Early Look

Thursday, February 4, 2021

Futures	Up/Down	%	Last
Dow	28.00	0.09%	30,655
S&P 500	5.25	0.14%	3,829
Nasdaq	55.50	0.42%	13,450

 

 

Stocks are managing to climb again in what has been a solid week of returns thus far, erasing all of last week’s losses behind stronger-than-expected quarterly earnings, mostly better economic data (this week) and hopes for more stimulus relief and buying momentum (the same drivers just about every day). Initial jobless claims are expected to come in below 900,000 for a second straight week later this morning (est. 830K), after dipping below that threshold for the first time in three weeks last week. The Biden administration is moving full speed ahead on a $1.9T coronavirus economic relief plan after House Democrats adopted a budget resolution that would enable a bill to pass with a simple majority (VP Kamala Harris would cast a tie-breaking vote). In Asian markets, The Nikkei Index dropped -304 points to 28,341, the Shanghai Index fell -15 points to 3,501 and the Hang Seng Index declined -193 points to 29,113. In Europe, the German DAX is higher by over 50 points to trade just below the 14,000 level, while the FTSE 100 is up a few points to 6,515. Gold and silver slipped on Thursday, as the dollar and U.S. Treasury yields gained and markets awaited clarity on U.S. fiscal stimulus measures and the Bank of England’s (BOE) policy outlook. Oil prices continue to churn higher. Today also marks another onslaught of corporate earnings results.

 

Major averages were higher most of Wednesday before sliding into the bell, as the S&P and Dow narrowly extended their winning streaks to 3-days while the Nasdaq Comp turned negative in the final seconds to erase its winning streak, but not due to GOOGL, which advanced over 7% on the day following its earnings report, closing at a record high. Markets remain bolstered by additional stimulus relief talk as U.S. President Joe Biden pushed ahead with efforts saying would not back down on including $1,400 checks for struggling Americans in his COVID-19 relief plan but would consider tighter limits on who gets them. Biden’s Democratic party was preparing to use a procedural maneuver to push Biden’s $1.9 trillion relief package through without Republican votes if necessary. Of the S&P’s 11 major sectors, energy was the biggest advancer as WTI crude touched one-year highs, while banks outperformed as Treasury yields quietly edge higher.

Market Closing Prices Yesterday

·     The S&P 500 Index edged higher 3.86 points, or 0.10%, to 3,830.17

·     The Dow Jones Industrial Average rose 36.12 points, or 0.12%, to 30,723.60

·     The Nasdaq Composite slid -2.23 points, or 0.02%, to 13,610.54

·     The Russell 2000 Index advanced 8.26 points, or 0.38% to 2,159.70

 

Events Calendar for Today

·     7:30 AM EST      Challenger Layoffs for January

·     8:30 AM ET         Weekly Jobless Claims…est. 830K

·     8:30 AM EST      Continuing Claims…est. 4.70M

·     8:30 AM EST      Nonfarm Productivity for Q4

·     8:30 AM EST      Unit Labor Costs for Q4

·     10:00 AM EST    Durable Goods Orders MoM for Dec

·     10:00 AM EST    Factory Orders MoM for Dec

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

 

Earnings Calendar:

·     Earnings Before the Open: ABC, AGCO, ALXN, AME, APD, ARW, BAX, BDX, BLL, BMY, BTU, BV, CG, CI, CMI, CMS, DGX, DX, GLT, GPI, HSY, ICE, IP, IRMD, LANC, LEA, LEE, MDP, MMS, MRK, NS, NYT, ODFL, ONEW, PBH, PENN, PH, PIPR, PM, PTEN, RGS, RL, SNA, SR, SXC, TPR, TW, VSTO, WD, WMS, XYL, YUM

·     Earnings After the Close: AINV, AOSL, ATVI, BILL, BRBR, CLX, COLM, CPT, CSL, CTVA, CURO, DHX, DXC, ENVA, ESS, EXPO, F, FLT, FTV, GHL, GILD, GPRO, HIG, HUBG, KN, LGF/A, MCHP, MOD, MPWR, MSI, MTX, NEWR, NLOK, NOV, NWSA, PFPT, PINS, PLT, POST, PRU, PTON, SKX, SNAP, SYNA, TDC, TWST, U, UNM, USAT, VREX, WERN, WWE, YRCW, ZEN

 

Other Key Events:

