fell -10.5% to $3.71B vs. est. $3.72B; sees Q2 revs $3.55B-$3.58B vs. est. $3.69B; sees FY23 revs $14.6B-$14.75B vs. est. $14.95B

·     eBay Inc. (EBAY) 2Q adj EPS $0.99 vs est. $0.89 on revs $2.4B vs est. $2.37B, qtrly GMV $18.5B -18% (-14% on FX-neutral basis), qtrly active buyers -12% to total 138Mm global active buyers; guides 3Q revs $2.29-2.37B vs est. $2.3B and adj EPS $0.89-0.95 vs est. $0.92; sees FY revs $9.6-9.9B vs est. $9.68B and adj EPS $3.95-4.10 vs est. $3.98

·     Fortinet (FTNT) Q2 EPS $0.24 vs. est. $0.22; Q2 revs rose 29% to $1.03B vs. est. $1.03B; guides Q3 revs $1.105B-$1.135B; guides FY22 revs $4.35B-$4.4B vs. est. $4.38B

·     Fastly (FSLY) Q2 EPS loss (-$0.23) vs. est. loss (-$0.17); Q2 revs $102.52M vs. est. $101.33M; sees FY22 EPS loss (68c)-(63c) vs. est. loss (56c); sees FY22 revs $415M-$425M vs est. $411.03M.

·     GoDaddy (GDDY) Q2 EPS $0.56 vs. est. $0.49; Q2 revs $1.02B, in-line with estimates; achieved strong growth in its commerce offerings with gross merchandise volume (GMV) of $28 billion, up 12% year-over-year in Q2; cuts FY22 revenue view to $4.10B-$4.13B from $4.14B-$4.16B (est. $4.15B); sees unlevered FCF of about $1.1B, representing growth of 15% y/y, versus $960M

·     MercadoLibre (MELI) Q2 EPS $2.43 vs. est. $1.79; Q2 revs rose 56% to $2.597B vs. est. $2.5B; in Q2, Mercado Pago exceeded 38 mln active users, up 26.3%; GMV reached $8.6Bn in q2, up 21.8% in dollars and up 26.2% in constant currency; Q2 gross profit of about $1.3B, up 70.3% in dollars

·     Qorvo (QRVO) 1Q adj EPS $2.25 vs est. $2.12 on revs $1.04B vs est. $1.02B, gr margin 36.2%; guides 2Q adj EPS $2.45-2.65 vs est. $2.62 and revs $1.12-1.15B vs est. $1.14B