Early Look

Friday, September 4, 2020

Stock futures are pointing to a mixed open as the Dow and S&P look to rebound after its ugly sell-off on Thursday (in a bout of profit taking), though the tech heavy Nasdaq Composite is looking at additional losses at this point. The bottom fell out in tech on Thursday (well, a sharp drop off record highs for major averages the day prior at least) as the S&P closed down 3.5%, the Dow fell 2.8% and the Nasdaq lost 5% in what was its worst day since June (though a late bounce kept the Nasdaq from having its worst day since the historic selloff of March 16). Apple (AAPL) had its worst day since March 16, off about 8%, dragging down Technology, while semiconductor chips took it on the chin as well, as all 11 sectors closed lower. Semiconductors are pointing lower again as China, in an effort to counter the U.S. restrictions on Huawei Technologies and technology exports to Chinese companies, is planning to develop a set of new government policies to develop its domestic semiconductor industry. The big story of the day comes at 8:30 AM when the payroll number for August is due and expected to show the U.S. likely added 1.2 million jobs and the official unemployment rate is forecast to drop to 9.8% from 10.2%, but growing evidence suggests companies are rehiring workers at a slower pace compared to earlier in the summer. In Asian markets, The Nikkei Index fell -260 points to 23,205, the Shanghai Index dropped -29 points to 3,355 and the Hang Seng Index declined -312 points to settle at 24,695. In Europe, the German DAX is higher by about 20 points to 13,075, while the FTSE 100 is up 35 points to 5,890.

Market Closing Prices Yesterday

·     The S&P 500 Index plunged -125.78 points, or 3.51%, to 3,455.06

·     The Dow Jones Industrial Average fell -807.77 points, or 2.78%, to 28,292.73

·     The Nasdaq Composite dropped -598.34 points, or 4.96%, to 11,458.10

·     The Russell 2000 Index declined -47.61 points, or 2.99% to 1,544.368

Economic Calendar for Today

·     8:30 AM EST      Change in Nonfarm Payrolls for Aug…est. 1.35M

·     8:30 AM EST      Change in Private Payrolls for Aug…est. 1.294M

·     8:30 AM EST      Change in Manufacturing Payrolls for Aug…est. 60K

·     8:30 AM EST      Unemployment Rate for Aug…est. 9.8%

·     8:30 AM EST      Average Hourly Earnings for Aug …est. 0.0%

·     1:00 PM EST       Baker Hughes Weekly Rig Count

World News

·     The Trump administration is looking into banning more Chinese apps that could pose a threat to national security, White House chief of staff Mark Meadows said late Thursday

Sector News Breakdown

Consumer

·     Caesars Entertainment (CZR) and VICI Properties (VICI) said they agreed to sell Harrah’s Louisiana Downs Casino, Racing & Entertainment to Rubico Acquisition for $22M

·     Kimberly-Clark (KMB) signs definitive agreement to acquire consumer business Softex Indonesia in all-cash transaction for ~$1.2B

·     Lululemon (LULU) was downgraded to neutral from buy citing its 63% rally this year as thinks highly of the brand and growth prospects, but the stock seems to be pricing in perfection

·     Oxford Industries (OXM) Q2 adjusted EPS loss (38c) on sales $192M (down -36% YoY) vs. est. loss (61c) and $170.6M; Q2 gross margin 54.6% vs. 59.5% YoY and Q2 operating margin -4.2% vs. 13.3% YoY; is not providing outlook for the year

·     Quanex (NX) Q3 adjusted EPS 34c/$212.1M vs. est. 8c/$185.47M; sees FY20 revenue $832M-$837M vs. est. $789.62M; cuts year adjusted Ebitda to $97M-$102M from prior $102M-$110M; 3Q adjusted Ebitda $27.7M, -16% YoY

·     Restaurant owners in New York City file a $2 billion lawsuit against city and state officials as the hard-hit industry continues to call on lawmakers for a timeline and plan to reopen for indoor dining amid the pandemic

·     Smith & Wesson (SWBI) Q1 adj EPS 97c on sales $278M vs. est. 48c and $206.3M; declares initial quarterly dividend of 5c

·     Tilly’s (TLYS) Q2 EPS 18c on sales $135.8M vs. est. loss (17c)/$130.68M

Energy, Industrials and Materials

·     Baker Hughes (BKR) announced International rig count for August fell 391 Y/Y to 747 and +4 sequentially; the international offshore rig count for the month fell 60 Y/Y and +1 sequentially to 184.

