Early Look

Tuesday, February 8, 2022

Futures	Up/Down	%	Last
Dow	-17.00	0.05%	34,952
S&P 500	-6.25	0.13%	4,469
Nasdaq	-33.50	0.23%	14,526

 

 

S&P futures are looking down slightly around 4,470, trading in a narrow range of about 25-points (high 4,496.50 and low 4,471.25) and trying to stay above its 200-day moving average support lower around 4,440. Meanwhile, Treasury yields move to their highest level in over 2-years with the 10-year hitting highs of 1.96% (closed 2021 at 1.51%) and the 2-yr at 1.325% (started the year at 0.77%) as investors brace for the monthly CPI data on Thursday. Stocks in the U.S. have been holding in a choppy range over the last week or so, while the Dow, S&P 500, and Nasdaq Composite remain down 4%, 6.5%, and 11.5% so far this year, respectively. In Asian markets, The Nikkei Index edged higher 35 points to 272,84, the Shanghai Index rose 23 points to 3,452, and the Hang Seng Index fell -250 points to 24,329. In Europe, the German DAX is down a few points to 15,200, while the FTSE 100 is up a few points to 7,580. Oil prices fall a second day further below 7-year highs and Bitcoin prices are steady after surging Monday.

 

Stocks tumbled late Monday with the S&P 500 and Nasdaq erasing earlier gains, while the Dow finished modestly higher and the SmallCap Russell 2000 outperformed. The S&P 500 remains down more than 5% so far in 2022, with investors worried that the U.S. Federal Reserve could raise interest rates faster than expected. More clues can be offered later this week when the January Consumer Price Index (CPI) is expected Thursday morning, with prices expected to rise +7.3% y/y. Markets are now pricing in a 33% chance the Fed might hike by a full 50 bps in March and the prospect of rates reaching 1.5% this year.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -16.66 points, or 0.37%, to 4,483.87

·     The Dow Jones Industrial Average rose 1.39 points, or 0.00%, to 35,091.13

·     The Nasdaq Composite slumped -82.34 points, or 0.58%, to 14,015.67

·     The Russell 2000 Index advanced 10.24 points, or 0.51% to 2,012.60

 

Events Calendar for Today

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

·     7:45 AM ET         ICSC Weekly Retail Sales

·     8:30 AM ET         International Trade for December

·     8:55 AM ET         Johnson/Redbook Weekly Sales

·     4:30 PM ET         API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AGCO, ARMK, AVNT, BBGI, CARR, CEIX, CNC, COTY, CTS, DD, EPC, FISV, HAE, HLI, HOG, INCY, IT, J, KKR, KPTI, LEA, MAS, MBUU, NRZ, PFE, POLY, SAVE, SPGI, SYY, TDG, TMHC, VIRT, VSH, WMG

·     Earnings After the Close: AAT, AIZ, APPS, ATGE, ATO, CCK, CMG, CMP, CNO, CRSR, CURO, DCPH, DEI, DHX, DOCS, EGP, ENPH, ENTA, ESE, FLT, FMC, GAIN, HIW, HUBG, ICHR, IIIV, INSP, JKHY, LBRT, LYFT, MN, MODN, NBR, NCR, NEWR, OMC, PAYC, PEAK, POWL, PTON, QNST, SCSC, STE, TCS, TSE, UDR, USNA, VOYA, VREX

 

Other Key Events:

·     Cowen Annual Aerospace/Defense & Industrials Conference (virtual), 2/8-2/10

·     Northland Winter Wonderland Best Ideas Investor Conference (virtual), 2/8-2/10

·     International Builders’ Show (IBS), in Orlando 2/8-2/10

 

 

Macro	Up/Down	Last
Nymex	-1.70	89.62
Brent	-1.92	90.77
Gold	-3.20	1,818.60
EUR/USD	-0.0018	1.1424
JPY/USD	0.18	115.30
10-Year Note	+0.029	1.945%

 

 

World News

·     President Biden’s top science adviser resigned after an internal White House investigation found that he demeaned staff in violation of the administration’s workplace-behavior rules. Eric Lander, the director of the White House’s Office of Science and Technology Policy, stepped down amid mounting criticism of his alleged treatment of his subordinates. People with knowledge of his behavior accused him of bullying, embarrassing and insulting staff.

