Early Look
Thursday, October 27, 2022
|
Futures |
Up/Down |
% |
Last |
|
Dow |
133.00 |
0.42% |
32,005 |
|
S&P 500 |
-0.50 |
0.01% |
3,840 |
|
Nasdaq |
-65.00 |
0.57% |
11,381 |
U.S. futures are looked mixed as the S&P currently trading flat around 3,840, but Nasdaq futures looking lower by -0.5% following another tech earnings disappointment. Better earnings this morning from Dow components CAT and MRK are helping boost the index early. Overnight, Meta (META) reported a mixed Q3 earnings report where the company topped revenue expectations but missed on profits and warned of near-term sales challenges. Revenues fell by 4%, better than expected, to land at $27.71B. While that beat expectations, costs and expenses rose 19%, and so operating income fell by 46%, to $5.66B. Shares are pointing lower by over 19% as the co trades at 6-year lows. The Nasdaq and the S&P 500 ended lower on Wednesday following disappointing earnings and/or guidance from the likes of large cap heavyweights GOOGL, MSFT and TXN, adding to increasing fears of a global economic slowdown, offsetting a temporary bounce after the Bank of Canada raised rates by less than was expected (50 bps vs. 75-bps). The move by the BoC sent Treasury yields down and boosted stocks (temporarily) on rising hopes that the Federal Reserve will follow suit in the future. Energy, Healthcare, Materials were the best performers of the S&P 500 while the Russell 2000 advanced. In Asian markets, The Nikkei Index dipped -0.3% to 27,345. the Shanghai Index fell -0.55% to 2,982, and the Hang Seng Index rose +0.72% to 15,427. In Europe, the German DAX is down nearly -100 points to 13,100, while the FTSE 100 rises +0.25% to 7,073. Tonight results from AAPL and AMZN dominate a huge night of earnings.
Economic Calendar for Today
· 8:30 AM ET Gross Domestic Product (GDP) for Q3…est. +2.4%
· 8:30 AMET GDP Price Deflator for Q3…est. +5.3%
· 8:30 AM ET Consumer Spending for Q3…est. +1.0%
· 8:30 AM ET Core PCE Prices Advance for Q3…est. +4.5%
· 8:30 AM ET Weekly Jobless Claims…est. 220K
· 8:30 AM ET Continuing Claims…est. 1.388M
· 8:30 AM ET Durable Goods Orders M/M for September…est. +0.6%
· 8:30 AM ET Durable Goods Ex: Transportation M/M for Sept…est. +0.2%
· 10:30 AM ET Weekly EIA Natural Gas Inventory Data
· 11:00 AM ET Kansas City Fed Manufacturing for October
· 1:00 PM ET US Treasury to sell $36B in 7-year notes
Earnings Calendar:
· Earnings Before the Open: ABG AIT ALNY AMAL AMT AN AOS ARCH ARES BAX BC BWA CARR CAT CBRE CBZ CFR CMCSA CMS CNX CRS CWT DAN DTE EME EXLS EXTR FAF FCFS FCN FISV GBX GEL GEO GVA HON HTZ INSM IP ITGR KDP KIM LAZ LECO LH LII LKQ LUV MA MCD MDC MMP MO MRK NOC NTCT OPCH OSK OSTK PATK PBF PCG PTEN RS SAH SNDR SO SPGI SWK TFX TNC TPH TROW TW TXT ULBI VC VLY WDC WEX WST WTBA XEL
· Earnings After the Close: AAPL ABCB AJG AMZN APPF ATW AX AXTI BIO BY CASH COF COHU COLM CPT CSL CTO CUBE CUZ CWST DECK DXCM EGHT EMN ENVA EXPO FSLR FTAI GILD GLPI HIG HUBG INTC JAKK KN LHX LMAT LOPE LPLA MHK MPWR MTX NATI NOV OFC PFG PINS PTCT PXD RMD RNGR RRR RSG SGEN SJW SKYW SSNC STAG SWN TBBK TEX TMUS TUSK TXRH VICI VRSN VRTX WY X ZYXI
Market Closing Prices Yesterday
· The S&P 500 Index dropped -28.51 points, or 0.74%, to 3,830.60
· The Dow Jones Industrial Average edged higher 2.37 points, or 0.01%, to 31,839.11
· The Nasdaq Composite tumbled -228.12 points, or 2.04%, to 10,970.99
· The Russell 2000 Index advanced 8.18 points, or 0.46% to 1,804.33
|
Macro |
Up/Down |
Last |
|
Nymex |
0.47 |
88.38 |
|
Brent |
0.38 |
96.07 |
|
Gold |
-3.80 |
1,665.40 |
|
EUR/USD |
-0.0042 |
1.0035 |
|
JPY/USD |
-0.09 |
146.27 |
|
10-Year Note |
+0.054 |
4.069% |
World News
· British Prime Minister Rishi Sunak is considering tax rises and major public spending cuts, according to The Telegraph. Sunak on Wednesday delayed the announcement of a keenly awaited plan for repairing the country’s public finances until Nov. 17, two-and-a-half weeks later than previously planned. The fortnight delay is expected to shrink the size of the black hole in the public finances by up to 10-15 billion pounds ($11.6 billion-$17.4 billion).
