Early Look

Wednesday, February 15, 2023

Futures	Up/Down	%	Last
Dow	-93.00	0.27%	34,028
S&P 500	-16.25	0.40%	4,128
Nasdaq	-64.50	0.51%	12,566

 

 

U.S. futures down slightly after major averages closed mixed on Tuesday, with the S&P 500 flat and the Nasdaq ending higher after a choppy session, as the latest reading on inflation gave investors more fuel to consider how high the Federal Reserve may continue raising interest rates to. Fed funds futures shifted higher after the data, and now imply a peak rate of 5.25% in July and remaining above 5% throughout the year. U.S. Treasury yields were higher while the dollar index climbed from a two-week low in the wake of the data. Several Fed officials said on Tuesday the central bank will need to keep gradually raising rates, with two signaling that borrowing costs may eventually need to go higher than is currently widely expected – but stock markets still extended its recent gains. Next up, a busy round of economic data this morning: read on the consumer with Jan retail sales data (est. +1.8% and +0.8% ex autos), NY empire Fed data for Feb (est. -18) both at 8:30 AM, industrial production for Jan at 9:15 (est. +0.55) and Business Inventories for Dec at 10:00 AM (est. +0.3%). We also expect to get monthly credit card NCO and delinquency data that day (COF, SYF). In Asian markets, The Nikkei Index fell -100 points to 27,501, the Shanghai Index dropped -12 points to 3,280, and the Hang Seng Index declined -301 points to 20,812. In Europe, the German DAX is up 60 points to 15,444, while the FTSE 100 is flattish around 7,050. Oil dropped for a second day as an industry report pointed to ample supplies in the United States and anticipation of further interest rate hikes sparked concerns over weaker fuel demand and the economic outlook.

 

Economic Calendar for Today

·     7:00 AM ET            MBA Mortgage Applications Data

·     8:30 AM ET            Empire Manufacturing for February…est. (-18.0)

·     8:30 AM ET            Advance Retail Sales M/M for January…est. +1.8%

·     8:30 AM ET            Retail Sales – Less Autos M/M for January…est. +0.8%

·     9:15 AM ET            Industrial Production M/M for January…est. +0.5%

·     9:15 AM ET            Capacity utilization for January…est. 79.0%

·     10:00 AM ET          Business Inventories M/M for December…est. +0.3%

·     10:00 AM ET          NAHB Housing Market Index for February…est. 37

·     10:30 AM ET          Weekly DOE Inventory Data

·     1:00 PM ET             US Treasury to sell $12B in 2-year notes.

·     4:00 PM ET             Net Long-term TIC Flows for December

 

Earnings Calendar:

·     Earnings Before the Open: ACRE ADI AVNT BIIB CEVA CHEF CHH CIM CRWS DNUT FIS GLDD GNRC HL IDCC KHC KPTI LAD MLM OC PSN R RBLX SABR SAH SITE SUN TGL TMHC TPG TTD WAB WAT

·     Earnings After the Close: AEE AIG ALB ALSN AM AMED AMPL AR ATOM AWK BLZE CF CSCO CYH EPRT EQT ESRT ET EQIX FARO FCPT FSLY HCC HST HT IBEA INVH IRT MRO MSA NEX NUS PEGA PGRE PLMR QDEL QS RBBN RGLD RNG ROIC ROKU ROL RPT RSH RUSHA SAM SGEN SNPS SPWR STAG SUM TNET TROX TRUP TWLO TXG TYL UFCS UPWK VECO WELL WH ZG

 

Other Key Events:

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

·     Cowen Annual Aerospace/Defense & Industrials Conference, 2/15-2/16, in VA

·     Credit Suisse Financial Services Forum, 2/13-2/15, in Miami

 

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -1.16 points, or 0.03%, to 4,136.13.

·     The Dow Jones Industrial Average slid -156.66 points, or 0.46%, to 34,089.27.

·     The Nasdaq Composite gained 68.36 points, or 0.57%, to 11,960.15.

·     The Russell 2000 Index slipped -1.23 points, or 0.06% to 1,939.91.

 

 

Macro	Up/Down	Last
Nymex	-0.70	78.36
Brent	-0.46	85.12
Gold	-20.10	1,845.30
EUR/USD	-0.0013	1.0722
JPY/USD	0.26	133.37
10-Year Note	-0.017	3.744%

 

 

World News

·     UK annual consumer price inflation (CPI) cooled to 10.1% last month, the lowest reading since September, the Office for National Statistics (ONS) said and was slightly below the economists forecast that it would drop to 10.3% in January, off October’s 41-year high of 11.1%.

