Early Look

Tuesday, May 3, 2022

Futures	Up/Down	%	Last
Dow	-104.00	0.32%	32,876
S&P 500	-12.25	0.30%	4,138
Nasdaq	-44.50	0.34%	13,028

 

 

U.S. stock futures are sliding after trading in a narrow range overnight, as investors await the Federal Reserve meeting results as their two day-meeting kicks off later this morning. Expectations are for an aggressive Fed, with an interest rate hike of at least 50 bps expected at this point but talk of a possible 75-bps hike not entirely discounted at this point. As for yesterday, it was a wild ride to start the month as major averages witnessed a series of intraday swings, which saw the S&P 500 index hit fresh lows dating back to May 2021, and the Nasdaq making new lows around 12,200 before a final 90-minute rally propelled stocks to close sharply higher, with the Nasdaq posting a 300-point swing off the lows. The question remains into the two-day FOMC meeting is if the late day rally was nothing more than bear-market short squeeze or did markets truly put in the bottom? The U.S. 10-Year Treasury yield hit 3.01%, or a fresh high back to December 2018. In Asian markets, some stock markets are closed as Chinese closed from May 2-4th, and Japan closed May 3- 5^th, while in Europe, the German DAX is up +0.2% to 13,970, while the FTSE 100 slips –0.7% to 7,490. Meanwhile in politics, the U.S. braces for protests after a leaked report (as per Politico) said the Supreme Court was on the verge of overturning the decision on abortion rights. In Australia, its central bank raised rates last night and stated that they are “committed to doing what is necessary to ensure that inflation in Australia returns to target over time.”

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 23.45 points, or 0.57%, to 4,155.38

·     The Dow Jones Industrial Average rose 84.29 points, or 0.26%, to 33,061.50

·     The Nasdaq Composite surged 201.38 points, or 1.63%, to 12,536.02

·     The Russell 2000 Index advanced 18.81 points, or 1.01% to 1,882.91

 

Economic Calendar for Today

·     7:45 AM ET                  ICSC Weekly Retail Sales

·     8:55 AM ET                  Johnson/Redbook Weekly Sales

·     10:00 AM ET                Durable Goods Orders m/m for March

·     10:00 AM ET                Factory Orders m/m for March…est. 1.1%

·     10:00 AM ET                JOLTs Job Openings for March…est. 11.0M

·     4:30 PM ET                   API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AGCO, AME, ARNC, ATKR, BEN, BIIB, BR, CEIX, CMI, CMS, CNP, CTLT, CVLT, DD, DKL, EL, ESPR, ETN, EXPD, FIS, GLDD, HLT, HSC, HSIC, INCY, IPGP, IT, ITT, ITW, J, KKR, LDOS, LEA, LGIH, LPX, MLM, MPC, MPLX, MTOR, NRZ, PARA, PEG, PFE, PINC, ROK, SABR, SAGE, SEE, SMG, SPGI, TAP, VAL, VSH, WAT, WLK, ZBH, ZBRA

·     Earnings After the Close: ABNB, ACHC, ADT, AHT, AIG, AIZ, AKAM, AMD, ANDE, ATEN, AYX, BFAM, BGFV, BLKB, BNFT, BXC, CNDT, CPSI, CRK, CRUS, CWH, CZR, DCO, DENN, DOOR, EGY, EHTH, ENVA, EXR, FRSH, GNW, GPOR, HASI, HLF, INFN, INSP, JKHY, KAR, LFUS, LSCC, LYFT, MASI, MRCY, MSTR, MTCH, MTW, MUSA, OKE, OMI, OUST, PAYC, PEAK, PKI, PRO, PRU, PSA, PTCT, PUMP, RDN, REG, RRR, SBUX, SCI, SPNE, SPT, SWKS, VIAV, VOYA, VREX, VRSK, WERN, WRAP, WTS

 

Other Key Events:

·     Association for Research in Vision & Ophthalmology (ARVO), 5/1-5/4, in Denver, CO

·     BMO Capital Global Reserve & Asset Managers Conference, 5/3-5/6, in Toronto

·     Oppenheimer Annual Industrial Growth Conference (virtual), 5/3-5/4

·     Piper Spring Biotech Symposium, 5/3-5/5, in Boston, MA

 

 

Macro	Up/Down	Last
Nymex	-1.04	104.13
Brent	-0.90	106.68
Gold	-6.30	1,857.30
EUR/USD	0.0005	1.1051
JPY/USD	-0.05	130.08
10-Year Note	-0.015	2.981%

 

 

World News

·     The Supreme Court is poised to overturn the right to abortion ensured by the nearly 50-year-old Roe v. Wade decision, according to a leaked initial draft of the new opinion obtained by Politico.

