Early Look

Thursday, November 3, 2022

Futures	Up/Down	%	Last
Dow	-137.00	0.43%	32,041
S&P 500	-21.25	0.57%	3,747
Nasdaq	-80.50	0.74%	10,863

 

 

After a violent and violent reaction to yesterday’s FOMC meeting, U.S. futures are pointing to another lower open as Wall Street digests Fed Chairman Powell’s statement. S&P futures are now -150 points lower from yesterday’s high-water point of around 3,900, having ripped then dipped following the release of the October FOMC Monetary policy meeting on Wednesday. The Fed boosted interest rates by 75-bps for a 4^th straight meeting (as expected) and gave initially what appeared to be a less “hawkish” statement about the pace and depth of further rate hikes. The Fed said it will take cumulative tightening and policy lags into account when deciding future rate hikes. That comment was the closest thing yet to a Fed that will be data dependent going forward. But Fed Chairman Powell’s press conference provided a bit more clarity, saying the ultimate interest rate level will be higher than previously expected, and it is “very premature to think about pausing rate hikes.” Those comments were not well received by investors and took the wind out of the sails of markets, which preceded to tumble over 2% on the day. Treasury yields and the dollar rose while gold and Bitcoin fell, a common theme over the last few months. The S&P 500 fell -2.5% on Wednesday, its 54th decline of 1% or more this year. That’s already the most downside volatility we’ve seen since 2009 and there’s still two and a half months to go. The Fed meeting overshadowed a very busy day of earnings. The 2-year US treasury yield is leading, jumping 16-bps to 4.737%, while the benchmark 10-year surges nearly 15-bps to 4.20% in response to Powell, and curve is inverting again. The 1-yr yield tops 4.8%. Inflation remains atop of investors minds heading into another busy day of earnings and economic data. In Asian markets, The Nikkei Index fell -15 points to 27,663, the Shanghai Index dipped -5 points to 2,997, and the Hang Seng Index tumbled over 3% to 15,339. In Europe, the German DAX is down about 1% or 130-points to 13,125, while the FTSE 100 slides -25 points to 7,117.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -96.62 points, or 2.51%, to 3,759.48

·     The Dow Jones Industrial Average fell -506.43 points, or 1.55%, to 32,146.77

·     The Nasdaq Composite plunged -366.05 points, or 3.36%, to 10,524.80

·     The Russell 2000 Index declined -62.26 points, or 3.36% to 1,789.13

 

Economic Calendar for Today

·     7:30 AM ET            Challenger Layoffs for October

·     8:30 AM ET            Weekly Jobless Claims…est. 220K

·     8:30 AM ET            Continuing Claims…est. 1.45M

·     8:30 AM ET            Nonfarm Productivity for Q3…est. +0.6%

·     8:30 AM ET            Unit Labor Costs for Q3…est. +4.1%

·     8:30 AM ET            International Trade for September…est. (-$72.2B)

·     9:45 AM ET            S&P Global Services, Final PMI

·     10:00 AM ET          Durable Goods Orders M/M for September

·     10:00 AM ET          Factory Orders M/M for September…est. +0.3%

·     10:00 AM ET          ISM Non-Manufacturing PMI, October…est. 55.5

·     10:30 AM ET          Weekly EIA Natural Gas Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ADT AGIO APD ARW BALL BALY BFLY BKI BRKR BTU CARS CCOI CI CMI COMM COP CROX CSII CVGI DDOG DEI DEN DNB DOC EPAM EXC FIS FTDR GCI GLT GOGO GOLF GPRE H HII ICE IRM IRWD ITRI ITT JCI K KTB LAUR LNG LXP MAC MAR MCS MD MDU MRNA MTD MTSI MUR NFG NKLA OFIX PBH PENN PTON PWR PZZA RCL REGN SHAK SPR SRE STAR STOR STRA SUP SWI TPX TREE TRGP UAA USPH W WCC WLK WLKP WMS WOW ZTS

