Early Look

Thursday, February 3, 2022

Futures	Up/Down	%	Last
Dow	-125.00	0.35%	35,367
S&P 500	-51.25	1.13%	4,525
Nasdaq	-326.50	2.16%	14,787

 

 

A much different picture for futures overnight, with broad declines across the board compared to the recent four-day winning streak seen for major averages. The technology heavy Nasdaq feeling the brunt of the selling pressure, down over 2% amid a decimation of the social media sector following weak earnings and revenue growth from Meta (FB), crushing shares of TWTR, PINS, SNAP, and other Internet names. The move in tech comes ahead of another market behemoth in the form of Amazon (AMZN) earnings tonight after the close. The S&P 500 closed just shy of its highs for a 4^th day, up 0.94% to 4,587 after topping its 100-day MA resistance earlier in the day (was 4,570), with its 50-day MA next at 4,627, as it has been a straight ride up last 4 days after bouncing above its 200-day Monday of 4,440. In Asian markets, The Nikkei Index declined over 1% to 27,241, the Shanghai Index remains closed for its week-long Lunar holiday and the Hang Seng Index also remained closed. In Europe, the German DAX is down -0.4% to 15,550, while the FTSE 100 is little changed at 7,580. In addition, the continued earnings barrage today (MRK, LLY, CI, HON, RDA, NOK), the European Central bank policy meeting is later today, with expectations to remain on hold for interest rates, but likely warns of inflationary pressures.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 42.77 points, or 0.94%, to 4,589.31

·     The Dow Jones Industrial Average rose 223.76 points, or 0.63%, to 35,629.00

·     The Nasdaq Composite climbed 71.54 points, or 0.50%, to 14,417.55

·     The Russell 2000 Index declined -21.22 points, or 1.03% to 2,029.52

 

Events Calendar for Today

·     8:30 AM ET         Weekly Jobless Claims…est. 245K

·     8:30 AM EST       Continuing Claims…est. 1.62M

·     8:30 AM ET         Non-farm Productivity, for Q4…est. 3.2%

·     8:30 AM ET         Unit Labor Costs. For Q4…est. 1.5%

·     9:45 AM ET         Markit Composite PMI, Jan-F

·     9:45 AM ET         Markit Services PMI, Jan-F

·     10:00 AM ET       Factory Orders for December…est. (-0.2%)

·     10:00 AM ET       ISM Non-Manufacturing Index, for January

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

 

Earnings Calendar:

·     Earnings Before the Open: ABMD, ALCO, AME, ARW, AZEK, BDX, BERY, BIIB, BSIG, BV, CAH, CG, CI, CMI, CMS, COP, CSII, CSWI, DGX, DLX, DX, EL, FTV, GWW, HAIN, HBI, HON, HSY, HUBB, ICE, ITW, LANC, LAZ, LEE, LITE, LLY, LPG, MCFT, MMS, MPW, MRK, MTOR, NJR, NS, ONEW, PBH, PENN, PH, RGS, RL, SNA, SNDR, SRDX, TKR, TW, ULBI, VSAT, WD, WEC, WMS, WRK, XYL

·     Earnings After the Close: AINV, AMZN, ATEX, ATVI, AVTR, BECN, BILL, BRBR, BYD, CDK, CLX, COLM, CPT, CUZ, DECK, DLB, EGAN, ENVA, EXPO, F, FARM, FTNT, GPRO, GTIM, HIG, LCI, LESL, LGF/A, LPLA, MCHP, MIME, MTX, MWA, NFG, NGVC, NLOK, NOV, NWSA, PCTY, PINS, POST, POWI, PRU, RGA, SIGI, SKX, SKYW, SNAP, SWKS, SYNA, U, USAK, UTI, VIAV, WERN, WWE

 

 

Macro	Up/Down	Last
Nymex	-1.33	86.92
Brent	-1.27	88.20
Gold	-5.90	1,804.40
EUR/USD	-0.0027	1.1276
JPY/USD	0.38	114.82
10-Year Note	+0.011	1.777%

