Early Look

Wednesday, November 3, 2021

Futures	Up/Down	%	Last
Dow	-39.00	0.11%	35,899
S&P 500	-3.25	0.07%	4,620
Nasdaq	11.50	0.07%	15,973

 

 

It was another day, another record for U.S. equities on Tuesday, but all eyes are on the Fed later this afternoon as they release results from their 2-day policy meeting. Overnight futures are mixed as expectations have grown that the FOMC will reveal how and when they will begin to taper their $120B monthly asset purchase program, what they see on the inflation front, and how long it will be before the central bank raises rates. In politics, big news overnight as two governor races in Democratic controlled states were in tight races, as Virginia Republican newcomer Glenn Youngkin defeated Democrat Terry McAuliffe in a state Biden won by 10 points in the presidential election a year ago. Also, in New Jersey, the race between Democratic Gov. Phil Murphy and Republican Jack Ciattarelli were virtually deadlocked with no winner called at this time.

 

Major U.S. averages settled at their highest levels ever on Tuesday, lifted by strong earnings reports from companies, but also on pure upward momentum as it marked the fourth straight session of record high closes for the S&P 500 (4 straight up days) and the Nasdaq (up 7-straight days). With most third-quarter reports now handed in, results have been better than expected as S&P 500 earnings are estimated to have climbed 40% in the third quarter from a year ago, according to Refinitiv. Next up is today’s FOMC policy meeting, where the central bank is expected to approve plans to start tapering its $120B in monthly bond purchases, while focus will also be on commentary about interest rates and how sustained the recent surge in inflation is. Most S&P sectors climbed on Tuesday, while energy lagged.

 

In Asian markets, The Nikkei Index was closed for Culture Day, the Shanghai Index slipped -0.2% to move just under 3,500, while the Hang Seng Index slip about -75 points or 0.3% to settle at 25,024. In Europe, the German DAX is down about -10 points to 15,945, while the FTSE 100 slips -20 points to 7,255. Oil prices are sharply lower, pulling back off multi-year highs reached the prior week with Brent and WTI both down around 2%.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 16.98 points, or 0.37%, to 4,630.65

·     The Dow Jones Industrial Average rose 138.79 points, or 0.39%, to 36,052.63

·     The Nasdaq Composite climbed 53.69 points, or 0.34%, to 15,649.60

·     The Russell 2000 Index advanced 3.74 points, or 0.16% to 2,361.86

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:15 AM ET         ADP Employment Index for October

·     9:45 AM ET         Markit Composite PMI Oct-F

·     9:45 AM ET         Markit Services PMI Oct-F

·     10:00 AM ET      Factory Orders MoM for September

·     10:00 AM ET      ISM Non-Manufacturing PMI for October

·     2:00 PM ET         FOMC Rate Meeting

·     10:30 AM ET      Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AAWW, AGIO, ASTE, BCRX, BDC, BGCP, BR, BWA, CDW, CLH, CLI, CLVS, CRL, CVGI, CVS, DISCA, DNOW, EAT, EMR, ETR, EVRG, EVRI, EXC, EXPI, FDP, FUN, GTHX, HFC, HUM, HZNP, ICPT, IONS, JLL, KNBE, KPTI, LAMR, LL, MAC, MAR, MGPI, MPLN, NCLH, NI, NYT, ODP, OMI, PBI, PCRX, RRD, SBGI, SBRA, SHOO, SMG, SPR, SUN, SUP, SYNH, TUP, UTHR, VSH, WING, WLL

·     Earnings After the Close: ACLS, ADPT, AEE, ALB, ALL, ANSS, APA, ARAY, ATEX, ATGE, AVNW, AXGN, BBSI, BKCC, BKNG, BLKB, BNFT, CAKE, CCRM, CDAY, CDXC, CENX, CF, CFMS, CHNG, CLR, CMLS, CPE, CPS, CSGS, CUTR, CW, CYTK, DIOD, DXC, EA, ELF, EPR, EQH, EQIX, ET, ETSY, EVH, FLT, FORR, FOXA, FSLY, FSR, GDDY, GDEN, GHL, GNK, H, HMN, HST, HUBS, ICUI, INFN, IR, ITT, IVR, KE, KW, LCI, LHCG, LNC, LUMN, MATX, MAXR, MBI, MET, MGM, MGNI, MLNK, MRO, MTG, MTW, NUS, NVST, ONEM, ORA, ORCC, OSUR, PARR, PEN, PING, PLYA, PTC, PXD, QCOM, QLYS, QMCO, QRVO, RCII, REGI, RGR, ROKU, RPD, RPT, RVLV, RYI, SKLZ, SPWR, SRPT, SUM, SUPN, TALO, TNDM, TPC, TRMB, TRUE, TTWO, TWNK, UHAL, UPLD, VMEO, VNDA, VVV, WK, YELL, ZY