· The European Central Bank (ECB) policy meeting this morning and is expected to raise interest rates again to the tune of 75-bps for a cumulative 2 percentage-point increase in three meetings – and signal that it is not yet done, even if the size of subsequent moves remains open to debate.
· The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -19.1 vs -33.6 last week. Bulls rise to 26.6% from 22.6%, Neutrals rise to 27.7% from 21.2%, and Bears fall to 45.7% from 56.2%
Sector News Breakdown
Consumer
· Altria Group Inc. (MO) said it is forming a partnership with Japan Tobacco Group to develop and sell heated tobacco devices in the U.S. and abroad. The move pits Altria against its former strategic partners, Philip Morris Inc. (PM) and Juul Labs Inc. https://on.wsj.com/3Fi7ERL
· Boot Barn (BOOT) 2Q EPS $1.06 vs est. $0.90 on revs $351.5Mm vs est. $343Mm, comps +2.3%; guides 3Q sales $502-514Mm vs est. $521.3Mm and EPS $1.71-1.83 vs est. $2.09; sees FY sales $1.65-1.67B vs est. $1.44B and EPS $5.70-5.90 vs est. $5.90
· Churchill Downs (CHDN) Q3 EPS $1.49 vs. est. $1.30; Q3 revs $383.1M vs. est. $393.82M; announces 7% increase in dividend to 71.4c per share
· Fortune Brands (FBHS) 3Q adj EPS $1.79 vs est. $1.72 on revs $2.1B vs est. $2.09B, adj op margin 16.3%; guides FY adj EPS $6.20-6.30 vs est. $6.40 and FCF $400-450Mm
· O’Reilly Automotive (ORLY) Q3 EPS $9.17 vs. est. $8.50; Q3 revs $3.8B vs. est. $3.71B; posted 7.6% increase in comparable store sales and a three-year stacked comparable store sales increase of 31.2%; sees year revs $14.1B-$14.3B vs. est. $14.15B
· Pilgrim’s Pride (PPC) Q3 adj EPS $1.09 vs. est. $0.79; Q4 revs rose 16.8% y/y to $4.47B vs. est. $4.5B; says on-track with previously announced organic growth projects
· Sleep Number (SNBR) 3Q EPS $0.22 vs est. $0.06 on sales $541Mm vs est. $529.4Mm; sees 4Q net sales flat y/y vs est. +21%; sees FY EPS $1.50-2.00 vs est. $3.29
· VF Corp. (VFC) 2Q adj EPS $0.73 vs est. $0.73 on revs $3.1B vs est. $3.1B, gross margin 51.4%; guides FY revs +5-6% constant dollars (no change from prior), adj gross margin down 100-150bps vs prior -50bps, adj op margin 11.0% vs prior approx 12%, adj EPS $2.40-2.50 vs prior $2.60-2.70 and est. $2.60, adj cash flow from ops $0.9B vs prior $1.0B
Energy
· Antero Resources (AR) Q3 EPS $1.72 vs. est. $1.87; Q3 revs $2.06B vs. est. $1.94B; Net production averaged 3.2 Bcfe/d, including 171 MBbl/d of liquids; realized pre-hedge natural gas price of $8.69 per Mcf, a $0.49 per Mcf premium to NYMEX pricing; Free Cash Flow was $797M; reduced total debt by $404 million during the quarter
· EQT Corp. (EQT) Q3 adj EPS $1.04, in-line with consensus and Q3 revs $2.07B vs. est. $1.76B; qtrly total sales volumes of 488 bcfe vs 495 bcfe and sees q4 total sales volume 450 bcfe – 475 bcfe; cuts FY22 CapEx view to $1.4B-$1.475B
· Shell (SHEL) posts Q3 profit of $9.45B, down q/q due to weaker refining and gas trading, as it announced plans to sharply boost its dividend and announced plans to buy $4B of stock
· Sunnova Energy (NOVA) Q3 EPS loss (-$0.54) vs. est. loss (-$0.28); Q3 revs $149.4M vs. est. $131.3M; backs FY22 adjusted EBITDA view $117M-$137M and FY22 customer addition’s view 85K-89K; Added 21,800 customers in Q3, bringing total to 246,600 as of September 30, 2022
Financials
· Annaly Capital (NLY) Q3 Non-GAAP EPS $1.06 vs. est. $0.99; Book value per common share of $19.94; Annualized GAAP return (loss) on average equity of (9.9%) and annualized EAD return on average equity of 17.6%
· Credit Suisse Group AG (CS) unveiled a strategic plan that will see the bank undertake a multi-billion-dollar capital raise, a carve out of its investment bank and thousands of job cuts as it seeks a return to profitability. The Zurich-based bank plans to raise 4 billion francs ($4.1 billion) through two capital raises, including a rights issue and selling shares to investors. The firm is also breaking up the investment bank, creating a separate advisory and capital markets business.
