Early Look

Wednesday, August 2, 2023

Futures	Up/Down	%	Last
Dow	-119.00	0.33%	35,638
S&P 500	-26.25	0.57%	4,575
Nasdaq	-139.50	0.88%	15,677

 

 

US futures are looking lower as overnight, rating agency Fitch downgraded the U.S. government’s top credit rating, cutting the United States to AA+ from AAA, citing fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills. The US dollar fell vs. rival currencies, stock futures ticked down and Treasury futures rose after the announcement. The news comes after stock averages finished mixed on Tuesday as the Dow Jones Industrial Average closed higher for the 16th time in the last 17 trading days, hitting a new all-time on a total return basis for the first time since January 4, 2022, Oil prices rose after weekly American petroleum Institute data reported the biggest weekly crude draw in at least 40 years. In Asian markets, The Nikkei Index tumbled -768 points or 2.3% to 32,707, the Shanghai Index fell -29 points to 3,261, and the Hang Seng Index declined -493 points or 2.47% to 19,517. In Europe, the German DAX is lower by -175 points to 16,061, while the FTSE 100 is down around -100 points or 1.25% to 7,569. The earnings barrage continues this busy week of results (details below). On the data front, private payroll monthly data from ADP at 8:15 AM this morning.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -12.23 points, or 0.27%, to 4,576.73.

·     The Dow Jones Industrial Average rose 71.15 points, or 0.20%, to 35,630.68.

·     The Nasdaq Composite slipped -62.11 points, or 0.43%, to 14,283.91.

·     The Russell 2000 Index declined -12.23 points, or 0.45% to 1,994.17.

 

Economic Calendar for Today

·     7:00 AM ET                  MBA Mortgage Applications Data

·     8:15 AM ET                  ADP Employment Change for July…est. 189K

·     10:30 AM ET                Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABC ADNT ASTE AVDX BG BGC BPMC BRY BWA CDW CERE CG CHEF CLDT CLH COCO CVS DD DFIN DNOW DRVN DT EDIT EEX EMR ETR EXC EXTR FDP FIS GFF GNRC HAYW HCC HUM ICPT IMXI JCI KHC KPTI LPX LXP MCS MPLN NAUT NI NNN PCRX PSN PSX PUMP RCM RGEN ROAD RXO SHEN SHOO SITE SMG SPR SR SRDX SUN TGI TTMI UTHR VAL VCEL VRSK WAT WING WWE XYL YOU YUM

·     Earnings After the Close: ACAD ACLS ADPT AEE AINC ALB ALLO AMWL ANSS APA ASPN ATUS BAND BBSI BCOV BKH BOOT CAKE CCRN CDAY CF CFLT CHRS CHRW CLX CNDT CNXN CPE CSGS CTSH CW CWAN CYH DASH DHX DXC EPR EQH ET ETSY EQIX EVH FARO FICO FMC FORM FSLY FWRD GKOS GRBK GT GXO HBB HDSN HI HLF HOOD HST HT HUBS INFA INN IPI IR JOBY KAR KN LESL LMND LNC MCK MET MGM MKSI MMS MOD MRO MTG NARI NCR NE NUVA NYMT O OHI OXY PK PSA PYPL QCOM QRVO RDN RGLD RGR RM RMAX ROOT RPT RUN SBGI SGEN SM SPG SRPT STAA SUM TVPG TRIP TWI U UPWK VAC WMB WSC WTS WTTR ZG

 

 

Macro	Up/Down	Last
Nymex	0.43	81.79
Brent	0.39	85.30
Gold	9.10	1,987.90
EUR/USD	-0.0008	1.0974
JPY/USD	-0.59	142.73
10-Year Note	-0.022	4.025%

 

 

Sector News Breakdown

Consumer

·     Starbucks (SBUX) Q3 adj EPS $1.00 vs. est. $0.95; Q3 revs $9.2B vs. est. $9.29B; Q3 global comparable store sales increased 10% vs. est. 11.1%, primarily driven by a 5% increase in comparable transactions; North America and U.S. comparable store sales increased 7% vs. est. 7.7% and international comparable store sales increased 24% (in-line).

·     Caesars Entertainment (CZR) Q2 EPS $4.26 on revs $2.9B vs est. $2.867B; says demand remains strong in both Las Vegas and regional markets, capital investments are generating stronger than expected returns based on recent new property openings.