 

Other Key Events:

·     Wolfe Research Wealth Symposium, 11/2-11/3 (virtual)

·     UBS Emerging SMID Cap Mini-Conference 11/3, (virtual)

 

 

Macro	Up/Down	Last
Nymex	-1.87	82.04
Brent	-1.61	83.11
Gold	-5.80	1,784.70
EUR/USD	0.0009	1.1586
JPY/USD	-0.08	113.87
10-Year Note	-0.019	1.528%

 

 

World News

·     Election results: In Virginia’s closely watched election for governor on Tuesday, Republican newcomer Glenn Youngkin defeated Democrat Terry McAuliffe in a state Biden won by 10 points in the presidential election a year ago. The loss raised red flags for Democrats over midterm elections in November 2022

·     Meanwhile, in new Jersey, Democratic Gov. Phil Murphy and Republican Jack Ciattarelli were virtually deadlocked early Wednesday after a campaign centered on the incumbent’s progressive policies and handling of the coronavirus pandemic. The final votes are still waiting to be counted in the race for New Jersey’s next governor. It’s unclear just how long it will take to get all the votes counted, including the vote by mail ballots

·     Chinese Oct Caixin Markit Services PMI beat: 53.8 vs 50.7 consensus

 

Sector News Breakdown

Consumer

·     Bed Bath & Beyond (BBBY) shares surge over 90% after announcing marketing collaboration with Kroger (KR) and accelerated stock buyback as expects to complete its $1 bln share repurchase plan by end of fiscal 2021, two years ahead of schedule

·     Allbirds (BIRD) said that it sold about 20.2 million shares at $15 each, up from the 19.2 million shares at $12 to $14 each it had planned to offer. At $15 a share, the startup’s valuation is roughly $2.15 billion

·     Asbury Automotive (ABG) 3.3M share Secondary priced at $182.00

·     Big 5 Sporting Goods (BGFV) Q3 EPS $1.07 vs est. $1.13 on revenue $289.6M vs est. $314.6M, declared a special dividend of $1; sees Q4 EPS 55c-70c vs est. 50c, same-store sales to be in the negative low-single digits to positive low-single digits

·     Camping World (CWH) Q3 adj EPS $1.98 vs est. $1.78 on revenue $1.917B vs est. $1.6B, adj EBITDA $288M vs est. $237.7M; vehicle inventories were $1.4B, an increase of $433.8M; raised FY21 adj EBITDA guidance to $915M-$930M from $840M-$860M (est. $862.2M)

·     Caesar’s Entertainment (CZR) Q3 cont ops EPS loss (-$1.10) vs. est. $0.18; Q3 revs $2.68B vs. est. $2.65B; Same-store Adjusted EBITDA of $882 million versus $433 million for the comparable prior-year period.

·     Denny’s (DENN) 3Q adj EPS $0.16 vs est. $0.16 on revs $103.8Mm vs est. $110.5Mm

·     Franchise Group (FRG) 3Q adj EPS $0.97 vs est. $0.80 on revs $828.8Mm vs est. $809.4Mm; guides FY revs to at least $3.1B vs est. $3.08B and adj EPS at least $3.80 vs est. $3.53

·     Herbalife (HLF) Q3 adj EPS $1.21 vs. est. $1.06; Q3 sales fell 6% to $1.4B; sees FY21 adj EPS $4.55-$4.95 vs. est. $4.81; sees FY21 net sales growth 4.5%-8.5% vs. 2020; said Q3 impacted by a challenging year-over-year comparison period

·     Lyft inc. (LYFT) 3Q revs $864.4Mm vs est. $862.7Mm, adj EPS $0.05 vs est. ($0.03); active riders +51.4%, qtrly rev/active rider $45.63, new rider activations +47%, achieved new record contribution margin of 59.4%, says driver supply materially improved in 3Q (up nearly 45%)

