Early Look

Wednesday, February 2, 2022

Futures	Up/Down	%	Last
Dow	49.00	0.14%	35,323
S&P 500	34.25	0.75%	4,569
Nasdaq	218.50	1.46%	15,213

 

 

Stocks rise overnight on this Groundhog’s Day (also 2/2/22) – will it be a repeat of the last three days, where major averages closed at their highs each day on strong upside momentum after good earnings and investors buying the dip after a dreadful January? Or will the rally stall after a more than 8-10% volatile move the last few days. Yesterday snapped an 8-day streak where the S&P moved in 100-point range (but still ended up 0.7% alongside 1% gains in the Russell 2000 and 2% gain in Dow Transports). Overnight futures jump +0.7% for the S&P and more than 1.4% for the Nasdaq, led by massive 10% gains for both AMD and GOOGL after solid earnings results (GOOGL also announced a 20-1 stock split). In Asian markets, The Nikkei Index jumped 455 points or 1.68% to 27,533, the Shanghai Index remained closed for its week-long Lunar holiday, the Hang Seng Index also remained closed. In Europe, the German DAX is up 0.25% to 15,660, while the FTSE 100 is up about +0.8% to 7,595.

 

Stocks rose for a third day Tuesday, as markets continue to recover after a wild January that saw stocks tumble on rising interest rate concerns. Even with those concerns firmly in place, investors have scooped up beaten up growth stocks the last 3-days, pushing major averages back above key technical levels, helped by a handful of upbeat earnings reports that last few days, especially in tech (Apple late last week and both AMD, GOOGL last night). Energy remains a market leader with oil prices holding near 7-year highs, which helped boost strong quarterly earnings from Exxon Mobil yesterday (posted $23B in profit for 2021, its highest total since 2014) while UPS shares spike 14% after lifting its dividend and reporting strong gains in revenue and profits. Weaker economic data failed to dent optimism on Tuesday, despite a higher inflation reading and two softer manufacturing reports.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 30.99 points, or 0.69%, to 4,546.54

·     The Dow Jones Industrial Average rose 273.38 points, or 0.78%, to 35,405.24

·     The Nasdaq Composite jumped 106.12 points, or 0.75%, to 14,346.00

·     The Russell 2000 Index advanced 22.29 points, or 1.10% to 2,050.74

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:30 AM ET         ADP Employment Index for January…est. 207K

·     10:30 AM ET       Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABBV, ABC, ARWR, ATI, AVY, CHRW, CRS, DHI, DT, EAT, EMR, EVR, HUM, HWM, IDXX, IEX, JCI, MHO, MMP, MPC, MPLX, NYT, ODFL, PATI, ROP, SAIA, SBH, SLAB, SPR, SR, TMO, TWIN, WM, WNC,

·     Earnings After the Close: ADTN, ALGN, ALGT, ALL, AVB, AVNW, BDN, BSX, CCMP, CCS, CENT, CHNG, CTSH, CTVA, DGII, DXC, EGHT, EHC, ELF, ESS, FB, FBHS, FORM, GHL, GL, GLAD, HI, HOLX, LNC, MAA, MCK, MET, MKL, MOD, MTG, MUSA, MXL, NEU, NTGR, OHI, OMF, QCOM, QRVO, RRR, RYN, SKY, TBI, THG, TMUS, TTEK, UGI, YELL, VSTO

 

 

Macro	Up/Down	Last
Nymex	-0.25	87.95
Brent	-0.40	88.76
Gold	1.80	1,803.40
EUR/USD	0.0043	1.1315
JPY/USD	-0.35	114.36
10-Year Note	-0.007	1.793%

 

 

World News

·     U.S. National Debt moves above $30 trillion for the first time; note the increase over the last 2 years was $7 trillion alone

·      

 

Sector News Breakdown

Consumer

·     General Motors (GM) 4Q adj EPS $1.35 vs est. $1.19, qtrly adj EBIT $2.8B vs est. $2.46B; guides FY adj EPS $6.25-7.25 vs est. $6.92, sees FY adj EBIT $13-15B vs est. $13.63B; CEO says company’s spending on EV rollout will increase through 2025 beyond current plans

