Early Look

Wednesday, October 27, 2021

Futures	Up/Down	%	Last
Dow	3.00	0.01%	35,647
S&P 500	-3.25	0.08%	4,562
Nasdaq	-19.50	0.13%	15,525

 

 

U.S. are mixed, with the Nasdaq looking down slightly, the S&P flat and Dow futures edge higher ahead of another busy day of earnings. Treasury yields again pulling back as the 10-year falls below 1.6%. U.S. stocks added to all-time highs Tuesday for the S&P 500 and Dow Jones Industrial Average behind strong earnings results (such as UPS, GE) and as lawmakers’ inch closer to a bipartisan infrastructure bill. House Speaker Nancy Pelosi said votes on the bill and the Democrat’s tax and spending plan are possible this week, with details on the corporate minimum tax proposal and a billionaire’s tax expected later. Strong economic data (new home sales rose 14%) and also fueled equity gains. Big tech earnings overnight set the stage for today with better results from AMD, MSFT and TWTR while GOOGL commentary was mixed. Bitcoin prices are down again (falls below $59K after hitting all-time highs last week above $67K), while the Treasury curve flattened and the $60 billion two-year auction was awarded the highest stop since February. While “fear” is not weighing on market sentiment yet with the CBOE Volatility index (VIX) near year lows, inflation and shortages remain in the back of investor minds. Car prices are elevated as a result of strong demand and a lack of semiconductor chips, gasoline has hit its highest cost per gallon in seven years and supply chain issues have delayed shipments of furniture, household appliances and other consumer goods. In Asian markets, The Nikkei Index was little changed at 29,098, the Shanghai Index dropped -35 points or nearly 1% to 3,562, and the Hang Seng Index fell over -1.5% or 400 points to 25,628. In Europe, the German DAX is down -0.25% at 15,715, while the FTSE 100 also slides over -0.2% to 7,250. A plan to raise revenue by increasing taxes on billionaires was running into opposition Tuesday. Democrats were looking at other options including a surtax for millionaires, imposing a 3% levy on those earning either $5 mln or $10 mln per year or targeting large companies with more than $1 bln in profits and apply a 15% minimum tax on those profits, which seems to be getting more traction, the NYT reported.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 8.31 points, or 0.18%, to 4,574.79

·     The Dow Jones Industrial Average rose 15.73 points, or 0.04%, to 35,756.88

·     The Nasdaq Composite climbed 9.01 points, or 0.06%, to 15,235.71

·     The Russell 2000 Index declined -16.56 points, or 0.72% to 2,296.08

 

Events Calendar for Today

·     7:00 AM ET         MBA Mortgage Applications Data

·     8:30 AM ET         Durable Goods Orders for September

·     8:30 AM ET         Durable Good Ex: Transportation for September

·     8:30 AM ET         Advance Goods Trade Balance for September

·     10:30 AM ET      Weekly DOE Inventory Data

·     1:00 PM ET         U.S. to sell $61 bln 5-year notes

 

Earnings Calendar:

·     Earnings Before the Open: ADP, AIT, APH, AVY, BA, BCO, BG, BMY, BSX, BXMT, CHEF, CME, CTS, DRVN, DT, DTE, DX, EVR, FISV, GD, GM, HES, HESM, HLT, HOG, IP, KHC, KO, MAS, MCD, MHO, MNRO, MPX, NSC, NYCB, OC, ODFL, PAG, PB, R, ROCK ROL, SIX, SLAB, SLGN, TMHC, TMO, TNL, VRTS, WAB

·     Earnings After the Close: AFL, ALGN, ALGT, ALRS, AM, AR, ASGN, AVB, AXTI, AZPN, BCOV, BHE, BMRN, BOOT, CACI, CCS, CDE, CHDN, CINF, CNO, CTSH, CYH, DRE, EBAY, EHC, EQT, ESI, EW, F, FLEX, FLS, FORM, FWRD, GSHD, GTY, IRBT, ISBC, IVC, JAKK, JBT, KLAC, KN, LC, LOB, MAA, MC, MKSI, MOH, MTH, MUSA, MXL, NDLS, NLY, NOVA, NOW, NTGR, OII, ORLY, PGRE, PI, PLXS, PPC, RJF, RWT, SNBR, TDOC, TTMI, TWLO, TYL, UCTT, UPWK, URI, VICI, WH, WOLF, XLNX, ZDGE