·     Mondelez (MDLZ) Q3 adj EPS $0.71 vs. est. $0.70; Q3 revs rose 7.8% to $7.18B vs. est. $7.03B; raising full-year 2021 organic net revenue growth outlook to approximately 4.5%; said Q3 revs rose +7.8% driven by organic net revenue growth of +5.5%, favorable currency and acquisitions

·     Red Rock Resorts (RRR) Q3 EPS $0.93 vs. est. $0.82; Q3 revs $414.8M vs. est. $415.8M; authorized an increase in the company’s shr repurchase program from $150M to $300M; Adjusted EBITDA was $184.5 million for the third quarter of 2021, an increase of 15%

·     Zillow Group (ZG) Q3 revs $1.7B below est. $2B; included in the company’s results is a write-down of inventory of approximately $304 million within the Homes segment as a result of purchasing homes in Q3 at higher prices than the company’s current estimates of future selling prices; expects an additional $240M-$265M of losses to be recognized in Q4 primarily on homes it expects to purchase in Q4; announces plans to wind down Zillow Offers

 

Energy

·     The American Petroleum Institute (API) showed a build of 3.59M barrels of oil for the week ending October 29, with gasoline inventories showing a draw of 552K barrels, distillate inventories show a build of 573K barrels and Cushing inventories show a draw of 882K barrels

·     Edison International (EIX) Q3 core EPS $1.69 vs. est. $1.75; Q3 revs $5.3B vs. est. $4.81B; sees FY21 core EPS $4.42-$4.52 from prior view $4.42-$4.62 and est. $4.53

·     Devon Energy (DVN) Q3 EPS $1.24 vs. est. $0.63; authorizes a $1.0 bln share-repurchase program; Q3 revs $3.46B; total production averaged 608,000 oil-equivalent barrels (boe) per day in Q3; now expects its production and capital spending to be at the high end of its 2021 guidance range; in 2022, prelim plan is to maintain production in range of 570,000 to 600,000 boe per day

·     ONEOK (OKE) Q3 EPS $0.88 vs est. $0.82, adj EBITDA $865.2M vs est. $830M; raised FY21 forecasts by 10% for net income and EPS, 5% for adj EBITDA to reflect continued strength in Rocky Mountain region volumes and higher commodity prices in natural-gas gathering and processing segment;

·     Plains All American (PAA) Q3 adj EPS $0.22, in-line with ests; reported a net loss for the period of $59M, including the non-cash impact of an approximately $220M asset impairment charge. Reported Q3 adjusted EBITDA of $519M.

·     SolarEdge (SEDG) 3Q adj EPS $1.45 vs est. $1.36 on revs $526.4Mm vs est. $528.4Mm; guides 4Q revs $530-560Mm vs est. $553.2Mm

·      

 

Financials

·     Genworth (GNW) Q3 adj EPS $0.46 vs. est. $0.24; Q3 revs $2.07B vs. est. $1.7B; qtrly net investment income was $859 mln in quarter, compared to $844 mln in prior quarter

·     Claros Mortgage (CMTG) 5.52M share IPO priced at $18.65

·     H&R Block (HRB) 1Q adj EPS ($0.78) vs est. ($1.07) on revs $192.6Mm vs est. $168.7Mm

·     Prudential (PRU) Q3 adj EPS $3.78 vs. est. $2.74; qtr end assets under management of $1.727 trillion versus $1.648 trillion for year-ago quarter; qtrly book value per common share of $160.29 versus $165.75 per share for year-ago quarter

·     Unisys (UIS) 3Q adj EPS $0.10 vs est. $0.16 on revs $488Mm vs est. $499.4Mm; reaffirms FY guide

·     Unum (UNM) Q3 adj EPS $1.03 vs. est. $1.15; Q3 revs $2.97B vs. est. $2.95B; book value per common share as of September 30, 2021 was $54.39, compared to $53.50 at September 30, 2020; Strong balance sheet and liquidity with holding company cash of $1.6 billion; weighted average risk-based capital ratio of approximately 380%

·     Voya Financial (VOYA) Q3 adj EPS $2.57 vs. est. $1.62; Common stock dividend increased over 20% to $0.20 per share; Total assets under management and administration were $718 billion as of Sept. 30, 2021.