·     The IEA raised global oil demand estimates by a hefty 500,000 barrels a day for the first quarter, and by just under half as much for the year. As a result, world consumption will climb by 2 million barrels a day this year to average 101.9 million a day, it said in a monthly report.

 

Sector News Breakdown

Consumer

·     AirBnB (ABNB) Q4 EPS $0.48 vs. est. $0.25; Q4 revs rose 24% y/y to $1.9B vs. est. $1.86B; qtrly average daily rates were $153, down 1%; qtrly nights & experiences booked 88.2 mln, up 20%; guides Q1 revs $1.75B-$1.82B vs. est. $1.68B; customer deposits held for future bookings +28% y/y, compared to +22% at the end of Q3 & only +18% six months ago.

·     Herbalife (HLF) 4Q adj EPS $0.53 vs est. $0.34 on revs $1.18B vs est. $1.13B, adj EBITDA $130.7Mm vs est. $98.7Mm; says given rapidly shifting macro sentiment and backdrop and increased volatility in the market, not providing FY23 guidance.

·     Service Corp. (SCI) Q4 adj EPS $0.92 vs. est. $0.80; Q4 revs $1.028B vs. est. $979.15M; Confirming 2023 earnings per share guidance midpoint of $3.60 for 2023; operating cash flow of $826 million for the full year 2022 above the midpoint of previous guidance.

·     Tesla (TSLA) to halt China plant again for more upgrades, some production lines being upgraded to make revamped Model 3 – Bloomberg.

·     TripAdvisor (TRIP) Q4 adj EPS $0.16 vs. est. $0.04; Q4 revs $354M vs. est. $343.9M

 

Energy

·     Comstock Resources (CRK) Q4 EPS $1.05 vs. est. $0.83; Q4 revs $922.4M vs. est. $657.15M; generated free cash flow from operations of $673M in 2022, including $129M in Q4; production in the fourth quarter increased 7% from last year to 1,445 Mmcfe per day.

·     Devon Energy (DVN) Q4 EPS of $1.66 missed the $1.75 estimate; had said in January that it estimated its Q4 production to be 2% lower due to severe winter conditions, with operations at its Williston basin in North Dakota affected the most; said expenses increased 1% in 2022, driven by higher personnel costs in the fourth quarter.

·     The American Petroleum Institute reported weekly crude inventories rose +10.507MM barrels, Gasoline rose +0.846MM, Distillates rose +1.728MM, and Cushing +1.954MM barrels.

 

Financials

·     Barclay’s (BCS) shares slide -10% after reported a 14% fall in full-year pretax profit; results were further marred by 1.2 billion pounds in credit impairment charges and a 26% leap in costs to 8.9 billion pounds, down from 8.2 billion the year before.

·     Capital One (COF) reported charge-offs for January of 3.81% vs. 2.03% y/y and delinquencies 3.65% vs. 2.4% y/y.

·     Upstart Holdings (UPST) Q4 adjusted EPS loss (-$0.25) vs. est. loss (-$0.47); Q4 revs fell -52% y/y to $146.9M but above consensus $133.59M; sees Q1 revenue approximately $100M below consensus $157.99M and sees Q1 net loss of approximately ($145M).

·     NMI Holdings (NMIH) 4Q adj EPS $0.86 vs est. $0.84 on net premiums earned $119.6Mm vs est. $122.5Mm

 

Healthcare

·     Amylyx Pharmaceuticals’ (AMLX) recently approved treatment for ALS, Relyvrio, is outpacing analysts’ expectations, the company said yesterday, defying some downbeat rumors about its early commercial performance – STAT News

·     Emergent BioSolutions (EBS) said it sealed a deal to sell a portfolio of travel vaccines to Danish vaccines-maker Bavarian Nordic for up to $380M.

·     OraSure Technologies (OSUR) 4Q adj EPS $0.36 vs est. ($0.01) on revs $123.1Mm vs est. $97.1Mm, gr mgn 40.3%; says cutting 11% of current non-production workforce as part of restructuring, expect to lead to annualized op exp reductions of approx $15Mm.

·     Adaptive Biotech (ADPT) 4Q adj EPS ($0.28) vs est. ($0.35) on revs $55.2Mm vs est. $54.7Mm, adj EBITDA ($19.6)Mm vs est. ($34.4)Mm; guides FY23 revs $205-215Mm vs est. $217.1Mm, op exp incl cost of revs below $385.5Mm.