·     Camping Worldwide (CWH) Q2 adj EPS $0.73 vs est. $0.78 on revs $1.9B vs est. $1.97B, same-store used vehicle units +8.8%, same-store new vehicle units -23.7%; gr mgn 30%; adj EBITDA $139.3Mm vs est. $139.88Mm.

·     Denny’s (DENN) Q2 adj EPS $0.14 vs est. $0.16 on revs $116.9Mm vs est. $120.61Mm, adj EBITDA $22.3Mm vs est. $23.4Mm; domestic system-wide coms +3% (+3% franchise, +3% company); guides FY domestic -system wide comps +3-6%, consolidated units +35-45 (net -15 to -25), commodity inflation +1-3%, labor inflation +4%.

·     Elf Beauty (ELF) Q1 adj EPS $1.10 vs est. $0.56 on revs $216.3Mm vs est. $184.02Mm; guides FY sales $792-802Mm vs est. $728.82Mm, adj EBITDA $171-174Mm vs est. $150.74Mm, adj EPS $219.2.22 vs est. $1.83.

·     Freshworks (FRSH) Q2 adj EPS $0.07 vs est. $0.02 on revs $145.1Mm vs est. $141.44Mm; guides Q3 revs $149-151.56Mm vs est. $150.06Mm and adj EPS $0.04-0.06 vs est. $0.02; sees FY revs $587-595Mm vs est. $586.33Mm and adj EPS $0.18-0.22 vs est. $0.10.

·     Sprouts Famers Market (SFM) Q2 adj EPS $0.71 vs. est. $0.63; Q2 revs $1.7B vs. est. $1.69; Q2 comp store sales +3.2%; raises FY23 EPS view to $2.68-$2.76 (est. $2.67) from $2.58-$2.68 and backs FY23 revenue growth view 5%-6%.

·     VF Corp. (VFC) Q1 EPS loss (-$0.15) vs. est. loss (-$0.11); Q1 revs $2.1B vs. est. $2.07B; reiterates full year eps guidance range of $2.05-$2.25; said revenue is now expected to be modestly down to flat for year 2024; says 2024 free cash flow is expected to be in line with previous guidance of approximately $900M; Q1 inventories increased by $446 mln during Q1’FY24.

 

Energy

·     Chesapeake (CHK) Q2 adj EPS $0.64 vs. est. $0.42; Delivered total net production of 3,653 mmcfe per day and adjusted EBITDAX of $524 million; Cash on hand of approximately $900 million as of June 30, 2023; expects to drill 30 to 40 wells and place 40 to 50 wells on production in Q3.

·     Devon Energy (DVN) Q2 adj EPS $1.18 vs. est. $1.17; Q2 revs $3.45B vs. est. $3.74B; expects to sustain 2023 production in the range of 643K-663K boe per day, total capital investment for the year expected to range from $3.6B-$3.8B.

·     First Energy (FE) Q2 adj EPS $0.47 vs. est. $0.45; guides Q3 adj EPS $0.80-$0.90 vs. est. $0.90; affirms FY23 op guidance; backs 6%-8% long term annual operating EPS growth rate.

·     Pioneer Natural Resources (PXD) Q2 adj EPS $4.49 vs. est. $4.17; Q2 revs $4.59B vs. est. $3.52B; Q2 oil production averaged 369 thousand barrels of oil per day; Q2 total production averaged 711 thousand barrels of oil equivalent per day; increased midpoints of FY23 oil and total production guidance to 369 mboepd and 707 mboepd, respectively.

·     Shoals Technology (SHLS) Q1 adj EPS $0.14 vs est. $0.13, gr mgn 42.4%, revs $119.2Mm vs est. $115.39Mm, adj EBITDA $38.7Mm vs est. $35.8Mm; guides FY revs $480-510Mm vs est. $500.06Mm, adj EBITDA $145-160Mm vs est. $155.99Mm, CAPEX $8-12Mm.

·     SolarEdge (SEDG) Q2 EPS $2.62 vs. est. $2.52; Q2 revs $991.3M vs. est. $992.34M; sees Q3 revenue $880M-$920M below consensus $1.05B and sees Q3 non-GAAP gross margin to be within the range of 28% to 31% and non-GAAP operating income range of $115M-$135M.