·     Western Union (WU) Q3 EPS $0.63 vs. est. $0.57; Q3 revs $1.3B vs. est. $1.32B; Consumer-to-Consumer revenues were flat on a reported basis, or declined 1% constant currency, while transactions declined 1% during the quarter; sees 2021 adjusted EPS $2.05-$2.10 vs. prior $2.00-$2.10 (est. $2.07); Digital money transfer revenues increased 15% on a reported basis, or 14% constant currency, and represented 24% and 37% of total C2C revenues

·     The Biden administration formally nominated Saule Omarova, a law professor and critic of big banks, to serve as a top banking regulator, a setback for Wall Street and other firms that had pushed to scuttle her nomination – WSJ

 

Healthcare

·     Amedisys, Inc. (AMED) Q3 adj EPS $1.53 vs est. $1.37 on revenue $553.5M vs est. $568.37M; sees FY adj EPS $5.88-$5.93 vs est. $6.08, adj EBITDA $296M-$298M vs est. $305.4M, revenue $2.2B-$2.205B vs est. $2.25B

·     Amgen (AMGN) 3Q adj EPS $4.67 on revs $6.7B vs est. $6.68B; guides FY adj ESP $16.50-17.10 vs est. $16.43, sees FY CAPEX about $900Mm and FY share repurchase at upper end of $3.0-5.0B range, continues to see gradual recovery from pandemic

·     Exact Sciences (EXAS) Q3 EPS loss (-$0.97) vs. est. loss (-$0.85); Q3 revs $456.4M vs. est. $430M; sees FY21 revenue $1.722B-$1.737B vs. est. $1.73B and above prior view $1.705B-$1.745B; said screening revenue expectations are lower due to the rapid rise in Delta variant cases starting in late July, causing in-person sales calls to significantly decrease in August and September

·     Humana (HUM) Q3 adj EPS $4.83 vs. est. $4.66; Q3 revs $20.87B vs. est. $20.91B; confirms $21.50 as the baseline for 2022 adjusted EPS growth; Updates FY 2021 expected individual Medicare Advantage membership growth to 450,000 members, reflecting year-over-year growth of 11%

·     Inspire Medical Systems, Inc. (INSP) 3Q EPS ($0.38) vs est. ($0.61) on revs $61.7Mm vs est. $55.6Mm; raising FY revs guide to $219-221Mm vs est. $212.9Mm

·     Pacific Biosciences (PACB) Q3 adj EPS ($0.23) vs est. ($0.22) on revenue $34.9M vs est. $33.2M

·     PerkinElmer, Inc. (PKI) Q3 adj EPS $2.31 vs. est. $1.73; Q3 revs $1.166B vs. est. $1.04B; raises FY21 adj EPS to $10.81 from $9.88 (est. $10.07) and boosts FY21 revenue $4.9B from $4.57B (est. $4.65B)

·     Phibro Animal (PAHC) 1Q adj EPS $0.25 vs est. $0.29 on revs $215Mm vs est. $201.7Mm; raises FY net sales guide to $860-890Mm (was $840-870Mm) vs est. $860.4Mm; sees FY adj EPS $1.25-1.32 vs est. $1.29

·     Tivity Health (TVTY) 3Q adj EPS $0.42 vs est. $0.36 on revs $126.3Mm vs est. $122Mm; guides FY revs $475-485Mm vs est. $480.2Mm, sees FY adj EPS $1.61-1.67 vs est. $1.50

·     Vertex Pharma (VRTX) 3Q adj EPS $3.56 vs est. $3.08 on revs $1.98B vs est. $1.86B; raises FY product revs guide to $7.4-7.5B

·     Zynex, Inc. (ZYXI) 3Q EPS $0.17 vs est. $0.12 on revs $34.8Mm vs est. $35.4Mm; guides 4Q revs $40-43Mm vs est. $41.9Mm, sees FY revs $130-133Mm vs est. $132.5Mm

 

Industrials & Materials

·     FMC Corp. (FMC) Q3 adj EPS $1.43 vs. est. $1.32; Q3 revs rose 10% to $1.19B vs. est. $1.17B; raises FY21 adj EPS view to $6.59-$6.99 from $6.54-$6.94 9est. $6.76); affirms FY revs in the range of $4.9B-$5.1B, reflecting 8% growth at the midpoint versus 2020

·     XPO Logistics (XPO) Q3 adj EPS $0.94 vs est. $0.93 on revenue $3.27B vs est $3.1B, adj EBITDA $307M vs est. $299.5M; sees Q4 adj EBITDA $300M-$305M, implying FY $1.228B-$1.233B, which raises midpoint by $16M; narrowed FY adj EPS view to $4.15-$4.25 from $4-$4.30 (est. $4.43)