 

Other Key Events:

·     American Society for Radiation Oncology (ASTRO) Annual Meeting, 10/24-10/27, in Chicago, IL

·     Goldman Sachs Fifth Annual Emerging Technology Conference, 10/27-10.28

 

 

Macro	Up/Down	Last
Nymex	-1.03	83.62
Brent	-0.83	85.57
Gold	-5.70	1,789.70
EUR/USD	-0.0005	1.1590
JPY/USD	-0.41	113.72
10-Year Note	-0.022	1.596%

 

 

World News

·     Democratic U.S. senators on Tuesday unveiled details of a plan to enact a 15% minimum corporate tax that is expected to apply to about 200 corporations, according to a CNBC report. A 15% corporate minimum tax would apply to U.S. corporations earning more than $1 billion in profits annually for three-year period under plan posted to Senator Warren’s website

·     The German government cut its growth forecast for this year to 2.6% from 3.5% but raised its estimate for next year to 4.1% as supply bottlenecks for semiconductors and rising energy costs delay the recovery in Europe’s largest economy

 

Sector News Breakdown

Consumer

·     Boyd Gaming (BYD) 3Q adj EPS $1.30 vs est. $1.25 on revs $843.1Mm vs est. $839.7Mm; says authorized new $300Mm repurchase program and has $61Mm remaining under prior program

·     EVgo (EVGO) announced the opening of a new EV charging station comprised of six new EVgo public direct current fast chargers. “The opening of another EVgo charging station in Colorado builds upon GM (GM) and EVgo’s effort to accelerate charging infrastructure build out by adding more than 2,700 DC fast charging stations.

·     Fortune Brands (FBHS) Q3 EPS $1.49 vs. est. $1.39; Q3 revs $2.0B vs. est. $1.94B; cuts FY21 EPS view to $5.63-$5.73 from $5.65-$5.85 (est. $5.75) to reflect near-term supply chain and labor availability challenges; sees full-year sales growth in the range of 24.5%-25.5%; sees FCF for FY21 $625M-$675M

·     Hawaiian Holdings (HA) Q3 adj EPS ($0.95) vs est. ($1.33) on revs $508.8M vs est. $488.8M (-33% vs 3Q19), adj EBITDA $2.8M, the first positive reading since the pandemic began; sees Q4 revenue down 32-37% vs 4Q19

·     USANA Health (USNA) Q3 EPS $1.36 vs. es.t $1.30; Q3 sales $274.4M vs. est. $268.1M; reiterates FY21 net sales and EPS outlook and generate about $130M of FCF for FY21

·     Rent The Runway (RENT) 17M share IPO priced at $21.00

·     Clarus (CLAR) 2.75M share Secondary priced at $27.00

·     Six Flags (SIX) Q3 EPS $1.80 vs. est. $1.55; Q3 revs $638M vs. est. $587.07M; Attendance was 22 million guests, a decrease of 5 million guests compared to the first nine months of 2019; Adjusted EBITDA1 was $279M, a decrease of $28M compared to third quarter 2019

 

Energy

·     American Electric Power (AEP) agrees to sell its Kentucky operations to Liberty Utilities, the regulated utility business of Algonquin Power & Utilities (AQN), for $2.846B including debt.

·     NOV Inc. (NOV) Q3 EPS loss ($0.18) vs. est. loss (-$0.09); Q3 revs $1.34B vs. est. $1.42B; as of September 30, 2021, backlog for capital equipment orders for completion & production solutions was $1.11B

·     Avangrid (AGR) 3Q adj EPS $0.34 vs est. $0.29 on revs $1.6B vs est. $1.55B; reaffirms FY outlook

·     API Oil Inventories: Crude +2.32m vs +1.9m expected: Gasoline +0.53m: Cushing-3.73m: Distillate +0.98m

·     Enphase (ENPH) shares rise 13%; Q3 adj EPS $0.60 vs est. $0.48 on revenue $351.5M vs est. $343.6M, an 11% increase from Q2; guides Q4 revs $390M-$410M above est. $371.8M

