Early Look

Friday, April 28, 2023

Futures	Up/Down	%	Last
Dow	-125.00	0.38%	33,800
S&P 500	-15.25	0.37%	4,138
Nasdaq	-36.50	0.27%	13,195

 

 

U.S. futures are pulling back slightly after posting one of the biggest daily returns since January, erasing declines earlier Tuesday/Wednesday to trade higher on the week as better earnings from the likes of META, LLY, and others overshadowed recession fears as Q1 GDP came in at 1.1%, below 2% estimate and 2.6% in Q4. Thursday’s gains were the largest since Jan. 6 for the Dow and S&P 500, with both indexes erasing a week-to-date decline and the Nasdaq 2.4% was its best since March 16th. In earnings/software space overnight, AMZN shares are looking lower -1% after comments about slowing AWS growth erased overnight gains of as much as 11% after earnings initially, pressuring shares of cloud software companies (DDOG, SNOW). Also today, a heavy dose of inflation data at 8:30 AM as the Q1 Employment Cost Index is one of the key data points with expectations for a rise to 1.1% from 1.0% prior and the PCE Deflator which is expected to fall to 4.1% in March from 5.0% prior. Also on the calendar is Personal income data for March at 8:30, Chicago PMI at 9:45, and University of Michigan sentiment final data for April, at 10:00. The Japanese yen weakened by 1.55% to 136.00 against the U.S. dollar and Japanese bonds rallied after the Bank of Japan pledged to continue persistent easing and launches a broad-based policy review that may take up to 18 months. The Nikkei Index jumped 398 points or 1.4% to 28,856, the Shanghai Index gained 37 points or 1.14% to 3,323, and the Hang Seng Index advanced 54 points to 19,894. Note next week, China is taking three trading days off for holiday, which is seen as a much-anticipated boost to its ongoing economic recovery. In Europe, the German DAX is down -57 points to 15,743, while the FTSE 100 slips -22 points to 7,809.

 

Economic Calendar for Today

·     8:30 AM ET             Personal Spending M/M for March…est. (-0.1%)

·     8:30 AM ET             Personal Income M/M for March…est. +0.2%

·     8:30 AM ET             PCE Price index M/M for March…est. +0.1%

·     8:30 AM ET             PCE Price Index Y/Y for March…est. +4.1% (prior +5%)

·     8:30 AM ET             Core PCE Price index M/M for March…est. +0.3%

·     8:30 AM ET             Core PCE Price Index Y/Y for March…est. +4.6% (prior 4.65)

·     8:30 AM ET             Employment Cost index Q/Q for Q1…est. +1.1%

·     9:45 AM ET             Chicago PMI for April…est. 43.6

·     10:00 AM ET           University of Michigan Confidence, Apr-F…est. 63.5

·     1:00 PM ET              Baker Hughes Weekly rig count data

 

Earnings Calendar:

·     Earnings Before the Open: AON ARES AVTR BCPC BLMN CHTR CL CVEO CVX DAN EAF FHB GNTX GTLS IMGN LAZ LYB MOG/A NWL NYCB POR SAIA STEL SXT VRTS WPC XOM

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 79.36 points, or 1.96%, to 4,135.35.

·     The Dow Jones Industrial Average rose 524.29 points, or 1.57%, to 33,826.16.

·     The Nasdaq Composite jumped 287.89 points, or 2.43%, to 12,142.24.

·     The Russell 2000 Index advanced 20.81 points, or 1.20% to 1,751.22.

 

 

Macro	Up/Down	Last
Nymex	0.29	75.05
Brent	0.54	78.91
Gold	-7.20	1,991.80
EUR/USD	-0.0037	1.0990
JPY/USD	1.95	135.90
10-Year Note	-0.053	3.475%

 

 

World News

·     The Bank of Japan (BoJ) said it intends to conduct an examination of past monetary policy which will take 1 to 1.5years, while new forward guidance removed a dovish reference that rates will be at “present levels or lower”, but retained that will add more easing if necessary, and will continue easing until 2% price target it hit.

·     In Japan: Tokyo April CPI above expected; +3.5% y/y vs 3.3% consensus; Tokyo April CPI Ex Fresh Food above expected; +3.5% y/y vs 3.2% consensus; April CPI Ex Fresh Food, Energy above expected; +3.8% y/y vs 3.5% consensus; March Retail Sales above expected; +7.2% y/y vs 5.8% consensus; preliminary Industrial Production above expected; +0.8% m/m vs +0.5% consensus.

