Early Look

Thursday, July 28, 2022

Futures	Up/Down	%	Last
Dow	-60.00	0.19%	32,112
S&P 500	-11.25	0.28%	4,013
Nasdaq	-78.25	0.62%	12,540

 

 

U.S. stock futures trading in a narrow 20-point range overnight (4,022.50 high and 4,004 low) after the Fed delivered a +75bps hike and a statement about as close to expectations on Wednesday, easing investor fears. Markets also bracing for one of the biggest earnings days of the quarter with Apple and Amazon after the bell tonight. Stocks soared on Wednesday after the Fed delivered a +75bps hike, in-line with expectations, easing investors’ concerns that the Fed is no longer behind the curve. Fed Chair Jerome Powell said the central bank would make upcoming rate decisions by considering each move “meeting by meeting.” The reaction in stocks was slow at first before surging into the bell in a broad-based rally. The headlines help offset generally mixed earnings results. Overnight saw more mixed outlooks with BBY guiding year comp sales lower, META posting its first y/y revs decline and QCOM also issuing a cautious outlook. A busy day of economic data with Q2 GDP estimated to rise +0.6% on higher core prices and weekly jobless claims. Solar and alternative energy stocks rise after Senator Joe Manchin and Majority Leader Chuck Schumer struck a deal on a $369 billion energy-climate plan. The yen rallies to near 135.40/USD as traders dial back most aggressive Fed rate hike bets. Treasury 2-year yield eases to around 2.99% and 10-year yield hovers near 2.78. In Asian markets, The Nikkei Index rose about 100-points to 27,815, the Shanghai Index edged higher 6 points to 3,282, and the Hang Seng Index dipped -47 points to 20,622. In Europe, the German DAX is down about -15 points to 13,150, while the FTSE 100 is down a few points to 7,340.

Economic Calendar for Today

·     8:30 AM ET            Weekly Jobless Claims…est. 253K

·     8:30 AM EST          Continuing Claims…est. 1.38M

·     8:30 AM ET            Gross Domestic Product (GDP), Q2-A…est. +0.5%

·     8:30 AM ET            GDP Consumer Spending, Q2-A

·     8:30 AM ET            GDP Price Deflator, Q2-A…est. +7.9%

·     8:30 AM ET            PCE Prices Advance for Q2…est.

·     8:30 AM ET            Core-PCE Advance Prices for Q2…est. +4.5%

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

·     1:00 PM ET             U.S. to sell $38B in 7-year notes

 

Earnings Calendar:

·     Earnings Before the Open: ABG AGCO AIMC ALNY AMT AOS ARCH ARES BAX BC BEN BTU CARR CBZ CFR CMCSA CMS CNX CRS CWT DTE EEFT EME EXLS EXP FAF FCFS FCN FTV GEL GVA HAYW HNI HOG HON HSY IP ITGR KDP KEX KIM KRNY LAZ LECO LH LII LKQ MA MAC MAS MDC MLM MMP MO MTSI NOC ORI OSK OSTK PATK PBF PBI PCG PFE POR RS SAH SNDR SO SWK TFX TKR TMO TREE TROW TXT VC VIRT VLO VLY VSTO WEX WING WST XEL

·     Earnings After the Close: AAPL AIRC AJG ALEX AMZN APPF ATR AVTR AXTI BIO BY BZH CC CE CG CLR COHU CPT CUZ CWST DECK DLR DXCM EB EIX EMN ENVA EW EXPO FIVN FSLR GLPI HAYN HIG HLI HURN INFN INTC KLAC LHX LUV MATW MHK MRK NATI OFC OLN PRO PTEN ROKU SCKT SGEN SIRI SKYW SSB TUSK TXRH ULCC VFC VRSN WRE X ZEN

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 102.56 points, or 2.62%, to 4,023.61

·     The Dow Jones Industrial Average rose 436.05 points, or 1.37%, to 32,197.59

·     The Nasdaq Composite surged 469.85 points, or 4.06%, to 12,032.42

·     The Russell 2000 Index advanced 43.09 points, or 2.39% to 1,848.34

 

 

Macro	Up/Down	Last
Nymex	1.99	99.25
Brent	1.57	108.19
Gold	20.70	1,739.80
EUR/USD	-0.004	1.0161
JPY/USD	-1.13	135.42
10-Year Note	+0.053	2.785%

 

 

