Early Look

Tuesday, August 8, 2023

Futures	Up/Down	%	Last
Dow	-188.00	0.53%	35,366
S&P 500	-23.25	0.51%	4,514
Nasdaq	-74.50	0.48%	15,411

 

 

U.S. stock futures are tracking weakness in Asia and Europe after China’s trade data for July was overall weak. While the trade surplus widened more than expected to $80.60B (prev. $70.62B, est. $70.0B), due to a large -12.4% decline in imports (-5.6% expected) and -14.5% fall in exports; US futures slide -0.5% to 4,514 after the China data. Also impacting US markets, transport giant UPS reported weaker than expected Q2 revenues and cut its forecast for the year. In positive news, Eli Lilly (LLY) and Novo (NVO) shares jump after positive drug trial data and earnings. U.S. stocks finished higher on Monday, regaining some of the ground lost last week, as investors added positions ahead of Thursday’s highly awaited U.S. inflation report (CPI). July core annual CPI is expected by economists polled by WSJ to accelerate to 3.3% from June’s 3%. On Friday, monthly July PPI ex-food and energy is forecast to accelerate to 0.2% from 0.1%. The main stock indexes ended last week lower as investors took profits after months of gains due to worries over economic data, mixed earnings, and rising Treasury yields.

 

In Asian markets, The Nikkei Index rose 122 points to 32,377, the Shanghai Index fell -8 points to 3,260, and the Hang Seng Index dropped -353 points to 19,184. In Europe, the German DAX is down -183 points or 1.15% to 15,767, while the FTSE 100 drops -47 points to 7,506. The U.S. dollar strengthens against all FX majors as Chinese tech shares lead Asian equities lower. Euro and pound both a touch lower; yen weakens above 143-handle as Japan’s wage growth unexpectedly slows in June. Treasury yields tumbling early, with the 10-year yield down below 4%, falling nearly 8-bps while oil prices decline -1.5% to $80.72 per barrel after China’s outbound shipments fell 14.5% from a year earlier in July, compared with the 12.4% decline in June, and Chinese imports declined 12.4% from a year earlier.

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 40.41 points, or 0.90%, to 4,518.44.

·     The Dow Jones Industrial Average rose 407.51 points, or 1.16%, to 35,473.13.

·     The Nasdaq Composite gained 85.16 points, or 0.61%, to 13,994.40.

·     The Russell 2000 Index edged higher 1.47 points, or 0.08% to 1,958.94.

 

Economic Calendar for Today

·     6:00 AM ET                  NFIB Small Business Optimism for July

·     7:45 AM ET                  ICSC Weekly Retail Sales

·     8:15 AM ET                  Fed’s Harker Speaks on Economic Outlook in Philadelphia

·     8:30 AM ET                  International Trade Balance for June

·     8:55 AM ET                  Johnson/Redbook Weekly Sales

·     10:00 AM ET                Wholesale Inventory M/M for June

·     1:00 PM ET                   US Treasury to sell $40B in 3-year notes.

·     4:30 PM ET                   API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ADT AGEN AHCO ALE ARMK AVXL BLUE BR BSY CECO CEIX CHH CRMD CRNC DDOG DUK EGRX ENR EVBG EXPD FOLD FOXA GFS HAE HNI HZNP IHRT IRWD J LLY MAC MPW NEO NRG NVAX NYT OB PAYO PMTS QTRX RPRX SEAS SEE SQSP SWIM TDG TPG TWKS UAA UPS VRTV WHF WMG WOW XERS ZTS ZVIA

·     Earnings After the Close: AKAM AMC ANGI APEI ARRY ATER AVD AXON AZEK BARK BHF BIRD BL BLNK BLZE BMBL BODY BOOM BROW BZFD CASA CELH CMP CPNG CRCT CTMX CUTR DAR DAVE DIOD DOCS DOOR DUOL EDR EGHT EMKR ESE FATE FLT FTK GNW GO GOOD GRWG HALO HL HRTG IAC IIIV IOVA IPAR IRBT JAMF LAZR LCII LGND LPRO LPSN LVLU LYFT LZ MAPS MARA MASI ME MEG MODN MQ MRTX MTTR NKTR NRDY NVTA OSCR PETQ PODD PRA PUBM QDEL QUOT REAL RIVN RKLB RLAY RPD RVNC RXT RYAM SALM SDC SGMO SIGA SMCI SNCR SND SUPN TALO TDUP TOST TTGT TWLO UPST VERU VRM VUZI VZIO WES WGS ZIP

