Early Look

Thursday, May 23, 2024

After three days of low volume, low volatility and tight trading ranges for major U.S. averages, U.S. futures are pointing to new record highs after semiconductor chip giant NVDA reported better-than-expected quarterly results, announced a 10-for-1 stock split, boosted its dividend, and had positive commentary on AI growth. NVDA recorded Q1 revenue of $26 billion, up 260% year-over-year, record Q1 EPS of $6.12, up 560% y/y, record $14.8 billion in net income, up 600% y/y, and record data center revenue of $19.4B, up 430% y/y and vs $3.8B two years ago. The expectations were high, and the company delivered, giving a boost to the entire “AI” complex this morning. The question is, will markets hold these highs? Or will it be a “sell on the news” type reaction, as stocks have only rallied the first three weeks of May. Outside of NVDA, economic data picks up this morning in the U.S. (see below), while a few companies moving on earnings overnight (RAMP, SNOW, ZUO rise on results while VFC, SNPS declines). In Asian markets, The Nikkei Index jumped 486 points to 39,103, the Shanghai Index fell -42 points to3,116 as China has seen some profit taking this week, and the Hang Seng Index declined -326 points to 18,868. In Europe, the German DAX is up 51 points to 18,732, while the FTSE 100 is flat at 8,369. In weekly sentiment data, The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 20.7 vs 17.6 last week. Bulls rise to 47% from 40.9%, Neutrals fall to 26.6% from 35.9% and Bears rise to 26.3% from 23.3%.

• The Dow Jones Industrial Average fell -201.95 points, or 0.51%, to 39,671.04.
• The Nasdaq Composite dropped -31.08 points, or 0.18%, to 16,801.54.
• The Russell 2000 Index declined -16.65 points, or 0.79% to 2,081.71.

• 8:30 AM ET                  Continuing Claims…est. 1.794M
• 9:45 AM ET                  S&P Global Manufacturing PMI May-Flash…est. 50.0
• 9:45 AM ET                  S&P Global Services PMI, May-Flash…est. 51.3
• 10:00 AM ET                New Home Sales M/M for April…est. 679K (prior 693K)
• 10:30 AM ET                Weekly EIA Natural Gas Inventory Data
• 11:00 AM ET                Kansas City Fed Manufacturing for May…prior (-13)

• Earnings After the Close: AMWD CVCO INTU LGF/A ME ROST SOL STEP WDAY

• TD Cowen 2nd Annual Sustainability Week, 5/21-5/23 (virtual)

• Live Nation (LVY) shares dropped after hours after Bloomberg reported the US Justice Department and a group of states will sue Live Nation Entertainment Inc. for antitrust violations related to Ticketmaster’s unrivaled control of concert ticket sales, according to people familiar with the case. US Justice Department to Seek Breakup of Live Nation-Ticketmaster https://tinyurl.com/5au9kcjs
• VF Corp. (VFC) Q4 adj EPS loss (-$0.32) vs. est. profit $0.01; Q4 revs $2.4B in-line with consensus $2.41B; sees FY25 free cash flow expected to generate roughly $600M; said in 2025 will continue to fix Americas, turning around Vans, reducing costs and paying down debt; announces new CFO; says intends to continue to pay dividends.

• DuPont de Nemours (DD) announced plans to break apart into three publicly traded companies, joining a list of industrial conglomerates seeking to boost returns by splitting into smaller, more focused businesses; seeking to spin out electronics and water businesses.
• EnerSys (ENS) Q4 adj EPS $2.08 vs. est. $2.01; Q4 sales fell -8% y/y to $910.7M vs. est. $893.6M; said Q4 Specialty segment sales $146.5M, -1.1% y/y and Energy Systems net sales $369.4M, -19% y/y; guides Q1 sales $860M-$900M and EPS $1.98-$2.08 vs. est. $1.93.
• Rio Tinto (RIO) faces class action over Bougainville mine impact; Mining at the Panguna copper pit ended in 1989 when militants forced the operation to shut down – WSJ.
• Triumph Group (TGI) Q4 adj EPS $0.31 vs. est. $0.20; Q4 revs $358.59M vs. est. $342.06M; sees FY25 EPS $0.42 vs. est. $0.70 and revs $1.2B vs. est. $1.28B; sees FY25 adjusted EBITDAP $182M.

• Radian (RDN) raises share repurchase authorization from $300M to $900M and approves regular quarterly dividend on common stock.
• Raymond James (RJF) April client assets under administration $1.41 trillion; financial assets under management $219.1B, +12% y/y.
• Toronto-Dominion Bank (TD) beat analysts’ estimates on strong performance in its capital-markets division and the company said that a “comprehensive overhaul” of its US anti-money-laundering program is “well underway.”

• Moderna (MRNA) and Pfizer (PFE) in talks with U.S. on HSN1 bird flu vaccine, the head of the U.S. government’s pandemic response administration said late Wednesday.
• Molina Healthcare (MOH) says Molina Healthcare of Wisconsin receives notice of intent to award new region 5 contract; Molina healthcare- go-live date expected to be Jan 1, 2025, and contract expected to have duration of 2 years, with option for three, 2-year extensions.

• Snowflake (SNOW) Q1 adj EPS $0.14 vs. est. $0.19; Q1 revs rose 33% y/y to $828.7M vs. est. $786.3M; Q1 product revs rose 34% y/y to $789.6M and professional services/other revs +17% y/y to $39.1M; guides Q2 product revs $805M-$810M vs. est. $785M.
• Synopsys (SNPS) Q2 adj EPS $3.00 vs. est. $3.05; Q2 revs $1.45B vs. est. $1.52B; sees Q3 adj EPS $3.25-$3.30 vs. consensus $3.22 and revenue $1.505B-$1.535B vs. est. $1.58B; said raising full year tgts for EPS and revs; guides FY EPS $12.90-$12.98 vs. est. $12.91.
• ePlus (PLUS) Q4 non-GAAP EPS $0.93 on revs $554.5M vs. est. $537.83M; said Q4 technology business revenue grew a healthy 12.6%, and gross billings grew 13.8%, driving consolidated annual revenue growth of 7.6% and gross profit growth of 6.4% to $550.8M; sees FY25 revenue growth 3%-6% and adj Ebitda $200.0M-$215.0M.
• Liveramp Holdings (RAMP) Q4 EPS $0.25 vs. est. $0.19; Q4 revs $171.85M vs. est. $160.62M; sees FY25 revenue $710M-$730M vs. est. $712.71M and sees FY25 operating income $125M-$129M.
• Zuora (ZUO) Q1 adj EPS $0.11 vs. est. $0.07; Q1 revs rose 6.5% y/y to $109.8M vs. est. $108.9M; Q1 cash and cash equivalents $265.7M, +11% y/y; sees Q2 adjusted EPS $0.09-$0.10 vs. est. $0.07 and revs $111.5M-$113.5M, vs. consensus $112.03M.
• GlobalFoundries (GFS) files automatic ordinary shares offering for holders; announces launch of $950M secondary offering of ordinary shares, including concurrent $200M share repurchase; announced pricing of $950 mln secondary offering of ordinary shares at a price to public of $50.75 per share.