·     BMO Capital Infrastructure and Utilities Virtual Conference, 2/3-2/4

·     Stephens Texas Bank Virtual Field Trip, 2/2-2/4

 

 

Macro	Up/Down	Last
Nymex	0.47	56.16
Brent	0.40	58.86
Gold	-22.55	1,811.50
EUR/USD	-0.0048	1.1988
JPY/USD	0.26	105.29
10-Year Note	+0.007	1.138%

 

 

Sector News Breakdown

Consumer

·     eBay (EBAY) 4Q adj EPS $0.86 vs. est. $0.83 on revs $2.9B vs. est. $2.7B, qtrly gross merch volume $26.6B +21%, annual active buyers +7%; sees 1Q adj EPS $1.03-1.08 vs. est. $0.86

·     Clorox (CLX) 2Q EPS $2.03 vs. est. $1.78 on sales $1.84B vs. est. $1.75B; sees FY21 sales +10-13% vs. est. +9%, sees FY21 EPS $8.05-8.25 incl $0.45-0.50 from increased stake in Saudi JV vs. est. $8.18

·     Costco (COST) January net sales rose 17.9% to $13.64B; twenty-two weeks ended January 31 net sales $79.11B; January comp store sales rose 15.9% vs. est. 11.7% as U.S. comp sales rose 15.4%; ex gas comps rose 15.7% overall and 16.4% in U.S.

·     Angi HomeServices (ANGI) Q4 EPS loss (3c) vs. est. loss (2c); Q4 revenue $359.3M vs. est. $357.17M; Marketplace Monetized Transactions increased 11% to a record high 208,000

·     E.L.F. Beauty (ELF) Q3 adjusted EPS 22c vs. est. 24c; Q3 revenue $88.6M vs. est. $86.79M; Gross margin decreased 50 basis points to 64%, as compared to 65% in the three months ended December 31, 2019; raises FY21 EPS view to 63c-64c from 59c-63c (est. 62c) and raises FY21 revenue view to $304M-$308M from $297M-$303M (est. $301.49M)

·     GrubHub (GRUB) Q4 active diners 31.4M, up 39% from 22.6M YoY; Daily Average Grubs: 658,100 a 31% YoY increase from 502,600 DAGs in the fourth quarter of 2019; Gross Food Sales: $2.4B, a 52% YoY increase from $1.6B

·     Yum China Holdings (YUMC) Q4 adj EPS 35c as revs rose 11% to $2.26B vs. est. 26c and $2.19B; Total system sales increased 5% year over year, with an increase of 3% at KFC and a decline of 3% at Pizza Hut, excluding F/X; same-store sales declined 4% year over year, with declines of 4% at KFC and 5% at Pizza Hut, excluding F/X; restaurant margin was 15.1%, compared with 12.4% in the prior year period

·     XPeng (XPEV) said it has shipped the second batch of over 200 G3 smart electric SUVs for the European market; achieved a record monthly delivery of 6,015 Smart EVs (3,710 P7s and 2,305 G3s) in the Chinese market in January 2021, representing a growth of 470% Y/Y

·     Lear (LEA) Q4 EPS $3.66 vs. est. $3.47; Q4 revenue $5.2B vs. est. $5.01B; consolidated three-year sales backlog is $2.8 bln and will drive continued global revenue growth and sales diversification; sees FY21 revenue $19.8B-$20.8B vs. est. $20.22B

 

Energy

·     MDU Resources (MDU) Q4 EPS 56c vs. est. 54c; Q4 revenue $1.385B; sees FY21 EPS $1.95-$2.15 vs. est. $1.94 and sees FY21 EBITDA $875M-$925M

·     Murphy USA (MUSA) Q4 EPS $2.16 vs. est. $2.17; Q4 revenue $2.86B vs. est. $2.97B; sees 2021 capex $325M-$375M

·     Ballard Power Systems (BLDP) signed a non-binding MoU with Australia’s Global Energy Ventures for development of a fuel cell-powered ship

·     Patterson-UTI (PTEN) Q4 EPS loss (57c) vs. est. loss (62c); Q4 revenue $220.8M vs. est. $218.12M

 

Financials

·     Aflac (AFL) 4Q adj EPS $1.07 vs. est. $1.05 on revs $5.9B vs. est. $5.46B, says pandemic conditions to remain with us thru 1H21, will impact sales in both US and Japan, as well as earned premiums and revenues

