Early Look

Wednesday, September 9, 2020

Futures	Up/Down	%	Last
DJ Industrials	107.00	0.39%	27,632
S&P 500	24.50	0.73%	3,359
Nasdaq	207.50	1.88%	11,268

 

 

Stock futures are rebounding after three days of massive selling pressure, with Nasdaq futures up nearly 2% after falling 10% the last few sessions combined on profit taking, paring its YTD losses. Stocks are active following COVID-19 news after one of the favorites to complete a vaccine for the virus, AstraZeneca (AZN) put its phase III study on temporary hold while the company investigates whether a patient suffered a serious side effect or if the illness had nothing to do with the shot. In Asian markets, The Nikkei Index fell -241 points to 23,032, the Shanghai Index dropped -61 points to 3,254 and the Hang Seng Index declined -155 points to 24,468. In Europe, the German DAX is higher by 107 points at 13,070, while the FTSE 100 is up about 47 points to 5,975. In retail, shares of Tiffany (TIF) plunge after LVMH looks to end talks citing US tariffs and the environment. Crude futures are also rebounding after falling 7% yesterday. Stocks tumbled again yesterday with all 11 S&P sectors sliding led by weakness in technology and energy on more profit taking/valuation concerns while oil stocks continued to follow crude prices down with WTI crude dropping over 7% to its lowest levels since June on demand concerns. When the carnage was over, the Nasdaq Composite closed down -4.1%, its lows of the session and has now fallen more than 1,200 points since its Sept. 2, a 10% correction from record highs. The S&P 500 index lost 2.8% and is down 7% from its highs and the Dow slumped down 2.3%, with Apple (AAPL) the biggest decliner, falling 6.8%. Tesla shares dropped over 21% for its worst one-loss ever after failing to be added to the S&P 500 index when changes were announced last Friday evening. The dollar rose vs. the euro and British Pound, gold prices advanced and Treasury yields sunk as prices rose.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -95.12 points, or 2.78%, to 3,331.84

·     The Dow Jones Industrial Average fell -632.42 points, or 2.25%, to 27,500.89

·     The Nasdaq Composite plunged -465.44 points, or 4.11%, to 10,847.69

·     The Russell 2000 Index declined -30.71 points, or 2.00% to 1,504.59

 

Economic Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     10:00 AM EST    JOLTs Job Openings in July

·     4:30 PM EST       American Petroleum Institute (API) inventory report

 

Earnings Calendar:

·     Earnings Before the Open: AEO, GIII, HDS, LOVE, MCFT, NAV, REVG, SCWX

·     Earnings After the Close: AVAV, BIGC, GME, LAKE, LMNR, MEIP, RH, VRNT, ZS

 

Other Key Events:

·     Barclay’s Consumer Staples Virtual Conference, 9/8-9/10

·     Barrington Annual Fall Investment Conference, 9/9

·     Citigroup Global Technology Virtual Conference, 9/8-9/10

·     Cowen Global Transportation virtual conference, 9/9-9/11

·     Credit Suisse Virtual Asset & Wealth Manager CEO week, 9/8-9/11

·     Deutsche Bank Aircraft, Finance & Leasing virtual conference, 9/8-9/9

·     Goldman Sachs virtual Annual Global Retail conference, 9/9-9/10

·     Goldman Sachs virtual European Medtech & Healthcare conference, 9/9-9/10

·     Morgan Stanley Industrial CEO’s unplugged virtual conference, 9/9-9/11

·     Raymond James US Bank Conference, 9/9-9/10

·     UBS Business Services, Leisure & Transport virtual Conference, 9/7-9/9

·     Wells Fargo virtual Healthcare Conference, 9/9-9/10

 

 

Macro	Up/Down	Last
WTI Crude	0.84	37.60
Brent	0.62	40.40
Gold	-6.00	1,925.00
EUR/USD	-0.0022	1.1757
JPY/USD	0.09	106.12
10-Year Note	-0.016	0.68%

 

 