 

Financials

·     Aflac (AFL) Q2 adj EPS $1.58 vs. est. $1.43; Q2 revs $5.2B vs. est. $4.46B; The average yen/dollar exchange rate in the second quarter of 2023 was 137.53, or 5.9% weaker than the average rate of 129.39 in the second quarter of 2022.

·     AIG Inc. (AIG) Q2 adj EPS $1.75 vs. est. $1.59; increased share repurchase authorization to $7.5B; Q2 end book value per common share $58.49, end adj book value per common share $75.76; Q2 general insurance gross premiums written $10.40B vs $9.58B; raises dividend by 12.5%; Q2 general insurance combined ratio 90.9%.

·     Allstate (ALL) Q2 EPS loss (-$4.42) vs. est. loss (-$4.18); Q2 revs $13.979B vs. est. $12.52B; 2Q book value per shr $51.29; Q2 catastrophe loss $2.7B; Q2 property and liability insurance premiums earned $11.92B.

·     HomeStreet Bank (HMST) is said to explore options including sale- Bloomberg news reported.

·     Prudential (PRU) Q2 adj EPS $2.94 vs. est. $3.01; assets under management of $1.415 trillion in qtr; Book value per Common share of $77.65 vs. $82.92 y/y; adjusted book value per Common share of $97.38 versus $97.91 per share for the year-ago quarter.

·     Unum (UNM) Q2 adj EPS $2.06 vs est. $1.86 on revs $3.112B vs est. $3.082B; guides FY adj EPS +20-25%.

·     Voya Financial (VOYA) Q2 adj EPS $2.21 vs. est. $2.01; authorizes the repurchase of an additional $500 million of common stock.

 

Healthcare

·     BeiGene (BGNE) enters a settlement and termination agreement with Bristol-Myers Squibb (BMY) and Celgene to mutually dismiss arbitration concerning ABRAXANE.

·     Exact Sciences (EXAS) Q2 EPS ($0.45) vs est. ($0.51) on revs $622.093Mm vs est. $600.14Mm, adj EBITDA $66.9Mm; guides FY revs $2.441-2.466B vs prior 2.380-2.420B and est. $2.416B.

·     Inspire Medical (INSP) Q2 EPS ($0.41) on revs $151.1Mm vs est. $136.3Mm, gr mgn 83.9%; guides FY revs $600-610Mm vs est. $589.63Mm, gr mgn 83-85%.

·     Nevro Corp. (NVRO) Q2 EPS ($0.69) vs est. ($0.69) on revs $108.809Mm vs est. $106.9Mm; guides Q3 revs $95-97Mm vs est. $109.25Mm and adj EBITDA $(10)Mm-$(8)Mm vs est. $(1.2)Mm; sees FY revs $410-415Mm vs est. $437.26Mm.

·     Penumbra (PEN) Q2 adj EPS $0.43 on revs $261.499Mmm vs est. $253.2Mm; guides FY revs $1.05-1.07B vs est. $1.049B.

·     Procept BioRobotics (PRCT) 4.422M share Spot Secondary priced at $33.9.

·     STERIS Plc (STE) Q1 adj EPS $2.00 vs. est. $1.86; Q1 revs +6.7% y/y to $1.28B vs. est. $1.21B; Healthcare revenue rose 17% y/y to $818.9M and Life science revs -0.6% y/y to $131.4M; sees FY24 EPS $8.60-$8.80, vs. consensus $8.68.

·     Vertex Pharmaceuticals (VRTX) Q2 adj EPS $3.89 vs est. $3.88 on revs $2.49B vs est. $2.42B; guides FY CF product revs $9.7-9.8B vs prior $9.55-9.7B.

 

Industrials & Materials

·     Axalta Coating (AXTA) Q2 EPS $0.35 vs. est. $0.38; Q2 revs $1.29B vs. est. $1.34B; guides Q3 EPS $0.35-$0.40 vs. est. $0.42 and sees Q3 rev growth 3%-5%.

·     DuPont (DD) Q2 adj EPS $0.85 vs. est. $0.83 and revs $3.09B vs. est. $3.03B but sees Q3 adjusted EPS 84c on revs $3.15B below consensus 93c/$3.18B and cuts FY23 adjusted EPS view to $3.40-$3.50 from $3.55-$3.70 while raises year revs outlook.