 

Industrials & Materials

·     AMMO Inc. (POWW) 3Q adj EPS $0.05 vs est. ($0.01) on revs $38.7Mm vs est. $54.2Mm, adj EBITDA $4.8Mm vs est. $9.9Mm; reduces FY23 guide to revs $185Mm vs est. $224Mm and adj EBITDA $22Mm vs est. $51.7Mm.

·     Andersons Inc. (ANDE) 4Q adj EPS $0.98 vs est. $0.47 on revs $4.68B vs est. $4.28B.

·     CF Industries Holdings, Inc. (CF) entered into an agreement with bp (NYSE: BP) for the supply of 2.2 billion cubic feet (BCF) of certified natural gas in 2023.

·     Clearwater Paper (CLW) 4Q adj EPS ($0.30) vs est. ($0.09) on revs $527Mm vs est. $523.5Mm, adj EBITDA $28Mm vs est. $31.6Mm; says well-positioned to deliver strong results this year.

·     Generac (GNRC) Q4 adjusted EPS $1.78 vs. est. $1.62; Q4 sales $1.05B vs. est. $1.07B; residential products net sales $575 million, -19% y/y.

·     GXO Logistics (GXO) 4Q adj EPS $0.83 vs est. $0.75 on revs $2.5B vs est. $2.45B, adj EBITDA $205Mm vs est. $199.7Mm; guides FY organic revs +6-8% vs est. +7.4%, adj EBITDA $700-730Mm vs est. $719.3Mm, FCF conversion approx 30% of adj EBITDA and adj EPS $2.30-2.50 vs est. $2.44.

·     Livent (LTHM) Q4 EPS $0.39 vs. est. $0.38; Q4 revs $219.4M vs. est. $239.8M; projects revenue to be in range of $1.0B-$1.1B vs. est. $1.12B and projects adjusted ebitda to be in range of $510M-$580M.

 

Technology, Media & Telecom

·     Akami (AKAM) 4Q adj EPS $1.37 vs est. $1.27 on revs $927.8Mm vs est. $904.8Mm, adj EBITDA $382Mm vs est. $367.3Mm.

·     ASML Holding NV (ASML) warned growing global trade and export controls pose a threat to its business, but it does not expect new restrictions on exports to China to affect 2023 earnings.

·     ASML Holding NV (ASML) also disclosed that it had recently discovered the “misappropriation” of confidential information by a now-dismissed employee in China.

·     BlackLine (BL) Q4 EPS $0.18 vs. est. $0.17; Q4 revs $139.96M, in-line with ests; sees Q1 EPS $0.15-$0.17 vs. est. $0.11 and revs $137M-$139M vs. consensus $142.2M.

·     Conduent Inc. (CNDT) 4Q adj EPS $0.01 vs est. $0.05 on revs $986Mm vs est. $994Mm, adj EBITDA $95Mm vs est. $99Mm; guides FY23 adj revs $3.7-3.8B vs est. $3.85B, adj EBITDA mgn 10.0-10.8%.

·     Credo Technology (CRDO) shares fall -44%; forecast 4Q revenue $30M-$32M, missing the average analyst estimate of $58.3M saying its largest customer has reduced its demand forecast for certain Credo products.

·     eGain Corp. (EGAN) 2Q adj EPS $0.05 vs est. $0.04 on revs $25.6Mm vs est. $25.1Mm; guides 3Q revs $23.0-23.5Mm vs est. $25.5Mm and adj EPS $0.00-0.01 vs est. $0.05; sees FY revs $97-99Mm vs est. $101.8Mm and adj EPS $0.13-0.20 vs est. $0.19.

·     GoDaddy (GDDY) Q4 EPS $0.60 vs. est. $0.62 and revs in-line at $1.04B; Total bookings of $4.4 billion, up 4.3% y/y, and 6.0% on a constant currency basis; sees Q1 revenue $1.03B-$1.05B, vs. consensus $1.05B and year revs $4.25B-$4.325B vs. est. $4.35B.

·     Udemy Inc. (UDMY) Q4 EPS loss (-$0.36) vs. est. loss (-$0.23); Q4 revs rose 22% y/y to $165.33M vs. est. $166.04M; guides Q1 revs $168M-$172M vs. est. $186.7M; Q4 Enterprise segment, or Udemy Business, revenue increased 57% y/y; Udemy Business Annual Recurring Revenue increased 55% y/y to $371.7M.

·     Taiwan Semi (TSM): Warren Buffett’s Berkshire Hathaway $BRKB sold over 50mn shares of TSM, over 80% of his position, according to filing last night.