Sector News Breakdown

Consumer

·     Ford Motor (F) 2Q adj EPS $0.68 vs est. $0.45 on revs $40.2B vs est. $34.3B; guides FY vehicle wholesales +10-15%, sees FY adj EBIT $11.5-12.5B vs est. $10.2B; raises qtrly dividend to $0.15/share; China Q2 sales dropped 22% during the quarter; affirmed its intention to produce electric vehicles at a rate of 600K globally per year by late in 2023

·     Best Buy Inc. (BBY) forecasts bigger FY sales drop than its previous estimate, as now expects FY comparable sales to fall about 11% vs previous outlook of a 3% to 6% decline

·     JetBlue (JBLU) to acquire Spirit (SAVE) at $33.50 per share in cash or $7.6B enterprise value, including a prepayment of $2.50 per share in cash payable upon Spirit stockholders’ approval of the transaction and a ticking fee of $0.10 per month starting in January 2023

·     Boot Barn (BOOT) 1Q EPS $1.29 vs est. $1.14 on sales $365.9Mm vs est. $366.9Mm, comps +10%; guides 2Q sales $339-346Mm vs est. $363.4Mm, comps approx flat and EPS $0.87-0.93 vs est. $1.17; sees FY sales $1.68-1.70B vs est. $1.73B, comps +12.9-14.2% and EPS $6.00-6.20 vs est. $6.27

·     Columbia Sportswear (COLM) 2Q EPS $0.11 vs est. $0.03 on sales $578.1Mm; sees FY net sales $3.44-3.5B vs est. $3.6B and EPS $5.00-5.40 vs est. $5.74

·     Nissan Motor Co (NSANY) said it was “cautiously optimistic” after posting a 14% drop in quarterly operating profit; the company stuck to its full-year operating profit forecast of 250B yen ($1.85 billion) for the year to March 31 and was seeking to achieve a global sales volume of 4M units.

·     O’Reilly Automotive (ORLY) 2Q EPS $8.78 vs est. $8.96 on revs $3.67B vs est. $3.7B; says cutting FY comps guide to +3-5%, sees revs $14.0-14.3B vs est. $14.29B, gross margin 50.8-51.3%, op margin 20-20.3%, EPS $31.25-31.75 vs est. $32.87

·     Pilgrim’s Pride (PPC) Q2 adjusted EPS $1.54 vs. est. $1.14; Q2 revs rose 27.3% to $4.63B vs. est. $4.31B

·     Vista Outdoor (VSTO) said it has agreed to acquire Simms Fishing Products, a Montana-based fishing goods brand, for $192.5M; adds purchase price includes a net present value of roughly $20 mln in future tax benefits; 1Q adj EPS $2.31 vs est. $1.88 on sales $803Mm vs est. $781Mm; sees FY sales $3.2-3.325B vs est. $3.22B

·     VICI Properties (VICI) 2Q AFFO/shr $0.48 vs est. $0.47 on revs $662.6Mm vs est. $592.2Mm; reaffirms FY AFFO guide

 

Energy

·     Solar stocks jump after hours on news that Senator Joe Manchin reached an agreement with Senate Majority Leader Chuck Schumer to vote on a package aimed at supporting alternative energy and lowering healthcare costs. According to The Wall Street Journal, the new package would raise $739B, of which $369B would be dedicated to climate and energy programs, and $64B to extending healthcare subsidies for some Affordable Care Act users – watch shares of FSLR, RUN, SEDG, SPWR, NOVA, CSIQ in solar and PLUG, FCEL, BLDP, BE in alt energy.

·     Helmerich & Payne (HP) Q3 adj EPS reported in-line at $0.05 on revs $550M vs. est. $520.47M; Quarterly North America Solutions operating income increased $56M sequentially, while direct margins increased $53M-$168M sequentially, as revenues increased by $77M-$486M and expenses increased by $24M-$318M — North America Solutions revenue per day increased approximately $1,950/day or 8% to $26,500/day on a sequential basis, while direct margins per day increased approximately $2,850/day or 37% to $10,600/day

·     NOV Inc. (NOV) Q2 EPS $0.18 vs. est. $0.04; Q2 revs $1.73B vs. est. $1.6B; Q2 orders of $670M with a book-to-bill of 117%; Q2 completion & production solutions generated revenues of $639M, Q2 backlog for capital equipment orders for completion & production solutions was $1.44B and new orders booked for completion & production solutions totaled $530M

