Early Look

Wednesday, November 8, 2023

Futures	Up/Down	%	Last
Dow	28.00	0.08%	34,243
S&P 500	2.00	0.05%	4,398
Nasdaq	-4.00	0.03%	15,370

 

 

A very “ho-hum” trading session overnight for US futures, holding in a tight 10-point trading range all night, and currently at its highs around 4,397.50 for Spuz as Treasury yields hold steady after slipping yesterday and mkts await another Treasury auction to watch demand. The winning ways continued again on Tuesday as the S&P 500 extended its winning streak to an incredible 7-days and the Nasdaq to an even more impressive 8-straight days as Treasury yields fell and investors continued to bet on a rebound in stocks. Treasury yields declined as markets remain confident that no more interest rate increases are upcoming this year as the 10-year declined 9.2-bps to 4.57%. Oil prices dropped to the lowest finish in three-and-a-half months as some global economic data points have pointed to the potential for a slowdown in energy demand. The US dollar is on track for its 3^rd day of gains, back around the level seen prior to last Friday’s jobs data. Later today, the US Treasury will auction $40B in 10-year notes at 1:00 PM and then $24B in 30-year bonds on Thursday following a modest reaction to a 3-yr auction on Tuesday. In Asian markets, The Nikkei Index dropped -105 points to 32,166, the Shanghai Index fell -4 points to 3,052, and the Hang Seng Index declined -101 points to 17,568. In Europe, the German DAX is up 2 points to 15,155, while the FTSE 100 is up a few points to 7,413.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 12.40 points, or 0.28%, to 4,378.38.

·     The Dow Jones Industrial Average rose 56.74 points, or 0.17%, to 34,152.60.

·     The Nasdaq Composite gained 121.08 points, or 0.90%, to 13,639.86.

·     The Russell 2000 Index declined -4.79 points, or 0.28% to 1,733.15.

 

Economic Calendar for Today

·     7:00 AM ET                  MBA Mortgage Applications Data

·     10:00 AM ET                Wholesale Inventories M/M for September

·     1:00 PM ET                   US Treasury to sell $35B in 10-year notes.

·     10:30 AM ET                Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ADNT AKBA ANIP BIGC BIIB BLDE BWEN BXSL CCO CEVA CRL DCO DDD EDR EHTH EVGO EVRI FOLD FOUR FSR FTCI HLMN K KPLT LITE LL MCFT MIDD NFE NXST BYT ODP PAYO PFGC RBLX REYN RL RPRX RXO SEAS SHOO SPTN STWD SWX UAA VCEL VSH WBD WOW WRBY YOU

·     Earnings After the Close: ACRX AEE AFRM AINC AKYA AMC APP APPS ATER ATO ATRO AVD BARK BE BGS BIRD BLZE CART CDE CDLX CDXC CENX COOK CPRX CTVA CUTR DIOD DIS DUOL EBS ECOR ENS ENV FICO FLT FOSL G GEVO GNK GNW GRWG HLTH HP HUBS HYLN INFN IONQ IPI JAZZ KRUS LAZR LGND LMB LPSN LVLU LYFT MAPS MARA MCHX ME MGM MGNI MODG MRCC NTRA OFIX OSPN PANL PAHC PUBM RAMP RKLB SILK SKLZ SKYT SUPN TTGT TTWO TWLO UHAL WHD ZIP

 

Other Key Events:

·     Baird Global Industrials Conference 2023, 11/7-11/9, in Chicago, IL

·     Bank America West Coast Payments Tour, 11/8-11/9, in San Francisco, CA

·     Truist Securities BioPharma Symposium, 11/8-11/9, in New York

 

 

Macro	Up/Down	Last
Nymex	-0.57	76.80
Brent	-0.59	81.02
Gold	-2.50	1,971.00
EUR/USD	-0.0024	1.0676
JPY/USD	0.36	150.70
10-Year Note	+0.004	4.575%

 

 

World News

·     Credit card debt has reached an all-time high of $1.08T as balances are up $154B YoY, the largest increase since 1999. Delinquencies are up as credit-card debt hits a record of $1.08 trillion. “The continued rise in credit card delinquency rates is broad-based across area income and region, but particularly pronounced among millennials and those with auto loans or student loans,” said Donghoon Lee, economic research advisor at the New York Fed.

·     Japanese manufacturers’ business confidence improved for the first time since August while service-sector mood rose for a second month, according to the Reuters Tankan poll; November manufacturers’ sentiment index +6 vs Oct +4; Service-sector index +27 vs Oct +24.