·     Matador Resources (MTDR) Q3 adj EPS $1.25 vs. est. $0.96; Q3 revs $472.35M vs. est. $390.51M; increased midpoint of Fy total natural gas production guidance by 4%, from 77.5 bln cubic feet to 80.5 bln cubic feet; increased midpoint of FY total oil equivalent production guidance by 2%, from 30.45 mln boe to 30.95 mln boe

·     Range Resources (RRC) Q3 adj EPS $0.52 vs. est. $0.53 on adj revenue $795M vs est. $722.9M; qtrly avg production 2.14 BCFE/day, ~30% liquids; improved midpoint of 2021 natural gas differential guidance by approx $0.07 per mcf, NGL differential by approx $0.25/barrel; FY21 avg daily production expected 2.12-2.13 BCFE/day; cuts FY21 capital budget view to $415M from $425M

·     Sunnova Energy Intl (NOVA) partners with ChargePoint, Inc. (CHPT) to offer Sunnova customers EV Charging Solutions

 

Financials

·     ACCO Brands Corporation (ACCO) 3Q adj EPS $0.33 vs est. $0.34 on sales $526.7Mm vs est. $531.5Mm; guides FY adj EPS $1.30-1.40 vs est. $1.38, sees FY sales $2.0-2.04B vs est. $2.03B, expects continued organic growth in 4Q

·     Ameriprise (AMP) Q3 adj EPS $5.91 vs. est. $5.48; Q3 revs $2.9B vs. est. $3.57B; qtr end assets under management and administration was $1.2 trillion, up 21%

·     Capital One Financial (COF) Q3 adj EPS $6.86 vs. est. $5.38; Q3 revs $7.8B vs. est. $7.44B; Q3 net interest margin 6.35%, up 46 bps sequentially; Net interest margin of 6.35 percent, an increase of 46 bps; Credit Card period-end loans increased 4% to $105.0B; Domestic Card period-end loans increased 4% to $99.3B and Consumer Banking period-end loans increased 3% to $77.1B

·     Chubb Inc. (CB) Q3 core EPS $2.64 vs. est. $2.24; Most 3Q catastrophe losses, net of reinsurance and including reinstatement premiums, were $1.15B pretax, or $943M after tax; 3Q consolidated net premiums written up 15.8%, with commercial P&C lines up 22%

·     CoStar Group (CSGP) Q3 EPS $0.25 vs. est. $0.23; Q3 revs $499.3M vs. est. $497.9M; Sees Q4 revenue $498M-$503M vs. est. $514.16M and expects adjusted EBITDA in a range of $161M-$166M; raises FY21 adjusted EPS view to $1.07-$1.08 from $1.04-$1.06 (est. $1.05), while lowers FY21 view to $1.935B-$1.94B from $1.94B-$1.95B; boosts FY adjusted EBITDA guidance

·     First Horizon Corporation (FHN) authorized a $500 million increase in its existing 2021 common share repurchase authorization

·     Principal Financial (PFG) Q3 EPS operating $1.69 vs. est. $1.60; assets under management (AUM) of $981.0 billion, including $688.1 billion managed by PFG at qtr end; raises dividend to $0.64 from $0.63

·     Robinhood Markets (HOOD) shares fall -8%; Q3 EPS loss ($2.06) vs. est. loss ($1.37); Q3 revs $364.92M vs. est. $431.48M; Q3 monthly active users increased 76% to 18.9M, compared with 10.7M yoy; assets under custody increased 115% to $95B, compared with $44B yoy; average revenues per user decreased 36% to $65, compared with $102 yoy

·     Trustmark Corp. (TRMK) 3Q EPS $0.34 vs est. $0.47 on revs $152.4Mm vs est. $155.2Mm

·     Visa Inc. (V) Q4 EPS $1.62 vs. est. $1.52; Q4 revs rose 29% yoy to $6.56B vs. est. $6.52B; qtrly total processed transactions were 45.3 bln, a 21% increase over the prior year; Q4 payments volume up 17% yoy; raises dividend

 

Healthcare

·     A panel of FDA advisors has voted to recommend authorization of the Pfizer (PFE)/BioNTech (BNTX) COVID-19 vaccine for children between the ages of 5 and 11 years old; the vote was 17-0 that the benefits outweigh the risks.

