Early Look

Tuesday, October 25, 2022

Futures	Up/Down	%	Last
Dow	-131.00	0.42%	31,414
S&P 500	-11.25	0.31%	3,797
Nasdaq	-9.50	0.08%	11,469

 

 

U.S. futures are looking lower a day after stocks finished Monday near their highs, as investors await earnings results from some of the biggest technology companies in the world later tonight (GOOGL, MSFT) and later this week (AAPL, AMZN) and a handful of large-cap heavy-weights reporting earnings this morning (GM, HAL, KMB, KO, MMM, UPS). Investors continue to weigh the next moves and outlook from the Fed with another 75-bps rate hike expected in November but hopes of a more wait and see attitude going forward which was hinted out this past week by a few Fed members. Lots of economic data to chew on later this morning, following weaker PMI data on Monday as new orders fell to the lowest reading since May of 2020, reversing an expansionary trend – prices paid slid to their lowest reading since November of 2020. US-listed Chinese shares plunged after that nation’s equity index tumbled as President Xi Jinping solidified his power. In Asian markets, The Nikkei Index rises 275 points to 27,250, the Shanghai Index was little changed at 2,976, and the Hang Seng Index dips -15 points to 15,165. In Europe, the German DAX is down over -100 points or -0.8% to 12,822, while the FTSE 100 drops -0.65% to 6,967. Busy morning of economic data – but earnings should be the key driver today.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 44.59 points, or 1.19%, to 3,797.34

·     The Dow Jones Industrial Average rose 417.06 points, or 1.34%, to 31,499.62

·     The Nasdaq Composite climbed 92.90 points, or 0.86%, to 10,952.61

·     The Russell 2000 Index advanced 6.16 points, or 0.35% to 1,748.40

 

Economic Calendar for Today

·     7:45 AM ET           ICSC Weekly Retail Sales

·     8:55 AM ET           Johnson/Redbook Weekly Sales

·     9:00 AM ET           Monthly Home Price Index M/M for August

·     9:00 AM ET           CaseShiller 20-City for August

·     10:00 AM ET         Consumer Confidence for October…est. 106.5

·     10:00 AM ET         Richmond Fed Index for October

·     1:00 PM ET            US Treasury to sell $43B in 2-year notes

·     4:30 PM ET            API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ADM ARCC AWI BIIB CLF CNC FELE FFWM FRME GATX GE GLW GM GPK HAL HUBB IEX ITW IVZ JBLU KMB KO MCO MMM MSCI NVR ONB PCAR PEBO PHM PII POR PROV RTX SBSI SFNC SHW SITC SSTK ST SYF TRN TRU UPS VLO XRX

·     Earnings After the Close: AGR AGYS AMP AXTA BXP BYD CC CHX CMG CSGP EGP ENPH EQR FCF FE FFIV FIBK GOOGL HA HAFC HIW JNPR KRC MANH MAT MSFT MTDR MXL NAVI NBR NCR NEX NXGN PFC RNST RUSHA SKX TENB TER TNET TRMK TXN UHS UMBF USNA V VBTX WH WIRE WSBC ZWS

 

 

Macro	Up/Down	Last
Nymex	-1.04	83.54
Brent	-1.24	92.05
Gold	-10.60	1,643.50
EUR/USD	-0.0015	0.9862
JPY/USD	0.00	148.96
10-Year Note	-0.055	4.177%

 

 

World News

·     Bank of England in talks with Treasury to avoid Halloween Budget meltdown ‘; BoE said that they are already talking to Treasury officials which are engaging with the OBR on the elements that will go into the 31 October announcement

·     Japanese Finance Minister Suzuki said “monetary policy should be left to the BoJ. The BoJ is aiming for inflation with wage growth”. And “the yen’s impact on inflation has been rising”.

 

Sector News Breakdown

Consumer

·     General Motors (GM) Q3 adj EPS $2.25 vs. est. $1.88; Q3 revs $41.89B vs. est. $42.22B; Sees adjusted Ebit $13.0B-$15B; sees Automotive net cash provided by operating activities $16B-$19B; still sees adjusted EPS $6.50 to $7.50 vs. estimate $6.75

·     PulteGroup (PHM) Q3 EPS $2.69 vs. est. $2.82; Q3 revs $3.94B vs. est. $4.17B; qtrly home sale revenues increased 16% to $3.8 bln; qtr-end unit backlog totaled 17,053 homes; backlog value increased 3% to $10.6 bln; qtr-end unit backlog totaled 17,053 homes