·     Israel said its troops have entered the middle of Gaza’s main city as they continue their offensive against Hamas, while the top US diplomat signaled there will probably be a post-conflict “transition period” before it’s clear who takes control of the territory – Bloomberg.

·     Fed Governor Lisa Cook said a worsening of geopolitical tensions, including those involving Russia, the Middle East, and China, could trigger broad negative spillovers to global markets, including higher inflation.

 

Sector News Breakdown

Consumer

·     Coty Inc. (COTY) Q1 adj EPS $0.09 vs. est. $0.17; Q1 revs rose 18% y/y to $1.641B vs. est. $1.58B; reaffirmed its full-year adj EPS of $0.44-$0.47; raises FY24 comp sales growth to between 9% and 11%, compared with its previous outlook of an 8% to 10% rise.

·     Dutch Bros (BROS) Q3 adj EPS $0.14 vs. est. $0.07; Q3 revs $264.5M, consensus $258.1M; system same shop sales increased 4.0%, and company-operated same shop sales increased 2.8%, as compared to the same period of 2022; sees FY23 adjusted EBITDA $150M-$155M up from prior view of $135M-$140M and est. $140.5M.

·     eBay Inc. (EBAY) Q3 adj EPS $1.03 vs. est. $1.00; Q3 revs $2.5B, in-line with ests; Q3 Gross Merchandise Volume (GMV) rose 2% to $18.0B on an as-reported basis and roughly flat on an FX-Neutral basis; sees Q4 adj EPS $1.00-$1.05 vs. est. $1.05 and revs $2.47B-$2.53B vs. est. $2.59B.

·     Grocery Outlet (GO) Q3 adj EPS $0.31 vs. est. $0.27; Q3 revs $1B vs. est. $1.01B; Q3 comparable store sales increased by 6.4%; narrows FY23 adjusted EPS view to $1.04-$1.06 from $1.04-$1.08; sees year comp sales up 7%-7.5% and reaffirms overall sales view.

·     Lucid Group (LCID) Q3 EPS loss (-$0.28) vs. est. loss (-$0.35); Q3 revs $137.8M vs. est. $192.72M; Q3 deliveries of 1,457 vehicles and produced 1,550 vehicles; adjusts its production outlook for 2023 to 8,000 – 8,500 vehicles (from 19K prior) to prudently align with deliveries.

·     Rivian Automotive (RIVN) Q3 EPS ($1.44) vs est. ($1.32) on revs $1.34B vs est. $1.33B, gr mgn -36%, adj EBITDA ($4)B vs est. ($1.059)B; sees FY production 54,000 total units, says Amazon remain focused on bringing 100,000 Rivian electric delivery vehicles to the road, forecast reaching positive gross profit in 2024.

·     RealReal inc. (REAL) Q3 adj EPS ($0.15) vs est. ($0.26) on revs $133Mm vs est. $125.43Mm; says on track to deliver positive adj EBITDA on full year basis in 2024.

·     Sleep Number (SNBR) Q3 EPS ($0.10) vs est. $0.17 on sales $473Mm vs est. $511.82Mm, gr mgn 57.4%; says initiated approx $50Mm of additional operating expense reduction actions for 2024 on top of estimated $80Mm for 2023, actions are broad-based with reduction in headcount across all areas of organization.

 

Energy

·     Array Technologies (ARRY) Q3 adj EPS $0.21 vs. est. $0.11; Q3 revs $350.41M vs. est. $374.1M; lowers FY revenue to $1.53B-$1.58B from $1.65B-$1.73B and lowers top end of year adj EBITDA to $280M-$290M from $280M-$295M (est. $290.3M).

·     Devon Energy (DVN) Q3 EPS adj EPS $1.65 vs est. $1.57, adj FCF $1.7B, avg production 665,000 BOE/day; says Q4 production expected to range from $640,000-660,000 BOE/day with oil production approx 315,000 bbls/day; sees FY24 sustaining oil production around 315,000 bbls/day; sees capital requirements declining about 10% in 2024 vs 2023 to $3.3-3.6B.

·     Occidental Petroleum (OXY) Q3 EPS $1.18 vs. est. $0.84; Q3 oil and gas pre-tax income was $2.0B, compared to pre-tax income of $1.1B in Q2; qtrly average worldwide realized NGL prices increased by approximately 10% from the prior quarter to $21.04 per barrel; qtrly production of 1,220 MBoed exceeded the mid-point of guidance by 34 MBoed.

