Morning Preview: December 03, 2020

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Early Look

Thursday, December 3, 2020





DJ Industrials




S&P 500










U.S. stock futures are looking at a flat to mixed open as the global stock market rally takes a pause following a tremendous run, while the U.S. dollar appears on track for a 7th consecutive daily decline, falling to fresh 2 1/2year lows. Oil prices dip after advancing yesterday as reports indicate OPEC+ appears to be leaning towards oil cuts rollover, with a modest boost to their collective oil output, by as much as 500,000 barrels a day, starting next month. In Asian markets, The Nikkei Index inched up 8 points to 26,809, the Shanghai Index slid -7 points to 3,442 and the Hang Seng Index rose 195 points to 26,728. In Europe, the German DAX is down about -50 to 13,265, while the FTSE 100 is little changed at 6,465. A handful of software companies reported earnings and guidance last night, with CrowdStrike, Okta and Zscaler all rising on results while Splunk and Snowflake drop on results. Markets remain hopeful of a compromise in Washington related to additional stimulus efforts as a bipartisan group of lawmakers from the House and Senate has offered a $908B compromise package (a far cry from the $1.8T-$2.2T package bantered about a few weeks ago) – but remains at a starting point.


It was another record high for the S&P 500 index on Tuesday, rallying back from early losses though major averages only settled modestly higher. U.S. stocks are flashing extreme bullish outlooks with the latest Investors Intelligence survey for the week ended Dec. 1 shows a persistently high percentage of bulls, ticking up to 64.7% from 64.6% the week before while bears dropped by 50 basis point to 16.7%, the lowest since September 2018. The CNN Fear & Greed index hit 93 intraday on Monday (out of 100) which compares to a 25 extreme fear a month ago (prior to positive vaccine data and right before the Presidential election). Still, there has been no fear evident in markets with major averages surging the last few days as Democrats said the $900B bipartisan COVID relief proposal is a good starting point as markets look for more upbeat news to help the economy.


Market Closing Prices Yesterday

·     The S&P 500 Index gained 6.56 points, or 0.18%, to 3,669.01

·     The Dow Jones Industrial Average rose 59.87 points, or 0.20%, to 29,883.79

·     The Nasdaq Composite slipped -5.74 points, or 0.05%, to 12,349.37

·     The Russell 2000 Index advanced 1.98 points, or 0.11% to 1,838.03


Economic Calendar for Today

·     7:30 AM EST      Challenger Layoffs for November

·     8:30 AM EST      Weekly Jobless Claims…est. 775K

·     8:30 AM EST      Continuing Claims…est. 5.915M

·     9:45 AM EST      Markit Composite PMI Nov-F…est.

·     9:45 AM EST      Markit Services PMI Nov-F

·     10:00 AM EST    ISM Non-Manufacturing for Nov…est. 56.0

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


Earnings Calendar:

·     Earnings Before the Open: AZEK, BBW, CBRL, DCI, DG, DLTH, EXPR, GMS, KIRK, KR, LE, MEI, MIK, SIG



Other Key Events:

·     Cowen Energy Conference (virtual), 12/3-12/4

·     Credit Suisse 24th Annual Technology Conference (virtual), 11/30-12/3

·     Credit Suisse Industrials Conference (virtual), 12/2-12/4

·     Piper 32nd Annual Healthcare Conference (virtual), 11/30-12/3






WTI Crude















10-Year Note





Sector News Breakdown


·     Costco (COST) reported net sales of $15.67 billion for the retail month of November, the four weeks ended November 29, 2020, an increase of 15.1 percent from $13.62 billion last year; for the twelve-week first quarter ended November 22, 2020, the Company reported net sales of $42.35 billion, an increase of 16.9 percent from $36.24 billion last year; Nov. total comp sales +13.4%, vs. est. +13.8%

