Early Look

Friday, November 18, 2022

Futures	Up/Down	%	Last
Dow	139.00	0.41%	33,720
S&P 500	23.25	0.59%	3,978
Nasdaq	86.50	0.74%	11,797

 

 

U.S. futures are pointing to a higher open, looking to pare weekly losses ahead of this option expiration trading day. Much has been mentioned about the high put to call ratios this week among the highest of the year, coming after mixed economic data mid-week and more hawkish commentary out of the Fed. Stocks faced pressure on Thursday after St. Louis Fed President James Bullard said interest rates may have to climb as high as 7% to restrict the economy enough to fight inflation. Bond yields resumed their upward weekly move with the 10-yr back above 3.8%, while the dollar was little changed. Friday’s data calendar includes releases on existing home sales and leading economic indicators. Sentiment remains dour as Bears have now outnumbered Bulls in the AAII sentiment poll for 34 consecutive weeks (since April 7). With data going back to 1987, this ties Feb-Oct 2020 (also 34 weeks) for the most persistent negative sentiment that we’ve seen in this poll, as per Charlie Bilello. In Asian markets, The Nikkei Index fell -30 points to 27,899, the Shanghai Index dipped -18 points to 3,097, and the Hang Seng Index dropped -53 points to 17,992. In Europe, the German DAX is up 143 points or 1% to 14,409, while the FTSE 100 rises 60 points to 7,406.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -12.23 points, or 0.31%, to 3,946.56

·     The Dow Jones Industrial Average dipped -7.51 points, or 0.02%, to 33,546.32

·     The Nasdaq Composite slumped -38.70 points, or 0.35%, to 11,144.96

·     The Russell 2000 Index declined -14.04 points, or 0.76% to 1,839.12

 

Economic Calendar for Today

·     10:00 AM ET          Existing Home Sales M/M for October

·     10:00 AM ET          Leading Index M/M for October

·     1:00 PM ET             Baker Hughes Weekly rig count data

 

Earnings Calendar:

·     Earnings Before the Open: ATKR BKE FL SPB TWST

 

Other Key Events:

·     Deutsche Bank 2022 Gaming, Lodging, Leisure & Restaurants 1:1 Conference, 11/17-11/18

·     Oppenheimer Virtual Internet Bus Tour, 11/17-11/18

·     Wolfe Research Healthcare Conference, 11/16-11/18, in NY

 

 

Macro	Up/Down	Last
Nymex	-0.32	81.32
Brent	-0.75	89.03
Gold	+0.10	1,763.10
EUR/USD	0.0007	1.0365
JPY/USD	-0.27	139.90
10-Year Note	+0.037	3.81%

 

 

World News

·     Explosives Found in Vicinity of Nord Stream Blasts, Sweden Says: Authorities have called explosions along the natural gas lines sabotage, but haven’t been able to determine a culprit – WSJ

·     North Korea test-fired a suspected intercontinental ballistic missile with an estimated range long enough to carry a warhead to the American mainland, prompting the US to condemn what it said was an unlawful action

 

Sector News Breakdown

Consumer

·     Gap Stores (GPS) 3Q adj EPS $0.71 vs est. $0.00 on revs $4.04B vs est. $3.8B; says net sales could be down mid-single digits 4Q vs est. -0.6%; continues to Target total inventory below year ago level by end 2022; took $53M in impairment charges related to Yeezy Gap in 3q

·     Ross Stores (ROST) 3Q EPS $1.00 vs est. $0.81 on sales $4.6B vs est. $4.4B; guides 4Q comps flat to -2%, EPS $1.13-1.26 vs est. $1.13

·     William Sonoma (WSM) Q3 EPS $3.72 vs. est. $3.71; Q3 revs $2.19B vs. est. $2.15B; Q3 comp store sales +8.1% and +25.0% on a 2-year basis and a 3-yr comp of almost 50%; Gross margin. Rate of 41.5% which was 220bps below last year, driven by higher shipping and freight costs; reiterating our fiscal year 2022 guidance of mid-to-high single digit annual net revenue growth and operating margins relatively in-line with our fiscal year 2021 operating margin

·     Farfetch Ltd (FTCH) Q3 adj EPS loss (-$0.24) vs. est. loss (-$0.28); Q3 revs rose 1.9% y/y to $593.4M vs. consensus $596.56M; Q3 Brand Platform GMV decreased 10.4% year-over-year to $148.1 million and In-Store GMV increased 35.3% year-over-year to $31.9 million.