·     Flowserve (FLS) Q2 adj EPS $0.52 on revs $1.08B vs est. $979.6Mm, adj gr mgn 30.3%, adj op mgn 10.4%; guides FY revs +16-18% vs prior +10-12% and est. +12%, adj EPS $1.85-2.00 vs prior 1.65-1.85 and est. $1.82.

·     Generac (GNRC) Q2 adj EPS $1.08 misses the $1.15 estimate on revs $1B vs. est. $977.15M; cuts FY23 revenue view to (12%)-(10%) vs. prior (10%)-(6%) citing the softer-than-expected consumer environment, and now anticipates lower residential product sales during the second half relative to prior expectations.

·     Mosaic Inc. (MOS) Q2 adj EPS adj $1.04 vs. est. $1.09 as sales declined to $3.39B from $5.37B the prior year but above consensus $3.13B; said Q2 selling, general, and administrative costs were $129.9M vs. $108.2M y/y and said grain and oilseed markets are expected to remain tight.

·     Terex Corp. (TEX) Q2 EPS $2.35 vs. est. $1.66; Q2 revs $1.4B vs. est. $1.27B; raises FY23 EPS view to ~$7.00 from $5.60-$6.00 (est. $6.02) and boosts FY23 revenue view to ~$5.1B from $4.8B-$5B (and above consensus $4.94B).

·     Virgin Galactic (SPCE) Q2 EPS ($0.46) vs est. ($0.41) on revs $1.87Mm vs est. $2.69Mm, adj EBITDA $(116)Mm vs est. $(134.8)Mm; guides Q3 and Q4 revs approx $1Mm each vs Q3 est. 3.7Mm and Q4 est. $5.0Mm.

 

Technology, Media & Telecom

·     Advanced Micro Devices (AMD) Q2 adj EPS $0.58 vs. est. $0.57; Q2 revs fell -18% y/y to $5.36B vs. est. $5.32B; expects Q3 revenue to be approximately $5.7B, plus or minus $300M vs. est. $5.82B; reported Q2 Data center revenue $1.32B vs. est. $1.4B, Gaming revenue $1.58B vs. est. $1.62B; said made progress meeting key hardware and software milestones to address growing customer pull for data center AI solutions in qtr.

·     Cardlytics (CDLX) Q2 adj EPS ($0.24) vs est. ($0.35) on revs $76.701Mm vs est. $69.07Mm, adj EBITDA $(4.1)Mm vs est. $(7.888)Mm; MAUs +5%, ARPU $0.38 flat yr/yr; guides Q3 revs $75-84Mm vs est. $77.66Mm and adj EBITDA $(2.0)Mm – $2.0Mm vs est. $(0.1757)mm.

·     EA Inc. (EA) Q1 EPS $1.47 vs. est. $1.02; Q1 revs $1.92B vs. est. $1.59B; Q1 net bookings $1.578B, up 21% y/y; live services and other net bookings for Q1 was $1.177B, up 4% y/y and represented 75% of total net bookings; sees 2024 revenue $7.3B-$7.7B vs. consensus $7.61B.

·     Match Group (MTCH) shares rose after Q2 beat and sees Q3 revenue $875M-$885M above consensus $863.4M and sees Q3 operating income $320M-$325M.

·     MicroStrategy (MSTR) held 152,800 bitcoins acquired for total cost of $4.53 billion, or $29,672 per bitcoin; Q2 EPS $1.52, on revs $120.4M vs. est. $124.7M; files to sell up to $750M in stock; Subscription Services Revenues of $19.9M, 42% increase y/y, 44% on a constant currency basis.

·     Paycom Software (PAYC) Q2 adj EPS $1.62 vs est. $1.59 on revs $401Mm vs est. $398.08Mm, adj EBITDA $157Mm vs est. $153.17Mm; guides Q3 revs $410-412Mm vs est. $411.95Mm, adj EBITDA $156-158Mm vs est. $156.68Mm; sees FY revs $1.715-1.717B vs est. $1.715B and adj EBITDA $722-724Mm vs est. $718.47Mm.

·     Pinterest (PINS) Q2 adj EPS $0.21 vs est. $0.12 on revs $708Mm vs est. $696.1Mm, adj EBITDA $107Mm vs est. $67.89Mm; qtrly global MAUS +8% to 465Mm; expects Q3 revs +high-single-digits vs est. +7.7% and adj op exp +low-single-digits y/y.

·     PTC (PTC) 5.831M share Spot Secondary priced at $141.75.