 

 

Sector News Breakdown

Consumer

·     Costco Wholesale Corp (COST) reported net sales of $15.76 bln for retail month of January, an increase of 15.5% from $13.64 bln last year

·     Allegiant Travel (ALGT) Q4 adj EPS $1.18 vs est. $1.17 on revenue $496.9M vs est. $482.3M; finished the year with an adj profit; says forward bookings are strong for upcoming peak leisure travel periods with spring break bookings particularly strong; the booking curve has normalized to its pre-COVID state over the past few months and are beginning to see positive demand trends into early summer; Jan. 2021 was its best-ever month for new cardholder acquisitions; sees Q1 revenue +5-9.5% vs 1Q19

·     Century Communities (CCS) Q4 adj EPS $4.78 vs. est. $4.07; Q4 revs $1.21B vs. est. $1.18B; Q4 net new home contracts increased to record of 2,700 contracts; Q4 homes in backlog improved 35% to a record 4,651 homes valued at $1.9B; sees FY22 revs $4.3B-$4.9B vs. est. $4.79B

·     e.l.f. Beauty, Inc. (ELF) Q3 adj EPS $0.24 vs. est. $0.15; Q3 revs $98.1M vs. est. $95.05M; FY22 boosts FY adj EPS view to $0.73-$0.76 from $0.65-$0.68 9est. $0.70) and raises FY22 revenue $372M-$379M from $364M-$370M (est. $372.78M)

·     Fortune Brands (FBHS) 4Q adj EPS $1.32 vs est. $1.29 on sales $2.0B vs est. $1.9B; guides FY22 adj EPS $6.35-6.55 vs est. $6.31, sales +5.5-7.5% vs est. +5.7% and FCF about $615-700Mm

·     Modine Manufacturing (MOD) 3Q adj EPS $0.31 vs est. $0.23 on sales $502.2Mm vs est. $489.1Mm; guides FY sales +10-16% vs est. +10.3% with adj EBITDA $145-160Mm vs est. $146Mm

·     Red Rock Resorts (RRR) Q4 EPS $1.66 vs est. $0.68 on revenue $422.4M vs est. $409M

·     Skyline Champion (SKY) Q3 EPS $1.18 vs. est. $0.74; Q3 revs rose 41.6% to $534.7M vs. est. $499.2M; said near-term operating environment remains challenging due to ongoing disruptions in supply chain and covid-related labor headwinds

·     TrueBlue, Inc. (TBI) 4Q adj EPS $0.69 vs est. $0.43 on revs $622Mm vs est. $584Mm

 

Energy

·     An oil production vessel exploded off the coast of Nigeria early on Wednesday with 10 crew members on board though it was not yet clear if there were any casualties or how much crude might have spilled into the sea. The Trinity Spirit can process up to 22,000 barrels of oil a day and can store up to 2 million barrels at any one time – Reuters

·     Core Laboratories (CLB) Q4 adj EPS $0.20 vs. est. $0.18; Q4 revs $125.1M vs. est. $108.2M; sees Q1 EPS $0.16-$0.20 vs. est. $0.17; sees Q1 revenue $117M-$122M vs. est. $109.53M.

·     Murphy USA (MUSA) Q4 EPS $4.23 vs. est. $3.20; Q4 revs $4.76B vs. est. $4.56B; opened 12 new-to-industry retail locations while closing 2 stores in q4 2021, bringing network total to 1,679; Food and beverage contribution margin increased significantly to 15.2% of total merchandise contribution dollars in Q4 2021 compared to 0.8% in Q4 2020

·     Shell Plc (RDSA) expanded its share buybacks after reporting profit that blew past analyst estimates on the back of surging energy prices; announced it will buy back $8.5 worth of shares in the first half of 2022, including $5.5B from the sale of its Permian shale assets in the U.S.