·     Inter Parfums, Inc. (IPAR) said Q3 net sales rose to a record $280 million, a 7% increase from $263 million in the third quarter of 2021, for a year-to-date sales increase of 16%. At comparable foreign currency exchange rates, third quarter net sales increased 12%

·     Philip Morris International’s (PM) $16b offer for Swedish Match will receive clearance from EU antitrust regulators after it offered to sell the Swedish smokeless tobacco manufacturer’s logistics unit, sources tell Reuters

·     Planet Fitness (PLNT) upgraded to Overweight from Neutral at Piper Sandler

·     Adidas (ADDYY) terminates partnership with Ye immediately

 

Energy

·     The head of the International Energy Agency (IEA) said its members have oil reserves available to conduct another round of releases if needed

·     Range Resources (RRC) Q3 adj EPS $1.37 vs. est. $1.41; Q3 production averaged 2.13 bcfe per day; Highest cash flow from operating activities in Company history $521M; highest cash flow from operations, before working capital changes, in Company history of $550M

 

Financials

·     AGNC Investment (AGNC) 3Q adj EPS $0.84 vs est. $0.69 on NII $177Mm, tangible net book value $9.08/share

·     Alexandria Real Estate (ARE) Q3 AFFO/share $2.13 vs. estimate $2.11; Q3 revs rose 20% y/y to $659.9M, vs. estimate $649.8M; sees FY FFO/shr $5.70 to $5.72, saw $6.28 to $6.34

·     Cathay General Bancorp (CATY) Q3 EPS $1.35 vs. est. $1.29; Return on average stockholders’ equity was 15.94% and return on average assets was 1.81% for the quarter ended September 30, 2022, compared to a return on average stockholders’ equity of 11.61% and a return on average assets of 1.45% for the same quarter a year ago

·     Discover Financial (DFS) Q3 EPS $3.54 vs. est. $3.77; Q3 net charge-off rate of 1.71%; total loans ended quarter at $104.9 bln, up 17% y/y; credit card loans ended the quarter at $83.6B, up 19% y/y; qtrly net interest income increased $438M, or 18%; qtrly payment services volume was $84.1 billion, up 10% y/y

·     Heidrick & Struggles (HSII) adj EPS $1.00 vs est. $0.86 on revs $258.3Mm vs est. $267.3Mm; sees 4Q revs $215-235Mm vs est. $263.5Mm

·     Hope Bancorp (HOPE) 3Q EPS $0.45 vs est. $0.45 on NII $153.2Mm vs est. $148.8Mm

·     Qualtrics Int’l (XM) Q3 adj EPS $0.04 vs. est. loss (-$0.02) Q3 revs rose 39% y/y to $377.5M vs. est. $358.6M; boosted its revenue guidance for the full year to $1.45B from $1.42b-$1.43B; sees Q4 revenue $380M-$382M vs. est. $373M

·     Synchrony (SYF) Q3 EPS $1.47 vs. est. $1.38; Q3 CET1 capital ratio 14.3%; Q3 net charge-offs 3%; Q3 tangible book value per share $22.10.

·     WR Berkley (WRB) Q3 adj operating EPS $1.01 vs. est. $0.85; Q3 revs $2.72B vs. est. $2.71B; Net investment income for the core portfolio grew 51.0%, driving record quarterly net investment income; record gross premiums written grew 10.6% to $3.1B and net premiums written grew 10.8% to $2.6B

·     WSFS Financial (WSFS) 3Q EPS $1.16 vs est. $1.25 on NII $176.8Mm vs est. $175.6Mm; net credit costs were $8.5Mm; ROA 1.44%

·     Zions Bancshares (ZION) 3Q EPS $1.40 vs est. $1.58 on NII $663Mm vs est. $662.6Mm

 

Healthcare

·     AstraZeneca PLC (AZN) said that a Phase 3 trial of its Fasenra treatment for eosinophilic esophagitis passed one dual-primary endpoint but failed the other.