·     Starbucks (SBUX) slips -4%; Q1 adj EPS $0.72 vs est. $0.80 on revenue $8.1B vs est. $7.95B, global comp store sales +13% vs est. +13.2%; now more than 5,500 stores in China with 34,317 stores globally; said Q1 comp sales in China fell -14%; experienced higher-than-expected inflationary pressures, increased costs due to omicron and a tight labor market; cuts FY22 adjusted EPS growth view to 8%-10% from at least 10%

·     D.R. Horton (DHI) Q1 EPS $3.17 vs. est. $2.79; Q1 revs $7.1B vs. est. $6.71B; pre-tax income increased 45% to $1.5B; consolidated pre-tax profit margin improved 380 bps to 21.2%; net sales orders increased 29% in value to $8.3 billion on 21,522 homes sold

·     Colgate (CL) upgraded to Market Perform from Underperform at Bernstein, while the firm downgraded Kimberly-Clark (KMB) to Underperform from Market Perform with $126 target and Clorox (CLX) to Underperform as well

 

Energy

·     The American Petroleum Institute (API) reported crude inventories fell 1.7M barrels in latest week, while crude inventories at Cushing fell -1.0M barrels; gasoline inventories with a build of 5.8M barrels and distillate inventories fell -2.5M barrels

·     Marathon Petroleum (MPC) Q4 adj EPS $1.30 vs. est. $0.55; Q4 revs $35.61B vs. est. $24.33B; Q4 adjustments exclude $132M of pre-tax charges; 2022 MPC standalone capital spending outlook of $1.7 billion; approximately 50% of growth capital for Martinez refinery conversion

 

Financials

·     PayPal (PYPL) shares slide over 9%; Q4 EPS $0.68 vs. est. $1.12; Q4 revs rose 13% YoY to $6.9B vs. est. $6.86B; processed $340B in payments in qtr, up 23%; says added 9.8M net new active accounts in qtr; said Q4 Venmo total payment volume up 29% to $61B; sees annual total payment up 19%-20% on a spot basis; issues lower Q1 guidance of about $0.87 vs. est. $1.16

·     Artisan Partners (APAM) Q4 adj EPS $1.29 vs. est. $1.27; Q4 revs $315M, in-line w ests and reports Q4 ending AUM $174.8B compared to $173.6B end of September; declares $0.72 per share special dividend

·     Equity Residential (EQR) Q4 FFO $0.76 vs. est. $0.80; sees Q1 adj FFO $0.78 vs. est. $0.79; sees year FFO $3.45 vs. est. $3.35; SSNOI range for the year guided to +11% to +13%

·     Chubb (CB) Q4 core operating EPS $3.81 vs. est. $3.30; Q4 net premiums written rose 8.8% to $9.15B and net premiums earned rise 11% YoY to $9.32B; Q4 book value per share $139.99 vs. $131.88 y/y and property & casualty combined ratio 85.5% vs. 87.6% y/y

·     Genworth (GNW) Q4 adj EPS $0.32 vs. est. $0.32; Q4 revs $1.73B vs. est. $2.01B; book value per share was $30.57

·     H&R Block (HRB) Q2 EPS loss (-$1.02) vs. est. loss (-$1.24); Q4 revs rose 12% to $159M vs. est. $152.8M; reiterates its previously given fiscal year 2022 outlook

·     Unum (UNM) 4Q adj EPS $0.89 vs est. $0.84 on revs $2.979B vs est. $2.975B; BV/share at year-end $56.37

 

Healthcare

·     AmerisourceBergen (ABC) Q1 adj EPS $2.58 vs. est. $2.57; Q1 revs $59.6B vs. est. $59.46B; boosts FY22 adjusted EPS view to $10.60-$10.90 from prior view $10.50-$10.80 (est. $10.69)