 

Financials

·     Aflac (AFL) Q4 EPS $1.57 vs. est. $1.27; Q4 revs $5.4B vs. est. $5.22B; in yen terms, Aflac Japan’s net earned premiums were ¥319.3 bln for quarter, or 4.3% lower than a year ago

·     Allstate (ALL) Q4 adj EPS $2.75 vs est. $2.76 on revenue $13B vs est. $10B, catastrophe losses $582M in the quarter; book value per share $81.52; net premiums written $10.3B vs est. $10B, net premiums earned $10.39B

·     AvalonBay (AVB) 4Q core FFO/share $2.27 vs est. $2.24, qtrly EPS $2.40, qtrly same-store sales +6.1%; sees 1Q core FFO/share $2.14-2.26 vs est. $2.25 and EPS $1.73-1.85

·     BankUnited (BKU) announces $150M share repurchase plan

·     Brandywine Realty (BDN) Q4 FFO $0.35 in-line with ests; Q4 revs $125.53M vs. est. $124.31M; sees 2022 FFO $1.37-$1.45 vs. est. $1.39

·     Essex Property (ESS) Q4 core FFO $3.25 vs. est. $3.23; said achieved same-property gross revenue and net operating income growth of 4.0% and 4.7%, respectively, y/y; for the full-year, same-property gross revenue and NOI declined by 1.2% and 2.7%, respectively

·     Globe Life (GL) 4Q EPS $1.70 vs est. $1.76; guides FY22 EPS $8.00-8.50 vs est. $8.24

·     Lincoln National (LNC) Q4 adj EPS $1.56 vs. est. $1.90; Q4 revs rose 20% to $3.0B; BVPS, including AOCI, of $114.41, down 3%; BVPS, excluding AOCI, of $78.05, up 9%

·     MetLife (MET) Q4 adj EPS $2.01 vs. est. $1.47; qtrly premiums, fees & other revenues $15.18 bln vs $15.77 bln; qtrly net investment income $5.23 bln vs $5.24 bln; book value of $77.12 per share at qtr-end, down 2% from $78.67 per share at Dec 31, 2020; remain on track to generate approximately $20.0 billion of free cash flow over the period of 2020 through 2024

·     OneMain holdings (OMF) Q4 adj EPS $2.38 vs est. $2.35; raised its dividend 36% to $0.95/shr, payable Feb. 18 to record holder at Feb. 14 close; approved a new $1B share repurchase program through 2024

·     Riot Blockchain (RIOT) in Texas will shut Whinstone mine for cold blast if asked – Bloomberg News reported

·     The Hanover (THG) 4Q op EPS $3.38 vs est. $2.46, qtrly net premiums written $1.21B vs est. $1.2B, net investment income $79.5Mm vs est. $67.75Mm, qtr-end book value/shr $88.59

 

Healthcare

·     United Healthcare (UNH), Anthem (ANTM), Humana (HUM) – shares bounced after hours yesterday after CMS Medicare rates came back much better than expected; watch for strength in major HC providers – Wells Fargo notes for Medicare Advantage — 2023 Advance Notice Significantly Better than Expected – the proposed 4.5% vs expectations of 1.5-2%

·     Cigna (CI) Q4 EPS $4.77 vs. est. $4.71; Q4 revs $45.69B vs. est. $43.88B; raises dividend; medical care ratio of 87.0% for fourth quarter 2021 compares to 84.8% for fourth quarter 2020

·     Eli Lilly (LLY) Q4 EPS $2.49 vs. est. $2.18; Q4 revs $8B vs. est. $6.88B; reaffirms FY22 EPS view $8.50-$8.65 and backs FY22 revenue view $27.8B-$28.3B

·     Merck (MRK) Q4 adj EPS $1.80 vs. est. $1.53; Q4 revs $13.5B vs. est. $13.16B; sees FY22 adjusted EPS $7.12-$7.27 vs. est. $7.29; sees FY22 revenue $56.1B-$57.6B vs. est. $56.64B

