Early Look

Tuesday, July 30, 2024

U.S. futures are inching higher before some economic data, ahead of earnings from MSFT and AMD later tonight after lackluster trading day on Monday saw major averages finish mixed, with Smallcaps underperforming ahead of tomorrow’s FOMC meeting results. The U.S. dollar remained steady against a basket of currencies and Treasury yields were flat ahead of central bank meetings tomorrow (the FOMC, Bank of Japan, Bank of Canada). Tech investors look to MSFT to put earnings back on track after GOOGL, TSLA results disappointed last week while chip names look to rebound behind AMD. In data, declining number of job openings have continued, falling to around 8 million from a peak of more than 12 million in March 2022, data at 10:00 is likely to show. In Asian markets, The Nikkei Index rose 57 points to 38,525, the Shanghai Index fell -12 points to 2,879, and the Hang Seng Index dropped -235 points to 17,002. In Europe, the German DAX is up 86 points to 18,406, while the FTSE 100 slips -19 points to 8,272. Lots of catalysts remain with tomorrow’s FOMC meeting among the biggest, as the central bank is widely expected to hold its benchmark short-term interest rate steady — in a range between 5.25% and 5.5%, a two-decade high — while setting the table to begin a series of reductions at the next meeting in September. Still have key jobs data mid and late week, along with earnings from AAPL, AMZN, and others, but for today, JOLTs, and earnings (Pharma giants MRK and PFE both reported results this morning with PFRE beating and raising and MRK beating with mixed guidance).

• The Dow Jones Industrial Average fell -49.41 points, or 0.12%, to 40,539.93.
• The Nasdaq Composite gained 47.41 points, or 0.38%, to 18,643.01.
• The Russell 2000 Index declined -24.74 points, or 1.09% to 2,235.33.

• 8:55 AM ET                  Johnson/Redbook Weekly Sales
• 9:00 AM ET                  Monthly Home Price Index M/M for May
• 9:00 AM ET                  CaseShiller 20 City Index for May…est. +0.3%
• 10:00 AM ET                Consumer Confidence for July…est. 99.7 (prior 100.4)
• 10:00 AM ET                JOLTs Job Openings for June…est. 8.0M (prior 8.14M)
• 4:30 PM ET API Weekly Inventory Data

• Earnings After the Close: AAT ACEL AEIS AHT AKR AMD ANET ATEN ATRC AX BGFV BHE BLKB BNL BXC BXP CCCS CHCT CRK CZR DENN DV EA EQH ESS EXR FE FORR FRSH FSLR FSP GRPN HA HLI HRZN HURN INFA JBT KRG LC LFUS LMND LSTR LYV MCY MDLZ MFIN MOD MSFT MTCH NARI NMIH BOG NWE OI OVV PCRX PEN PINS POWL PRO PRTS PSA QRVO QUAD RCKY RYI SBUX STAG SWKS STK TEX TWO UDR UNM VOYA WERN WGS WPC WTTR WU ZWS

• Yesterday, the U.S. Treasury financing estimates: During Q3, Treasury expects to borrow $740 billion in privately held net marketable debt, assuming an end-of-September cash balance of $850 billion. The borrowing estimate is $106 billion lower than announced in April 2024, largely due to lower Federal Reserve System Open Market Account (SOMA) redemptions and a higher beginning-of-quarter cash balance. During the Q4, Treasury expects to borrow $565 billion in privately held net marketable debt, assuming an end-of-December cash balance of $700 billion.

• Whirlpool (WHR) downgraded to Underperform from No Rating, given recent M&A speculation appears to have faded following Bosch’s public comments that the company will be focused on closing its acquisition JCI’s light commercial and residential HVAC assets over the next 12 months.
• JetBlue (JBLU) Q2 adj EPS $0.08 vs. est. loss (-$0.11); Q2 revs $2.4B, in-line with consensus $2.4B; sees Q3 revenue growth down (5.5%)-(1.5%) from $2.35B last year and sees Q3 ASMs (6%)-(3%) vs. last year; will cut $3 billion in capital spending through 2029 and plans other measures to boost pre-tax income by as much as $900 million.
• Sprouts Farmer Market (SFM) Q2 EPS $0.94 vs est. $0.78 on revs $1.894B vs est. $1.837B; sees Q3 adj EPS $0.71-0.75 vs est. $0.69; sees FY net sales +9-10% vs est. +8.2%, sees FY adj EPS $3.29-3.37 vs est. $3.13.