·     Weatherford (WFRD) guides full-year revenue outlook increased to mid-teens growth year-over-year; Q2 revenues of $1,064 million increased 13% sequentially, led by strong international growth of 14%; operating income was $104 million, compared to $18 million in the first quarter of 2022 and adjusted EBITDA was $186 million or a 17.5% adjusted EBITDA margin

 

Financials

·     Jack Ma plans to cede control of Alibaba (BABA) affiliate Ant Group in a move that would look to reduce governance risks, the WSJ reported. Ant is taking the opportunity to reduce the company’s reliance on Ma. Ma currently controls 50.52% of Ant’s shares via an entity in which he holds the dominant position and could relinquish his control https://on.wsj.com/3beBKca

·     Avalon Bay (AVB) 2Q core FFO/shr $2.43 vs est. $2.36, same store sales +13.1%; sees 3Q core FFO/shr $2.47-2.57 vs est. $2.45; sees FY core FFO/shr $9.76-9.96 vs est. $9.63

·     Invitation Homes (INVH) 2Q core FFO/shr $0.42 vs est. $0.41 on revs $557Mm vs est. $545.6Mm; sees FY core FFO/shr $1.66-1.72 vs est. $1.67

·     Schwab (SCHW) authorizes $15 billion stock repurchase, declares 10% increase in quarterly common stock dividend, and declares preferred stock dividends

 

Healthcare

·     Pfizer (PFE) reports Q2 adjusted EPS $2.04 vs. est. $1.80; Q2 revs $27.7B vs. est. $25.74B; raises lower end of 2022 adjusted diluted eps guidance by $0.05 to a range of $6.30 to $6.45; said current financial guidance does not anticipate any additional share repurchases in 2022; sees 2022 revenues $98.0 bln to $102.0 bln

·     Merck (MRK) Q2 adjusted EPS $1.87 vs. est. $1.69; Q2 revs $14.6B vs. est. $13.9B; narrows expected fFY2022 worldwide sales range to be between $57.5 billion and $58.5 billion and narrows expected FY 2022 non-Gaap eps range to be between $7.25 and $7.35, including negative impact from foreign exchange of about 3%

·     Teladoc (TDOC) shares tumble over 20% after hours after Q2 net loss widens to $3.1B from $133.8M a year ago and said it recorded a non-cash goodwill impairment charge of $3B in the qtr; maintains previous 2022 revenue and adjusted EBITDA outlooks but now expects results to be toward the lower end of those ranges

·     Community Health Systems (CYH) tumbles over 50% as posted Q2 adjusted loss per share (-$2.52) vs. estimate EPS $0.06 as net revs fell -2.4% y/y to $2.92B below est. $3.13B and adjusted EBITDA down -44% y/y to $253M vs. est. $427.2M

·     Fresenius Medical (FMS) shares slide as sees FY22 adj revs at the low end of forecast and withdraws 2025 targets due to up headwinds

·     Molina Healthcare (MOH) 2Q adj EPS $4.99 vs est. $4.29 on revs $8.05B vs est. $7.69B; guides FY premium revs approx $30B and adj EPS at least $17.60 vs est. $17.27

·     Thermo Fisher (TMO) Q2 adj EPS $5.51 vs. est. $4.99; Q2 revs $10.97B vs. est. $9.97B; qtrly organic revenue growth was 3%

 

Industrials & Materials

·     Honeywell (HON) Q2 EPS $2.10 vs. est. $2.03; Q2 revs $8.95B vs. est. $8.67B; Q2 orders were up 12% with backlog up 12% to $29.5B; raises FY22 adjusted EPS view to $8.55-$8.80 from $8.50-$8.80 (est. $8.68), while lowers FY22 revenue view to $35.5B-$36.1B from $35.5B-$36.4B (est. $35.82B) and sees FY22 free cash flow $4.7B-$5.1B

·     Northrop Grumman (NOC) Q2 adjusted EPS $6.06 vs. est. $6.10; Q2 revenue $8.8B vs. est. $9.07B; backs FY22 transaction-adjusted EPS view $24.50-$25.10 (est. $24.83) and backs FY22 revenue view $36.2B-$36.6B (est. $36.54B)

·     CH Robinson (CHRW) 2Q EPS $2.67 vs est. $1.98 on revs $6.8B vs est. $6.8B, adj op margin 45.5%; says watching economic conditions closely, and the management team and board continue to consider all strategies to grow operating profits and maximize long-term shareholder returns through all phases of the business cycle and various economic scenarios.

