Early Look

Thursday, September 7, 2023

Futures	Up/Down	%	Last
Dow	2.00	0.01%	34,481
S&P 500	-15.25	0.34%	4,456
Nasdaq	-106.50	0.69%	15,293

 

 

U.S. stock futures looking mixed as the tech heavy Nasdaq tumbles overnight while Dow futures look higher and the S&P on track for a 3^rd day of declines. Apple (AAPL) shares looking lower again (after falling 3.5% Wednesday), weighing on technology names after reports that China moves to widen state employee iPhone curbs. Shares dropped yesterday after the WSJ reported China ordered officials at Central government agencies not to use Apple’s iPhones and other foreign-branded devices for work. Also weighing on tech, weaker guidance views from handful of companies overnight. In Asian markets, The Nikkei Index fell -249 points to 32,991, the Shanghai Index dropped -35 points to 3,122, and the Hang Seng Index slides -247 points to 18,202. In Europe, the German DAX gains 11 points to 15,753, while the FTSE 100 rises 30 points to 7,456. Treasury yields edged higher and the dollar extended gains to a six-month high amid increasing bets for further Federal Reserve policy tightening following stronger-than-expected macroeconomic indicators. Heavy dose of Fed speakers today as Fed Harker speaks on future of fintech later today, Fed Goolsbee delivers welcome remarks at Chicago Fed event, Fed Williams speaks at Bloomberg Market Forum, Fed Bostic speaks on economic outlook, and Fed Bowman on future of money. One big potential M&A deal in the paper sector has shares of Westrock (WRK) trading higher (see story below).

 

Market Closing Prices Yesterday

·     The S&P 500 Index slumped -31.22 points, or 0.69%, to 4,465.61.

·     The Dow Jones Industrial Average fell -197.59 points, or 0.57%, to 34,444.38.

·     The Nasdaq Composite dropped -148.48 points, or 1.06%, to 13,872.47.

·     The Russell 2000 Index declined -6.17 points, or 0.33% to 1,874.28.

 

Economic Calendar for Today

·     8:30 AM ET             Weekly Jobless Claims…est. 234K

·     8:30 AM ET             Continuing Claims…est. 1.715M

·     8:30 AM ET             Nonfarm Productivity for Q2…est. +3.4%

·     8:30 AM ET             Unit Labor Costs for Q2…est. +1.9%

·     10:00 AM ET           Fed’s Harker Speaks on Future of Fintech

·     10:30 AM ET           Weekly EIA Natural Gas Inventory Data

·     3:30 PM ET              Fed’s Williams Speaks at Bloomberg Market Forum

·     3:45 PM ET              Fed’s Bostic Speaks on Economic Outlook

 

Earnings Calendar:

·     Earnings Before the Open: ABM DBI MEI SAIC SCWX

·     Earnings After the Close: AOUT BRZE DOCU GWRE LTRX PL SMAR SMTC SWBI ZUMZ

 

Other Key Events:

·     Barclay’s CEO Energy-Power Conference 9/5-9/7, in New York

·     Citigroup Global Technology Conference, 9/6-9/8, in New York

·     Citigroup 18th Annual BioPharma Conference, 9/6-9/7, in Boston, MA

·     DA Davidson Big Sky Summit, 9/6-9/7, in Big Sky, MT

·     Deutsche Bank 13th Annual Aircraft Finance & Leasing Conference & Airline One on One Day, 9/5-9/7, in New York

·     Goldman Sachs Communacopia + Technology Conference 2023, 9/5-9/8, in San Francisco, CA

·     Goldman Sachs 20th European MedTech & Healthcare Services Conference, 9/6-9/7, in London

·     Goldman Sachs 19th Annual Australia and New Zealand Investment Forum, 9/7-9/8, in London

·     Jefferies 2023 Industrials Conference, 9/6-9/7, in New York

·     RBC Capital Global Engineering Construction & Infrastructure Solutions Conference, 9/7 (virtual)

