Early Look

Tuesday, February 14, 2023

Futures	Up/Down	%	Last
Dow	47.00	0.14%	34,315
S&P 500	10.25	0.24%	4,157
Nasdaq	47.00	0.38%	12,588

 

 

After closing at the highs on Monday, U.S. stock futures are trading at the high end of overnight range, up +0.25% at 4,157 (overnight high 4,159.50 and low 4,140.25) and takes out yest highs of 4,150.75, as markets rally further into the 8:30 AM ET CPI print – 10-yr yield down at 3.68%. T-minus 2 hours before the big news today: the Consumer Price Index (CPI) for January at 8:30 AM ET. On a headline M/M basis, prices expected to rise +0.5% (prior -0.1%) and on a Y/Y basis rise +6.2% (prior +6.5%). On a core basis, CPI Ex: Food & Energy M/M expected to rise +0.4% (prior +0.3%) and rise +5.5% Y/Y (prior +5.7%). Markets are reacting as if the data point will come in lower, showing a continued deceleration in prices (note the S&P has jumped the last 4-CPI prints dating back to October). Markets are hoping that a further slowing in prices will lead the Fed to lower their pace of rate hikes and pause by the May meeting. The market is also no longer pricing in any interest rate cuts in 2023. Just two weeks ago, markets were expecting 2 interest rate cuts in 2023. Yesterday saw solid gains for all sectors except Energy, which took a rest after a solid performance last week; large-cap growth sectors were among leaders today and still lead YTD (communications, technology and discretionary). Outside of the data today there have been several odd happenings over the last week including two trail derailments (NSC in Ohio 2-weeks ago leading to hazardous gases released by the Ohio river and CSX yesterday in South Carolina), four “flying objects” that have been shot down across various parts of the US, another SPR release yesterday for no explained reason and tensions ramping between the US and China given the spying concerns of this flying objects. They have not had any impact on markets as stocks continue to push higher. In Asian markets, The Nikkei Index gained 175 points to 27,602, the Shanghai Index gained 9 points to 3,293, and the Hang Seng Index fell -50 points to 21,113. In Europe, the German DAX is up 55 points to 15,453, while the FTSE 100 is up 35 points to 7,983.

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 46.83 points, or 1.14%, to 4,137.29.

·     The Dow Jones Industrial Average rose 376.66 points, or 1.11%, to 34,245.93.

·     The Nasdaq Composite surged 173.67 points, or 1.48%, to 11,891.79.

·     The Russell 2000 Index advanced 22.33 points, or 1.16% to 1,941.14.

 

Economic Calendar for Today

·     6:00 AM ET           NFIB Small Business Optimism for January…prior 89.80

·     7:45 AM ET            ICSC Weekly Retail Sales

·     8:30 AM ET            Consumer Price Index (CPI) M/M for January…est. +0.5% (prior -0.1%)

·     8:30 AM ET            Consumer Price Index (CPI) Y/Y for January…est. +6.2% (prior +6.5%)

·     8:30 AM ET            CPI core Ex: Food & Energy M/M for Jan…est. +0.4% (prior +0.3%)

·     8:30 AM ET            CPI core Ex: Food & energy Y/Y for Jan…est. +5.5% (prior +5.7%)

·     8:55 AM ET            Johnson/Redbook Weekly Sales

·     11:00 AM ET          Fed’s Logan Takes Part in a Moderated Discussion

·     2:05 PM ET             Fed’s Williams Gives Speech at New York Bankers Conference

·     4:30 PM ET             API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BTU CLF ECL ENTG EXC FELE FNMA GEO GFS HR HRI HWM IPGP KO LCII LDOS MAR NTWK PKI SAFE SHOP TGH TRU UE USAC UTL WCC ZTS

·     Earnings After the Close: ABNB ADC ADPT AKAM AKR ANDE BL CIDM CLW CNDT CPSI CRK DVN EGAN ENLC GDDY GXO HLF IPW IVT KNW LTHM MCY NMIH NRDS OSUR POWW SCI TRIP UDMY UPST WIRE

 

Other Key Events:

·     BTIG MedTech, Digital Health, Life Sciences & Diagnostic Tools Conference, 2/14-2/16, in UT

 

 

Macro	Up/Down	Last
Nymex	-1.47	78.67
Brent	-1.12	85.49
Gold	3.50	1,867.00
EUR/USD	0.0037	1.0757
JPY/USD	-0.21	132.20
10-Year Note	-0.033	3.686%

 

 

World News

·     The yen is stronger below 132-handle after Japan’s government nominates Kazuo Ueda as the next BOJ Governor.