·     Earnings After the Close: AAOI ADPT AEE ALEX ALTR AMGN AMN APPN ATSG AVB BE BECN BIGC BILL BL BOOM CABO CASA CDNA CDXS CE CERS CGNX CHUY COIN COLD CRSR CTRA CTVA CVNA CVT CWK DASH DBX DMRC DVAX DXC EB EGLE EOG EXAS EXPE FARM FATE FND FNKO FOXF FRT GDDY GDYN GH GPRO HASI HEAR HMN IHRT III ILMN IOVA JYNT KTOS LASR LGF/A LOCO LUNG LYV MAXR MCHP MDRX MED MET MGNX MNRL MP MTZ NDLS NET NKTR OLED OPEN OUT PBPB PBYI PCTY PEN PODD PYPL REG RGA RKT RMAX SBUX SM SPCE SQ STEM SWKS SYNA TEAM TMST TRUP TWLO UPLD USX VIAV VVI WATT WBD WMC WW YELP ZEUS

 

 

Macro	Up/Down	Last
Nymex	-1.12	88.88
Brent	-1.10	95.06
Gold	-27.90	1,622.10
EUR/USD	-0.0076	0.9741
JPY/USD	0.47	148.37
10-Year Note	+0.145	4.206%

 

 

World News

·     China Caixin Service PMI Oct: 48.4 vs. est. 49.0 and prior 49.3; Composite PMI Oct: 48.3

·     Central banks bought 399 tons of bullion in the third quarter, almost double the previous record, with most buyers not being identified. Some speculate buyers include Russia and China as they try to move more away from dollars. – Bloomberg https://bloom.bg/3h5gbNJ

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -2.3 vs -19.1 last week. Bulls rise to 30.6% from 26.6%; Neutrals rise to 36.5% from 27.7%; and Bears fall to 32.9% from 45.7%

 

Sector News Breakdown

Consumer

·     Booking.com (BKNG) Q3 adj EPS $53.03 vs. est. $49.85; Q3 revenue $6.1B vs. est. $5.92B; Q3 gross travel bookings were $32.1B, an increase of 36% y/y, or approximately a 52% increase on a constant-currency basis; Q3 room nights booked increased 31% y/y

·     eBay (EBAY) Q3 adj EPS $1.00 vs. est. $0.93; Q3 revs $2.4B vs. est. $2.32B; Q3 gross merchandise volume (GMV) was $17.7 bln, down 11% on an as-reported basis and down 5% on an FX-neutral basis; raises FY22 adjusted EPS view to $4.07-$4.13 from $3.95-$4.10 and narrows FY22 revenue view to $9.71B-$9.79B from $9.6B-$9.9B

·     e.l.f. Beauty (ELF) 2Q adj EPS $0.36 vs est. $0.16 on sales $122.3Mm vs est. $104.9Mm, gross margin 65% +190bps, adj EBITDA $27.3Mm vs est. $20Mm; guides FY net sales $478-486Mm vs prior $448-456Mm and est. $459.5Mm, adj EBITDA $93-95Mm vs prior $83-85Mm and est. $87.1Mm, adj EPS $1.07-1.10 vs prior $0.84-0.87 and est. $0.91

·     Etsy Inc. (ETSY) Q3 revs $594.5M vs. est. $564.5M; sees Q4 revs $700M-$780M; Q3 Consolidated GMS was $3.0 billion, down 3.3% year-over-year and up 0.7% on a currency-neutral basis; Etsy marketplace GMS was $2.6 billion, down 3.8% y/y, and up 134% vs. Q3’19

·     Host Hotels (HST) 3Q AFFO/shr $0.38 vs est. $0.39 on revs $1.189B vs est. $1.177Ball owned hotel REVPAR $306.11 +3.8%, all owned hotel adj EBITDA $341Mm vs est. $330.6Mm; guides FY all owned hotel total REVPAR $313-316, all owned hotel EBITDA mgn 31.6-31.9% and AFFO/shr $1.75-1.79 vs est. $1.78