· Digital Realty (DLR) 3Q core FFO/shr $1.67 vs est. $1.68 on revs $1.2B vs est. $1.19B, adj EBITDA $620Mm vs est. $612.5Mm
· Everest Re Group (RE) 3Q op EPS ($5.28) vs est. ($5.61) on revs $3.07B vs est. $3.05B; $3.7B GWP vs est. $3.7B
· Invitation Homes (INVH) same store NOI +8.6%, same store avg occupancy 97.5% -60bps, same store new lease rent growth +15.6%, same store renewal rent growth +10.2%
· Lending Club (LC) Q3 EPS $0.41 vs. est. $0.33; Q3 revs rose 24% y/y to $304.9M vs. est. $294.8M; sees Q4 revenue $255M-$265M vs. est. $279.68M; sees Q4 net income $15M-$25M
· Raymond James (RJF) Q4 adj EPS $2.08 vs. est. $2.00; Q4 revs $2.83B vs. est. $2.75B
· UDR Inc. (UDR) 3Q AFFO/shr $0.54 vs est. $0.59 on revs $391.3Mm vs est. $381.8Mm; guides FY AFFO/shr $2.11-2.13 vs est. $2.32
Healthcare
· Merck (MRK) Q3 adj EPS $1.85 vs. est. $1.71; Q3 revs $15B vs. est. $14.08B; raises FY22 adjusted EPS view to $7.32-$7.37 from $7.25-$7.35 and boosts FY22 revenue view to $58.5B-$59B from $57.5B-$58.5B, vs. consensus $58.51B
· Align Technology (ALGN) 3Q adj EPS $1.36 vs est. $2.18 on revs $890.3Mm vs est. $952.6Mm
· BioMarin (BMRN) Q3 GAAP EPS loss (-$0.04) vs. est. loss (-$0.01); Q3 revs $505.3M vs. est. $518.41M; backs FY22 revenue view $2.06B-$2.16B
· Molina Healthcare (MOH) Q3 adj EPS $4.36 vs. est. $4.21; Q3 revs $7.93B vs. est. $7.8B; increased its full year 2022 adjusted earnings guidance to at least $17.75 per diluted share, above its previous guidance of at least $17.60 per diluted share; consolidated MCR for the third quarter of 2022 was 88.4%, compared to 88.9% for third quarter of 2021
· Teladoc (TDOC) 3Q EPS ($0.45) vs est. ($0.57) on revs $611.4Mm vs est. $610Mm; guides 4Q revs $625-640Mm vs est. $637.3Mm and EPS ($0.40)-($0.10); sees FY revs $2.40-2.41B vs prior $2.40-2.50B and est. $2.4B
Industrials & Materials
· Caterpillar (CAT) Q3 adj EPS $3.95 vs. est. $3.18; Q3 revs rise 21% y/y to $14.99B vs. est. $14.43B; increase in sales volume in qtr driven by impact from changes in dealer inventories, higher sales of equipment to end users, higher services
· Boeing (BA): Reuters reported China Southern Airlines Co Ltd has scheduled domestic flights with the 737 MAX on Oct. 30, a booking search on its website shows, marking a possible return to service for the Boeing Co model in China after more than three years.