• Chinese solar module producer Zhejiang Akcome New Energy Technology has filed for bankruptcy at one of its subsidiaries, citing an inability to repay its debts, according to a Monday filing.
• Sandridge Energy, Inc. (SD) announces entry into a definitive agreement to acquire assets in the western Anadarko basin and entry into joint development agreement; proposed deal for cash consideration of $144M.

• Brixmor (BRX) Q2 FFO/shr $0.54 vs est. $0.51, EPS $0.23 vs est. $0.22; sees FY FFO/shr $2.11-2.14 vs est. $2.10 and EPS $0.96-0.99 vs est. $0.95; sees FY same-property NOI growth +4.25-5.00%.
• COPT Defense Properties (CDP) Q2 FFO/shr $0.64 vs est. $0.63, EPS $0.31 vs est. $0.31; raises midpoint of FY FFO/shr guide by $0.02 to $2.56 vs est. $2.54.
• Cushman & Wakefield (CWK) Q2 adj EPS $0.20 vs. est. $0.19; Q2 revs $2.29B vs. est. $2.37B; posts third consecutive quarter of global leasing growth; said Q2 net cash flow from operations and free cash flow both improved by more than $130M YTD vs. 2023; Q2 Services, Capital markets and Valuation and other declined 3%, 15% and 4%, respectively.
• Renasant Corporation (RNST) to acquire the First Bancshares, Inc. (FBMS) in proposed deal for all-stock transaction valued at approximately $1.2B; under deal, shareholders of first will receive 1.00 share of Renasant common stock for each share of first common stock.
• StanChart (SCFBY) unveils record $1.5 billion buyback, boosts income outlook; H1 statutory pre-tax profit climbs 5% to $3.49 bln, just ahead of a consensus estimate; expects operating income to grow more than 7% on a constant currency basis vs its previous projection of between 5% and 7%.
• Welltower (WELL) Q2 normalized FFO/shr $1.05 vs est. $1.00, EPS $0.42 vs est. $0.34; sees FY normalized FFO/shr $4.13-4.21 vs est. $4.12 and EPS $1.52-1.60 vs est. $1.32.

• Hologic Inc. (HOLX) Q3 EPS $1.06 tops consensus $1.02; Q3 revenue $1.01B vs. consensus $1.0B; revs beat primarily driven by higher sales in Molecular Diagnostics, Breast Imaging, and Surgical; Q3 Diagnostics revenue increased 0.3%, or 0.7% in constant currency; sees Q4 EPS $0.97-$1.04 on revs $970M-$985M vs. est. $1.04/$1.0B.
• Merck & Co (MRK) Q2 EPS $2.28 vs. est. $2.17; Q2 revs $16.1B vs. est. $15.84B; said it expects FY EPS in the range of $7.94 to $8.04 on sales of $63.4 billion to $64.4 billion. Below consensus for EPS of $8.16 and sales of $64.29 billion.
• Novavax (NVAX) downgraded to Underweight from Neutral at JP Morgan saying shares are up 267% since the announced strategic partnership with Sanofi (SNY) for Novavax’s COVID-19 vaccine program.
• Pfizer (PFE) reports strong second-quarter 2024 results and raises 2024 guidance; launched manufacturing optimization program with anticipated cost savings of approximately $1.5B by end of 2027; said on track to deliver at least $4B in net cost savings by end of 2024; raises FY revs view to $59.5B-$62.5B, from prior $58.5B-$61.5B view and EPS to $2.45-$2.65, forecast $2.15-$2.35 after Q2 results beat ($0.60/$13.3B vs. est. $0.45/$13.1B).
• Tilray (TLRY) said that its beverage-alcohol division saw a 127% jump in revenue, to $76.7M in the fiscal fourth quarter from $32.4M y/y; said Beverage-alcohol gross profit increased 146% to $40.8M in the quarter; narrowed its quarterly loss to $15.4M compared with a net loss of $119.8M in the prior-year quarter.
• Verastem Oncology (VSTM) said the FDA granted Orphan Drug Designation to avutometinib, a RAF/MEK clamp, in combination with defactinib, a selective FAK inhibitor, for the treatment of pancreatic cancer.