·     TD Cowen 16th Annual Global Transportation Conference, 9/6-9/7, in Boston MA

 

 

Macro	Up/Down	Last
Nymex	-0.54	87.00
Brent	-0.43	90.17
Gold	0.80	1,945.00
EUR/USD	-0.0019	1.071
JPY/USD	-0.122	147.43
10-Year Note	-0.018	4.272%

 

 

World News

·     China’s August exports fell by 8.8% YoY (est. -9%; prev. -14.5%), while imports contracted -7.3% YoY (est. -9%; prev. -12.4%).

·     The bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 12.6 vs -1.4 last week. Bulls rise to 42.2% from 33.1%, Neutrals fall to 28.2% from 32.4%, Bears fall to 29.6% from 34.5%.

 

Sector News Breakdown

Consumer

·     American Eagle Outfitters (AEO) Q2 EPS $0.25 vs. est. $0.15; Q2 sales Q2 revs in-line at $1.2B; sees Q3 revenue up low single digits and expects FY24 sales to be up low single digits y/y, above prior guidance for revs in the range of flat to down low single digits; sees FY24 operating income in range $325M-$350M, up from prior guidance of $250M-$270M.

·     Calavo Growers (CVGO) Q3 EPS $0.41 vs. est. $0.31; Q3 revs $259.9M vs. est. $280.81M; Q3 adj EBITDA of $13.8M vs. $8.1M y/y; said Q3 Avocado margins meaningfully improved sequentially and versus the prior year quarter.

·     Dave & Busters (PLAY) Q2 adj EPS $0.94 vs. est. $0.93; Q2 revs $542.1M vs. est. $559M; board approved increase to existing shr repurchase authorization of $100M; Q2 combined comparable store sales fell (-6.3%).

·     Dutch Bros (BROS) files mixed securities shelf.

·     GameStop (GME) Q2 adj EPS loss (-$0.03) vs. est. $0.14; Q2 revs $1.16B vs. est. $1.14B; Q2 cash, cash equivalents and marketable securities were $1.195 billion at the close of the quarter; said will not be holding a conference call.

·     Sportsman Warehouse (SPWH) Q2 adj EPS loss (-$0.04) vs. est. $0.08; Q2 revs $309.5M below consensus $325.88M; Q2 comp store sales fell (-16.2%); said Q2 sales decrease primarily due to lower demand across all product categories and a decline in store traffic; sees 3q net sales $310M-$330M below consensus of $382.3M.

·     Torrid Holdings (CURV) Q2 EPS $0.06 vs. est. $0.10; Q2 revs $289.1M vs. est. $286.74M; cuts FY23 revenue view $1.08B-$1.115B from $1.095B-$1.145B and lowers FY23 adjusted EBITDA view to $115M-$130M from $90M-$100M.

 

Energy, Industrials and Materials

·     Advanced Energy (AEIS) offers $500M in convertible senior notes due 2028.

·     ChargePoint (CHPT) Q2 EPS loss (-$0.35) vs. est. loss (-$0.15); Q2 revs rose 39% y/y to $150.5M vs. est. $153.1M; sees Q3 revenue $150M-$165M vs. est. $181.6M; sees FY24 revenue $605M-$630M, below consensus $674.9M; Q2 GAAP gross margin of 1%, non-GAAP gross margin of 3%.

·     Crescent Energy (CRGY) raises FY23 CapEx view to $580M-$630M from $575M-$625M and raises FY23 production view to 146-151 from 143-148 MBoe/d; announces offering of 10M shares of Class A stock; to acquire additional interests in its operated Western Eagle Ford for $250M.

·     Fisker Ocean (FSR) to ramp up production to an expected 300 units per day in q4 and accelerate U.S. deliveries in September.

·     Fluor (FLR) charged for accounting improprieties by SEC; fined $14.5M.