·     MGM Resorts (MGM) Q3 adj EPS $0.03 vs. est. $0.23; Q3 revs $3.4B vs. est. $3.24B; qtrly casino revenue up 36% compared to the prior year qtr at co’s Las Vegas strip resorts; Q3 MGM China net rev of $87M compared to $289M y/y; qtrly rooms revenue up 83% compared to the prior year qtr at co’s Vegas strip resorts and RevPAR of $210 mln vs $148 mln

·     Park Hotels (PK) 3Q adj AFFO/shr $0.42 vs est. $0.40; pro forma REVPAR $171.27 +61.7%, pro forma occupancy 71.7%, -1% sequential; adj EBITDA $158Mm vs est. $158.4Mm; guides 4Q AFFO/shr $0.35 vs est. $0.45; sees FY AFFO/shr $1.45-1.52 vs est. $1.52

·     RLJ Lodging Trust (RLJ) 3Q AFFO/shr $0.40 vs est. $0.38 on revs $318.1Mm vs est. $311.8Mm; increased qtrly cash dividend to $0.05/shr; given continued uncertainties company is unable to provide outlook at this time

·     Rush Street (RSI) 3Q adj EPS ($0.08) vs est. ($0.11) on revs $148Mm vs est. $157.1Mm, real-money MAU’s in US and Canada +31% y/y; sees FY revs $580-600Mm vs est. $614.4Mm

·     Zillow (ZG) Q3 revs $483M vs. est. $456M; sees Q4 revenue $395M-$425M vs. est. $433.1M and sees Q4 adjusted EBITDA $48M-$63M after Q3 Ebitda $130M; said deteriorating affordability for homes continued to curb consumer demand in the period

 

Energy

·     APA Corp. (APA) Q3 EPS $1.97 vs. est. $1.78; qtrly reported production of 382,000 barrels of oil equivalent (boe) per day; qtrly adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 310,000 boe per day; raises annual dividend to $1.00

·     Continental Resources (CLR) Q3 adj EPS $2.88 vs est. $2.93; Q3 revs $2.45B vs. est. $2.5B; Q3 total production averaged 414.4 Mboepd; Q3 oil production averaged 200.5 Mboepd; Q3 natural gas production averaged 1,284 MMcfpd; on track to achieve full year 2022 production guidance

·     Marathon Oil (MRO) Q3 adj EPS $1.24 vs. est. $1.19; Q3 revs $2.25B vs. est. $2.02B; announced it has entered into a definitive purchase agreement to acquire the Eagle Ford assets of Ensign Natural Resources for total cash consideration of $3B; increased outstanding buyback authorization to $2.5 billion as of Nov. 2 and raised quarterly base dividend 13%

·     SunRun (RUN) Q3 revs rose 44% to $631.9M vs. est. $565,1M; Total cost of revenue was $521.3M, an increase of 50% y/y; total operating expenses were $768.2M, an increase of 33% y/y; in Q3, customer additions were 35,760, including 25,468 subscriber additions

 

Financials

·     Allstate (ALL) Q3 adj loss (-$2.58) vs. est. loss (-$1.52); Q3 revs rose 5.8% y/y to $13.2B vs. est. $12.03B; Q3 property-liability earned premium of $11.2 billion increased 9.8%

·     Fleetcor Technologies (FLT) 3Q adj EPS $4.24 vs est. $4.18 on revs $893Mm vs est. $880Mm; guides FY revs $3.4-3.42B vs est. $3.41B and adj EPS $15.85-16.05 vs est. $15.97

·     Marathon Digital (MARA) produced a record 615 BTC in October 2022. As of November 1, operating mining fleet consisted of approximately 69,000 active miners, producing approximately 7.0 EH/s, after approximately 32,000 miners were successfully energized during October 2022

·     MetLife (MET) Q3 adj EPS $1.21 vs. est. $1.17; Q3 revs $22.27B vs. est. $20.58B; qtr-end book value of $27.00 per share; Q3 premiums, fees, and other revenues of $19.6B, up 68% y/y; qtrly net investment income was $3.6B, down 36% y/y

·     Lincoln Financial (LNC) tumbles -15%; Q3 adj operating loss (-$10.23) which includes goodwill impairment; Q3 book value per share $13.10 and ex AOCI $64.09; Q3 revs $4.8B vs. est. $4.4B