 

Other Key Events:

·     BTIG Biotechnology Conference 2023 (Virtual), 8/7-8/8

·     Oppenheimer 26th Annual Technology Internet & Communications Conference (virtual), 8/8-8/9

·     TD Cowen 9th Annual Communications Infrastructure Summit, 8/7-8/8, in CO

·     TD Cowen Hot Wheels Bus Tour, 8/8-8/10, in New Jersey

·     China July CPI, PPI data

 

 

Macro	Up/Down	Last
Nymex	-1.19	80.75
Brent	-1.43	83.91
Gold	-2.20	1,966.70
EUR/USD	-0.0046	1.0958
JPY/USD	0.75	143.25
10-Year Note	-0.078	4.00%

 

 

World News

·     China’s trade data for July was overall weak. While the trade surplus widened more than expected to $80.60B (prev. $70.62B, est. $70.0B), due to a large -12.4% decline in imports (-5.6% expected) and -14.5% fall in exports. China’s crude imports in July slipped to the lowest since January as the nation’s lackluster economic recovery weighs on energy demand.

·     The British Retail Consortium (BRC) said like-for-like retail sales increased by 1.8% in July, its slowest growth since last October and half the 12-month average of 3.6%.

·     Japan’s current account rose to 2,345.9bn yen in June from 1,702.7bn yen the previous month; exports rose a solid 7.1% MoM, while imports lifted 1.1% MoM.

 

Sector News Breakdown

Consumer

·     ACV Auctions (ACVA) Q2 EPS loss (-$0.10) vs. est. loss (-$0.14); Q2 revs $124M vs. est. $119.85M; sees FY23 revs $474M-$482M or up 12%-14% y/y; year GAAP net income (loss) of ($79M)-($83M) and adjusted EBITDA of ($23M)-($27M).

·     Beyond Meat (BYND) Q2 revs $102.1M vs. est. $108.4M; Q2 adj Ebitda (-$40.8M) vs. est. (-$42M); says unlikely to meet cash flow positive target in timeframe; forecast FY23 revs between $360M-$380M, below prior view $375M-$415M.

·     CarGurus, Inc. (CARG) said it will issue a press release reporting financial results for the second quarter ended June 30th, 2023, after the close of the market on August 9th, 2023. August 3rd said postponed its second quarter results.

·     Chegg Inc. (CHGG) shares jump +25%; Q2 adj EPS $0.28 vs est. $0.29 on revs $182.9Mm vs est. $176.51Mm, adj EBITDA $59.8Mm vs est. $54.01Mm; guides Q3 revs $151-153Mm vs est. $152.37Mm, gr mgn 68-69%, adj EBITDA $34-36Mm vs est. $37.77Mm

·     International Flavors (IFF) Q2 adj EPS $0.86 vs est. $1.10 on sales $2.93B vs est. $3.07B, adj EBITDA $510Mm vs est. $559.78Mm; guides FY revs $11.3-11.6B from prior view $12.3B and vs est. $12.154B, adj EBITDA $1.85-2.0B vs est. $2.274B.

·     Jeld-Wen (JELD) Q2 adj EPS $0.44 vs. est. $0.33; Q2 revs $1.13B vs. est. $1.1B; raises FY23 revenue view to $4.2B-$4.4B from $4B-$4.4B and boosts FY23 adjusted cont ops EBITDA view to $350M-$370M from $330M-$370M.

·     Lucid Group (LCID) Q2 EPS ($0.40) vs est. ($0.33) on revs $150.9Mm vs est. $175Mm, customer deliveries of 1,404 vehicles in qtr; says Lucid Gravity unveiling in November, start of production on track for late 2024.

·     Beacon Roofing Supply (BECN) said it offers 5m shares of stock.

 

Energy

·     Coterra Energy (CTRA) Q2 adj EPS $0.39 vs est. $0.34 on revs $1.19B vs est. $1.272B; sees FY production volumes 630-655 Mboepd, oil production 91-94 Mboepd, Nat gas production 2750-2900 MMcfpd; FCF approx $1.2B.