·     Five Below (FIVE) Q3 EPS 36c on revs $476.61M vs. est. 20c and $446.01M; Q3 comparable sales increased by 12.8% vs. est. 5.3%; opened 36 new stores and ended the quarter with 1,018 stores in 38 states and expects to open 120 net new stores in 2020

·     Guess Inc. (GES) Q3 adjusted EPS 58c on revs $569M vs. est. 5c and $515.58M; ended the qtr with $365 m in cash and cash equivalents; not providing detailed guidance for the 4q or the full fiscal; expect Q4 revs to be down in the low to mid-twenties citing lower customer traffic in stores related to pandemic and temporary government-mandated store closures

·     PVH Corp. (PVH) Q3 EPS $1.32 vs. est. 24c and Q3 revenue $2.12B vs. est. $2.00B; company’s revenue through digital channels grew 36%, with sales through its directly operated digital commerce businesses up 70% compared to the prior year period;

·     Sportsman’s Warehouse (SPWH) Q3 adj. EPS 71c on revs $385.75M above the consensus of 47c and $327.83M; Q3 same store sales increased 40.9%; sees Q4 EPS 39c-45c on revs $356M-$386M above est. 26c and $299.91M and sees Q4 same store sales growth 32%-42%

·     Tesla (TSLA) upgraded to Buy from Neutral at Goldman Sachs with a price target of $780, up from $455 on better long-term sales outlook and margin expansion


Energy, Industrials and Materials

·     OPEC+ appears to be leaning towards oil cuts rollover, with a modest boost to their collective oil output, by as much as 500,000 barrels a day, starting next month, according to reports – earlier in the week was talks of delaying a January production hike by three months, but that option ran into obstacles due to a clash between Saudi Arabia and the UAE.

·     FMC Corporation (FMC) raises dividend by 9% to 48c per share

·     Golar LNG (GLNG) announces offering of 11M common shares

·     XPO Logistics (XPO) announces plan to spin off logistics segment to its shareholders

·     Array Technologies (ARRY) 31.875M share Secondary priced at $35.00



·     Waddell & Reed Financial (WDR) agrees to be acquired by Macquarie Group for $25 per share, in a $1.7B deal, a ~48% premium to the stock’s closing price on Dec. 1. Macquarie also will sell Waddell & Reed’s wealth management platform to LPL Financial (LPLA) for $300M and enter into a long-term partnership with Macquarie

·     Dyal Capital Partners is in talks to merge with Owl Rock Capital Partners LP (ORCC), part of a complicated deal with a special-purpose acquisition company that would value the fast-growing asset managers at about $13 billion – WSJ reports

·     MarketAxess Holdings (MKTX) reported trading volume of $503.8B for November vs. $460.5B year ago; trading volume consisted of $219.2B in credit volume and $284.7B in rates volume.

·     Capstead Mortgage (CMO) files $300M mixed securities shelf

·     Shift4 Payments (FOUR) 8M share Secondary priced at $55.50

·     XP Inc. (XP) 31.654M share secondary priced at $39.00



·     Eli Lilly (LLY) announces 650,000 additional doses of neutralizing antibody bamlanivimab (ly-cov555) purchased by U.S. government to treat covid-19; purchase agreement is for $812.5 mln and doses will be delivered through January 31, 2021

·     Omeros (OMER) rises after a rule from the Centers for Medicare & Medicaid Services showed the company’s Omidria qualifies as a non-opioid pain management drug that functions as a surgical supply.