·     Shell (SHEL) considered shutting its flagship Prelude liquefied natural gas facility off Australia for a year to fix issues that have plagued its operations, but instead opted for shorter maintenance period to allow it to capture strong gas demand – Reuters.

·     Westrock (WRK) shares rise 11% after the WSJ reported WestRock and Smurfit Kappa (SMFKY) are nearing a deal to combine into a $20B entity, citing people familiar with discussions. The deal could be announced as soon as this week, the report states. https://tinyurl.com/ypm2upsr

 

Financials

·     AvalonBay Communities (AVB) announced that Same Store Residential rental revenue for the two months ended August 31, 2023, increased 5.3% over the prior year period. This is approximately 40 basis points above what the Company’s expectation.

·     LegalZoom (LZ) 14M share Spot Secondary priced at $10.00.

 

Healthcare

·     Boston Scientific Corporation (BSX) said it received FDA approval for the latest-generation WATCHMAN FLX™ Pro Left Atrial Appendage Closure (LAAC) Device.

·     Phreesia Inc. (PHR) Q2 EPS loss (-$0.68) vs. est. loss (-$0.42); Q2 revs $85.8M vs. est. $85.2M; guides FY adj Ebitda (-$54M-$49M) which is better than prior view of (-$60M-$55M) and sees revs $353M-$356M vs. est. $355.3M.

 

Technology, Media & Telecom

·     Amkor Technology (AMKR) 10M share Spot Secondary priced at $24.00.

·     Apple Inc. (AAPL) shares adding to yesterday -3.5% drop after reports that China moves to widen state employee iPhone curbs. Shares dropped yesterday after the WSJ reported China ordered officials at Central government agencies not to use Apple’s iPhones and other foreign-branded devices for work.

·     Blackberry (BB) forecast Q2 revenue to fall -21.4% to $132M, below ests $156.8M due to cybersecurity segment lags; BB said expects Q2 cybersecurity revenue of $80 mln; says revenue lower than expected primarily due to certain large government deals not closing in the quarter.

·     C3.AI.inc (AI) Q1 EPS loss (-$0.09) vs. est. loss (-$0.17); Q1 revs $72.4M vs. est. $71.6M; Q1 subscription revs $61.4M, or 85% of total revs; sees Q2 revs $72.0M-$76.5M vs. est. $73.9M and still sees FY revs $295M-$320M vs. est. $307.3M; announced the launch of the C3 Generative AI Suite including 28 new domain-specific generative AI offerings.

·     Sprinklr Inc. (CXM) Q2 EPS $0.04 vs. est. $0.05; Q2 revs $178.5M vs. est. $173.4M; raises FY revenue view to $719M-$721M from $711M-$715M; guides Q3 results above views.

·     UiPath (PATH) Q2 adj EPS $0.09 vs. est. $0.03; Q2 revs $287.3M vs. est. $282.14M; sees Q3 revenue $313M-$318M vs. est. $315.33M and sees Q3 ARR $1.359B-$1.364B; raises FY24 revenue view to $1.273B-$1.278B from $1.267B-$1.272B; announces $500M stock buyback.

·     Verint Systems (VRNT) Q2 EPS $0.48 vs. est. $0.57; Q2 revs $210.2M below consensus $225.1M; said Q2 SaaS ARR increased 17% y/y driven by solid New SaaS ACV bookings combined with strong SaaS renewals; backs year EPS but cuts FY24 revenue view to $910M, plus or minus 2%, from $935M, plus or minus 2% prior.

·     Vishay (VSH) announces proposed offering of $600 million of convertible senior notes.

·     Yext Inc. (YEXT) Q2 adj EPS $0.07 vs. est. $0.06; Q2 revs $102.6M vs. est. $101.97M; Q2 gross margins 78.2% and ARR $398M; raises FY24 adjusted EPS view by penny on top and bottom end of guidance and ups FY24 revenue $405M-$407M from $404M-$407M (est. $406.38M).