·     ONEOK (OKE) Q2 EPS $1.04 beats consensus $1.02; announces 13% Increase in Second Quarter 2023 Net Income and 10% Increase in Adjusted EBITDA; 26% increase in Gulf Coast/Permian region NGL raw feed throughput volumes; 14% increase in Rocky Mountain region NGL raw feed throughput volumes; 17% increase in natural gas volumes processed; raises FY23 guidance.

 

Financials

·     Moody’s downgraded the credit ratings on 10 small and mid-sized banks and placed some of the large US banks on review for downgrades (including STT, BK, NTRS). Higher funding costs, potential regulatory capital weaknesses and rising risks tied to commercial real estate loans amid weakening demand for office space are among the strains prompting the review.

 

Healthcare

·     Eli Lilly (LLY) Q2 revenue $8.31B vs. est. $7.58B; Q2 adj EPS $2.11 vs. est. $1.98; 2023 revenue guidance increased by $2.2B to range of $33.4 to $33.9B; financial results in Q2 were led by Mounjaro sales and a strong performance from growth products; 2023 research and development expenses guidance increased by $600M to range of $8.9 to $9.1B.

·     Novo Nordisk (NVO) shares rose 10% after the company said its obesity treatment semaglutide, marketed as Wegovy, met its main goal in a trial evaluating its ability to reduce cardiovascular events and not just help with weight loss. Eli Lilly (LLY) shares rose in reaction as it is also testing its drug, Mounjaro, originally approved as a diabetes treatment, in obese or overweight patients who don’t have type 2 diabetes.

·     Arcturus Therapeutics (ARCT) Q2 EPS ($1.98) on revs $9.565Mm vs est. $48.5Mm; says cash runway remains extended through beginning of 2026.

·     Arrowhead Pharmaceuticals (ARWR) Q3 EPS ($0.96) vs est. ($0.65) on revs $15.825Mm vs est. $49.19Mm.

·     DocGo (DCGO) Q2 EPS loss (-$0.02) vs. est. $0.03; Q2 revs $125.5M vs. est. $119.8M; strong demand they are seeing across the board is driving increase in full year revenue and adjusted EBITDA guidance to $540-$550 million and $48-$53 million, respectively.

·     Hims & Hers Health (HIMS) Q2 EPS loss (-$0.03) vs. est. loss (-$0.05); Q2 revs $207.9M vs. est. $205.0M; guides Q3 revs above views and raises FY23 revenue view to $830M-$850M from $810M-$830M (est. $830.8M); Q2 Subscribers grew to 1.3 million from 748,000 at the end of the quarter; monthly online revenue per average subscriber grew to $53 from $51.

·     ICU Medical (ICUI) Q2 adj EPS $1.88 vs est. $1.60 on revs $549.3Mm vs est. $568.53Mm, adj EBITDA $98.1Mm vs est. $97.4Mm; guides FY adj EBITDA $375-405Mm vs est. $408.38Mm and adj EPS $6.00-6.85 vs est. $7.08.

·     Sabra Health Care (SBRA) Q2 FFO $0.33 vs. est. $0.34; Q2 revs $161.2M vs. est. $158.4M; says generated $18 million of gross proceeds from the disposition of four skilled nursing facilities.

·     Shockwave Medical (SWAV) Q2 EPS $0.79 vs est. $0.86 on revs $180.165Mm vs est. $173.8Mm; guides FY revs $725-730Mm vs prior $700-725Mm and est. $716.1Mm.

 

Industrials & Materials

·     UPS (UPS) shares fall -5% after reports Q2 adj EPS $2.54 vs. est. $2.50 on weaker revs $22.1B, below consensus $23.1B; cuts FY23 revenue view to about $93B from about $97B and well below consensus $96.77B; updates operating margins lower to 11.8% from 12.8% prior as well primarily to reflect the volume impact from labor negotiations and the costs associated with the tentative agreement reached with the International Brotherhood of Teamsters on July 25, 2023.

·     AECOM (ACM) Q3 adj EPS $0.94 vs est. $0.94 on revs $3.66B vs est. $3.484B, adj EBITDA $247Mm vs est. $244.91Mm; guides FY adj EBITDA $950-970Mm vs est. $959.93Mm and adj EPS $3.63-3.73 vs est. $3.68.