·     Russia Deputy PM Novak said OPEC+ does not see the need for further oil output cuts this year but is always able to adjust prices, this helped to steady market prices.

 

Sector News Breakdown

Consumer

·     Amazon Inc. (AMZN) shares rose 11% initially on results, now down -1% on AWS comments; 1Q EPS $0.31 vs est. $0.21 on revs $127.4B vs est. $124.55B; Q1 operating income of $4.8B vs prior of $0-4 bln; $5.3B if back out severance costs; AWS net sales $21.35B vs est. $21.03B; guides 2Q op Inc $2.0-5.5B vs est. $4.7B, sales $127-133B vs est. $129.83B; shares reversed gains after hours after the CFO said AWS revenue growth is decelerating in the current quarter as April revenue growth rates are 500-bps lower than in Q1.

·     Beazer Homes (BZH) 2Q EPS $1.13 vs est. $0.82 on revs $543.9Mm vs est. $519.9Mm, adj EBITDA $62.1Mm vs est. $52.1Mm; homebuilding adj gr mgn 18.8%; says home affordability remains quite challenging, home buyers appear to be adjusting to a higher interest rate environment aided by both wage growth and moderating home prices.

·     Boston Beer (SAM) Q1 EPS loss (-$0.73) vs. est. loss (-$0.31); Q1 revs $410M vs. est. $412.4M; 1Q depletions decreased 6% and shipments decreased 7.6%; Q1 performance reflected strong growth in twisted tea, offset by continuing challenges in the hard seltzer category.

·     Columbia Sportswear (COLM) Q1 EPS $0.74 vs. est. $0.78; Q1 revs $820.6M vs. est. $730.2M; backs FY23 revenue view of $3.57B-$3.67B vs. est. $3.27B

·     Imax Corp. (IMAX) Q adj EPS $0.16 vs est. $0.13 on revs $86.9Mm vs est. $79.5Mm, adj EBITDA mgn 34.4%.

·     Mondelez (MDLZ) 1Q adj EPS $0.89 vs est. $0.80, gr mgn 37.6%, results driven by ongoing pricing execution to offset cost inflation and solid volume: guides FY 10+% organic net revs growth vs prior +5-7% and est. +8.3%, adj EPS growth 10+% vs prior +high-single and est. +6.2%.

·     Skechers (SKX) 1Q EPS $1.02 vs est. $0.61 on sales $2.0B vs est. $1.86B; guides 2Q sales $1.85-1.9B vs est. $1.98B and EPS $0.40-0.50 vs est. $0.74.

 

Energy

·     Chevron (CVX) Q1 adj EPS $3.55 vs. est. $3.41; Q1 revs $50.79B vs. est. $47.89B; Q1 cash flow from operations $7.2B, free cash flow $4.2B; qtrly worldwide net oil-equivalent production 2,979 MBoed vs 3,060 MBoed y/y; Q1 U.S. upstream earnings $1.78B vs $3.24B and downstream earnings $977M vs $486M.

·     ExxonMobil (XOM) Q1 adj EPS $2.83 vs. est. $2.59; Q1 revs $86.5B vs. est. $85.4B; Q1 upstream worldwide earnings of $6,457B vs earnings of $4,488B as reported last year; oil and gas production rose by nearly 300,000 barrels per day (bpd) compared to year-ago levels; ended the first quarter with $32.7 billion in cash; said on track to meet company’s full year guidance of $23b-$25b in capital expenditures.

·     First Solar (FSLR) shares fell -8%; 1Q EPS $0.40 vs est. $1.02 on revs $548Mm vs est. $718.4Mm; guides FY net sales $3.4-3.6B vs est. $3.52B, op exp $415-440Mm, CAPEX $1.9-2.1B.

·     First Energy (FE) 1Q adj EPS $0.60 vs est. $0.63 on revs 3.2B vs est. $3.05B; guides 2Q EPS $0.40-0.50 vs est. $0.55; affirmed FY adj EPS $2.44-2.64 vs est. $2.53.

·     Southwest Energy (SWN) 1Q adj EPS $0.31 vs est. $0.28 on revs $2.12B vs est. $1.64B, adj EBITDA $799Mm vs est. $743.3Mm, adj FCF $99Mm, qtrly total net production 411 BCFE, 4.6 BCFE/day; guides 2Q total production 408-420 BCFE, gas production 355-365 BCF.