·     Graco Inc. (GGG) 2Q EPS $0.68 vs est. $0.67 on revs $548.5Mm vs est. $533.9Mm; confirms FY outlook of +high-single-digit organic revs growth on constant currency basis

·     Hubbell (HUBB) files mixed securities shelf

·     Aspen Aerogels (ASPN) 2Q EPS ($0.68) vs est. ($0.57) o revs $45.6Mm vs est. $38.8Mm; sees FY revs $180-200Mm vs est. $177.1Mm and EPS ($2.35)-($2.16) vs est. ($2.16)

·     United Rentals (URI) 2Q adj EPS $7.86 vs est. $6.46 on revs $2.77B vs est. $2.7B; guides FY revs $11.4-11.7B vs prior $11.1-11.5B and est. $11.26B, sees adj EBITDA $5.4-5.55B vs prior $5.2-5.4B and est. $5.26B

 

Technology, Media & Telecom

·     Meta (META) 2Q EPS $2.46 vs est. $2.59 on revs $28.8B, down 1% y/y vs est. $28.9B, qtrly ad revs $28.15B; sees 3Q revs $26-28.5B vs est. $30.5B; reduced hiring and overall expense growth plans to account for more challenging environment; weak advertising demand was reflected in Meta’s average price per ad, which fell 14% in the quarter; lowered year rev outlook to $85B-$88B from prior view of $87B-$92B

·     Qualcomm (QCOM) 3Q EPS $2.96 vs est. $2.87 on revs $10.9B vs est. $10.9B; guides 4Q adj EPS $3.00-3.30 vs est. $3.23, revs $11-11.8B vs est. $11.9B; says now expects smartphone sales to fall 5% this year, vs. previous forecast of flat growth

·     STMicroelectronics (STM) raised its full-year outlook; said bookings remained strong across all customers and geographies; lifted its 2022 revenue forecast to between $15.9 billion and $16.2 billion from a range of $14.8 billion to $15.3 billion; forecast third-quarter net revenue of $4.24 billion, beating an estimate of $3.81 billion.

·     Etsy Inc. (ETSY) 2Q EPS $0.51 vs est. $0.31 on revs $585Mm vs est. $556Mm, consolidated GMS $3.0B -0.4% (+2.6% currency neutral); guides 3Q GMS $2.8-3.0B, revs $540-575Mm vs est. $568.4Mm, adj EBITDA margin approx 26%

·     Coursera (COUR) shares fell -30%; 2Q EPS ($0.34) vs est. ($0.13) on revs $124.8Mm vs est. $130.5Mm; sees 3Q revs $126-130Mm vs est. $142.3Mm and FY revs $509-515Mm vs est. $542.1Mm

·     Impinj (PI) 2Q adj EPS $0.11 vs est. ($0.02) on revs $59.8Mm vs est. $55.1Mm; sees 3Q revs $63.5-65.5Mm vs est. $58.7Mm and adj EPS $0.15-0.20 vs est. $0.03

·     Lam Research (LRCX) 4Q adj EPS $8.83 vs est. $7.32 on revs $4.64B vs est. $4.2B; sees Q1 EPS $8.75-$10.25 vs. est. $8.82; sees Q1 revenue $4.6B-$5.2B vs. est. $4.63B

·     NetGear (NTGR) 2Q adj EPS ($0.19) vs est. ($0.24) on revs $223.2Mm vs est. $209.8Mm; sees 3Q net revs $240-255Mm vs est. $231.8Mm

·     Plexus (PLXS) 3Q EPS $1.33 vs est. $1.10 on revs $981Mm vs est. $909.3Mm; guides 4Q revs $980Mm-1.02B vs est. $940.8Mm and EPS $1.19-1.35 vs est. $1.19

·     ServiceNow Inc. (NOW) 2Q adj EPS $1.62 vs est. $1.54 on revs rose 24% to $1.75B vs est. $1.76B; sees 3Q subscription revs $1.75-1.755B; expects FY22 subscription revenue to grow by 24% versus its previous forecast of 26% growth

·     Samsung (SSNLF) reported revenue of 77.2 trillion won, or the equivalent of about $59 billion, for the three months ended June 30. That represented a 21.6% rise from the year-ago quarter but a slight pullback versus the opening three months of the year when Samsung posted record-high revenues of 77.8 trillion won.