Early Look

Friday, May 10, 2024

U.S. futures are pointing higher, adding to strength yesterday as markets finished near their highs, and all major U.S. averages are on track for gains of more than 4% this week. The S&P 500 touched one-month highs on Thursday, with broad-based advances driven by expectations that the Federal Reserve will be able to start its easing cycle at some point later in the year. There remains zero fear in stock markets around the globe with several all-time highs in Europe and U.S. markets not far off their all-time bests. Yesterday, a weaker-than-expected U.S. jobless claims data helped reinforce this year’s rate cut view, with claims rising to over 8-month highs. Next week attention firmly turns to inflation with the April Producer Price Index (PPI) on Tuesday 5/14 and the Consumer Price Index (CPI) on Wednesday 5/15. Prices have risen unexpectedly the last 3 months and outside of a few downturn market blips in April, U.S. stocks are still near record highs on expectations the Fed will maintain cut later this year, and the current rate hike cycle is behind us (any change of that narrative could change the stock market outlook). Ten of the 11 major S&P sectors rose on Thursday, led by utilities (XLU), a market leader this year and at 52-week highs and REITs (XLRE), which is the only sector down year-to-date in the S&P. In Asian markets, The Nikkei Index gained 155 points to 38,229, the Shanghai Index was little changed at 3,154, and the Hang Seng Index jumped 425 points to 18,963. In Europe, more gains and record highs for several markets as the German DAX jumps 120 points to 18,806, while the FTSE 100 pushes higher 70 points to 8,451. Later today we get a few Fed speakers and the University of Michigan Sentiment at 10:00. The Dow comes into the day rising a 7-day winning streak.

• The Dow Jones Industrial Average rose 331.37 points, or 0.85%, to 39,387.76.
• The Nasdaq Composite gained 43.51 points, or 0.27%, to 16,346.27.
• The Russell 2000 Index advanced 18.50 points, or 0.90% to 2,073.63.

• 10:00 AM ET                University of Michigan 1-yr and 5-yr inflation expectations (3.2% and 3% prior respectively)
• 12:45 PM ET                Fed’s Goolsbee Speaks in Moderated Q&A
• 1:00 PM ET                   Baker Hughes Weekly rig count data
• 2:00 PM ET                   Federal budget for April

• China CPI, PPI Y/Y for April

• Fed’s Bostic says economy likely slowing, though rate-cut timing uncertain; forecasts a single quarter percentage PT cut this year – Reuters.
• Fed’s Daly said uncertainty about the inflation outlook has increased and made it difficult to make projections for policy until the central bank gets more clarity. two possible scenarios for the path of interest rates. One has inflation resuming its downward trajectory with a cooling job market, and in that case lowering rates would be appropriate. The other scenario has inflation continuing to stall out as it has during the first three months of this year. If that happens, it would not be appropriate to cut rates unless the job market falters, she said.

• Sweetgreen (SG) Q1 EPS ($0.23) vs est. ($0.16), adj EBITDA $0.1Mm vs est. ($2.3Mm) on revs $157.9Mm vs est. $151.97Mm; sees FY revs $660-675Mm vs est. $666.81Mm and comps +4-6%.
• Trex Co (TREX) Q1 EPS $0.82 vs est. $0.72, EBITDA $133.166Mm vs est. $118.45Mm on revs $373.635Mm vs est. $366.73Mm; sees Q2 sales $380-390Mm vs est. $375.23Mm; sees FY revs $1.215-1.235B vs est. $1.242B and EBITDA mgn 30.0-30.5%.
• Nio (NIO), Xpeng (XPEV), Li Auto (LI): The U.S. said it was planning to place a tariff on Chinese electric vehicles and other sectors including batteries and solar equipment, while also maintain existing levies after a review. The announcement builds on calls to increase tariffs on steel and aluminium and a probe into Chinese shipbuilding.

• Bloom Energy (BE) Q1 EPS loss (-$0.17) vs. est. loss (-$0.11); Q1 revs $235.3M vs. est. $250.21M; sees FY24 revenue $1.4B-$1.6B vs. est. $1.49B while reaffirms FY24 non-GAAP Gross Margin ~28% and non-GAAP Operating Income: $75-$100M; announces power capacity agreement with Intel (INTC).
• Genpact (G) Q1 adj EPS $0.73 vs est. $0.68, adj op Inc $182Mm vs est. $175.83Mm on revs $1.13B vs est. $1.11B; sees Q2 revs $1.143-1.148B vs est. $1.128B, gr mgn approx 34.8%, adj op Inc mgn approx 16.5%; sees FY revs $4.59-4.63B vs est. $4.593B, gr mgn approx 35.3%, adj op Inc mgn approx 17%, adj EPS $3.01-3.04 vs prior $3.00-3.03 and est. $3.01.

