Early Look

Wednesday, February 8, 2023

Futures	Up/Down	%	Last
Dow	-91.00	0.27%	34,115
S&P 500	-13.25	0.32%	4,162
Nasdaq	-24.50	0.19%	12,752

 

 

U.S. futures edging lower after another strong performance for major averages on Tuesday as investors prepare for another deluge of earnings and speeches from several Federal Reserve members including Williams, Cook, Barr, Bostic, Kashkari & Waller. Main U.S. indexes ended sharply higher on Tuesday, led by strength in the Energy sector and a 1.9% jump in the Nasdaq after Fed Chairman Jerome Powell repeated comments he made last week that disinflation has started. Defensive Utilities and Staples were among the weakest groups while the dollar dipped, and Treasury yields rallied. Powell’s comments suggested to some investors a less hawkish stance saying he expects significant declines in inflation this year, and that when it comes to tightening monetary policy, the data “shows you why this will be a process that takes a significant period of time.” The incredible start to 2023 has been led in communications, technology, and consumer discretionary as @bespokeinvest noted seven stocks have each added more than $100 billion in market cap so far this year for a combined $1.377 trillion. (These 7 lost $4.86 trillion in 2022) – referring to AAPL, AMZN, GOOGL, META, MSFT, NVDA, and TSLA. Bespoke also noted that yesterday was the 12th trading day in the last 13 where SPY was up from the open to the close. In Asian markets, The Nikkei Index fell -79 points to 27,606, the Shanghai Index fell -16 points to 3,232, and the Hang Seng Index slipped -15 points to 21,283. In Europe, the German DAX is up 0.75% at 15,435, while the FTSE 100 gains +0.7% to 7,922.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 52.92 points, or 1.29%, to 4,164.00.

·     The Dow Jones Industrial Average rose 265.67 points, or 0.78%, to 34,156.69.

·     The Nasdaq Composite jumped 226.34 points, or 1.90%, to 12,113.79.

·     The Russell 2000 Index advanced 14.89 points, or 0.76% to 1,972.61.

 

Economic Calendar for Today

·     7:00 AM ET           MBA Mortgage Applications Data

·     10:00 AM ET         Wholesale Inventory M/M for December

·     10:30 AM ET         Weekly DOE Inventory Data

·     1:00 PM ET            US Treasury to sell $32B in 10-year notes.

 

Earnings Calendar:

·     Earnings Before the Open: BDC BG BXMT CDW CME COHR COTY CSPI CVS D EEFT EMR EPC ETN FOXA GPP GPRE INGR MCFT NYT PAG PFGC REYN SITC TRMB UAA UBER VSH

·     Earnings After the Close: AB ACLS AEIS AFRM APP APPS ASGN ASYS AVB AZEK BLBD CDAY CXW DIS EFX EMKR ENS EQH ESE FARM FLNC FLT FORM FR FRT FWRD GBDC GEOS GT HI HOOD HPP IFF INFA LNC MAT MC ME MGM MMS MOH MPWR NLY NVST ORLY PAA PAHC PFLT PHX PI PPC PTEN PYCR QNST RDN REXR RM RPD SON SONO STC STE TSE TTMI TWO UHAL ULCC VKTX VNDA WTS XPO

 

Other Key Events:

·     Fed’s Williams Interviewed at WSJ Live Event at 9:15 AM ET

·     Oppenheimer Healthcare Winter CEO & Investor Summit, 2/7-2/9, in Vail, CO

·     Piper Immuno-Oncology & Cell Therapy Conference & KOL/Corporate Private Dinner

·     Stephens Regional Banks Investor Trip, 2/7-2/9, in Dallas, TX

·     Stifel Transportation & Logistics Conference, 2/7-2/8, in FL

 

 

Macro	Up/Down	Last
Nymex	0.64	77.77
Brent	0.65	84.34
Gold	10.00	1,894.80
EUR/USD	0.0021	1.0744
JPY/USD	-0.35	130.70
10-Year Note	-0.033	3.642%

 

 

World News

·     Fed officials speaking on Wednesday: New York President John Williams at 9:15 a.m. Eastern, followed by Fed Gov. Lisa Cook at 9:30 a.m., Vice Chair Michael Barr and Atlanta President Raphael Bostic at 10 a.m., Minneapolis President Neel Kashkari at 12:30 p.m., then Fed Gov. Christopher Waller at 1:45 p.m.

·     President Biden delivered his second State of the Union speech saying that he would not let the US default over the debt limit. He also said he has made Chinese President Xi aware the US seeks competition, not conflict. If China threatens sovereignty, then US will act, he added.

 

Sector News Breakdown

Consumer

·     Chipotle Mexican Grill (CMG) Q4 adj EPS $8.29 below consensus of $8.91; Q4 revs $2.2B vs. est. $2.23B; Q4 comp sales +5.6% vs. est. 7.04% and operating margin 13.6% up from 8.1% year ago but below the est. 14.7%; sees Q1 comparable restaurant sales growth in high-single digits.