·     Codexis (CDXS) 4.289M share Spot Secondary priced at $17.50

·     Kinnate Biopharma (KNTE) 12M share IPO priced at $20.00

·     Oak Street Health (OSH) 5.63M share Secondary priced at $46.00

·     Outset Medical (OM) 4M share Secondary priced at $53.00

·     Progenity (PROG) 7.645M share Secondary priced at $3.60

·     Twist Bioscience (TWST) 2.8M share Secondary priced at $110.00


Technology, Media & Telecom

·     Crowdstrike (CRWD) shares rise 13%; Q3 EPS 8c on revs $232.5M vs. est. 0c and $212.6M; said Q3 Annual Recurring Revenue (ARR) increased 81% YoY and grew to $907.4M as of October 31, 2020, of which $116.8 million was net new ARR added in the quarter; guides FY21 EPS 21c-22c above the 6c estimate and revs $855M-$860M vs. est. $819.96M

·     Elastic NV (ESTC) Q2 adjusted EPS loss (3c) vs. est. loss (20c); Q2 revenue $144.9M vs. est. $130.5M; sees Q3 adjusted EPS loss (16c)-(14c) on revs $145M-$147M above the consensus loss (28c) and $139.76M; Q2 SaaS revenue was $37.4 million, an increase of 81% YoY, or 79% on a constant currency basis; Q2 calculated billings was $177.7 million, an increase of 42% YoY, or 39% on a constant currency basis; Q2 deferred revenue was $309.2 million, an increase of 54% YoY

·     Okta Inc. (OKTA) Q3 adjusted EPS 4c vs. est. loss (1c) and revs $217.4M vs. est. $202.7M; OKTA and Amazon Web Services bring the Okta Identity Cloud to AWS Marketplace; boosts FY21 EPS view to 4c-5c from (3c)-(1c) and revs to $822M-$823M from $800M-$803M (est. $803.32M); Remaining performance obligations (RPO), or subscription revenue backlog, grew 53% year-over-year and record quarterly operating and free cash flows

·     Semtech (SMTC) Q3 EPS 47c on revs $154.1M vs. est. 46c and $149.83M; sees Q4 EPS 45c-51c on revs $153M-$163M vs. est. 45c and $149.92M; sees Q4 gross margin 61%-62%, SG&A expense of $31M-$32M, and effective tax rate of 15%-17%

·     Snowflake (SNOW) Q3 EPS loss ($1.01) vs. est. loss (26c) and revenue $159.6M vs. est. $147.52M; Q3 product revenue of $148.5M, representing 115% year-over-year growth; 3,554 total customers; said net revenue retention rate of 162%; 65 customers with trailing 12-month product revenue greater than $1 million

·     Splunk (SPLK) shares tumble -20%; Q3 adj EPS (7c) vs. est. 9c and revs of $559M miss the $613.03M estimate; sees Q4 revenue $650M-$700M below consensus $777.73M and sees Q4 adjusted operating margin (4%)-3%; Q3 Cloud ARR was $630 million, up 71% YoY, total ARR was $2.07 billion, up 44% YoY and cloud revenue was $145M, up 80% YoY

·     Synopsys (SNPS) Q4 adjusted EPS $1.58 on revs $1.025B vs. est. $1.57 and $1.03B; sees FY21 adjusted EPS $6.23-$6.30 vs. est. $6.16 and sees FY21 revenue $4B-$4.05B vs. est. $3.98B; says entering FY21 with ‘considerable customer momentum

·     Zscaler (ZS) shares rise 11%; Q1 EPS 14c vs. est. 6c and revs $142.6M vs. est. $132.31M; sees Q2 EPS 7c-8c vs. est. 7c and revs $146M-$148M vs. est. $140.28M; Q1 Calculated billings grows 64% year-over-year to $144.7 million; Q1 Deferred revenue grows 51% year-over-year to $371.9 million

·     Dada Nexus (DADA) 9M share Spot Secondary priced at $50.00

·     Docebo (DCBO) 3M share IPO priced at $48.00

·     Nexstar Broadcast Group Inc. (NXST) programming went dark for more than five million Dish Network Corp. (DISH) pay-TV customers Wednesday evening after the two companies couldn’t come to terms on a new distribution agreement. he dispute revolves around how much Dish is willing to pay Nexstar for the right to show its channels on its pay-TV packages


Market commentary provided by Catena Media Financials US, LLC, 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.

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