·     Becton, Dickinson (BDX) announced its board of directors has approved the planned spinoff of its diabetes care business, which will be known as Embecta Corp

·     Boston Scientific (BSX) Q4 adj EPS $0.45 vs. est. $0.44; Q4 revs $3.13B vs. est. $3.11B; qtrly estimates net sales growth for q1 of 2022, versus prior year period, to be in a range of approximately 5% to 8%; estimates net sales growth for fy22, versus prior year period, to be in range of about 6% to 8% on both reported basis and organic basis

·     Gilead Sciences (GILD) 4Q adj EPS $0.69 vs est. $1.59 on revs $7.2B vs est. $6.66B; guides FY22 total product sales $23.8-24.3B vs est. $24.4B, total product sales ex. Veklury $21.8-22.3B

·     PerkinElmer (PKI) 4Q adj EPS $2.56 vs est. $2.19 on revs $1.36B vs est. $1.26B (+1% reported, -9% organic); guides 1Q adj EPS $2.05-2.10 vs est. $1.51 and revs about $1.17-1.19B vs est. $1.06B; sees FY adj EPS $6.80-7.00 vs est. $6.60 and revs $4.42-4.5B vs est. $4.32B

·     Pfizer (PFE) and BioNTech (BNTX) initiate rolling submission for emergency use authorization of their COVID-19 vaccine in children 6 months through 4 years following request from U.S. FDA

·     Regeneron Pharmaceuticals Inc (REGN) positive Dupixent® (dupilumab) data across five diseases with underlying type 2 inflammation to be presented at 2022 American Academy of Allergy, Asthma, and Immunology Annual meeting

·     Thermo Fisher (TMO) Q4 adj EPS $6.54 vs. est. $5.27; Q4 revs $10.7B vs. est. $9.29B; Organic growth from the base business was 8%; revenue from the Covid-19 response added $2.45B

 

Industrials & Materials

·     Amcor Plc (AMCR) 1H sales increased 12% to $6.927B, adj EPS 35.8c was +9%; increased its expected FYs buybacks by $200M to $600M; reaffirms FY22 guidance for adj EPS +7-11%, adj FCF $1.1B-$1.2B

·     Ashland (ASH) 1Q EPS $0.83 vs est. $0.87 on revs $512Mm vs est. $515.8Mm; guides FY22 sales $2.25-2.35B vs est. $2.29B

·     IDEX Corp (IEX) 4Q adj EPS $1.55 vs est. $1.58 on sales $714.8Mm vs est. $708.5Mm; guides 1Q adj EPS $1.73-1.76 vs est. $1.71, sees FY adj EPS $7.33-7.63 vs est. $7.06

·     Mercury Systems (MRCY) Q2 adj EPS $0.39 vs. est. $0.42; Q2 revs $220.38M vs. est. $223.22M; Q2 bookings of $237M yielding book-to-bill of 1.08; acks FY22 EPS view $2.51-$2.60 and revs view $1B-$1.03B (est. $2.55 and $1.03B).

·     Owens Illinois (OI) 4Q adj EPS $0.36 vs est. $0.33 on revs $1.6B vs est. $1.52B; guides 1Q adj EPS $0.38-0.43 vs est. $0.37, sees FY adj EPS $1.85-2.00 vs est. $1.92; sees year capex $600M

·     Zurn Water Solutions (ZWS) Q4 adj EPS $0.22 vs. est. $0.11; Q4 revs rose 23% to $232M vs. est. $222.34M; expect Q1 Zurn total sales to increase y/y by a high teen’s percentage, Adjusted EBITDA margin, excluding corporate costs, to range between 24% and 24.5%

 

Media & Telecom

·     Match.com (MTCH) 4Q revs $806Mm vs est. $818Mm, qtrly payers +15% to 16.2Mm, qtrly RPP +8% to $16.16; guides 1Q adj op Inc $260-265Mm vs est. $231Mm, sees 1Q revs +18-20% to $790-800Mm vs est. $835.75Mm; sees FY revs +15-20% vs est. +20.9%

 