·     Shoals Technologies (SHLS) Q3 adj EPS $0.20 vs est. $0.15, adj EBITDA $48Mm vs est. $41.04Mm on revs $134.2Mm vs est. $136.02Mm; sees FY revs $485-495Mm vs est. $498.89Mm and adj EBITDA $165-175Mm vs est. $155.14Mm.

 

Financials

·     H&R Block (HRB) Q1 EPS loss (-$1.05) vs. est. loss (-$1.12); Q1 revs $183.8M vs. est. $182.06M; backs FY24 EPS and rev outlook; Total operating expenses of $390.1M increased by $1.0M.

·     Jack Henry & Associates (JKHY) Q1 EPS $1.39 vs est. $1.32 on revs $571.368Mm vs est. $565.08Mm; guides FY adj revs $2.193-2.214B vs est. $2.217B, adj op mgn 22.2-22.3% and EPS $4.98-5.04 vs est. $4.97.

·     LegalZoom (LZ) Q3 EPS $0.04 vs. est. $0.09; Q3 revs $167.3M vs. est. $160.01M; guides Q4 revs above views and sees FY23 revenue $657M-$659M vs. est. $648.79M and FY23 adjusted EBITDA is now expected to be in the range of $114M-$116M.

·     Marqueta Inc. (MQ) Q3 EPS loss (-$0.10) vs. est. loss (-$0.09); Q3 revs fell -43% y/y to $108.9M vs. est. $95.07M which included a 60-percentage point negative growth impact due to the change in revenue presentation caused by the new Cash App contract; Q3 gross margin 67%.

·     Robinhood (HOOD) Q3 revs $467M vs. est. $478.9M (up from $361M y/y); total operating expenses for full-year 2023 to be in the range of $2.399B-$2.439B; qtr end assets under custody increased 34% y/y to $87B; 3Q transaction-based rev decreased 11% y/y to $185M; monthly active users decreased 16% y/y to 10.3M.

·     Upstart Holdings (UPST) Q3 adj EPS loss (-$0.05) vs. est. loss (-$0.02); Q3 revs fell -14% y/y to $135M vs. est. $140M; sees Q4 revenue about $135M below consensus $157.0M; Q3 total fee revenue was $147M, a decrease of 18% y/y; Q3 Lending partners originated 114,464 loans, totaling $1.2B across platform, down 34% y/y.

 

Healthcare

·     Cytek BioSciences (CYTK) Q3 adj EBITDA $3.72Mm vs est. $1.291Mm on revs $48Mm vs est. $55.48Mm; sees FY revs $188-192Mm.

·     DaVita Inc. (DVA) Q3 adj EPS $2.85 vs est. $2.02 on revs $3.1B vs est. $3.019B, adj op Inc $525Mm vs est. $434.13Mm; sees FY adj EPS $7.80-8.30 vs est. $7.10.

·     Gilead Sciences (GILD) Q3 adj EPS $2.29 vs est. $1.92 on revs $7.05B vs est. $6.802B; guides FY total product sales $26.7-26.9B vs est. $26.875B and raises FY23 EPS view to $6.65-$6.85 from $6.45-$6.80.

·     Inspire Medical (INSP) Q3 EPS ($0.29) vs est. ($0.58) on revs $153.3Mm vs est. $154.45Mm, gr mgn 84.1%; guides FY revs $608-612Mm vs est. $611.09Mm, gr mgn 83-85%.

·     Maravai LifeSciences (MRVI) Q3 EPS ($0.05) vs est. $0.01 on revs $66.9Mm vs est. $75.52Mm; sees FY revs $275-285Mm vs est. $308.73Mm, adj EBITDA $55-60Mm vs est. $71.86Mm and adj EPS $0.01 vs est. $0.06; plans cost realignment initiative that includes expected reduction to workforce of about 15% or about 100 employees.

·     Masimo Corp. (MASI) Q3 adj EPS $0.63 vs est. $0.59 on revs $478.9Mm vs est. $498.85Mm; sees FY adj revs $2.025-2.075B vs est. $2.132B and adj EPS $2.85-3.05 vs est. $3.42.

·     PetIQ (PETQ) Q3 adj EPS $0.42 vs est. $0.02, adj EBITDA $29.3Mm vs est. $19.11Mm on sales $277Mm vs est. $229.06Mm; sees FY net sales $1.06-1.08B vs est. $1.032B and adj EBITDA $99-103Mm vs est. $95.87Mm.

