Early Look

Friday, February 3, 2023

Futures	Up/Down	%	Last
Dow	-25.00	0.03%	3,
S&P 500	-2.25	0.05%	3,
Nasdaq	-4.50	0.33%	11,

 

 

U.S. futures are pointing to a lower open following a strong Thursday for stocks, showing incredible resiliency after three of the biggest companies in the world by market cap, Apple, Amazon, and Alphabet (GOOGL) shares slide 3% or more overnight after weaker than expected earnings/guidance. Last night, several companies issued disappointing quarterly results/guidance, weighing on shares of Ford (F), Starbucks (SBUX), Qualcomm (QCOM) as well, but investor focus to start the year remains the Fed and interest rates and have largely been giving companies a “pass” on bad quarters. This morning look like more of the same for now ahead of the monthly nonfarm payroll report at 8:30 where 185K jobs are expected to be added, 190K private payrolls, unemployment rate to tick up to 3.6% and wages to rise +0.3%. Following the FOMC policy meeting Wednesday, Fed Chair Powell noted the “tight” payroll market remains a close watch for them, and investors will be closely looking at today’s figures. A strong number and higher wages will likely weigh on sentiment, keeping the thought alive of higher and deeper rate hikes to come, while softer payrolls/wages keeps with the current narrative that the Fed will raise hikes in March and then pause, which is what the market is currently forecasting. We will see shortly. In Asian markets, The Nikkei Index gains 107 points to 27,509, the Shanghai Index fell -22 points to 3,263, and the Hang Seng Index tumbles 297 points to 21,660. In Europe, the German DAX is down -85 points to 15,423, while the FTSE 100 rises 15 points to 7,837.

 

Economic Calendar for Today

·     8:30 AM ET            Nonfarm Payrolls for January…est. +185K

·     8:30 AM ET            Private Payrolls for January…est. +190K

·     8:30 AM ET            Manufacturing Payrolls for January…est. +6K

·     8:30 AM ET            Unemployment Rate for January…est. 3.6%

·     8:30 AM ET            Average Hourly Earnings M/M for January…est. +0.3%

·     9:45 AM ET            S&P Global Composite, Jan-F

·     10:00 AM ET          ISM Non-Manufacturing Index for January…est. 50.4

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

 

Earnings Calendar:

·     Earnings Before the Open: AON AVTR CBOE CHD CI EAF JOUT LYB MOG/A NFG PIPR REGN SAIA TWST VRTS WT ZBH

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 60.55 points, or 1.47%, to 4,179.76.

·     The Dow Jones Industrial Average slid -39.02 points, or 0.11%, to 34,053.94.

·     The Nasdaq Composite spiked 384.50 points, or 3.25%, to 12,200.82.

·     The Russell 2000 Index advanced 40.41 points, or 2.06% to 2,001.22.

 

 

Macro	Up/Down	Last
Nymex	-0.19	75.69
Brent	-0.24	81.93
Gold	-4.70	1,926.10
EUR/USD	0.0017	1.0928
JPY/USD	-0.20	128.45
10-Year Note	-0.006	3.392%

 

 

World News

·     Caixin China Services purchasing managers index rose to 52.9 in January from 48.0 in December, official subindex measuring service activity rose sharply to 54.0 in January from December’s 39.4.

 

Sector News Breakdown

Consumer

·     Amazon Inc. (AMZN) Q4 revenue $149.2BB vs. est. $145.42B; Q4 AWS revs $21.4B vs. est. $21.87B and above $17.78B a year ago; sees Q1 revenue $121B-$126B vs. est. $125.11B; sees Q1 operating income is expected to be between $0 and $4.0B vs. $3.7B y/y; CFO said expect AWS growth rate to slow “for the next few quarters”.

·     Activist investor Ryan Cohen has taken a sizable stake in Nordstrom (JWN) and plans to urge the company to make changes to its board following a major stock dip – WSJ https://on.wsj.com/3jxnX4r

·     Beazer Homes (BZH) 1Q adj EPS $0.80 vs est. $0.74 on revs $444.1Mm vs est. $456.1Mm, adj EBITDA $47.1Mm vs est. $48.3Mm, backlog $940.9Mm -33%, backlog units 1,740 -40.2%, avg selling price +11.9%

·     Boyd Gaming (BYD) Q4 EPS $1.63 vs. est. $1.45; Q4 revs $922.9M vs. est. $879.01M; Adjusted EBITDAR was $360.1M in Q4, up from $347.3M y/y.

·     Clorox (CLX) Q2 adj EPS $0.98 vs. est. $0.65; Q2 revs $1.72B vs. est. $1.66B; raises FY23 adjusted EPS view to $4.05-$4.30 from $3.85-$4.22 (est. $4.17) and FY23 net sales are now expected to be between a 2% decrease to a 1% increase (organic sales from flat to a 3% increase) vs. prior view of a 4% decrease to a 2% increase (organic sales from a 3% decrease to a 3% increase).