·     Robinhood (HOOD) Q3 EPS loss (-$0.20) vs. est. loss (-$0.31); Q3 revs $361M vs. est. $355.27M; monthly active users decreased 1.8M sequentially to 12.2M for September; Gaap total operating expenses for full-year 2022 to be in range of $2.34B-$2.4B; qtrly transaction-based revenues from cryptocurrencies decreased 12% sequentially to $51M

 

Healthcare

·     Acadia Pharma (ACAD) Q3 EPS loss (-$0.17) vs. est. loss (-$0.19); Q3 revs $130.7M vs. est. $138.8M; lowers FY21 NUPLAZID net sales view to $510M-$520M from $510M-$540M

·     AmerisourceBergen Corp (ABC) Q3 adj EPS $2.60 vs. est. $2.57; Q3 revs $61.2B vs. est. $60.57B

·     Aurinia Pharma (AUPH) Q3 net rev $55.8M – including $30M milestone from Otsuka related to European Approval of LUPKYNIS; issues preliminary net product revenue guidance for FY’23 in the range of $120-140M from sales of LUPKYNIS; cash, cash equivalents $400M

·     Glaukos (GKOS) 3Q adj EPS ($0.45) vs est. ($0.52) on sales $71.3Mm vs est. $67.9Mm; guides FY net sales $278-280Mm vs est. $278.6Mm

·     Nevro Corp. (NVRO) 3Q adj EBITDA ($3.8Mm) vs est. ($10Mm); guides FY revs $403-407Mm vs est. $405Mm, raises FY revs guide for PDN to approx $45-47Mm, sees adj EBITDA loss $20-22Mm vs est. loss $43.3Mm

·     Quidel (QDEL) Q3 EPS $1.85 vs. est. $0.74; Q3 revs rose 54% y/y to $783.8M vs. est. $719.6M; Growth in revenue, excluding COVID-19 revenue, was driven by Point-of-Care and Donor Screening product lines

·     Tandem Diabetes (TNDM) Q3 EPS loss (-$0.76) vs. est. loss (-$0.05); Q3 revs rose 14% y/y to $204.5M vs. est. $207.7M; Worldwide installed base increased 35 percent to more than 400,000 customers; cuts FY22 revenue view to $800M-$805M from $835M-$845M (est. $836M)

 

Industrials & Materials

·     Albemarle (ALB) 3Q adj EPS $7.50 vs est. $6.99 on revs $2.1B vs est. $2.25B; sees FY net sales $7.1-7.4B vs est. $7.51B, adj EBITDA $3.3-3.5B vs est. $3.46B (adj EBITDA margin 46-47%), adj EPS $19.75-21.75 vs est. $21.29

·     CF Industries (CF) Q3 EPS $2.18 vs. est. $3.33; Q3 revs $2.32B vs. est. $2.4B; gross ammonia production for q3 was about 2.3 mln tons; sees FY capital expenditures in a range of $500M

·     Activist investor Carl Icahn has accumulated a $700M stake in Crown Holdings (CCK), making him the second largest shareholder with a stake of about 8% – WSJ reported https://on.wsj.com/3NvRA0B

·     Ingersoll Rand (IR) 3Q adj EPS $0.62 vs est. $0.59 on revs $1.516B vs est. $1.45B; sees FY organic revs +12-14% vs prior +11-13% and total revs +11-13% vs est. +11.4%

·     Werner Enterprises (WERN) Q3 adj EPS $0.90 vs. est. $0.97; Q3 revs $827.6M vs. est. $824.44M; guides 2022 capital expenditures $300M-$325M vs. prior $275M-$325M

 

Media & Telecom

·     Roku inc. (ROKU) 3Q qtrly ARPU $44.25 +10%, net revs $761Mm vs est. $694Mm, adj EBITDA -$135Mm vs est. -$63.5Mm; guides 4Q total net revs approx $800Mm vs est. $895Mm, total gr profit approx $325Mm and adj EBITDA -$135Mm vs est. -$52Mm