Sector News Breakdown

Consumer

·     Tiffany (TIF) shares drop -16% after LVMH says it is not in the position to complete its acquisition of Tiffany; board to meet to review status of planned investments in light of recent developments; pulls out of deal citing US tariffs

·     HD Supply (HDS) Q2 adjusted EPS 83c on revs $1.6B vs. est. 73c/$1.55B; not providing guidance for Q3, FY20

·     Calavo Growers (CVGW) Q3 adj EPS 73c on revs $270.43M vs. est. 72c/$325.37M;

·     Casey’s (CASY) Q1 EPS $3.24 on revs $2.11B vs. est. $2.12/$2.11B; Q1 inside same-store sales were approximately flat for the quarter with an average margin of 39.6% and digital revenue grew 162% in the quarter; 1Q same-store grocery sales 0% vs. +3.20% YoY

·     Lululemon (LULU) Q2 EPS 74c on revs $902.9M vs. est. 55c/$844.49M; 2Q direct-to-consumer revenue ex-FX +157%; 2Q gross margin 54.2% and operating margin 13.8% vs. 19% YoY; 2Q inventory $672.8 million, +36% YoY; not providing FY20 guidance

·     Lyft Inc. (LYFT) said in first two months of Q3, rides on its rideshare platform were down (-53.6%), rideshare rides in month of august 2020 increased 7.3% MoM; in week ended September 6, rideshare rides reached a new high since April as change in rideshare rides recovered to less than a 50% YoY decline; expects lower driver incentives spend will result in a more favorable relationship between rev & rideshare rides in Q3 than previously expected

·     Under Armour (UAA) on Sept 2, board approved a $75 mln increase to 2020 restructuring plan; now sees $550M-$600M of total pretax charges

·     Vroom Inc. (VRM) files for offering of up to 9.0M shares of common stock; sees q3 ecommerce unit sales of 8,700 – 8,900, average total revenue per unit of $24,500, average gross profit per unit of $1,850 – $1,950; sees q3 2020 total revenue of $290M-$310M vs. est. $290M

 

Energy, Industrials & Materials

·     ABM Industries (ABM) Q3 adj EPS 75c on revs $1.39B vs. est. 42c and $1.47B; says remains difficult to predict accurate FY guidance range

·     Kosmos Energy (KOS) has entered into an agreement with B.V. Dordtsche Petroleum Maatschappij, a wholly-owned subsidiary of Royal Dutch Shell (RDS.A, RDS.B), to farm down interests in a portfolio of frontier exploration assets for approximately $100 million, plus future contingent payments of up to $100 million.

·     Fluor (FLR) said that it expects to recognize non-cash charges ranging from $450M-$475M during 1Q20, related to impairment of goodwill, intangibles, equity method investments, assets held for sale and technology assets, as well as losses associated with reserves for changes in credit risk. FLR identified material errors in financial statements for the years ended December 31, 2018, 2017 and 2016, and for each of the interim quarterly periods for 2018 and 2019

·     Northrop Grumman Corp. (NOC) said it is halting development of its OmegA rocket, conceived as the company’s primary project to compete for lucrative U.S. national-security launches against the likes of Boeing Co. (BA), Lockheed Martin Corp. (LMT), Elon Musk’s SpaceX and most recently, boosters manufactured by a startup run by billionaire Jeff Bezos.

 

Financials

·     A consortium led by insurer Arch Capital Group Ltd (ACGL) has made an approximately $500 million offer to acquire reinsurance firm Watford Holdings Ltd (WTRE), Reuters reported last night; the bid comes more than a year after Watford went public https://reut.rs/35qRqUa

·     Mastercard (MA) says switched volume continues to improve since the week ended Aug. 28 due to the relaxation of social distancing measures in several markets; said switched volume transactions increased 5% in the week ended Aug. 28 vs. up 3% for the week ended July 21 and remaining flat for the prior week ended Aug. 21; cross-border volume fell 35% in the week ended Aug. 28 vs. 35% in the week ended Aug. 7 and 40% in the week ended July 21.