• Crane Inc. (CR) Q2 adj EPS $1.30 vs est. $1.24 on sales $581Mm vs est. $568.29Mm, adj op Inc $103Mm vs est. $100Mm, op mgn 17.7%; sees FY sales +11% vs prior +10% and est. +10.54%, adj segment op mgn approx 20.7% vs prior 20.5%, adj EPS $4.95-5.15 vs prior $4.75-5.05 and est. $5.01.
• Element Solutions (ESI) Q2 adj EPS $0.36 vs est. $0.35 on sales $612.7Mm vs est. $608.28Mm; guides FY adj EBITDA $530-545Mm vs est. $537.2Mm and FCF $280-300Mm.
• Flowserve Corp. (FLS) Q2 EPS $0.55 vs. est. $0.63; Q2 revs $1.16B vs. consensus $1.13B.
• Fluor Corporation (FLR) announced that it has signed a contract with RoPower Nuclear for Phase 2 front-end engineering and design work at its small modular reactor facility in Doicesti, Romania. Fluor will recognize the contract as a new award in the third quarter of 2024.
• Glencore (GLNCY) left its 2024 production guidance unchanged for most metals and increased coal to reflect the acquisition of Teck’s steelmaking coal unit, saying it will announce whether it will proceed with a demerger of its coal assets at its half-year financial results next week.
• Leidos (LDOS) Q2 EPS $2.63 vs. consensus $2.27; Q2 revenue $4.13B above consensus $4.06B; reports Q2 net bookings of $4B with a book-to-bill ratio of one for the quarter and 1.1 for trailing twelve months; raises FY24 adjusted EPS view to $8.60-$9.00 from $8.40-$8.80 and narrows its year sales view.
• Woodward Inc. (WWD) Q3 EPS $1.63 vs est. $1.52 on sales $847-688Mm vs est. $853.52Mm; sees FY adj EPS $5.80-6.00 vs est. $5.98 and revs $3.25-3.3B vs est. $3.31B; forecasts FY adj FCF $300M to $350M, forecast $325M to $375M.

• F5 Networks (FFIV) Q3 EPS $3.36 tops consensus $2.97; Q3 revenue $695M vs. consensus $686.06M; sees Q4 EPS $3.38-$3.50, vs. consensus $3.33 and guides Q4 revenue $720M-$740M vs. est. $717.39M; now expect fiscal year 2024 revenue toward the top end of our prior expectations, at approximately $2.8 billion, or roughly flat with last year.
• Harmonic (HLIT) Q2 adj EPS $0.08 vs. est. $0.04; Q2 revs $138.7M vs. consensus $133.67M; sees Q3 adj EPS $0.19-$0.24 vs. consensus $0.19 and sees Q3 revenue $175M-$190M vs. est. $177.83M; announced that Telecentro has selected Harmonic’s industry-leading cOS broadband platform to modernize its broadband network.
• Lattice Semiconductor (LSCC) Q2 adj EPS $0.23 vs est. $0.24 on revs $124.1Mm vs est. $130.17Mm, ad gr mgn 69%; sees Q3 revs $117-137Mm vs est. $142.47Mm, adj gr mgn 68-70%.
• Rambus Inc. (RMBS) Q2 EPS $0.33 vs. est. $0.44; Q2 revs $132.1M vs. consensus $138.9M; said achieved solid Q2 results in line with expectations and generated outstanding cash from operations of $70.4M; delivered $56.7M in product revenue, up 13% sequentially; sees Q3 licensed billings $60M-$66M, and product revenue $62M-$68M.
• Sanmina Corp. (SANM) Q3 adj EPS $0.1.25 vs est. $1.28 on revs $1.84B vs est. $1.859B, adj op mgn 5.3%; sees Q4 adj EPS $1.30-1.40 vs est. $1.44 on revs $1.9-2.0B vs est. $2.013B.
• SBA Communications (SBAC) Q2 AFFO $3.29 vs. consensus $3.28 on revs $660.48M vs. est. $665.12M; cuts FY24 AFFO view to $13.06-$13.43 from $13.09-$13.46 (est. $13.20) and cuts FY24 revenue view to $2.642B-$2.672B from $2.67B-$2.71B vs. consensus $2.67B; Q2 adjusted EBITDA was $467.1M, a 1.0% decrease y/y.
• Sensata Technologies (ST) Q2 adj EPS $0.93 vs est. $0.93, adj op Inc $196.7Mm vs est. $190.3Mm on revs $1.036B vs est. $1.039B; sees Q3 revs $970Mm – $1B vs est. $1.028B and adj EPS $0.82-0.88 vs est. $0.93.
• Varonis Systems (VRNS) Q2 adj EPS $0.05 vs est. ($0.02), adj op Inc $2.1Mm vs est. $($5.37)Mm on revs $130.346Mm vs est. $124.84Mm; guides Q3 revs $140-143Mm vs est. $135.62Mm, adj op Inc $7-8Mm vs est. $2.84Mm and adj EPS $0.07-0.08 vs est. $0.03; sees FY revs $544-552Mm vs est. $542.24Mm, adj op Inc $18-21Mm vs est. $11.35Mm and adj EPS $0.22-0.24 vs est. $0.17.