·     VF Corp. (VFC) Q3 adj EPS $1.12 vs. est. $0.98; Q3 revs $3.53B vs. est. $3.48B; cuts quarterly dividend to 30c from 51c; reaffirms full year fiscal 2023 EPS outlook and revenue within the prior range and unveils actions to strengthen financial position; to reduce inventory by $300M.

·     Yum China (YUMC) Q4 adj EPS $0.13, in-line with ests and revs -8.9% y/y to $2.09B vs. est. $2.22B; Pizza Hut comparable sales -8% vs. est. +0.5%, Restaurant margin 10.4% vs. 7.5% y/y, as KFC restaurant margin 12.7% vs. 8.6% y/y, and Pizza Hut restaurant margin 1.9% vs. 5.9% y/y.

·     Manchester United (MANU) rises 18% after the Daily Mail reported the bid from Qatar, which hosted the World Cup, will “blow away” other offers. https://on.mktw.net/3jHqgSI

·     China’s passenger car retail sales plunged 37.9% last month as businesses shut down for an early Lunar New Year holiday and nationwide vehicle purchase tax cuts and electric-car subsidies ended.

 

Energy

·     Enphase (ENPH) Q4 EPS $1.51 vs est. $1.24; Q4 revs $724.65M vs. est. $706.51M; sees Q1 revenue $700M-$740M above consensus $690.46M, guides Q1 gross margin 41%-44% and sees Q1 operating expenses $100M-$104M; GAAP gross margin of 42.9%; non-GAAP GM of 43.8%.

·     Nabors (NBR) 4Q EPS ($7.87) on revs $769.3Mm, adj FCF $101Mm, adj EBITDA $230Mm; guides FY adj FCF to exceed $400Mm.

·     The American Petroleum Institute reported weekly Crude Stocks fell -2.2 Mln Barrels, Gasoline Stocks rose +5.3 Mln barrels, Distillate Stocks rose +1.1 Mln barrels and Cushing Crude Stocks +0.2 Mln Bbl in Week.

 

Financials

·     American Express (AXP) upgraded to overweight from equal-weight at Morgan Stanley as its consumer-finance analysts shift stock picks toward higher credit quality, sustainable revenue growth and positive operating leverage.

·     Essex Property (ESS) 4Q core FFO/shr $3.77 vs est. $3.72; sees 1Q core FFO/shr $3.51-3.63 vs est. $3.72; guides FY23 core FFO/shr $14.53-14.97 vs est. $15.21.

·     H&R Block (HRB) 2Q adj EPS ($1.37) vs est. ($1.48) on revs $166.4Mm vs est. 148.7Mm; reaffirms prior FY guide.

·     Prudential (PRU) Q4 adj EPS $2.42 vs. est. $2.51; raises quarterly dividend to $1.25; board authorizes $1B share buyback; Book Value Per Common Shr $43.81; Adjusted Book Value Per Common Shr $99.22 and Assets Under Management down -21% y/y to $1.377 Trillion.

·     Voya Financials (VOYA) Q4 adj EPS $2.18 vs. est. $1.94; Q4 revs $1.96B; Assets under management rise 22% y/y to $321.36B.

·     Western Union (WU) Q4 adj EPS $0.32 vs. est. $0.35; Q4 revs fell -15% y/y to $1.1B vs. est. $1.07B; New U.S. outbound branded digital customers grew 30% during Q4; sees FY23 adjusted EPS $1.55-$1.65 vs. est. $1.58 and FY23 revenue (9%) to (7%).

 

Healthcare

·     CVS (CVS) to acquire Oak Street Health (OSH) in deal valued at $10.6 billion that’s a primary-care play, paying $39 per share and confirming reports yesterday https://on.mktw.net/3Yx7ZX8 ; VS also reported Q4 results that topped consensus expectations.

·     Encompass Health (EHC) 4Q adj EPS $0.88 vs est. $0.84 on revs $1.14B vs est. $706.5Mm; guides FY net operating revs $4.68-4.76B and adj EPS $2.87-3.16.

·     Exelixis (EXEL) 4Q adj EPS ($0.03) vs est. ($0.12) on revs $423.9Mm vs est. $417.5Mm; maintaining previously provided FY23 guide.

·     Healthpeak (PEAK) 4Q adj FFO/shr $0.44 vs est. $0.43; sees FY23 adj FFO/shr 1.70-1.76 vs est. $1.77, sees total portfolio same-store cash adjusted NOI growth 2.75-4.25%.

·     Illumina (ILMN) Q4 adj EPS $0.14 vs. est. $0.10; Q4 revs $1.08B vs. est. $1.07B; sees FY23 adjusted EPS $1.25-$1.50 below consensus $1.98 and sees FY23 revenue up 7%-10% vs. FY22.