·     Align Technologies (ALGN) Q4 adj EPS $2.83 vs est. $2.71 on revenue $1.03B VS EST. $1.02B; FY22 net revenue growth is expected to be within its long-term Target range of +20-30% assuming no significant Covid surges after the current wave, meaningful practical practice disruptions, nor material supply chain issues throughout the year

·     Hologic, Inc. (HOLX) Q1 EPS $1.95 vs. est. $1.28; Q1 revs $1.471B vs. est. $1.18B; sees Q2 EPS $1.50-$1.60 vs. est. $0.95 and revs $1.250B-$1.3B vs. est. $998.87M; sees FY22 EPS $4.90-$5.20 above est. $3.83 and revs $4.4B-$4.55B vs. est. $4.02B

·     McKesson (MCK) 3Q adj EPS $6.15 vs est. $5.42 on revs $68.6B vs est. $66.5B; guides FY22 adj EPS $23.55-23.95 vs est. $22.78

·     Omega Healthcare Investors (OHI) 4Q adj FFO/share $0.77 vs est. $0.81 on revs $249.9Mm vs est. $264.7Mm, not providing guidance for FY22

 

Industrials & Materials

·     Honeywell (HON) 4Q adj EPS $2.09 vs est. $2.08 on revs $8.7B vs est. $8.7B; guides FY22 revs $35.4-36.4B vs est. $36.7B (organic +4-7%, ex covid-driven mask sales +5-8%), sees FY segment margin 21.1-21.5% and EPS $8.40-8.70 vs est. $8.97

·     Corteva, Inc. (CTVA) Q4 adj EPS $0.08 vs. est. $0.09; Q4 revs $3.49B vs. est. $3.46B; guides FY22 net sales $16.7-17.0B vs est. 16.62B and op EBITDA $2.8-3.0B vs est. $2.98B, sees FY EPS $2.30-2.50 vs est. $2.58; expects to deliver $1.0-1.5B to shareholders in 2022

·     Hillenbrand, Inc. (HI) 1Q adj EPS $0.94 vs est. $0.88 on revs $728Mm vs est. $699.7Mm; guides 2Q adj EPS $0.96-1.02 vs. est. $0.95

·     Rayonier (RYN) Q4 EPS $0.01 vs. est. 0c; Q4 revs $262M vs. est. $204.15M; sees FY22 EPS $0.57-$0.64 vs. est. $0.53; sees FY adj Ebitda $310M-$340M

·     Tetra Tech, Inc. (TTEK) Q1 adj EPS $1.19 vs est. $1.03 on revenue $859M vs est. $663M; sees Q2 EPS $0.86-$0.91 vs est. $0.89 on revenue $620M-$670M vs est. $651.5M; raised FY22 outlook for EPS to $4.15-$4.30 from $4-$4.20 and revenue to $2.65B-$2.8B from $2.6B-$2.8B

·     XL Fleet Corp. (XL) announced that Cielo Hernandez has resigned as CFO of the Company as of January 31, 2022, to pursue other career opportunities. Ms. Hernandez’s departure is not related to any disagreement with the Company over its accounting principles or practices, or financial statement disclosures

 

Media & Telecom

·     8×8 Inc. (EGHT) Q3 EPS $0.02 vs. est. $0.01; Q3 revs $156.9M vs. est. $154.1M; Q3 total ARR rises 16% y/y to $572M, with 907 enterprise customers with ARR greater than $100,000, compared to 734 customers y/y; enterprise ARR growth of 30%; sees Q4 revs $180M-$182M vs. est. $159.9M

·     ADTRAN (ADTN) Q4 EPS $0.10 vs. est. loss (-$0.02); Q4 revs $154.2M vs. est. $141.3M