 

Sector News Breakdown

Consumer

·     Denny’s (DENN) 4Q adj EPS $0.18 vs est. $0.16, adj EBITDA $23.4Mm vs est. $22Mm on revs $120.8Mm vs est. $120.5Mm, domestic system-wide comps +2.0%, adj FCF 14.6Mm; guides FY23 domestic system-wide comps +3-6%, consolidated openings +35-45, commodity inflation +4-6%, labor inflation approx +5%, consolidated total G&A $79-82Mm incl approx $14Mm share-based comp exp, consolidated adj EBITDA $86-90Mm vs est. $91.1Mm.

·     iRobot (IRBT) initiated a new restructuring program that is expected to deliver net annualized savings of approximately $14M as reduces 7% of workforce; Q4 non-GAAP EPS ($1.52) and Q4 revenue $357.9M

·     Ford (F) to cut 3,800 Jobs in Europe in EV Shift.

 

Energy

·     First Energy (FE) Q1 adj EPS $0.50 vs. est. $0.53; sees 2023 earnings guidance of $2.44-$2.64 per share for the full year vs. est. $2.44; affirmed its long-term, 6%-8% annual operating earnings growth rate, which is based off the previous year’s operating earnings guidance midpoint.

·     SolarEdge (SEDG) Q4 adj EPS $2.86 vs. est. $1.56; Q4 revs $890.7M vs. est. $879.23M; sees Q1 revenue $915M-$945M vs. est. $918.5M; sees Q1 Non-GAAP gross margin expected to be within the range of 28%-31% and non-GAAP operating profit to be within the range of $150M-$170M; gross margin from the solar segment expected to be within the range of 31% to 34%.

·     The Organization of the Petroleum Exporting Countries will release its February monthly oil market report at 1314 GMT (1414 Vienna time) on Tuesday, OPEC said in an email.

 

Financials

·     Arch Capital (ACGL) 4Q EPS $2.26 vs est. $1.34, adj combined ratio 82%, bv/shr $32.62, gross premiums written +30%.

·     Discover Financial Services (DFS) said credit card delinquency rate 1.33% at Jan 2023 end vs 1.27% at dec 2022 end and credit card charge-off rate 1.33% at Jan 2023 end vs 1.25% at Dec.

·     Vornado Realty (VNO) Q4 adj EPS $0.72 vs. est. $0.67; Q4 revs $446.9M vs. est. $444.64M.

 

Healthcare

·     Fusion Pharmaceuticals Inc (FUSN) rises 17%; saying to acquire from RadioMedix Inc, drug candidate targeting certain types of prostate cancers. FUSN plans to expand the mid-stage program to additional sites, expects to report data on 20 to 30 patients in Q1 2024.

·     Outset Medical (OM) Q4 adj EPS loss (-$0.71) vs. est. loss (-$0.86); Q4 revs $32M vs. est. $30.92M; reaffirms FY23 revenue view $140M-$150M vs. est. $145.79M.

·     PerkinElmer (PKI) Q4 adjusted EPS $1.70 vs. est. $1.62; Q4 revs $1.09B vs. est. $1.04B.

·     Usana Health Sciences (USNA) announces CEO transition plan.

·     Vir Biotechnology (VIR) announces amended collaboration agreement with Glaxo (GSK); VIR to continue advancing next-generation COVID-19 solutions independently or with other partners.