·     The RBA lifted interest rates 25bps to lift the RBA’s cash rate from 0.10% to 0.35% and lifted the interest rate on Exchange Settlement balances from zero per cent to 0.25%. The Australian Central Bank committed said it is committed to doing what’s needed to ensure inflation returns to target over time, and Board judged that now was right time to begin withdrawing some extraordinary monetary support, this will require a further lift in rates over period ahead.

·     Italy’s government approved 14 bln euros of new stimulus without extra borrowing. The plan will be partly financed by increasing a windfall tax on energy companies

 

Sector News Breakdown

Consumer

·     Clorox (CLX) shares fall -5% on lower guide; 3Q adj EPS $1.31 vs est. $0.97 on revs $1.8B vs est. $1.8B, gross margin 35.9%; guides FY adj EPS $4.05-4.30 vs est. $4.18

·     Expedia (EXPE) shares rise 4%; 1Q adj EPS ($0.47) vs est. ($0.62) on revs $2.25B vs est. $2.23B, total gross bookings $24.4B; says continue to see positive indicators for a strong recovery in leisure travel this summer, was early impact from Omicron which faded as turnaround in demand reached new highs since start of covid

·     Chegg Inc. (CHGG) shares fall over -30%; 1Q adj EPS $0.32 vs est. $0.24 on revs $202.2Mm vs est. $201.3Mm; sees 2Q revs $188-192Mm vs est. $209.3Mm; guides FY revs $740-770Mm vs est. $843.5Mm

·     Freshpet (FRPT) 1Q EPS ($0.40) vs est. ($0.39) on sales $132.2Mm vs est. $126.6Mm; reiterates FY guide

·     Kellogg (K) and Tyson (TSN) were downgraded to underweight from neutral by Piper citing shifting consumer habits caused by inflation pressures and valuations that are ahead of their historical averages

·     Leggett & Platt (LEG) 1Q EPS $0.66 vs est. $0.56 on sales $1.32B vs est. $1.26B; FY guide unchanged at revs $5.3-5.6B vs est. $5.3B and EPS $2.70-3.00 vs est. $2.74

·     MGM Resorts (MGM) Q1 adjusted EPS $0.01 vs. est. loss (-$0.07); Q1 revs $2.9B vs. est. $2.78B; MGM China net revenues of $268 million in Q1 compared to $296 million in the prior year quarter; qtrly RevPAR for Las Vegas strip resorts $154 vs $60; qtrly Las Vegas strip resorts casino revenue $475 mln vs $232 mln

·     Carnival Cruise Line (CCL) is first major cruise line in U.S. to get entire fleet back to guest operations -With the departure of Carnival Splendor from the Port of Seattle today, Carnival Cruise Line celebrates the restart of its entire fleet of ships and Carnival becomes the first major cruise line in the U.S. to achieve that milestone

·     Ancora Sends Letter to Hasbro’s (HAS) Board of Directors regarding opportunities to strengthen the company’s long-term positioning and unlock shareholder value. Highlights opportunity for a properly refreshed board to pursue a full or partial sale of eOne, which represents a $4.5+ billion capital allocation misstep that has become a non-synergistic distraction

 

Energy

·     BP Plc (BP) Q1 net profit of $6.25B is its highest in over a decade, on soaring oil and gas prices; says it will boost its quarterly share repurchases to $2.5 bln before end of Q2; takes $24B charge in write-down on exit of its Russia businesses, slightly lower than its initial estimates of $25B

·     Coterra Energy (CTRA) Q1 adj EPS $1.01 vs. est. $0.85; maintaining full-year 2022 capital investment guidance of $1,400 to $1,500 mln; maintaining full-year 2022 production and cost guidance; Q1 FCF $961M

·     Diamondback Energy (FANG) 1Q EPS $4.36 vs est. $4.51; qtrly avg production 222.8 MBO/D, adj FCF $1.25B; sees FY net production 218-222 MBO/D