·     Columbia Sportswear (COLM) 4Q EPS $2.02 vs est. $2.28 on net sales $1.17B vs est. $1.16B; guides FY23 net sales $3.57-3.67B vs est. $3.61B, op Inc $413-448Mm vs est. $442.7Mm, EPS $5.15-5.55 vs est. $5.59.

·     Decker Outdoors (DECK) Q3 EPS $10.48 vs. est. $9.61; Q3 revs $1.35B vs. est. $1.26B; Q3 Gross margin 53% vs. 52.3% y/y; raises FY23 EPS view to $18.00-$18.50 vs. est. $18.20 and sees FY23 revenue $3.5B-$3.53B; UGG brand net sales decreased 1.6% to $930.4M, HOKA brand net sales increased 90.8% to $352.1M, and Teva brand net sales increased 48.3% to $30.5M.

·     Ford Motor (F) shares fall as 4Q adj EPS $0.51 vs est. $0.62 on revs $44B vs est. $40.37B; sees FY23 adj EBIT $9-11B vs est. $9.1B and adj FCF about $6B.

·     Skecher’s (SKX) 4Q EPS $0.48 vs est. $0.37 on revs $1.88B vs est. $1.77B, guides 1Q sales $1.8-1.85B vs est. $1.96B and EPS $0.55-0.60 vs est. $0.84.

·     Starbucks (SBUX) Q1 EPS $0.75 vs. est. $0.77; Q1 revs $8.71B vs. est. $8.78B; Q1 comparable sales +5%, vs. est. +6.79%, N.A. comparable sales +10% vs. est. +9.54%, International comparable sales -13%, vs. est. -3.87% and China comparable sales -29%; says FY23 guidance unchanged.

 

Energy, Industrials and Materials

·     Hub Group (HUBG) Q4 EPS $2.42 vs. est. $2.34; Q4 revs $1.29B vs. est. $1.39B; guides FY revs $5.2B-$5.4B; Q4 gross margins 15.9%

·     US Steel (X) Q4 EPS $0.87 vs. est. $0.63; Q4 revs $4.34B vs. est. $3.94B.

 

Financials

·     Silvergate (SI) faces DOJ fraud probe over FTX and Alameda dealings, Bloomberg reported overnight – said bank hasn’t been accused of wrong-doing, probe in early phases.

·     Hartford Financial (HIG) 4Q core EPS $2.31 vs est. $1.87 on revs $6.02B vs est. $5.74B, BV/share $41.53

·     LPL Financial (LPLA) Q4 EPS $3.95 vs. est. $4.00; Q4 revs $902.44M vs. est. $2.27B; EBITDA increased 137% year-over-year to $533Mm; Total advisory and brokerage assets decreased 8% y/y to $1.11T; advisory assets decreased 9% y/y to $583B; raises dividend.

·     Reinsurance Group (RGA) Q4 adj EPS $2.99 vs. est. $3.73; Q4 revs $4.38B vs. est. $4.27B; Premium growth of 1.1% over the prior-year quarter, 6.0% on a constant currency basis.

 

Healthcare

·     Gilead Sciences (GILD) 4Q adj EPS $1.67 vs est. $1.50 on revs $7.4B vs est. $6.64B; guides FY total product sales $26.0-26.5B vs est. $25.76B, sees FY adj EPS $6.60-7.00 vs est. $6.73.

·     Omega Healthcare (OHI) 4Q adj FFO/shr $0.73 vs est. $0.72 on revs $144.85Mm

·     Roivant Sciences (ROIV) 26.67M share Secondary priced at $7.50.

·     Structure Therapeutics (GPCR) 10.74M share IPO priced at $15.00.

 

Technology, Media & Telecom

·     Apple Inc. (AAPL) Q1 EPS $1.88 vs. est. $1.94; Q1 revs fell -5.5% y/y to $117.2B vs. est. $121.1B; segment breakdown: Q1 Products revs -7.7% y/y to $96.39B (miss), iPhone revs down -8.2% y/y to $65.78B (miss $683B est.), Mac revs -29% y/y to $7.74B (big miss), Wearables, home and accessories fell -8.3% y/y to $13.48B (big miss) – while service revs bright spot +6.4% at $20.7B.

·     Alphabet (GOOGL) Q4 EPS $1.05 vs. est. $1.18; Q4 revs $76.05B vs. est. $76.5B; Q4 Google Cloud revenue $7.3B vs. $5.54B last year; Revenue from Google advertising, which includes Search and YouTube, fell to $59.04B from $61.24B; Q4 net income fell to $13.62B from $20.64B; said saw further pullback in spend by some advertisers in search in Q4 versus Q3.