·     Allstate (ALL) Q4 adj EPS $5.87 vs. est. $3.81; Q4 total revs $12.0B; property-liability combined ratio of 84.0 in Q4; property-liability written premium of $8.61 billion decreased 1.5% in Q4; Net investment income $1.19B, +73% YoY and catastrophe losses $424M, +44% YoY

·     Chubb (CB) raises share repurchase program by $1B

·     Lincoln Financial (LNC) Q4 adj EPS $1.78 vs. est. $1.93; Q4 revs $4.14B vs. est. $4.61B; as of December 31, 2020, book value per share, including AOCI, increased 18% from prior-year period to $118.02; resumed share repurchases with $50 mln completed in quarter

·     MetLife (MET) Q4 adjusted EPS $2.03 vs. est. $1.52; Q4 revs $19.42B up 13%; qtrly premiums, fees and other revenues $15.77 bln, up 15%; qtrly net investment income $5.24 bln, up 13%; book value of $78.67 per share at qtr-end, up 15% from $68.62 per share at Dec. 31, 2019

·     PayPal (PYPL) 4Q adj EPS $1.08 vs. est. $1.00 on revs $6.12B vs. est. $6.09B, qtrly total payment volume $277B +39%; guides FY21 adj EPS about +17% vs. est. +19%, sees FY21 revs about $25.5B vs. est. 25.4B

 

Healthcare

·     Align Technologies (ALGN) shares rose 8%; Q4 EPS $2.61 vs. est. $2.14; Q4 revenue $834.5M vs. est. $793.56M; Q4 Clear Aligner revenues up 12.9% sequentially and 28.9% year-over-year to a record $700.7M; Q4 Clear Aligner volume up 14.5% sequentially and 37.3% year-over-year to 568.0 thousand cases; Q4 Clear Aligner volume for teenage patients was 160.9 thousand cases, up 38.7% year-over-year

·     Becton Dickinson (BDX) Q1 adj EPS $4.55 vs. est. $3.11; Q1 revenue $5.32B vs. est. $4.88B; raises FY21 adj. EPS view to $12.75-$12.85 from $12.40-$12.60 (est. $12.58) while guides FY21 revenue up 12%-14% (est. $19.23B)

·     Cigna (CI) Q4 EPS $3.51 on revs $41.71B vs. est. $3.68 and $39.99B; pharmacy customer base at q4-end 89.18 mln vs 86.60 mln at q3; total customer relationships at qtr-end 175.71 mln vs 189.70 mln at q3-end; medical care ratio of 85.8%; sees 2021 cash flow from operations of at least $7.5 bln

·     Change Healthcare (CHNG) Q3 adj EPS 34c vs. est. 30c; Q3 revs $785.1M vs. est. $783.9M

·     Lannett (LCI) shares fell -17%; 2Q adj EPS $0.08 vs. est. $0.08 on sales $139.9Mm vs. est. $130Mm, says established new $30Mm revolver; guides FY21 adj net sales $480-500Mm vs. est. $529.3Mm, sees FY CAPEX $10-15Mm

·     Quest Diagnostics (DGX) increases dividend 10.7% to $0.62 per quarter; announces $1 billion increase in share repurchase authorization

·     Veracyte (VCYT) announces $400M common stock offering

·     Landos Biopharma (LABP) 6.25M share IPO priced at $16.00

·     Sensei Biotherapeutics (SNSE) 7M share IPO priced at $19.00

 

Industrials & Materials

·     Albemarle (ALB) 8.5M share Secondary priced at $153.00

·     Atotech (ATC) 29.27M share IPO priced at $17.00

·     Air Products (APD) Q1 adj EPS $2.12 vs. est. $2.19; Q1 revenue $2.4B vs. est. $2.35B; Increased quarterly dividend 12 percent to $1.50 per share;

·     American Airlines (AAL) issued a warning to 13,000 employees that they could be laid off unless travel revives strongly or Congress provides more federal aid by April (aid is set to end March 31st)

·     CMC Materials (CCMP) Q1 adj EPS $1.92 vs. est. $1.73; Q1 revenue $287.9M vs. est. $278.34M; raises FY21 adjusted EBITDA view to $367M-$387M vs. prior view $358M-$385M

·     Hillenbrand (HI) 1Q adj EPS $0.96 vs. est. $0.67 on revs $693Mm vs. est. $647.2Mm; sees 2Q revs +12-16% pro forma