·     Cabot Corp. (CBT) Q3 adj EPS $1.42 vs. est. $1.55; said anticipate pricing pressures in EV value chain in China will impact battery materials results in near-term; says expects FY23 results to be below previously communicated forecast range; Q3 sales $968M vs. est. $1.09B; sees Q4 adj EPS $1.40-$1.55 vs. est. $1.73.

·     Celanese (CE) Q2 adj EPS $2.17 vs. est. $2.48; Q2 revs $2.8B below consensus $2.96B; Generated second quarter operating cash flow of $762M and free cash flow of $611M, all-time records by $132M and $91M respectively; and reduced net debt by $515M.

·     Electric vehicle company Proterra (PTRA) shares fall over -60% after saying it voluntarily filed for chapter 11 bankruptcy in Delaware on Monday to strengthen its financial position “through a recapitalization or going-concern sale.”

 

Technology, Media & Telecom

·     Alteryx Inc. (AYX) Q2 adj EPS ($0.37) vs est. ($0.67) on revs $188Mm vs est. $182Mm, adj gr mgn 87%; guides Q3 revs $208-212Mm vs est. $233Mm, ARR $901-905Mm, adj EPS ($0.08)-($0.04) vs est. $0.09; sees FY revs $930-940Mm vs est. $983.92Mm, adj EPS $0.62-0.72 vs est. $0.68.

·     Five9 Inc. (FIVN) shares slip after Q3 rev guidance light despite beats; Q2 adj EPS $0.52 vs. est. $0.39; Q2 revs rose 18% y/y to $222.9M vs. est. $214.21M; said LTM subscription revenue grew 28% y/y and achieved another record for GAAP operating cash flow, as adjusted EBITDA margin reached 19%; raises FY23 EPS view to $1.79-$1.83 from $1.73-$1.77, and ups FY23 revenue view to $908M-$910M from $906M-$909M.

·     Maravai Lifesciences (MRVI) Q2 EPS ($0.05) vs est. $0.01 on revs $68.9Mm vs est. $71.1Mm, adj EBITDA mgn 13.2%; guides FY revs $300-325Mm vs est. $403.92Mm, adj EBITDA $70-80Mm vs est. $150.4Mm, adj EPS $0.04-0.08 vs est. $0.29.

·     Paramount (PARA) Q2 revs $7.62B tops $7.43B estimate, driven by growth in its flagship streaming platform “Paramount+” and a rebound in its advertising business; announces KKR to buy Simon & Schuster from paramount global for $1.62B (confirms prior reports); Q2 DTC advertising revenue rose 21%, driven by higher impressions for paramount+ and Pluto TV; Paramount+ grew revenue 47% and reached about 61m subscribers in qtr.

·     Palantir (PLTR) Q2 adj EPS $0.05 vs est. $0.05 on revs $533.3Mm vs est. $532.71Mm, adj EBITDA $143.4Mm vs est. $131Mm; guides Q3 revs $553-557Mm vs est. $552.09Mm, adj op Inc $135-139Mm, GAAP net income; sees FY revs more than $2.212B vs est. $2.209B, adj op Inc in excess of $576Mm, GAAP net income in each qtr; authorizes $1B stock repurchase program.

·     RingCentral Inc. (RNG) Q2 EPS $0.83 vs. est. $0.75 and revs $539M vs. est. $536.2M; guides Q3 EPS below consensus (75c-78c vs. est. 82c) but reaffirms year EPS and revenue view; Q2 Subscriptions revenue increased 11% y/y to $514 million.

·     Skyworks Solutions (SWKS) Q3 adj EPS $1.73 vs est. $1.70 on revs $1.071B vs est. $1.07B; guides Q4 adj EPS $2.10 vs est. $2.11 on revs $1.19-1.24B vs est. $1.224B.

·     Teradata Corp. (TDC) Q2 adj EPS $0.48 vs. est. $0.45; Q2 revenue $462M vs. est. $446.26M; said broad-based momentum across the business generated strong financial results, including 77% Cloud ARR growth, 10% increase in Total ARR growth and EPS that exceeded our guidance.