·     Devon Energy (DVN) announces Q1 dividend, increases share-repurchase authorization to $2.0B; Q1 EPS $1.88 vs. est. $1.75; Q1 production averaged 575,000 oil-equivalent barrels per day, with oil accounting for 50% of the volume; said intends to further improve its financial strength by retiring low-premium debt of about $1.0 billion in 2022 and 2023; on track to meet the strategic objectives that underpin its operating plan in 2022

·     Williams Energy (WMB) 1Q adj EPS $0.41 vs est. $0.35 on revs $2.52B vs est. $2.98B; says expect FY adj EBITDA +7% vs est. +5.8%, midpoint $6.05B vs est. $5.96B

·     SolarEdge (SEDG) Q1 Non-GAAP EPS $1.20 vs. est. $1.27; Q1 revs $655.1M vs. est. $636M; sees Q2 revs $710M-$740M vs. est. $687.1M and Q2 GM’s 25%-29%

 

Financials

·     Boston Properties (BXP) sees FY FFO/shr $7.40 to $7.50, saw $7.30 to $7.45 – sees 2q FFO/shr $1.84 to $1.86, est. $1.83 – 1q rev. $754.3m, est. $731.1m – 1q FFO/shr $1.82, est. $1.74

·     Brixmor Property (BRX) 1Q FFO/shr $0.49 vs est. $0.48 on revs $298.6Mm vs est. $291.8Mm; same-property NOI +8.4%; guides FY FFO/shr $1.88-1.95 vs est. $1.92 and same-property NOI +3.0-4.5%

·     Genworth (GNW) announces $350m share buyback

·     Vornado Realty (VNO) Q1 adj FFO $0.79 vs. est. $0.77; Q1 revs $442.1M vs. est. $415.2M

 

Healthcare

·     Axsome Therapeutics (AXSM) upgraded to Outperform with a new $58 PT (prev. $29) at SMBC Nikko on improved risk-reward profile ahead of an expected FDA regulatory action on the AXS-05 NDA in MDD in 2Q22. With the Sunosi acquisition and CRL for AXS-07 in migraine now largely in the rearview, all eyes are on AXS-05

·     Sage Therapeutics (SAGE) Q1 EPS loss (-$2.07) vs. est. loss (-$2.05); anticipates cash, cash equivalents and marketable securities of approximately $1.3 billion at the end of 2022; does not anticipate receipt of any milestone payments from collaborations in 2022

 

Industrials & Materials

·     Avis Budget (CAR) 1Q adj EPS $9.99 vs est. $3.45 on revs $2.4B vs est. $2.08B

·     Cabot Corp (CBT) 2Q adj EPS $1.69 vs est. $1.42 on net sales $1.09B vs est. $922.6Mm; guides FY adj EPS $5.80-6.20 up from prior view $5.50-$5.90 and vs est. $5.80

·     Chemours (CC) Q1 adj EPS $1.46 vs. est. $0.92; Q1 revs rose 23% y/y to $1.8B vs. est. $1.57B; sees FY adj EBITDA $1.48B-$1.58B, up from prior $1.3B-$1.43B; in our TT segment, we continue to manage through ore challenges, which we now believe will continue into second half of 2022

·     DuPont (DD) Q1 adj EPS $0.82 vs. est. $1.13; Q1 revs $3.27B below consensus $4.2B; guides Q2 EPS and revs below consensus and cuts FY22 adjusted EPS view to $3.20-$3.50 from $4.60-$4.90 (est. $4.94) and cuts FY22 revenue view to $13.3B-$13.7B from $17.4B-$17.8B (est. $17.38B)

·     FMC Corp. (FMC) Q1 adj EPS $1.88 vs. est. $1.71; Q1 revs $1.35B vs. est. $1.29B; maintains FY22 revenue view $5.25B-$5.55B (est. $5.41B) and maintains adjusted EBITDA view $1.32B-$1.48B; also maintains FY free cash flow view $515M-$735M; expect costs will keep increasing in q2 but will be offset by solid volume growth and pricing actions

·     Flowserve (FLS) Q1 adj EPS $0.07 vs. est. $0.21; Q1 revs $821.1M vs. est. $845.5M; recorded $20.2M pre-tax charge in Q1 over Russia exit; cuts 2022 revenue outlook to up 5%-7% from 7%-9% prior and cuts year EPS view to $1.50-$1.70 from $1.70-$1.90