 

Media & Telecom

·     Match.com (MTCH) Q3 EPS $0.43 vs est. $0.55 on revenue $802M vs est. $838.5M, adj EBITDA $285M vs est. $278M, quarterly payers increased 16% to 16.3M; currently testing virtual currency in several markets, expect initial versions of Tinder with virtual goods to start testing in 2022; expect FY22 revenue growth in mid-to-high teens

·     T-Mobile (TMUS) Q3 EPS $0.55 vs. est. $0.52; Q3 revs $19.62B vs. est. $20.18B; Q3 net customer adds were 1.3 million and total customer count increased to a record-high of 106.9 million; Q3 postpaid net customer additions were 1.3M, post-paid phone churn was 0.96% in Q3

·     8×8 Inc. (EGHT) 2Q adj EPS $0.01 vs est. $0.01 on revs $151.6Mm vs est. $149.7Mm; guides 3Q revs $152.7-154.2Mm vs est. $153.9Mm, sees FY revs $611-615Mm vs est. $610.6Mm

 

Technology

·     Activision (ATVI) 3Q EPS $0.89 vs est. $0.70 on revs $2.07B vs est. $1.88B, qtrly MAUs 390Mm; guides FY net revs $8.66B vs est. $8.8B, sees FY net bookings $8.65B

·     Akami (AKAM) Q adj EPS $1.45 vs est. $1.39 on revs $860Mm vs est. $851.5Mm; authorizes new 3-yr $1.8B repurchase program; raises FY21 EPS view to $5.63-$5.69 from $5.54-$5.65; raises FY21 revenue view to $3.439B-$3.464B from $3.42B-$3.45B

·     Amdocs (DOX) 4Q adj EPS $1.16 vs est. $1.18 on revs $1.1B vs est. $1.09B; guides 1Q revs about $2.0B vs est. $1.12B, sees 1Q adj EPS $1.15-1.21 vs est. $1.28

·     Alteryx Inc. (AYX) 3Q adj EPS ($0.18) vs est. ($0.19) on revs $124Mm vs est. $123.1Mm; guides 4Q revs $163-168Mm vs est. $164.7Mm, sees 4Q adj EPS $0.02-0.07 vs est. $0.17

·     Lattice Semi (LSCC) 3Q $0.19 vs est. $0.25 on revs $131.9Mm vs est. $128.2Mm; sees 4Q revs $129-139Mm vs est. $129Mm

·     LivePerson, Inc. (LPSN) 3Q EPS ($0.47) vs est. $0.17) on revs $118.3Mm vs est. $118.2Mm; sees FY adj EBITDA $11.9-16.3Mm vs est. $19Mm

·     Paycom Software (PAYC) 3Q adj EPS $0.92 vs est. $0.90 on revs $256.2Mm vs est. $250Mm; sees 4Q revs $274.5-276.5Mm vs est. $272.8Mm

·     Sprout Social (SPT) Q3 adj EPS (3c) vs est. (8c) on revenue $49.1M vs est. $47.4M, customers grew 20% YoY to 30,705; announced it will be integrating WhatsApp messaging into its product suite and plans to begin launching it to customers by the end of the year; now sees FY revenue growing about 40% to $185.8M-$185.9M from prior $182M-$182.6M range (est. $184.4M)

·     Super Micro Computer (SMCI) Q1 adj EPS $0.58 vs est. $0.38 on sales $1.03B vs est. $950.2M; sees Q2 adj EPS $0.70-$0.90 vs est. $0.62 on sales $1.1B-$1.2B vs est. $1.04B; for full-year, sees adj EPS at least $3.20 vs est. $2.99 on sales $4.2B-$4.6B vs est. $4.27B

·     Verisk Analytics, Inc. (VRSK) Q3 EPS $1.44 vs. est. $1.36; Q3 revs $759.0M vs. est. $757.22M; acquired Data Driven Safety, a leading public record data aggregation firm that specializes in driver risk assessment in the United States

·     R.R. Donnelley & Sons Co. (RRD) is nearing a deal to sell itself to a private-equity firm for just over $2 billion including debt, according to people familiar with the matter, the WSJ reported. Atlas Holdings is expected to pay around $8.50 a share to take R.R. Donnelley private, the people said as a deal could be unveiled as soon as Wednesday https://on.wsj.com/3nVolYC