·     Natural Grocers (NGVC) 4Q EPS $0.09 vs est. $0.15 on sales $274.2Mm vs est. $282Mm, comps -0.2%; sees FY23 EPS $0.70-0.90 vs est. $1.04

·     Rent the Runway (RENT) downgraded to equal-weight from overweight at Morgan Stanley and its PT slashed to a street-low of $2.50 from $10 saying recent web traffic data indicates a slowdown ahead for the fashion rental company

·     Brown-Forman (BF/B) raises quarterly dividend by 9% to 20.55c per share

 

Energy, Industrials and Materials

·     ESCO Technologies (ESE) Q4 adj EPS $1.21 vs. est. $1.16; Q4 revs rose to $256M vs. est. $234.2M; says FY net sales expected to grow 6%-8% in range of $910M-$930M

·     Haynes International (HAYN) 4Q EPS $1.30 vs est. $1.28 on revs $143.8Mm vs est. $139.8Mm; sees 1Q EPS $0.55-0.70 vs est. $0.97; guides FY revs +15-20% vs est. +12.3%

·     Woodward Inc. (WWD) 4Q adj EPS $0.84 vs est. $0.76 on net sales $640Mm vs est. $628Mm; sees FY net sales $2.6-2.75B vs est. $2.6B and EPS $3.15-3.60 vs est. $3.58

 

Financials

·     StoneCo (STNE) Q3 adjusted EPS R$0.52 vs. R$0.30 last year and Q3 revs R$2.51B vs. R$1.47B y/y; Active clients 2.37M and payment volume R$93.3B, +24% y/y

·     Primerica (PRI) announces $375M share repurchase program

·     Euro banks will return €296.3 billion of cheap loans to the ECB after their terms were toughened to help the battle against record inflation – Bloomberg

 

Healthcare

·     G1 Therapeutics (GTHX) 7.7M share Spot Secondary priced at $6.50

·     Rapt Therapeutics (RAPT) 4.05M share Spot Secondary priced at $18.50

·     Iveric bio-Inc. (ISEE) rises 20% after the FDA granted breakthrough-therapy designation to its investigational product avacincaptad pegol for a degenerative eye disease

·     Centene (CNC) has signed a definitive agreement to sell Magellan Specialty Health to Evolent Health (EVH); Centene expects to receive over $750M in the aggregate from the transaction

·     Provention Bio Inc (PRVB) rises after saying the FDA approved use of its drug teplizumab, the first treatment aimed at delaying onset of insulin-dependent type 1 diabetes, in those aged eight years and older

·     Vertex (VERX) 1.5M share Spot Secondary priced at $15.15

 

Technology, Media & Telecom

·     Applied Materials (AMAT) 4Q adj EPS $2.03 vs est. $1.73 on sales $6.75B vs est. $6.5B; sees 1Q net sales approx $6.3-7.1B vs est. $6.5B and adj EPS $1.75-2.11 vs est. $1.83

·     Palo Alto Networks (PANW) Q1 adj EPS $0.83 vs. est. $0.69; Q1 revs rose 25% y/y to $1.6B vs. est. $1.55B; will acquire Cider Security for approximately $195 mln in cash

·     Keysight Technologies (KEYS) Q4 adj EPS $2.14 vs. est. $1.99; Q4 revs $1.44B vs. est. $1.4B; sees Q1 adj EPS $1.81-$1.87 vs. est. $1.81 and revs $1.36B-$1.38B vs. est. $1.34B; as of October 31, 2022, cash and cash equivalents totaled $2.04 billion

·     JD.com (JD) Q3 EPS $0.88 vs. est. $0.63; Q3 revs 243.5 billion yuan ($34.22 billion), compared with est. of 242.81 bln yuan; Q3 annual active customer accounts increased by 6.5% to 588.3M

·     American Software (AMSWA) Q2 EPS $0.10 vs. est. $0.08; Q2 revs $31.4M vs. est. $32.9M; lowers FY23 revenue view to $125.5M-$127.5M from $132.5M-$135M (est. $133.4M) while boosts FY23 adjusted EBITDA view to $18M-$20M from $16M-$18M

·     Dolby Labs (DLB) 4Q adj EPS $0.54 vs est. $0.60 on revs $278.2Mm vs est. $305.2Mm; sees 1Q revs $300-330Mm vs est. $364Mm and adj EPS $0.76-0.91 vs est. $1.10; sees FY revs +low-single digit vs est. +5.7%

·     Globant SA (GLOB) Q3 EPS $1.27 vs. est. $1.26; Q3 revs rose 34.2% y/y to $458.9M vs. est. $457.08M; raises FY22 adjusted EPS view to at least $5.06 from $4.94 (est. $5.05) and guides FY22 revenue at least $1.778B (in-line with consensus)

·     Hewlett Packard (HPQ) downgraded to neutral from outperform at Credit Suisse on macro risks to its near-term revenue and margin outlook.