• Americold Realty (COLD) Q1 AFFO/shr 0.37 vs est. $0.28 on revs $665Mm vs est. $668.89Mm, adj EBITDA $155.8Mm vs est. $143.63Mm; sees FY AFFO/shr $1.38-1.46 vs prior $1.32-1.42 and est. $1.18.
• Artisan Partners Asset Management Inc. (APAM) preliminary assets under management ("AUM") as of April 30, 2024 totaled $155.7 billion. Artisan Funds and Artisan Global Funds accounted for $75.5 billion of total firm AUM, while separate accounts and other AUM accounted for $80.2 billion.
• Franklin Resources (BEN) reported preliminary month-end assets under management of $1.60 trillion at April 30, 2024, compared to $1.64 trillion at March 31, 2024. This month’s decrease in AUM reflected the impact of negative markets and slight long-term net outflows inclusive of $5.9 billion related to the $25 billion from Great-West Lifeco.
• H&R Block (HRB) Q3 adj EPS $4.94 vs est. $4.62 on revs $2.2B vs est. $3.553B; guides FY revs $3.53-3.585B vs est. $3.553B and adj EPS $4.10-4.30 vs est. $4.42.
• Invesco Ltd. (IVZ) prelim month-end assets under management (AUM) of $1,625.2B, a decrease of 2.3% vs the prior month-end. The firm delivered net long-term inflows of $5.0B in the month. Non-management fee earnings were $0.7B and money market net outflows $1.0B. AUM was negatively impacted by unfavorable market returns which decreased AUM by $39B.
• Lazard, Inc. (LAZ) reported preliminary assets under management as of April 30, 2024 totaling approximately $240.8 billion. The month’s AUM included market depreciation of $4.4 billion, net outflows of $3.6 billion and foreign exchange depreciation of $1.6 billion.
• Marathon Digital Holdings (MARA) Q1 revs $165.1M vs. est. $180.7M; said produced 2,811 Bitcoin during Q1 2024, a 28% increase from Q1 2023; energized hash rate increased 142% to 27.8 eh/s in Q1 2024 from 11.5 eh/s in Q1 2023.
• Virtus Investment Partners, Inc. (VRTS) preliminary assets under management of $170.1 billion as of April 30, 2024. In addition, the company provided services to $2.6 billion of other fee-earning assets, which are not included in assets under management.