·     The Kremlin denied on Tuesday that Vladimir Putin had promised French President Emmanuel Macron that Russia would stage no further maneuvers near Ukraine for now, pouring cold water on a tentative French assertion of diplomatic progress – Reuters

 

Sector News Breakdown

Consumer

·     Chegg Inc. (CHGG) shares rose 8%; Q4 adj EPS $0.38 vs. est. $0.31; Q4 revs rose 1% to $207.5M vs. est. $195.2M; sees Q1 revs $200M-$205M and year revs $830M-$850M; Q4 Services Revenues grew 6% year-over-year to $187.2M, or 90% of total net revenues

·     Kforce Inc. (KFRC) 4Q EPS $0.98 vs est. $0.98 on revs $410.4Mm vs est. $399.3Mm; guides 1Q EPS $0.72-0.80 vs est. $0.68 and revs $403-411Mm vs est. $395.5Mm; guides FY EPS at least $4.20 vs est. $3.86 and revs $at least $1.7B vs est. $1.63B

·     General Motors (GM) downgraded to Equal Weight from Overweight at Morgan Stanley and cut tgt to $55 from $75

·     Leggett & Platt (LEG) Q4 EPS $0.77 vs. est. $0.73; Q4 revs $1.33B vs. est. $1.29B; guides year EPS $2.70-$3.00 vs. est. $3.00; sees FY22 revenue $5.3B-$5.6B vs. est. $5.23B

·     Peloton Interactive (PTON) co-founder, John Foley, will step down as CEO and the company will cut 20%, or 2,800, of its corporate positions, according to the WSJ. The report said former Spotify CFO Barry McCarthy will become CEO, while Foley will become executive chair.

·     Velodyne Lidar (VLDR) surged over 40% as disclosed that the company agreed to issue to Amazon.com NV Investment Holdings, a wholly owned subsidiary of Amazon (AMZN), a warrant to acquire up to 39,594,032 shares of the Velodyne’s common stock

 

Energy

·     American Electric Power (AEP) has withdrawn its request that the Federal Energy Regulatory Commission approve changes to an operating agreement for a coal-fired power plant owned by Kentucky Power and Wheeling Power under pressure from the Kentucky Public Service Commission https://bit.ly/3HDH5Ve

·     BP (BP) Plc reported strong quarterly earnings and announced an acceleration of its push to become a net-zero emissions company. BP said it intends to cut 50% of emissions by 2030, up from prior guidance of 30% to 35%, as it increases capital expenditures

 

Financials

·     BNP Paribas announced quarterly results with revenue of EUR11.2 billion ($12.8 billion) below expectations of EUR11.3 billion. Net income of EUR2.3 billion beat estimates of EUR2 billion

·     Principal Financial (PFG) Q4 EPS $1.76 vs. est. $1.65; Q4 assets under management were $714B

·     SelectQuote (SLQT) shares slide -50%; Q2 EPS ($0.84) vs est. $0.59 on adj revenue $340M vs est. $456.7M; now sees FY revenue $810M-$850M vs est. $1.3B; said they “faced a series of unexpected challenges in our core Senior segment this Medicare Advantage season. Overall parity in Medicare Advantage plan features along with delayed hiring drove considerably lower close rates, which negatively impacted profitability

·     Simon Property Group (SPG) 4Q FFO/shr $3.09 vs est. $2.90; guides FY FFO/shr $11.50-11.70 vs est. $11.79 and EPS $5.90-6.10 vs est. $6.10