· Allison Transmission (ALSN) Q3 EPS $1.45 vs. est. $1.28; Q3 revs rose 25% y/y to $710M vs. est. $681.2M; narrows FY22 revenue view to $2.69B-$2.74B from $2.65B-$2.75B and raising our full year 2022 guidance midpoints
· Olin Corp (OLN) Q3 EPS $2.18 vs. est. $1.85; Q3 revs $2.32B vs. est. $2.35B; expect Q4 adjusted ebitda to decline approximately 15% to 20% from Q3 2022 levels
· Teck Resources (TECK) announced it has agreed to sell its 21.3% interest in the Fort Hills Energy Limited Partnership and certain associated downstream assets to Suncor Energy (SU) for gross proceeds of approximately $1B in cash
· Tronox Holdings (TROX) Q3 adj EPS $0.69 vs. est. $0.75; Q3 revs rose 3% y/y to $895M vs. est. $894.7M; Delivered Adjusted EBITDA of $247 million and an Adjusted EBITDA margin of 27.6%; Generated free cash flow of $25 million in the quarter
· United Rentals (URI) Q3 EPS $9.27 vs. est. $9.06; Q3 revs $3.05B vs. est. $3.07B; announces new $1.25B share repurchase program; raises 2022 revenue outlook to $11.5B-$11.7B from $11.4B-$11.7B (est. $11.58B) & boosts 2022 adj EBITDA outlook to $5.5B-$5.6B from $5.4B-$5.55B
Technology, Media & Telecom
· Meta Platforms (META) Q3 EPS $1.64 vs. est. $1.89; Q3 revs fell -4% y/y to $27.71B vs. est. $27.38B; daily active users (DAUs) 1.98B vs. est. 1.86B and monthly active users (MAUs) 2.96B vs. est. 2.97B; in Q3, ad impressions delivered across family of apps increased by 17%, average price per ad decreased by 18%; expect 2022 capital expenditures, including principal payments on finance leases, to be in range of $32-33B; Meta’s metaverse losses top $9.4 billion for the year
· KLA-Tencor (KLAC) 1Q adj EPS $7.06 vs est. $6.21 on revs $2.72B vs est. $2.6B; sees 2Q revs $2.65-2.95B vs est. $2.59B, gr margin 59.8-62%, adj EPS $6.30-7.70 vs est. $6.15
· ServiceNow (NOW) Q3 adj EPS $1.96 vs. est. $1.84; Q3 revs rose 21% y/y to $1.83B vs. est. $1.85B; sees Q4 subscription revenues $1.83B-$1.84B vs. est. $1.93B; sees Q4 adjusted income from operations margin 26%; reaffirms year sub revs and adj gross margin
· STMicroelectronics (STM) Q3 EPS $1.16 vs. est. $1.04; Q3 revs $4.32B vs. est. $4.22B; said Q3 inventory was $2.38B, compared to $1.97B in the year-ago quarter; days sales of inventory at quarter-end and in the year-ago quarter were 96 days; sees Q4 revenue $4.4B vs. est. $4.43B
· Upwork (UPWK) 3Q adj EPS ($0.04) vs est. ($0.08) on revs $158.6Mm vs est. $157.3Mm, adj EBITDA ($2.9Mm) vs est. ($7.0Mm); sees FY revs $615M to $617M, saw $612M to $617M
· Wolfspeed (WOLF) 1Q adj EPS ($0.04) vs est. ($0.05) on revs $241.3Mm vs est. $239.3Mm; guides 2Q revs $215-235Mm vs est. $252Mm, adj EPS ($0.16)-($0.08) vs est. $0.00
· Impinj Inc. (PI) 3Q adj EPS $0.34 vs est. $0.16 on revs $68.3Mm vs est. $64.7Mm; guides 4Q revs $71.5-73.5Mm vs est. $67.2Mm and adj EPS $0.32-0.37 vs est. $0.16
· Coursera (COUR) 3Q adj EBITDA (-$4.9)Mm vs est. $(12)Mm on revs $136.4Mm vs est. $128.3Mm; guides 4Q revs $135.5-139.5Mm vs est. $137.6Mm and adj EBITDA $(16.5)Mm-$(13.5)Mm vs est. $(7.95)Mm
· Flex Inc. (FLEX) Q2 adj EPS $0.63 vs. est. $0.51; Q3 revs $7.8B vs. est. $7.21B and vs. year ago $6.23B; boosts FY23 adjusted EPS view to $2.20-$2.35 from $2.09-$2.24 (est. $2.22) and raises FY23 revenue view to $29.1B-$30.1B from $28.4B-$29.4B
· NetGear (NTGR) 3Q EPS $0.10 vs est. $0.08 on revs $249.6Mm vs est. $244.6Mm; guides 4Q revs $235-250Mm vs est. $270.6Mm and adj op margin (2.0)% – (1.0)
· Madison Square Garden Entertainment (MSGE) announced that it has confidentially submitted an initial Form 10 Registration Statement with the U.S. Securities and Exchange Commission for the proposed spin-off of its traditional live entertainment and MSG Networks businesses
Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.