·     Cortexyme (CRTX) shares fell over -60% after it narrowed the pool for its Alzheimer’s drug after only certain patients responded to the twice-daily pill, as the study missed its primary goal: Improvement on two measures of cognition across all patients.

·     DBV Technologies S.A. (DBVT) shares slide; said on October 14, 2021, DBV received communication from the FDA concerning the STAMP protocol submission of May 6, 2021. The FDA has requested a stepwise approach to DBV’s modified Viaskin Peanut (mVP) development program.

·     Masimo (MASI) 3Q adj EPS $0.94 vs est. $0.91 on revs $307.4Mm vs est. $295.7Mm; raises FY21 EPS guidance to $3.88 from $3.85 (est. $3.79) and boosts FY21 total revenue guidance to $1.23B from $1.216B (est. $1.22B)

·     Teva Pharmaceutical Industries Ltd. (TEVA) and MODAG GmbH announced a strategic collaboration on the exclusive worldwide licensing and development of MODAG’s lead compound anle138b and a related compound, sery433.

·     Boston Scientific (BSX) Q3 adj EPS $0.41 vs. est. $0.40; Q3 revs $2.93B vs. est. $2.97B; cuts FY21 revenue view to up 19%-20% from up 21%-22%; narrows FY21 adjusted EPS view to $1.60-$1.62 from $1.58-$1.62

·     Thermo Fisher (TMO) Q3 adj EPS $5.76 vs. est. $4.67; Q3 revs $9.33B vs. est. $8.39B; raising its revenue guidance by $1.2B to $37.1B this would result in 15% revenue growth over 202; is raising its adj EPS guidance by $1.30 to $23.37, which would represent 20% growth YoY

 

Industrials & Materials

·     CH Robinson Worldwide (CHRW) 3Q EPS $1.85 vs est. $1.42 on revs $6.3B vs est. $5.43B; said revs beat driven primarily by higher pricing and higher volume across most of our services; Operating expenses increased 26.7% to $533.4M and personnel expenses increased 32.0% to $399.9M;

·     IDEX Corp. (IEX) 3Q adj EPS $1.63 vs est. $1.59 on sales $712Mm vs est. $697.4Mm; narrows FY adj EPS to $6.30-6.33 from prior $6.26-$6.36 and vs est. $6.31

 

Technology, Media & Telecom

·     Alphabet (GOOGL) Q3 EPS $27.99 vs. est. $23.48; Q3 revs $65.11B vs. est. $63.34B; qtrly google advertising rev $53,130 mln vs $37,095 mln; qtrly operating margin 32 % vs 24 %; says Google Play sales growth in current qtr will be muted due to fee, usage changes; and expects sales and marketing expenses to be elevated during holiday season

·     AMD Inc. (AMD) 3Q adj EPS $0.73 vs est. $0.67 on revs $4.3B vs est. $4.12B, gross margin 48% in-line with estimates; qtrly computing and graphics revs $2.4B +44%; qtrly enterprise revs $1.9B +69%; guides 4Q revs about $4.4-4.6B vs est. $4.25B, sees 4Q adj gross margin about 49.5% vs est. 49.6%

·     Microsoft Corp. (MSFT) 3Q EPS $2.71 vs est. $20.7 on revs $45.3B vs est. $44B; azure and other cloud services revs +50%; server products and cloud services revs +35%; LinkedIn revs +42%; productivity and business process +22%; guides Q2 revenue $50.15-$51.05B vs. est. $48.92B as sees Q2 Productivity and Business Processes revenue $15.7B-15.95B, Intelligent Cloud revenue $18.1B-18.35B and More Personal Computing revenue $16.35B-$16.75B

·     Texas Instruments (TXN) 3Q EPS $2.07 vs est. $2.05 on revs $4.64B vs est. $4.66B; guides 4Q revs $4.22-4.58B vs est. $4.44B

·     Twitter (TWTR) 3Q adj EPS ($0.54) vs est. $0.15 on revs $1.28B vs est. $1.14B; guides 4Q revs $1.5-1.6B vs est. $1.44B; 3Q avg MDAU 211Mm (US 37Mm, Int’l 174Mm); expect 4Q MDAU to grow at/above 3Q rate of 13% yoy