·     Brixmor Property Group Inc. (BRX) 4Q FFO/shr $0.46 and EPS $0.27 vs est. $0.18 on revs $295.3Mm vs est. $286.4Mm; guides FY22 FFO/shr $1.86-1.95 vs est. $1.91

·     Piedmont Office Realty Trust, (PDM) 4Q core FFO/shr $0.51 vs est. $0.51; guides FY22 core FFO/shr $1.97-2.07 vs est. $2.05

 

Healthcare

·     Pfizer (PFE) Q4 adj EPS $1.08 vs. est. $0.88; Q4 revs $23.8B vs. est. $24.17B; sees 2022 adj EPS $6.35 to $6.55, vs. est. $6.65; raises 2022 revenue guidance for Comirnaty to about $32 bln, reflecting doses expected to be delivered under supply contracts signed as of late-January

·     Amgen Inc. (AMGN) 4Q adj EPS $4.36 vs est. $4.08, adj op margin 47.8%, revs $6.85B vs est. $6.87B; has seen some volatility with recent Omicron surge which could impact sales of Prolia in 2022

·     WuXi Biologics slides over 20% overnight after being added to unverified list for exports by the U.S. The U.S. Commerce Department on Monday said it had added 33 entities in the People’s Republic of China to its unverified list for receiving U.S. exports

·     Biogen (BIIB) entered into a commercialization and license agreement with Swedish pharmaceutical company Xbrane Biopharma AB for Xcimzane

·     Centene (CNC) Q4 adj EPS $1.01 vs. est. $0.99; Q4 revs $32.57B vs. est. $32.5B; said end of year managed care membership of 26.6M, an increase of 1.1M members, or 4% y/y; health benefits ratio (HBR) of 87.9% for q4 of 2021, compared to 88.4% in q4 of 2020

·     Cooper Companies (COO) said it has signed a binding letter of intent to acquire Cook Medical’s Reproductive Health business, a manufacturer of minimally invasive medical devices focused on the fertility, obstetrics, and gynecology markets for approximately $875M

·     Editas (EDIT) shares fell over 7% after terminating its chief medical officer, Lisa Michaels, effective immediately

·     Intercept Pharma (ICPT): France says withdrew its application for reimbursement in France of Ocaliva

·     Tenet Healthcare (THC) 4Q adj EPS $2.30 ($1.41 ex grant income) vs est. $1.49, Same-hospital adjusted admissions for Q4’21 were consistent with Q4’20, Same-facility system-wide ambulatory surgical cases increased 4.4% versus Q4’20; FY22 adj EPS from continuing ops $5.86-7.05 vs est. $6.62, adj EBITDA $3.375-3.575B vs est. $3.355B

·     IRadimed (IRMD) announces special $1.00 per share cash dividend

 

Industrials & Materials

·     DuPont (DD) Q4 adj EPS $1.08 vs. est. $1.13; Q4 revs $4.27B vs. est. $4.2B; sees Q1 adj EPS $0.94-$1.00 vs. est. $1.10; sees Q1 revs $4.2B-$4.3B vs. est. $4.17B; sees Q1 operating EBITDA between $940M-$980M; announces new $1B share buyback program and raises dividend; sees FY22 adjusted EPS $4.60-$4.90 vs. est. $4.94

·     AECOM (ACM) Q1 adj EPS $0.89 vs. est. $0.77; Q1 revs fell 1% to $3.267B vs. est. $3.45B; guides FY22 adj EPS guidance to $3.30-$3.50 from prior $3.20-$3.40 (est. $3.35); still sees adjusted EBITDA of between $880M-$920M, which would reflect 8% growth at the mid-point of the range

·     Kennametal Inc. (KMT) 2Q adj EPS $0.35 vs est. $$0.39 on sales $487Mm vs est. $496.2Mm; sees 3Q sales $500-520Mm vs est. $536.5Mm; sees FY CAPEX $110-120Mm