·     Patterson-UTI Energy (PTEN) announced an average of 59 drilling rigs operating for the month of August vs. 60 in July; for the two months ended August 31, 2020, the company had an average of 59 drilling rigs operating.

·     Plug Power (PLUG) rises after DE Shaw reports a 5% passive stake in the company in SEC filing

·     PolyMet Mining (PLM) rises after a Ramsey County District Court judge found that the Minnesota Pollution Control Agency (MPCA) did not engage in any procedural irregularities in connection with the processing of the National Pollutant Discharge Elimination System (NPDES) permit for the NorthMet copper-nickel-precious metals project, a wholly owned subsidiary of the Company.

·     Volaris (VLRS) reports revenue passenger miles fell 31.6% Y/Y to 1.226B in August, whereas sequentially improved 20.8%; said domestic RPMs slipped 24.8% Y/Y and international RPMs dropped 47.5% for the month

Financials

·     Medallia (MDLA) entered into a definitive agreement to acquire contact center coaching automation platform, Stella Connect for ~$100M in cash and the acquisition is expected to close this September.

Healthcare

·     Cooper Companies (COO) Q3 adj EPS $2.28 on sales $578.2M vs. est. $1.53 and $535.8M; guides Q4 EPS $3.00-$3.20 on sales $665M-$693M vs. est. $2.81 and $661.8M

·     The FDA has approved the emergency use of Roche’s (RHHBY) cobas SARS-CoV-2 & Influenza A/B Test for use on the fully automated cobas 6800/8800 Systems.

·     Savara (SVRA) to discontinue exploratory encore study evaluating molgradex for the treatment of ntm lung infection in people living with cystic fibrosis (CF)

·     Novacyt (NVYTF) launches its CE-Mark’d two-gene COVID-19 test molecular test in countries requiring a two-gene testing approach to detect the presence of SARS-CoV-2, including France, Belgium, Croatia, Poland and the UAE.

·     The FDA has approved emergency use authorization of an in-house SARS-CoV-2 molecular test developed at MiraDx. The nod includes OraSure’s (OSUR) ORAcollect-RNA device for the collection of oropharyngeal samples.

Technology, Media & Telecom

·     Broadcom (AVGO) Q3 adj EPS $5.40 on rev $5.82B vs. est. $5.22 and $5.77B; guides Q4 revs $6.4B +/- $150M vs. est. $6.19B; sees Q4 adj Ebitda of $3.74B +/- $75M; said qtr. driven by healthy demand from cloud and telecom customers, which more than offset expected reset in wireless; Q4 outlook reflects strong ramp in wireless, as well as continuing surge in demand for networking from cloud and telecom customers; plan to pay down an additional $3B in debt in Q4

·     DocuSign (DOCU) Q2 adj EPS 17c on revs $342.2M vs. est. loss 8c and $319.3M; Q2 billings $305.7M vs. est. $340.1M; guides Q3 revs $358M-$362M vs. est. $336M and year revs raised to $1.38B-$1.39B from $1.31B-$1.32B prior

·     Domo (DOMO) Q2 EPS loss (37c) on revs $51.1M vs. est. loss (50c)/$49.03M; sees Q3 EPS loss (46c) to (42c) on revs $51.2M-$52.2M vs. est. loss (45c)/$49.59M; sees FY21 EPS ($1.91) to ($1.83) on revs $202.5M-$206.5M vs. est. loss ($2.03)/$197.23M

·     Yandex N.V. (YNDX) has signed an agreement with Uber to contribute the Yandex.Drive car-sharing business from Yandex N.V. to MLU B.V. (MLU), Yandex’s ride-hailing and foodtech joint venture with Uber

·     Yext (YEXT) Q2 EPS loss (7c) on revs $88.1M vs. est. loss (12c)/$85.15M; sees Q3 EPS loss (9c) to (7c) vs. est. loss (13c) and revs $86M-$88M vs. est. $88.95M