·     IDEX Corp. (IEX) 4Q adj EPS $1.37 vs. est. $1.31 on sales $614.8Mm vs. est. $602.1Mm; guides 1Q EPS $1.38-1.42 vs. est. $1.39, sees 1Q organic sales +2-4%; guides FY EPS $5.65-5.95 vs. est. $5.68, sees FY organic sales +6-8%

·     Rayonier (RYN) 4Q pro forma EPS $0.08 vs. est. $0.05 on revs $205.5Mm vs. est. $194.4Mm, says expects to achieve net income attributable to Rayonier of $44-56Mm in FY21

 

Media & Telecom

·     IAC Interactive (IAC) reported higher Q4 profit and sales; posted a profit of $509.1M, up from $6.9M in the year-earlier quarter; revenue was $848.8 million, up 27% YoY above estimates of $813.7M; Vimeo’s revenue climbed 54% from a year ago, to $83.8M and added about 300,000 net subscribers in 2020, to over 1.5 million; IAC plans to spin off the online video platform in the second quarter.

 

Technology

·     Cognizant Technology (CTSH) Q4 adj EPS 67c vs. est. 90c; Q4 revenue $4.2B vs. est. $4.25B; sees FY21 adjusted EPS $3.90-$4.02 vs. est. $3.97 and FY21 revenue $17.6B-$18.1B vs. est. $17.66B

·     Digi International (DGII) Q1 EPS 32c vs. est. 6c; Q1 revenue $73.1M vs. est. $70.16M; Q1 Adjusted EBITDA increased to $13.0M compared to $6.7M, an increase of $6.3 million, or 94.8%

·     ePlus (PLUS) 3Q adj EPS $1.79 vs. est. $1.35 on revs $427.6Mm vs. est. $391.4Mm

·     Inovalon (INOV) Q4 EPS 21c vs. est. 19c; Q4 revenue $189.75M vs. est. $187.44M; Q4 new sales ACV $93.5M; backs year EPS and revenue outlooks

·     KLA-Tencor (KLAC) Q2 EPS $3.24 vs. est. $3.19; Q2 revs $1.65B vs. est. $1.6B; sees Q3 EPS $3.23-$3.91 vs. est. $3.22 and revs $1.665B-$1.815B vs. est. $1.61B; Cash flow from operations and free cash flow were both records at $561.1 million and $501.9 million, respectively

·     Kulicke & Soffa (KLIC) Q1 EPS 86c vs. est. 75c; Q1 revenue $267.9M vs. est. $264.94M; Q1 operating margin 22.3%, up 900bps from last year; sees Q2 EPS about 88c, plus/minus 10% vs. est. 58c and revs $280M-$320M vs. est. $239.54M

·     Silicon Motion (SIMO) Q4 EPS 86c vs. est. 71c; Q4 revenue $143.9M vs. est. $139.94M; sees FY21 revenue $650M-$700M vs. est. $590.12M; sees FY21 gross margin 47%-49% and operating margin 24%-26%

·     MaxLinear (MXL) Q4 adj EPS 39c vs. est. 36c; Q4 revenue $194.7M vs. est. $190.34M; said posted record revenue, up 24% sequentially, due to stronger-than-expected demand for broadband access and connectivity products; sees Q1 revs $200M-$210M vs. est. $193.9M; expects q1 Gaap gross margin of approximately 51.5% to 53.5%; non-Gaap gross margin of approximately 57.5% to 59.5%

·     Netgear (NTGR) 4Q adj EPS $0.99 vs. est. $0.84 on revs $367.1Mm vs. est. $346.3Mm; guides 1Q revs $300-315Mm vs. est. $313.3Mm, sees 1Q adj op mgn 8.0-9.0%

·     Qorvo (QRVO) 3Q adj EPS $3.08 vs. est. $2.68 on revs $1.1B vs. est. $1.07B; guides 4Q revs $1.025-1.055B vs. est. $943.9Mm, sees 4Q adj EPS $2.42 at mid-point vs. est. $2.01

·     Qualcomm (QCOM) shares fell -8%; 1Q adj EPS $2.17 vs. est. $2.10 on adj revs $8.23B vs. est. $8.27B; sees 2Q adj EPS $1.55-1.75 vs. est. $1.57, sees 2Q revs $7.2-8.0B vs. est. $7.1B