 

Financials

·     Fed emergency bank loans rise to $155.2b from $143.9b prior week; Fed discount window borrowing at $73.9 billion on April 26 vs.$69.9 billion on April 19

·     Capital One Financial (COF) Q1 EPS $2.31 vs. est. $3.92; Q1 revs $8.9B vs. est. $9.05B; Q1 net interest margin of 6.6%, down 24 bps vs. Q4; Q1 total non-interest expense decreased 3% to $4.9B, a 2% increase in operating expenses; Q1 provision for credit losses increased $379 million to $2.8 billion and net charge-offs of $1.7 billion.

·     Fair Isaac (FICO) 2Q adj EPS $4.78 vs est. $5.04 on revs $380.3Mm vs est. $373.2Mm; guides FY revs $1.48B vs prior $1.463B and est. $1.473B, adj EPS $19.45 vs prior $19.42 and est. $19.60.

·     Hartford Financial (HIG) Q1 core EPS $1.68 vs. est. $1.72; Net income ROE for the trailing 12 months of 12.8% and core earnings ROE for the same period of 14.3%; P&C written premiums rose 10% in first quarter 2023, driven by Commercial Lines premium growth of 11%.

·     LPL Financial (LPLA) 1Q adj EPS $4.49 vs est. $4.33 on revs $2.42B vs est. $2.4B.

·     Principal Financial Group (PFG) Q1 EPS $1.48 vs. est. $1.49; Q1 Investors AUM $478.7B vs. est. $468.49B and Int’l AUM $167.1B

·     Digital Realty Trust (DLR) 1Q AFFO/shr $1.66 vs est. $1.64, adj EBITDA $668Mm vs est. $645.3Mm; maintains core FFO/shr guide $6.65-6.75 vs est. $6.71.

 

Healthcare

·     Amgen inc. (AMGN) 1Q adj EPS $3.98 vs est. $3.85 on revs $6.1B vs es.t $6.17B, adj op mgn 48.3%; guides FY revs $26.2-27.3B vs est. $26.7B, adj EPS $17.60-18.70 vs est. $17.72, CAPEX approx $925Mm.

·     Dexcom (DXCM) Q1 EPS $0.12 vs. est. $0.15; Q1 revs $741.5M vs. est. $720.7M; sees FY23 revenue $3.40B-$3.52B vs. est. $3.47B; sees FY23 gross margin 62%-63%; sees 2023 non-Gaap operating margin of approximately 16.5%.

·     Gilead Sciences (GILD) Q1 adj EPS $1.37 vs. est. $1.54; Q1 revs $6.4B vs. est. $6.33B; Q1 Biktarvy sales up 24% y/y to $2.7B; Q1 oncology sales up 59% y/y; qtrly Veklury sales $573 mln, down 63%; backs FY23 adjusted EPS view $6.60-$7.00, vs. consensus $6.84.

·     ResMed (RMD) 3Q adj EPS $1.68 vs est. $1.59 on revs $1.12B vs est. $1.05B, adj gr mgn 56.1%, adj op profit +27%.

·     Accolade (ACCD) Q4 EPS loss (-$0.42), in-line with consensus; Q4 revs $99.03M vs. est. $99.44M; sees Q1 revenue $89M-$91M vs. est. $94.51M and Q1 adjusted EBITDA loss $15M-$18M.

 

Industrials & Materials

·     Allison Transmission (ALSN) Q1 EPS $1.85 vs. est. $1.54; Q1 revs $741M vs. est. $717.38M; boosts FY23 revenue view to $2.9B-$3B from $2.83B-$2.93B and raises FY23 adjusted EBITDA view to $1.01B-$1.09B from $965M-$1.03B.

·     Chemours (CC) Q1 adj EPS $0.98 vs. est. $0.47; Q2 revs $1.5B vs. est. $1.46B; reaffirming its full year 2023 Adjusted EBITDA and Free Cash Flow guidance of $1.2B-$1.3B and FCF of greater than $350 million, inclusive of approximately $400 million of capital expenditures.