·     T-Mobile (TMUS) Q4 EPS $0.34 vs est. %0.15 on revenue $20.79B vs est. $21.08B; added 1.8M postpaid net customers to bring FY21 total to 5.5M that exceeded guidance, 315k postpaid net accounts; qtrly postpaid Phone ARPU $48.03; sees FY22 core adj EBITDA growing ~10% at its guidance midpoint, sees FY22 postpaid net customer additions 5M-5.5M

 

Technology

·     Meta Platforms (META) shares fall -20% on disappointing guidance and miss and said it also lost about a million daily users globally; 4Q EPS $3.67 vs est. $3.85, miss on active users (DAUS 1.93B for December); revs $33.67B vs est. $33.4B; guides 1Q revs $27-29B vs est. $30.15B (weak guidance hits other online names PINS, TWTR, SNAP)

·     Qualcomm (QCOM) Q1 adj EPS $3.23 vs. est. $3.01; Q1 revs $10.71B vs. est. $10.42B; sees Q2 adj EPS $2.80-$3.00 vs. est. $2.49; sees Q2 revenue $10.2B-$11B vs. est. $9.61B; quarterly guidance calls for $8.7B-$9.3B in revenue from the chip business and $1.45B-$1.65B from licensing biz

·     Nokia (NOK) reinstated its quarterly dividend, launched a share buyback program and introduced new, long-term goals; Q4 fell 2% to EUR6.41 billion from the same period in 2020, missing expectations of EUR6.51 billion

·     Spotify (SPOT) share fall -17%; 4Q-end had 3.6Mm podcasts on platform up from 3.2Mm end 3Q, 4Q qtrly premium subs +16% to $180Mm, qtrly MAUS +18% to 406Mm, revs +24% to EUR 2.689B; guides 1Q op loss EUR67Mm, sees 418Mm total MAUS and 183Mm premium subs for 1Q

·     American Superconductor (AMSC) Q3 EPS loss (-$0.16) vs. est. loss (-$0.17); Q3 revs $26.8m vs. est. $26.1M; said sees Q4 loss not to exceed (-$0.18) vs. est. (-$0.14) and revs $26M-$29M vs. est. $28.2M

·     Cognizant Technology (CTSH) Q4 adj EPS $1.10 vs est. $1.04 on revenue $4.8B vs est. $4.78B; sees Q1 revenue $4.8B-$4.84B vs est. $4.826B, FY adj EPS $4.46-$4.60 vs est. $4.54, FY revenue $20B-$20.5B vs est. $20.14B; increased its qtrly dividend to $0.27/shr from $0.24

·     DXC Technology (DXC) 3Q adj EPS $0.92 vs est. $0.91 on revs $4.09B vs est. $4.1B; guides FY adj EPS $5.00-5.25 vs est. $3.67; says intends to self-fund $1B of additional share repurchases over next twelve months

·     Formfactor (FORM) Q4 EPS $0.44 vs. est. $0.40; Q4 revs $205M vs. est. $198.17M; sees Q1 EPS $0.35-$0.43 vs. est. $0.40; Q1 revs $188M-$200M vs. est. $195.45M

·     MaxLinear (MXL) Q4 adj EPS $0.64 vs. est. $0.84; Q4 revs $247.9M vs. est. $244.74M; said Q4 Wi-Fi grew 40% sequentially and exited Q4 on a $100 million annualized revenue run rate which we expect to build upon through 2022; non-GAAP gross margin for Q4 improved to 61.7%; sees 1q non-Gaap gross profit margin 61%-63%, sees 1q GAAP gross profit margin 57%-59%

·     NetGear (NTGR) 4Q adj EPS $0.27 vs est. $0.08 on revs $251.2Mm vs est. $290.15Mm; guides 1Q adj op margin 1.0-2.0%

·     Qorvo Inc. (QRVO) Q3 adj EPS $2.98 vs est. $2.76 on revenue $1.114B vs est. $1.11B; sees Q4 adj EPS $2.94 at the midpoint vs est. $2.87 on revenue $1.135B-$1.165B vs est. $1.15B