·     Elon Musk intends to eliminate about half of Twitter’s staff or about 3,700 jobs to reduce the company’s costs, Bloomberg reported

·     Equinix Inc. (EQIX) 3Q FFO $7.73 vs est. $7.23 on revs $1.8B vs est. $1.84B; guides FY revs $7.24-7.26B vs est. $7.27B

·     Lumen Technologies (LUMN) Q3 adj EPS $0.14 misses est. $0.37; Q3 revs $4.39B vs. est. $4.41B; enters pact for proposed sale of EMEA business to Colt for $1.8B

·     Sinclair Broadcasting (SBGI) downgraded to Underweight from Overweight, and PT cut to $16 from $30 at Wells Fargo saying while stock is inexpensive, it faces multiple headwinds vs its broadcast peers, 2022 & 2033 EBITDA estimates

·     WWE Inc. (WWE) Q3 EPS $0.49 vs. est. $0.50; Q3 revs rose 19% y/y to $304.6M vs. est. $281.9M; sees FY22 adjusted OIBDA at upper end of $370M-$385M range

 

Technology

·     Qualcomm (QCOM) Q4 adj EPS $3.13, in-line with est. and Q4 revs $11.4B vs. est. $11.37B; sees Q1 adjusted EPS adj EPS $2.25-$2.45 below consensus $3.42 and Q1 revenue $9.2B-$10B, also sharply below consensus $12.02B; for apple product revenues, now expect to have vast majority of share of 5g modems for 2023 iphone launch, up from our previous 20% assumption

·     Cognizant Technology (CTSH) 3Q adj EPS $1.17 vs est. $1.16 on revs $4.9B vs est. $5B; guides 4Q revs $4.72-4.77B vs est. $5.0B; sees FY adj EPS $4.43-4.46 vs est. $4.53

·     Fastly (FSLY) Q3 revenue of $108.5M, up 6% from Q2 and 25% y/y; GAAP net loss of $63.4M, Enterprise ARPU of $759,000 up 4% q/q; raises full year revenue guidance to $425M-$429M, up from $415M-$425M

·     Fortinet (FTNT) Q3 adj EPS $0.33 vs. est. $0.27; Q3 revs $1.15B vs. est. $1.12B; Q3 billings of $1.41 billion, up 33% y/y; sees FY22 adj EPS $1.13-$1.15 vs. est. $1.05 and sees FY22 revenue $4.41B-$4.45B vs. est. $4.38B

·     HubSpot (HUBS) Q3 adj EPS $0.73 vs. est. $0.51; Q3 revs $444M vs. est. $425.31M; raises FY22 EPS view to $2.48-$2.50 from $2.28-$2.30 and boosts FY22 revenue view to $1.705B-$1.707B from $1.69B-$1.695B; Q3 Subscription revenue was $435M, up 32% y/y and professional services and other revenue was $8.9 million, down 13% compared to Q3’21

·     Procore tech (PCOR) 3Q EPS ($0.52) vs est. ($0.17) on revs $186Mm vs est. $175.3Mm, adj gr margin 84%; sees 4Q revs $189-191Mm vs est. $185.8Mm and adj op margin (11%)-(10%); sees FY revs $707-709Mm vs est. $694Mm and adj op margin (12%)-(11%)

·     PTC Inc. (PTC) Q4 adj EPS $1.27 vs. est. $1.14; Q4 cash flow from operations $38M and free cash flow $29M; sees FY23 revenue $1.91B-$1.99B vs. est. $1.92B

·     Qualys Inc. (QLYS) 3Q adj EPS $0.94 vs est. $0.86 on revs $125.6Mm vs est. $124.9Mm; sees FY revs $488.6-489.6Mm vs est. $488.9Mm and adj EPS $3.60-3.62 vs est. $3.50

·     Qorvo (QRVO) announces $2B share repurchase program; Q2 EPS $2.66 vs. est. $2.57; Q2 revs $1.16B vs. est. $1.14B; guides Q3 EPS $0.50-$0.75 vs. est. $1.69 and revs $700M-$750M vs. est. $989M