·     Hub Group (HUBG) 1Q EPS $1.88 vs est. $1.84 on revs $1.2B vs est. $1.24B, adj EBITDA $124Mm vs est. $112.9Mm; guides FY EPS $6.00-7.00 vs est. $7.43 and revs $4.6-4.8B vs est. $5.17B, tax rt 23.5-24.5%, CAPEX $140-150Mm.

·     L3Harris Technologies (LHX) Q1 adj EPS $2.86 vs. est. $2.58; Q1 revs $4.47B vs. est. $4.25B; reaffirms FY23 EPS view $12.00-$12.50 and backs FY23 revenue view $17.4B-$17.8B.

·     Olin Corp. (OLN) Q1 EPS $1.16 vs. est. $1.33; Q1 revs $1.84B vs. est. $2.05B; guides 2023 adj EBITDA $1.6B-$1.9B after Q1 adj EBITDA $434.1M.

·     Republic Service Group (RSG) Q1 adj EPS $1.24 vs. est. $1.13; Q1 revs $3.58B vs. est. $3.43B; Q1 adj net income $393.7M, adj Ebitda margin 29%.

·     SkyWest (SKYW) 1Q EPS ($0.45) vs est. ($0.33) on revs $692Mm vs est. $674Mm; anticipates adding 2 E175 aircraft in 4Q23, 1 E175 in 2024 and one E175 aircraft in 2025.

·     U.S. Steel (X) Q1 adj EPS $0.77 vs. est. $0.65; Q1 sales $4.47B vs. est. $4.24B; 1Q steel shipments rose 7% y/y to 3.95M tons, vs. est. 3.73M and Q1 adj net $195M vs. est. $161M.

·     Weyerhaeuser (WY) 1Q EPS $0.21 vs est. $0.11 on sales $1.88B vs est. $1.85B, adj EBITDA $395Mm vs est. $319Mm; guides 2Q Timberlands earnings and adj EBITDA will be approx $20Mm below 1Q23, 2Q Real Estate, Energy and Natural Resources earnings comparable to 1Q and adj EBITDA approx $20Mm below 1Q, Wood Products 2Q earnings and adj EBITDA slightly above 1Q.

 

Technology, Media & Telecom

·     Intel Corp. (INTC) Q1 adj EPS loss (-$0.04) vs. est. loss (-$0.15); Q1 revs $11.7B vs. est. $11.04B; sees Q2 EPS adj loss (-$0.04) vs. est. $0.01 and revs $11.5B-$12.5B vs. est. $11.75B; said PC inventory correction as expected; PC usage remains strong; said GEN4 Xeon code named sapphire rapids on track to hit a billion unites by mid-year, feeling solid uptick in market.

·     Alteryx (AYX) shares -13%; Q1 EPS loss (-$0.19) vs. est. loss (-$0.26); Q1 revs $199.1M vs. est. $200.07M; Most announced a workforce reduction plan that is expected to impact about 11% of our employees and incur charges $11M-$13M; guides Q2 non-GAAP EPS loss (-$0.65-$0.69) vs. est. loss (-$0.42) and revs $180M-$184M below consensus $205.1M.

·     Cloudflare (NET) shares slid -25%; Q1 EPS $0.08 vs. est. $0.03; Q1 revs $290.2M vs. est. $290.8M; guides Q2 EPS $0.07-$0.08 vs. est. $0.03 and revs $305-306M vs. est. $319M.

·     Pinterest (PINS) shares down -13%; 1Q adj EPS $0.08 vs est. $0.02 on revs $602.6Mm vs est. $593Mm, adj EBITDA $27Mm vs est. $1.4Mm; guides 2Q revs grow roughly in-line with 4Q22 and 1Q23 growth, see 2Q adj expenses grow +low-teens %.

·     Snap inc. (SNAP) shares -20%; Q1 adj EPS $0.01 vs. est. loss (-$0.01) on revs $989M vs. est. $1.01B; Q1 DAUs 383M, up 15% y/y in-line; said internal revenue range for Q2 is $1.00B-$1.09B, with an internal forecast of $1.04B, implying a y/y decline of 6% and q/q growth of 5%.

·     T-Mobile (TMUS) Q1 EPS $1.58 vs. est. $1.48; Q1 revs $19.63B vs. est. $19.81B; added 538,000 monthly bill-paying phone subscribers in Q1 vs. est. 547,800 and added 927,000 prior; raised its full-year forecast for wireless subscriber growth to 5.3M-5.7M vs. prior 5.0M-5.5M.