 

Industrials & Materials

·     Axon Enterprises (AXON) Q3 EPS $1.02 vs. est. $0.76; Q3 revs $414M vs. est. $391.14M; Q4 Adjusted EBITDA margin expectation of approximately 20% implies full year Adjusted EBITDA margin of 20.8%; raises FY23 revenue view to $1.55B from $1.51B-$1.53 or 30% annual growth.

·     Enovix Corp. (ENVX) Q3 non-GAAP EPS loss (-$0.19) vs. est. loss (-$0.23); sees Q4 revenue to increase sequentially to between $3M-$4M due to a partial quarter from Routejade and continued shipments of silicon batteries for the U.S. Army program; remain on track to move to high volume production in Malaysia in 2024.

·     GXO Logistics (GXO) Q3 EPS $0.55 vs est. $0.66 on revs $2.5B vs est. $2.478B; sees FY organic revs +2-4% vs prior +6-8%, sees FY adj EPS $2.55-2.65 vs prior $2.45-2.65 and est. $2.59.

·     Mercury Systems (MRCY) Q1 adj EPS ($0.24) vs est. $0.18, adj EBITDA $2Mm vs est. $29.24Mm; sees FY revs $950Mm – $1B, adj EBITDA $160-185Mm vs est. $170.62Mm and adj EPS $1.19-1.54 vs est. $1.33.

·     Mosaic Inc. (MOS) Q3 adj EPS $0.68 vs est. $0.75, adj EBITDA $594Mm vs est. $603.62Mm on revs $3.5B vs est. $3.237B, gr mgn 11.5%; global grain and oilseed markets expected to remain tight well into 2024, potash supply remains uncertain; says demand for products has rebounded this year and expect robust demand through 2024.

·     Spirit AeroSystems (SPR) files automatic mixed securities shelf.

·     Iron ore on China’s Dalian Commodity Exchange ended daytime trading 1.03% higher at 935 yuan ($128.46) a metric ton; Sentiment was bolstered following a Reuters report that Chinese authorities have asked Ping An Insurance Group to take a controlling stake in embattled Country Garden, the nation’s biggest private property developer.

 

Technology, Media & Telecom

·     Akami (AKAM) Q3 adj EPS $1.63 vs. est. $1.50; Q3 revs $965M vs. est. $943.32M; guides Q4 EPS and sales above views and raises FY23 adj EPS view to $6.08-$6.13 from $5.87-$5.95 (est. $5.92) and boosts FY23 revenue view to $3.8B-$3.82B from $3.765B-$3.795B.

·     Bumble Inc. (BMBL) Q3 revenue $275.5M vs. est. $277M; sees Q4 revenue $272<-$278M below consensus of $285.9M; shares repurchase increased to $300M; Bumble App revenue increased 23% to $222M and app paying users increased 25% to 2.6M; Grew 147,000 Q/q.

·     Coupang Inc. (CPNG) Q3 adj EBITDA $239Mm vs est. $311.38Mm on revs $6.2B vs est. $5.938B, gross margin 25.3%.

·     Kyndryl Holdings (KD) Q2 EPS ($0.62) vs est. ($0.65), adj EBITDA $574Mm vs est. $518.08Mm on revs $4.073B vs est. $3.953B; guides FY adj EBITDA mgn approx 14.5% vs prior 14% and adj pretax income at least $140Mm vs prior at least $100Mm.

·     Power Integrations (POWI) Q3 adj EPS $0.46 vs. est. $0.47; Q3 revs $125.511M below consensus $130.45M; sees Q4 revenue $90M plus/minus $5M below consensus $139.12M.

·     Take-Two Interactive (TTWO) shares rise pre mkt on a report its unit Rockstar Games plans to announce the next highly anticipated Grand Theft Auto (GTA) game as early as this week, Bloomberg News reports, citing people familiar with its plans. Take-Two plans to publish a trailer for Grand Theft Auto VI next month to celebrate Rockstar’s 25th anniversary.

·     Toast Inc. (TOST) Q3 EPS loss (-$0.09) vs. est. loss (-$0.10); Q3 revs $1.03B in-line with consensus; Q3 ARR grew 40% to over $1.22B; Q3 Gross Payment Volume (GPV) rose 34% y/y to $33.7B; total locations increased 34% y/y to approximately 99K, with net new locations of over 6,500 in Q3.

·     Meta Platforms (META) said starting in 2024, advertisers will have to disclose when artificial intelligence (AI) or other digital methods are used to alter or create political, social or election related advertisements on Facebook and Instagram.