• CareDx (CDNA) Q1 EPS loss (-$0.03) vs. est. loss (-$0.21); Q1 revs $72M vs. est. $63.14M; said raising guidance for full year 2024 revenue which is expected to be in range of $274M-$282M.
• Crinetics Pharma (CRNX) Q1 EPS ($0.93) vs est. ($0.81), op Inc ($73.52Mm) vs est. ($63.32Mm) on revs $0.6Mm vs est. $0.2556Mm.
• Figs (FIGS) Q1 EPS $0.01 vs. est. $0.00; Q1 revs $119.3M vs. est. $117.5M; Q1 Active customers as of March 31, 2024 increased 8.7% y/y to 2.6 million; net revenues per active customer were $210, a decrease of 2.8% y/y; AOV was $116, an increase of 1.8% y/y; narrows FY24 revenue view to down 2% to up 2%, from prior view "down single digits to flat".
• Ginko Bioworks (DNA) Q1 adj EBITDA ($100Mm) vs est. ($91.05Mm) on revs $38Mm vs est. $46.04Mm; announced plan to reach adj EBITDA break-even by end 2026 on run-rate basis; sees FY revs $170-190Mm vs. est. $223.2Mm; restructuring actions, including expected reduction in labor expenses of at least 25%, planned consolidation of some facilities.
• Guardant Health (GH) Q1 adj EPS ($0.46) vs est. ($0.81), adj EBITDA ($61.1)Mm vs est. ($91.7)Mm on revs $168.5Mm vs est. $160.91Mm; guides FY revs $675-685Mm vs prior $655-670Mm and est. $664.02Mm, adj gr mgn 61-63% vs prior 60-62% and FCF $(275)Mm to $(285)Mm.
• Insulet Corp. (PODD) Q1 EPS $0.23 vs est. $0.39, adj EBITDA $89.2Mm vs est. $63.72Mm on revs $441.7Mm vs est. $424.1Mm; sees Q2 revs +15-18% vs est. +15.45%; guides FY revs +14-18% vs prior +12-17% and est. +15.62%.
• Iovance Biotherapeutics (IOVA) Q1 EPS loss (-$0.42), in-line with consensus and said had cash, cash equivalents, investments, and restricted cash of approximately $362.6M, compared to $346.3M at December 31; Amtagvi Regulatory submissions on track in the European Union (EU), United Kingdom (UK), and Canada in 2024.
• MacroGenics (MGNX) shares fell -66% overnight after the drug developer reported five deaths in a mid-stage trial of its investigative therapy for prostate cancer, prompting several analyst downgrades.
• Mettled Toledo (MTD) Q1 adj EPS $8.89 vs est. $7.64, adj EBIT $267.3Mm vs est. $227.41Mm; guides Q2 local currency sales approx -4% vs est. -5.47%, adj EPS $8.90-9.05 vs est. $9.33; sees FY local currency sales approx +2% vs est. +0.94% and adj EPS $39.90-40.40 vs est. $39.90.
• Natera Inc. (NTRA) Q1 EPS ($0.56) vs est. ($0.71) on revs $367.7Mm vs est. $316.31Mm, gross margin 56.7%; guides FY revs $1.42-1.45B vs est. $1.341B, gross margin 53-55%.
• Novavax (NVAX) shares rise over 50% after signing a licensing agreement with Sanofi (SNY) that includes commercializing a combined Covid-19 and flu shot, in which the firm will receive $500 million in upfront payments as well as $700 million in development, regulatory and launch milestones.
• Progyny Inc. (PGNY) shares fall -30%; Q1 EPS $0.17 vs est. $0.13, adj EBITDA $50.291Mm vs est. $49.74M on revs $278.078M vs est. $289.46M; sees Q2 revs $300-310M vs est. $335.76M, adj EBITDA $52-55M vs est. $58.97M, adj EPS $0.39-0.41 vs est. $0.18; sees FY revs $1.23-1.27B vs est. $1.298B, adj EBITDA $216-226Mm vs est. $227Mm and EPS $1.61-1.68 vs est. $0.69.

• Arlo Technologies (ARLO) Q1 adj EPS $0.09 vs est. $0.09 on revs $124.2Mm vs est. $123.3Mm, adj gr mgn 39.4%; guides Q2 revs $120-130Mm vs est. $124.70Mm and adj EPS $0.06-0.12 vs est. $0.09.
• Dropbox (DBX) Q1 EPS $0.58 vs. est. $0.50; Q1 revs $631.3M vs. est. $628.7M; Q1 total ARR rose 3.6% y/y to $2.556B; Q1 paying users was 18.16M and Q1 average rev per paying user was $139.59.
• Gen Digital (GEN) Q4 EPS $0.53 vs. est. $0.52; Q4 revs $967M vs. est. $965.02; sees FY25 EPS $2.17-$2.23 vs. est. $2.22 and sees FY25 revenue $3.879B-$3.93B vs. est. $3.93B; authorizes $3 billion share repurchase program.
• Onto Innovation (ONTO) Q1 adj EPS $1.18 vs est. $1.08 on revs $228.846Mm vs est. $222.55Mm; sees Q2 revs $230-240Mm vs est. $226.02Mm, adj EPS $1.14-1.26 vs est. $1.11.
• Scripps (SSP) raises its outlook for political advertising – the company “now believes its 2024 election-year political advertising revenue will be $240-270MM vs. the prior $210-250MM. The increased outlook is being driven largely by U.S. Senate races in Montana and Ohio as well as controversial ballot issues in several states.”
• SoundHound (SOUN) Q1 EPS loss (-$0.12) vs. est. (-$0.09); Q1 revs rose 73% y/y to $11.6M vs. est. $10.1M; Q1 gross margin 59.7%; sees FY24 revenue $65M-$77M vs. consensus $69.49M.
• Unity Software (U) Q1 adj EBITDA $79Mm vs est. $47.9Mm on revs $460Mm vs est. $431.6Mm.
• Taiwan Semiconductor Manufacturing Co Ltd (TSM) said April sales t$236.02 billion, +59.6% y/y and says Jan-April sales t$828.67 bln, +26.2% y/y.
• Yelp (YELP) Q1 EPS $0.20 vs. est. $0.06; Q1 revs rose 6.5% y/y to $332.8M vs. est. $333.43M; sees Q2 revenue $350M-$355M below consensus $358.35M and sees Q2 adjusted EBITDA $70M-$75M; affirms 2024 revenue outlook $1.42B-$1.44B.