·     Matrix Service (MTRX) Q2 adj EPS ($0.38) vs est. ($0.26) on revenue $162M vs est. $174.6M; project awards in the qtr $192.2M resulting in a book-to-bill of 1.2, with project awards in 1H22 surpassing full FY21

·     Raytheon Technologies Corp.’s (RTX) missiles division had three senior executives leave the company, shaking up the aerospace giant’s largest defense business – Bloomberg

·     Simpson Manufacturing Co (SSD) 4Q EPS $1.61 vs est. $0.95 on revs $418.6Mm vs est. $373.7Mm

·     TFI International Inc. (TFII) Q4 adj EPS $1.57 vs. est. $1.21; Q4 revs jumped 91% y/y to $2.14B vs. est. $2.02B

 

Technology, Media & Telecom

·     SoftBank’s (SFTBY) proposed $66B sale of Arm to Nvidia (NVDA) has fallen apart after regulators in the U.S., U.K., and EU raised major concerns about the potential deal’s impacts on competition in the global chip industry, the Financial Times reported https://on.ft.com/3srJtrQ

·     Cathie Wood-run ARK Invest sold ~4M shares in Twitter (TWTR) ahead of earnings; sold 3.7M TWTR shares from its ARK Innovation ETF ARKK.P and 280,974 shares from ARK Next Generation Internet ETF ARKW.P – together worth $142.2 mln based on TWTR’s last close

·     Axcelis Technologies (ACLS) Q4 EPS $1.05 vs. est. $0.84; Q4 revs $205.7M vs. est. $190.04M; guides Q1 EPS $0.92 vs. est. $0.87; sees Q1 revs $193M vs. est. $190.96M; sees Q1 gross margin to be approximately 43%; and operating profit $41M

·     PC Connection (CNXN) Q4 EPS $0.85 vs. est. $0.70; Q4 revs rise 18.4% y/y to $800.2M vs. est. $747.9M; Ebitda totaled $113.0M for the year ended December 31, 2021, compared to $90.6M for the twelve months ended December 31, 2020

·     Rambus Inc. (RMBS) Q4 EPS $0.05 vs. est. $0.37; Q4 revs $91.8M vs. est. $121.5M; Produced record annual product revenue of $143.9M as memory interface chips, up 26% y/y; record cash from operations of $209.2M for full year 2021

·     Take-Two Interactive (TTWO) 3Q EPS $1.24 vs est. $0.94 on revs $903.3Mm vs est. $874.6Mm; guides 4Q revs $835-885Mm vs est. $924.2Mm and EPS $0.46-0.56 vs est. $0.65; raises net bookings outlook for FY22 to $3.37-3.42B

·     Teradata Corp. (TDC) Q4 adj EPS $0.57 vs est. $0.27 on revenue $475M vs est. $478.6M; sees Q1 adj EPS $0.63-$0.67 vs est. $0.51, now sees FY adj EPS $1.82-$1.92 (est. $1.77) up from $1.60-$1.70 at Sept’s Investor Day; sees FY total revenue growth flat-to-low-single-digit percentage; raised FY outlook for public cloud ARR to be +80% from at least +70%

·     Varonis Systems, Inc. (VRNS) 4Q adj EPS $0.16 vs est. $0.13 on revs $126.6Mm vs est. $122Mm; guides 1Q adj EPS loss $0.10-0.11 vs est. loss $0.06 and revs $94.5-96.5Mm vs est. $94.6Mm; sees FY adj EPS $0.16-0.17 vs est. $0.22 and revs $485-490Mm vs est. $477.7Mm

·     Kimball Electronics, Inc. (KE) 2Q EPS $0.20 vs est. $0.40 on sales $315.3Mm vs est. $324.1Mm; FY22 sales guide low end $1.4-1.5B vs est. $1.45B and op margin 3.75-4.25% vs original guide 4.5-5.0% reflecting tough 1H due to unavailability of material