·     Centene (CNC) Q3 adj EPS $1.30 vs. est. $1.24; Q3 revs $35.87B vs. est. $35.47B; raises FY22 adj EPS view to $5.65-$5.75 from $5.60-$5.70 (est. $5.71) and raises FY22 revenue view to $142.7B-$144.7B from $141.6B-$143.6B (est. $143.63B); sees FY22 adjusted effective tax rate 25.3%

·     Hoth Therapeutics (HOTH) announces a 1:25 reverse stock split effective pre-market opening on October 26, 2022

·     Medpace (MEDP) Q3 EPS $2.05 vs. est. $1.47; Q3 revs $383.744 vs. est. $357.18M; backlog as of september 30, 2022 increased 20.9% to $2.2 bln from $1.8 bln as of september 30, 2021; raises FY revenue to $1.44B-$1.46B from $1.41B-$1.44B and sees EBITDA $302M-$310M up from prior $26M-$280M; raises year EPS outlook as well

 

Industrials & Materials

·     3M (MMM) Q3 adj EPS $2.69 vs. est. $2.60; guides FY adj EPS $10.10-$10.35 vs. est. $10.29; sees FY operating cash flow of $6.8 to $7.4 bln; sees FY total sales growth -3.5 to -3.0%; sees FY organic sales growth: 1.5 to 2.0%

·     UPS (UPS) Q3 adj EPS $2.99 vs. est. $2.84; Q3 revs $24.2B vs. est. $24.32B; reaffirmed its full-year revenue forecast of about $102 billion and adjusted operating margin of around 13.7%; Revenue per piece in the company’s e-commerce-dependent domestic unit rose 9.8% for the quarter

·     General Electric (GE) Q3 adj EPS $0.35 vs. est. $0.46; Q3 revs rose 3% y/y to $19.1B vs. est. $18.62B; maintaining prior 2022 outlook for organic non-GAAP rev, trending toward low end of high-single-digit growth range; now expects 125 to 150 basis points of adj organic profit margin (non-GAAP) expansion and adj eps range of $2.40 to $2.80 in FY22; Spinoffs remain on track

·     Boeing (BA) appointed a senior troubleshooter to help turn around loss-making programs at its Defense, Space & Security (BDS) division in what some industry sources view as a potential template for wider efforts to address industrial woes – Reuters

·     Crane Co (CR) Q3 adj EPS $1.86 vs. est. $1.85; Q3 revs $815M vs. est. $816.62M; narrows FY22 EPS view to $7.58-$7.72 from $7.45-$7.85 (est. $7.75)

·     Crown Holdings (CCK) Q3 adj EPS $1.46 vs. est. $1.77; Q3 revs $3.26B vs. est. $3.3B; cuts FY22 adjusted EPS view to $6.60-$6.70 from $8.00-$8.20 (est. $7.67); sees Q4 adjusted EPS $1.00-$1.10 vs. consensus $1.77

·     Hexcel Corp. (HXL) 3Q adj EPS $0.33 vs est. $0.33 on revs $365Mm vs est. $398Mm; guides FY adj EPS $1.12-1.24 vs prior $1.00-1.24 and est. $1.23, sees FY sales $1.53-1.60B vs prior $1.50-1.63B and est. $1.59B

·     Packaging Corp (PKG) 3Q adj EPS $2.83 vs est. $2.81 on revs $2.1B vs est. $2.2B; guides 4Q EPS $2.22 vs est. $2.56, sees most of the issues that impacted 3Q packaging segment demand continuing into 4Q

·     PotlatchDeltic (PCH) Q3 adj EPS $0.74 vs. est. $0.64; Q3 revs $306.7M vs. est. $295.21M; Maintained strong liquidity position of $773 million as of September 30, 2022

·     Simpson Manufacturing (SSD) Q3 EPS $2.06 vs. est. $1.52; Q3 revs rose 39.6% y/y to $553.7M vs. est. $527.2M; Income from operations of $122.8 million increased 22.1% y/y; lowers FY22 CapEx to $55M-$65M from $80M-$90M

·     Waste Management (WM) assumed at Buy from Hold at Jefferies

 

Technology, Media & Telecom

·     Cadence Design (CDNS) 3Q adj EPS $1.06 vs est. $0.97 on revs $903Mm vs est. $871Mm, adj EBIT margin 39%; guides 4Q adj EPS $0.89-0.93 vs est. $0.89 and revs $870-890Mm vs est. $866.6Mm

·     Calix Inc. (CALX) 3Q adj EPS $0.34 vs est. $0.23 on revs $236.3Mm vs est. $215.3Mm; guides 4Q revs +2% sequential and approx +36% y/y at mid-point vs est. +23.6% y/y

·     Logitech (LOGI) Q2 EPS $0.84 vs. est. $0.79; Q2 revs $1.15B vs. est. $1.21B; affirms FY23 revenue outlook down 8% to down 4%; CFO leaving the company and said will be launching a search and Olmstead currently plans to stay on as CFO through the transition