·     Agilysys, Inc. (AGYS) 2Q adj EPS $0.18 on revs $37.9Mm; guides FY revs $160-170Mm vs est. $167.2Mm

·     F5 Networks (FFIV) Q4 adj EPS $3.01 vs est. $2.75 on revenue $682M vs est. $671.7M; sees Q1 adj EPS $2.71-$2.83 vs est. $2.76, revenue $665M-$685M vs est. $667.2M; sees FY22 revenue +8-9%

·     Juniper Networks (JNPR) Q3 EPS $0.46, in-line w ests; Q3 revs rose 4% to $1.189B vs. est. $1.2B; sees Q4 revs about $1.265B plus/minus $50M vs. est. $1.2B

·     Littlefuse (LFUS) 3Q adj EPS $3.95 vs est. $3.15 on revs $539.6Mm vs est. $518.8Mm; guides 4Q sales $503-517Mm vs est. $494.75Mm, sees 4Q adj EPS $2.80-2.96 vs est. $2.69

·     Tenable Holdings (TENB) shares rise 10%; Q3 EPS $0.07 vs. est. $0.02; Q3 revs $138.7M vs. est. $134.53M; sees FY21 EPS $0.31-$0.32 vs. est. $0.28 and revs $535.1M-$537.1M vs. est. $530.08M; sees Q4 EPS $0.02-$0.03 vs. est. $0.04 and revs $143M-$145M vs. est. $141.99M

·     Teradyne (TER) Q3 adj EPS $1.59 vs. est. $1.43; Q3 revs rise 16% to $951M vs. est. $932.9M; sees Q4 revs $820M-$900M vs. est. $850.6M; sees Q4 EPS $1.14-$1.40 vs. est. $1.18

·     Manhattan Associates (MANH) 3Q adj EPS $0.71 vs est. $0.54 on revs $169.2Mm vs est. $164.2Mm; guides FY adj EPS $2.12-2.14 vs est. $2.04, sees FY revs $653-655Mm vs est. $648.4Mm

·     Spotify Technology SA (SPOT) Q3 revenue rose 27% to 2.50 billion euros, beating the 2.45 billion expected; reported a 19% jump in paid subscribers for its premium service to 172 million, just beating analysts’ expectations of 171.7 million; total monthly active users rose 19% to 381 million.

·     Arteris (AIP) 5M share IPO priced at $14.00

·     Informatica (INFA) 29M share IPO priced at $32.00

 

REITs

·     Digital Realty (DLR) 3Q core FFO/share $1.65 vs est. $1.62 on revs $1.1B vs est. $1.1B; raised FY core FFO/share view to $6.50-6.55 from $6.45-6.50 vs est. $6.50

·     Equity Residential (EQR) Q3 EPS $1.15, normalized FFO $0.77 vs est. $0.75, revenue $623.2M vs est. $606.3M; achieved positive Q/Q same-store revenue growth for first since pandemic began; sees Q4 FFO $0.76; now sees FY FFO $2.98-$3 from $2.89-$2.99, also raised FY guidance ranges for same-store revs, NOI, EPS

·     Essex Property (ESS) Q3 core FFO/share $3.12 above guidance range $2.98-$3.10, EPS $1.82 vs est. $1.01; same-property revs +2.7% YoY, +3.2% sequentially due to increase in scheduled rents and lower levels of concessions and delinquencies; sees Q4 EPS $0.99-$1.09, raised FY EPS view to $6.39-$6.49 from $5.42-$5.66; raised midpoints of FY guidance for same-property revs by 0.2%, NOI by 0.3%, and core EPS by $0.11 to $12.44

·     Four Corners Property (FCPT) 3Q FFO/share 0.38 vs est. $0.38, EPS $0.28 vs est. $0.27; proposes 3Q dividend $0.3175/share

·     UDR Inc. (UDR) Q3 adj FFO $0.46 vs est. $0.51 on revs $329.8M vs est. $319.9M; sees Q4 adj FFO $0.46-$0.48, full-year adj FFO $1.82-$1.84 from $1.79-$1.83 (est. $2.01)

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