 

Industrials & Materials

·     Avis Car Rental (CAR) 4Q adj EPS $10.46 vs est. $6.79 on revs $2.77B vs est. $2.69B.

·     Cleveland Cliffs (CLF) Q4 EPS loss (-$0.41) vs. est. loss (-$0.30); Q4 revs $5.0B vs. est. $5.19B; Q4 adjusted EBITDA was $123M vs. $1.5B y/y; sees 2023 CAPEX $700M to $750M vs. est. $786.5m.

·     MRC Global (MRC) 4Q adj EPS $0.18 vs est. $0.17 on revs $869Mm vs est. $872Mm, adj EBITDA $66Mm vs est. $65.2Mm; reaffirms previous 2023 guidance targeting double-digit revs growth vs est. +11% and adj EBITDA mgn to exceed 8%.

·     Albany Int’l (AIN) 4Q adj EPS $0.75 vs est. $0.67 on net sales $268.8Mm vs est. $242.3Mm, adj EBITDA $58.4Mm vs est. $54.6Mm; guides FY23 revs $1.01-1.05B vs est. $1.05B and adj EPS $3.10-3.60 vs est. $3.93.

 

Technology, Media & Telecom

·     AMKOR (AMKR) 4Q adj EPS $0.67 vs est. $0.70 on revs $1.91B vs est. $1.85B, gr mgn 17.5%; guides 1Q net sales $1.4-1.5B vs est. $1.64B, gr mgn 10.5-13.5%, EPS $0.06-0.22 vs est. $0.53.

·     Arista Networks (ANET) Q4 adj EPS $1.41 vs. est. $1.21; Q4 revs $1.28B vs. est. $1.2B; sees Q1 revenue $1.275B-$1.325B vs. est. $1.21B; Q4 gross margin 61.1% and sees non-GAAP gross margin of approximately 60%; and non-GAAP operating margin of approximately 40%.

·     Blackbaud Inc. (BLKB) sees 2023 adj rev $1.08B-$1.11B and 2023 adj EPS $3.30-$3.60 vs. est. $3.18 and sees 2023 adj. EBITDA margin 29.5% to 30.5%.

·     Cadence Design Systems (CDNS) Q4 EPS $0.96 vs. est. $0.92; Q4 revs $900M vs. est. $884.8M; sees Q1 EPS $1.23-$1.27 vs. est. $1.10; sees Q1 revs $1.0B-$1.02B vs. est. $930.9M.

·     Instructure Holdings (INST) 4Q adj EPS $0.20 vs est. $0.26 on revs $124.7Mm vs est. $121.5Mm; sees 1Q revs $126.5-127.5Mm vs est. $125Mm, adj EBITDA $47-48Mm vs est. $47.5Mm; sees FY revs $519.4-523.4Mm vs est. $520.9Mm, adj EBITDA $198-202Mm vs est. $196.6Mm, adj unlevered FCF $200-204Mm.

·     Lattice Semiconductor (LSCC) 4Q adj EPS $0.49 vs est. $0.48 on revs $176Mm vs est. $175.2Mm, adj gr mgn 70%; sees 1Q revs $175-185Mm vs est. $174.7Mm, adj gr mgn 69-71%, adj total op exp $53-55Mm.

·     Palantir Technologies (PLTR) 4Q adj EPS $0.04 vs est. $0.03 on revs $508.6Mm vs est. $502.3Mm; guides 1Q revs $503-507Mm vs est. $520Mm, adj op Inc $91-95Mm; sees FY revs $2.18-2.23B vs est. $2.29B and adj op Inc $481-531Mm.

·     Paramount Global (PARA) is again seeking to sell Simon & Schuster, months after the media company’s $2.2 billion deal to sell the book publisher to Penguin Random House collapsed, according to people familiar with the matter – Reuters reported. https://reut.rs/3YsrwIl

·     SkyWater technology (SKYT) 4Q adj EPS ($0.03) vs est. ($0.11) on revs $65.1Mm vs est. $55.5Mm; adj gr mgn 26.2%, adj EBITDA $10.3Mm vs est. $4.45Mm.