·     Inspire Medical (INSP) 4Q EPS $0.10 vs est. ($0.57) on revs $137.9Mm vs est. $129.3Mm; guides FY23 revs $560-570Mm vs est. $541.6Mm, gr mgn 83-85%.

·     Vertex Pharmaceuticals (VRTX) 4Q adj EPS $3.76 vs est. $3.51 on sales $2.3B vs est. $2.3B; guides FY23 product revs $9.55-9.7B vs est. $9.6B; authorizes $3.0B buyback.

·     Longboard Pharmaceuticals (LBPH) 5M share Spot Secondary priced at $4.00.

·     Treace Medical (TMCI) 4.76M share Spot Secondary priced at $21.00.

 

Industrials & Materials

·     Carlisle Co’s (CSL) Q4 EPS $3.92 vs. est. $3.76; Q4 revs $1.5B vs. est. $1.44B; said pricing remained consistently positive across segments as we continue to demonstrate our value to our customers.

·     Crown Holdings (CCK) Q4 adj EPS $1.17 vs. est. $1.05; Q4 revs $3.01B vs. est. $3.12B; Global beverage can shipments grew 3% for the fourth quarter and full year; global beverage can shipments expected to grow mid-single digits in 2023; sees FY23 adjusted EPS $6.20-$6.40, vs. consensus $6.84 and adj Ebitda to grow in the range of 8-12%.

·     FMC Corp. (FMC) Q4 adjusted EPS $2.37 vs. est. $2.33; Q4 revs $1.62B vs. est. $1.53B; sees FY23 adjusted EPS $7.20-$8.00 vs. est. $8.37; sees FY23 revenue $6.08B-$6.22B vs. est. $6.03B.

·     Werner Enterprises (WERN) Q4 adj EPS $0.99 vs. est. $0.92; Q4 revs $861.5M vs. est. $844.86M; Operating margin of 10.3%, down 260 basis points.

 

Technology, Media & Telecom

·     Fortinet (FTNT) 4Q adj EPS $0.44 vs est. $0.39 on revs $1.28B vs est. $1.29B, billings $1.72B; guides 1Q billings $1.415-1.465B, revs $1.18-1.22B vs est. $1.18B, adj gr mgn 75-76%, adj op mgn 23-24% and adj EPS $0.27-0.29 vs est. $0.27; sees FY billings $6.71-6.79B, revs $5.37-5.43B vs est. $5.36B, adj gr mgn 75-76%, adj op mgn 25-26%, adj EPS $1.39-1.47 vs est. $1.39.

·     LiveRamp (RAMP) 3Q adj EPS $0.28 vs est. $0.27 on revs $158.6Mm vs est. $157.8Mm, adj gr mgn 76%; guides 4Q revs $147-152Mm vs est. $150Mm and adj op Inc $13-16Mm, sees FY revs $595-600Mm and adj op Inc $60-63Mm.

·     Lumen Technologies (LUMN) shares fell -14%; 4Q adj EPS $0.43 vs est. $0.20 on revs $3.8B vs est. $3.78B, adj EBITDA 1.39B vs est. $1.4B, adj FCF $126Mm; sees FY23 adj EBITDA $4.6-4.8B vs est. $5.2B, FCF $0-200Mm, CAPEX $2.9-3.1B.

·     New Relic (NEWR) shares rise 14%; Q3 adj EPS $0.32 vs. est. $0.15; Q3 revs $239.8M vs. est. $232.7M; sees FY23 adjusted EPS $0.40-$0.43 vs. est. $0.19 and revs $923.1M-$925.1M vs. est. $914.92M; Q3 gross margin was 74.4%, compared to 66.2% one year ago.

·     Omnicom (OMC) Q4 EPS $2.09 vs. est. $1.98; Q4 revs $3.87B vs. est. $3.75B; Q4 operating profit margin 16.5%; SG&A expenses decreased $25.4 million to $84.5 million.

·     Paycom Software (PAYC) 4Q adj EPS $1.73 vs est. $1.49 on revs $370.6Mm vs est. $366.8Mm, adj EBITDA $163.9Mm vs est. $145.2Mm; sees 1Q revs $443-445Mm vs est. $437.1Mm and adj EBITDA $210-212Mm vs est. $209.2Mm; sees FY revs $1.7-1.702B vs est. $1.69B.

·     SS&C Technologies (SSNC) Q4 adj EPS $1.16 on revs $1.34B, in-line with consensus; sees Q1 adjusted EPS $1.10-$1.16 on revs $1.332B-$1.372B vs. est. 41.19/$1.33B; guides FY23 adjusted EPS $4.67-$4.97 vs. est. $4.98, sees FY23 revenue $5.455B-$5.655B vs. est. $5.47B.

·     ViaSat inc. (VSAT) 3Q adj EPS ($0.14) vs est. (0.14) on revs $714Mm vs est. $721Mm; guides FY adj EBITDA roughly flat y/y.