·     Kennametal (KMT) 3Q adj EPS $0.47 vs est. $0.43 on sales $512Mm vs est. $510.6Mm; sees 4Q sales $510-530Mm vs est. $543.3Mm

·     Mosaic (MOS) Q1 EPS $2.41 vs. est. $2.40; Q1 revs rose 71% y/y to $3.9B vs. est. $4.08B; for both potash and phosphates, supply chain constraints and impacts related to covid are only just beginning to abate; said disappointing rail service in N.A. experienced during Q1 has improved but not expected to reach normal performance levels until h2 2022; said Q1 sales in the potash segment totaled $1.06 billion, up from $477 million one year ago; sees year cape-ex $1.3B

·     Nutrien (NTR) Q1 EPS $2.70 vs. est. $2.72; Q1 revs $7.66B vs. est. $7.62B; boosts FY22 EPS view to $16.20-$18.70 from $10.20-$11.80 (est. $14.73) and raises FY22 adjusted EBITDA view to $14.5B-$16.5B from $10.0B-$11.2B

·     Rocket Lab USA (RKLB) captures falling four-story-tall rocket stage out of the air with a helicopter before dropping it in ocean in “There and Back Again” mission. Mission launched 34 satellites into orbit at 2250 GMT, taking its total satellites launched with Electron launch vehicle to 146

·     Woodward (WWD) 2Q adj EPS $0.72 vs est. $0.88 on sales $587Mm vs est. $599.9Mm; guides FY net sales $2.40-2.55B vs est. $2.47B and adj EPS $3.20-3.60 vs est. $3.71

 

Technology, Media & Telecom

·     Arista Networks (ANET) Q1 EPS $0.84 vs. est. $0.81; Q1 revs $877.1M vs. est. $854.2M; sees Q2 revenue $950M-$1.0B vs. est. $917.8M; sees Q2 gross margin 60%-62% and operating margin of 37%-38%

·     BigCommerce (BIGC) Q1 EPS loss (18c) vs. est. loss (17c); Q1 revs $66.1M vs. est. $63.9M; said Q12 total annual revenue run (ARR) rate as of March 31, 2022 was $280.4M, up 43% compared to March 31, 2021; raises FY22 revenue view to $277.8M-$286.6M from $271.6M-$283.6M and ups FY22 operating loss to $47.9M-$53.9M from $45.9M-$53.8M.

·     Harmonic (HLIT) 1Q adj EPS $0.08 vs est. $0.04 on revs $147.4Mm vs est. $136.4Mm

·     Logitech (LOGI) Q1 EPS $0.81 vs. est. $1.10; Q1 revs $1.23B vs. est. $1.27B; Cuts FY23 operating income to $875M-$925M from $900M-$950M and lowers FY23 revenue growth view to 2%-4% from MSD

·     Monolithic Power Systems (MPWR) 1Q adj EPS $2.45 vs est. $2.26 on revs $377.7Mm vs est. $360.5Mm; guides 2Q revs $420-440Mm vs est. $378.3Mm

·     NXP Semiconductor (NXPI) Q1 EPS $2.48 vs. est. $3.17; Q1 revs $3.14B vs. est. $3.1B; sees Q2 revs $3.175B-$3.375B vs. est. $3.15B

·     Sanmina (SANM) Q2 adj EPS $1.14 vs. est. $1.01; Q2 revs $1.91B vs. est. $1.76B; sees Q3 adjusted EPS $1.05-$1.15 vs. est. $1.05; sees Q3 revenue $1.825B-$1.925B vs. est. $1.78B

·     Q2 Holdings (QTWO) 1Q adj EPS $0.03 vs est. $0.06 on revs $134.1Mm vs est. $132.5Mm; guides 2Q adj revs $139.5-141Mm vs est. $140.4Mm, sees FY adj revs $577.5-581.5Mm vs est. $578.7Mm

·     ZoomInfo (ZI) Q1 adj EPS $0.18 vs. est. $0.15; Q1 revs $241.7M vs. est. $227.5M; sees Q2 revs $01.7-$01.8 vs. est. $0.17 and revs $253M-$255M vs. est. $242.1M; announced it has acquired Comparably, a leading recruitment marketing and employer branding platform, to enable companies to proactively attract and engage top talent