Technology

·     Alphabet (GOOGL) shares jump over 7% on beat, ad rev strength, stock split; Q4 adj EPS $30.69 vs. est. $27.35; Q4 revs $75.3B vs. est. $72.13B; Cloud revs $5.4B vs. est. $5.42B and ad revs rose 32% YoY to $61.24B; board had approved and declared a 20-for-one stock split in the form of a one-time special stock dividend; Operating income $21.89 billion, +40% YoY; YouTube had $8.6B in ad revenue in Q4 and $28.8B for the year (Google bought them several years ago for $1.65B)

·     AMD Inc. (AMD) 4Q adj EPS $0.92 vs est. $0.76 on revs $4.83B vs est. $4.53B, gross margin 50%; guides 1Q revs $4.9-5.1B vs est. $4.3B and adj gross margin about 50.5%; guides FY22 revs about $21.5B vs est. $19.3B

·     EA Inc. (EA) 3Q adj EPS $3.20 vs est. $3.22 on revs $1.79B vs est. $2.66B; guides FY22 net revs about $6.925B vs est. $7.62B, sees net bookings about $7.525B and operating cash flow about $1.9B

·     A10 Networks (ATEN) 4Q adj EPS $0.20 vs est. $0.17 on revs $70.7Mm vs est. $68.8Mm; sees 1Q and FY revs about +10-12% vs est. +10.7% and +8.24%, respectively

·     Amdocs (DOX) Q1 adj EPS $1.20 vs est. $1.18 on revenue $1.1B vs est. $1.12B;sees Q2 adj EPS $1.22-$1.28 vs est. $1.30 on revenue $1.11-B-$1.15B vs est. $1.12B, sees FY revenue tracking at the high-end of its +6-10% guidance range; also announced it was selected by Globe Telecom to accelerate 5G network expansion, partnered with Vodacom to create African Center of Excellence for next-gen customer experience in the 5G era

·     CSG Systems International (CSGS) boosts dividend by 6%; Q4 adj EPS $0.83 vs. est. $0.81; Q4 revs rose 5.6% to $275M vs. est. $250M

·     Littlefuse Inc. (LFUS) Q4 adj EPS $2.94 vs. est. $3.21; Q4 sales rose 38% to $553.1M vs. est. $524.6M; guides Q1 adj EPS $3.14-$3.30 vs. est. $3.21 and revs $563M-$577M vs. est. $559.2M

·     Manhattan Associates, Inc. (MANH) Q4 adj EPS $0.48 vs. est. $0.38; Q4 revs $171.5M vs. est. $162.84; guides FY22 adj EPS $1.98-$2.10 vs. est. $2.02; sees FY22 revs $700M-$715M vs. est. $708.05M

·     MicroStrategy (MSTR) Q4 EPS ($8.43) on revenue $134.5M vs est. $133.2M; added over 10,300 bitcoins in the qtr to become the world’s largest publicly traded corporate owner of Bitcoin with over 125,000 bitcoins; as of Dec. 31, the original cost basis of its Bitcoin was ~$30,159

·     Netflix (NFLX) is expanding its gaming lineup once again with the launch of two more titles, which will begin to roll out globally starting today at 5 PM ET. Among the new addition is Riot Games’ “Hextech Mayhem,” and “Dungeon Dwarves” – TechCrunch reported

·     Super Micro (SMCI) 2Q adj EPS $0.88 vs est. $0.78 on sales $1.17B vs est. $1.15B; guides 3Q adj EPS $0.70-0.90 vs est. $0.75 and sales $1.1-1.2B vs est. $1.07B

·     Tenable Holdings (TENB) Q4 adj EPS 5c vs est. 3c on revenue $149M vs est. $144.5M; sees Q1 adj EPS 4c-5c vs est. 6c on revenue $152M-$154M vs est. $148M, FY adj EPS 15c-19c vs est. 35c on revenue $66M-$670M vs est. $639.7M; agreed to acquire Cymptom, a leader in attack path management, for an undisclosed sum