·     Qualcomm (QCOM) 1Q adj EPS $2.37 vs est. $2.34 on revs $9.46B vs est. $9.6B; guides 2Q revs $8.7-9.5B vs est. $9.6B, adj EPS $2.05-2.25 vs est. $2.26; said sees weak handset market persisting through first half.

·     Atlassian Corp. (TEAM) Q2 adj EPS $0.45 vs. est. $0.31; Q2 revs rose 27% y/y to $872.7M vs. est. $851.32M, driven by subscription revenue growth of 40% y/y; FY23 Cloud revenue growth year-over-year is expected to be in the range of 35% to 40% and total rev growth 25% y/y.

·     Bill.com Holdings (BILL) announces $300M share repurchase program; Q2 adj EPS $0.42 vs. est. $0.13; Q2 revs $260M vs. est. $243.5M; boosts FY23 EPS view to 99c-$1.05 from 48c-59c (est. $0.55) and raises FY23 revs view to $999M-$1.007B from $994M-$1.007B (est. $999.04M).

·     Cirrus Logic (CRUS) 3Q adj EPS $2.40 vs est. $1.99 on revs $590.6Mm vs est. $544.6Mm, adj gr mgn 50.2%; guides 4Q revs $340-400Mm vs est. $372Mm, gr mgn 49-51%.

·     Cognizant Technology (CTSH) Q4 adjusted EPS $1.01 vs. est. $1.02; Q4 revs $4.8B vs. est. $4.78B; sees Q1 revenue $4.71B-$4.76B vs. est. $4.88B; raises dividend.

·     Dolby Labs (DLB) 1Q adj EPS $1.11 vs est. $0.79 on revs $334.9Mm vs est. $306.6Mm; sees 2Q revs $340-370Mm vs est. $332.1Mm, adj EPS $0.90-1.05 vs est. $0.93; sees FY revs $+low-single vs est. +1.75% and adj op mgn approx 30%

·     Microchip (MCHP) 3Q adj EPS $1.56 vs est. $1.55 on revs $2.17B vs est. $2.15B, gr mgn 67.8%; guides 4Q net sales $2.191-2.256B vs est. $2.187B and adj EPS $1.61-1.63 vs est. $1.58.

·     MicroStrategy (MSTR) Q4 EPS loss ($21.93) vs. est. profit $0.02; Q4 revs $132.55M vs. est. $131.33M; Q4 Product licenses and subscription services revenues were $45.0M, up 1.5%; Operating expenses for the fourth quarter of 2022 were $299.5M, a 20.8% increase y/y; the carrying value of MicroStrategy’s digital assets (comprised of approximately 132,500 bitcoins) was $1.840B, which reflects cumulative impairment losses of $2.153B since acquisition.

·     Paylocity (PCTY) 2Q adj EPS $0.28 vs est. $0.29 on revs $273Mm vs est. $259.8Mm, adj EBITDA $77.4Mm vs est. $65.4Mm; guides 3Q revs $330.5-334.5Mm vs est. $318.7Mm and adj EBITDA $121.5-124.5Mm vs est. $117.9Mm; sees FY revs $1.156-1.161B vs est. $1.125N, adj EBITDA $358.5-362.5Mm vs est. $338.1Mm

·     Synaptics (SYNA) Q2 EPS $2.20 vs. est. $2.34; Q2 revs $353.1M vs. est. $365.38M; sees Q3 revs $310M-$340M below consensus $365.38M, sees Q3 gross margin 60%-62% and sees Q3 operating expense $98M-$102M; GAAP gross margin of 52.9% and non-GAAP 59.8%.

·     Viavi (VIAV) announces restructuring plan, to cut 5% of global workforce; 2Q adj EPS $0.14 vs est. $0.11 on revs $284.5Mm vs est. $271.5Mm; guides 3Q revs $256-276Mm vs est. $263.3Mm and adj EPS $0.10-0.12 vs est. $0.11.

·     WWE Corp. (WWE) 4Q adj EPS $0.52 vs est. $0.58 on revs $325.3Mm, adj OIBDA $90.2Mm vs est. $89.7Mm; sees 1Q adj OIBDA $65-75Mm vs est. $109Mm, guides FY23 adj OIBDA $395-410Mm vs est. $406.3Mm

·     2U Inc. (TWOU) 4Q adj EPS $0.23 vs est. $0.21 on revs $236Mm vs est. $234.7Mm, adj EBITDA $58.4Mm; guides FY23 revs $985-995Mm vs est. $986Mm, adj EBITDA $155-160Mm vs est. $151.9Mm