 

Healthcare

·     AstraZeneca (AZN) has paused its Phase III study of a potential coronavirus vaccine due to a “suspected serious adverse reaction” of a participant in the UK, STAT News reports. A company spokesperson said the company’s “standard review process triggered a pause to vaccination to allow review of safety data.”

·     Pfizer (PFE) and BioNTech (BNTX) said on track to seek regulatory review of BNT162B2 as early as Oct 2020, to potentially supply EU with 200Mm doses of mRNA-based Covid vaccine candidate

·     Global Blood Therapeutics (GBT) said it entered into an exclusive agreement with Biopharma-Middle East and Africa (Biopharma-MEA) for the distribution of Oxbryta (voxelotor) tablets with several countries in the Middle East

·     HealthEquity (HQY) 2Q adj EPS ($0.42) vs. est. $0.27 on revs $176Mm vs. est. $171.3Mm, says achieved goal of $50Mm run-rate synergies from WageWorks deal, raises synergy target to $80Mm over next 18 months; guides FY adj EPS $1.48-1.58 vs. est. $1.45, sees FY revs $720-730Mm from prior 770mM-$790Mm vs. est. $733.4Mm

·     Phreesia (PHR) Q2 EPS loss (17c) on revs $35.01M vs. est. loss 913c)/$31.62M

·     Qiagen (QGEN) to launch rapid portable test that can analyze over 30 samples per hour for sars-cov-2 antigen; access anti-sars-cov-2 antigen test, is expected to become available in q4 of 2020; access anti-sars-cov-2 antigen test, developed in collaboration with ellume provides accurate results in less than 15 minutes

·     Trillium Therapeutics Inc. (TRIL) shares rise 37%; announced updated data from its ongoing TTI-622 and TTI-621 dose escalation studies; TTI-622 (sirpa-igg4 fc) now escalating to 12 mg/kg dose level and TTI-621 (sirpa-igg1 fc) well tolerated at 1.4 mg/kg; said encouraged by evolving profile of TTI-622; Trillium also said it received a $25 million equity investment from Pfizer Inc. Pfizer will purchase Trillium shares at $10.88 each

·     Albireo Pharma (ALBO) files to sell 3M shares of common stock

 

Technology, Media & Telecom

·     Coupa Software (COUP) 2Q adj EPS $0.21 vs. est. $0.08 on revs $125.9Mm vs. est. $118.8Mm; guides 3Q adj EPS $0.02-0.03 vs. est. $0.05, sees 3Q revs $123-124Mm vs. est. $122.3Mm; guides FY adj EPS $0.43-0.45 vs. est. $0.38, sees FY revs $496.5-498.5Mm vs. est. $491.2Mm; 2Q subscription rev. $111.6M, +34% YoY, 2Q adjusted gross margin 72.1% and 2Q adjusted operating margin 9.8% vs. 5.10% YoY

·     Qorvo (QRVO) guides Q2 EPS $2.14 at midpoint on revs $1B-$1.03B vs. est. $1.91 and $940.7M

·     Microsoft Corp.’s (MSFT) Xbox Series S console is coming Nov. 10 for $299; following a series of leaks, the software giant confirmed the next-generation videogame console in an official launch trailer on Tuesday

·     Sensata (ST) raises Q3 revenue view to $735M-$765M from $675M-$705M and above the consensus $698M saying they are seeing increased business activity especially in our Automotive business in Europe and the U.S. which has translated into higher orders and deliveries

·     Slack Technologies (WORK) shares fell -15% on billings miss; Q2 EPS 0c on revs $215.9M vs. est. loss (93c)/$209.1M; Q2 Calculated Billings was $218.2M, an increase of 25% YoY but fell short of the $226M consensus views; ended qtr with over 130,000 paid customers +30% YoY; sees Q3 EPS (6c) to (5c) vs. est. loss (5c) and sees Q revenue $222M-$225M vs. est. $223.73M; now has 87 customers that spent more than $1 million on its services, up 78% from a year-earlier; sees FY21 revenue $870M-$876M vs. est. $872.34M