Early Look

Wednesday, March 29, 2023

S&P futures (Spuz) near the overnight high, up +0.9% at 3,036 (high 4,0404.25 and low 4,006) as easing worries about a banking crisis lifted risk sentiment. The consumer sector gets a boost after a quarterly beat and raise from LULU lifts retails, Treasury yields remain largely unchanged ahead of the core PCE report this Friday, and risk appetite in full throttle with Bitcoin up 4% at $28,400 as investors shrug off regulatory crackdowns in the space. Market jitters about stress in the banking system have been soothed in recent days by a U.S. regulator- backed sale of failed lender Silicon Valley Bank’s assets as well as few signs of further trouble in the sector since the buyout deal. Mega cap technology stocks looking higher pre-mkt after a two-day profit taking pullback (MSFT, NVDA, AAPL, GOOGL, META). Former UBS CEO Sergio Ermotti was rehired to oversee the bank’s takeover of Credit Suisse gave European shares an early boost. Michael Barr, the Fed’s vice chairman for supervision, will testify before Congress for the second day after he criticized SVB‘s risk management on Tuesday during the first congressional hearing since the collapse of the regional lender. In Asian markets, The Nikkei Index jumped 365 points to 27,883, the Shanghai Index dipped -5 points to 3,240, and the Hang Seng Index gained 407 points to 20,192. In Europe, the German DAX is up 132 points to 15,275, while the FTSE 100 rises 57 points to 7,540.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -6.26 points, or 0.16%, to 3,971.27.

·     The Dow Jones Industrial Average fell -37.83 points, or 0.12%, to 32,394.25.

·     The Nasdaq Composite slipped -52.76 points, or 0.45%, to 11,716.08.

·     The Russell 2000 Index declined -1.04 points, or 0.06% to 1,752.63.

Economic Calendar for Today

·     7:00 AM ET             MBA Mortgage Applications Data

·     10:00 AM ET           Pending Home Sales M/M for February

·     10:30 AM ET           Weekly DOE Inventory Data

·     1:00 PM ET              U.S. Treasury to sell $35B in 7-year notes.

Earnings Calendar:

·     Earnings Before the Open: BLUE CONN CTAS GLYC LOCL PAYX UNF

·     Earnings After the Close: AXDX BEEM CNXC CXM DERM FC FUL OCX OPGN PL RH SMTC VRNT XOS

Other Key Events:

·     House Banking to hold March 29^th hearing on SVB collapse.

·     Enterprise Connect Conference & Expo, 3/27-3/30, in Orlando, FL

·     Shop Talk Conference, 3/26-3/30, in Las Vegas

·     Barclays Crypto Summit, 3/29-3/30, in Miami, FL.

Sector News Breakdown

Consumer

·     Lulu Lemon (LULU) shares rise 14%; 4Q adj EPS $4.40 vs est. $4.26 on revs $2.8B vs est. $2.7B, comps +27% (comp store sales +15%, direct net revs +37%), adj gr mgn -70bps; guides 1Q revs $1.89-1.93B vs est. $1.85B and EPS $1.93-2.00 vs est. $1.64; sees FY revs $9.3-9.41B vs est. $9.14B and EPS $11.50-11.72 vs est. $11.26.

·     Cal-Maine (CALM) Q3 EPS $6.62 vs. est. $5.59; Q3 sales $997.5M vs. est. $902M; Conventional egg net average selling price per dozen increased to $3.678 for Q3 compared with $1.458 the prior-year quarter. Net average selling price for specialty eggs rose to $2.616 per dozen, compared with $1.923 per dozen for Q3.

·     Conn’s (CONN) Q4 adjusted EPS loss (-$1.53) vs. est. loss (-$0.87); Q4 revs $334.9M vs. est. $331.22M; Q4 same store sales decreased (-21.8%).

·     Dave & Busters (PLAY) announces $100M share buyback; Q4 EPS $0.80 vs. est. $0.73; Q4 revs $563.8M vs. est. $534.51M; Pro forma combined comp store sales (including Main Event branded stores) increased 19.0% compared with the same period in 2021 and 14.1% compared with the same period in 2019.

·     Shift Technologies (SFT) Q4 revenue $65.6M vs. est. $73.2M; reports Total retail units sold were 2,520; gross profit per unit was $895; adjusted gross profit per unit1 was $1,041; sees Q1 revs in range of $56M-$58M.

·     Hershey (HSY) upgraded to Equal Weight at Wells Fargo.

Energy, Industrials and Materials

·     Emergency releases from the U.S. Strategic Petroleum Reserve are slated to end this month, concluding an unusual attempt to lower gas prices after Russia’s invasion of Ukraine sent oil prices soaring. Over the release period, Washington sold 180 million barrels of crude at an average of $96.25 apiece, well above the recent market price of $74.29—meaning the U.S., for now, is almost $4 billion ahead – WSJ https://on.wsj.com/40LtwMW

·     American Petroleum Institute inventory data showed crude stockpiles fell -6.076M barrels, Cushing -2.388M barrels, Gasoline fell -5.891M barrels and Distillates +0.548M.

·     Transocean Ltd. (RIG) announced contract awards for two of its harsh environment semisubmersibles; the fixtures represent approximately $382 million in firm contract backlog.

Financials

·     UBS Group AG (UBS) rehired Sergio Ermotti as CEO to steer its massive takeover of neighbor Credit Suisse (CS) in a surprise move to take advantage of the Swiss banker’s experience rebuilding the bank after the global financial crisis.

·     Senate probe alleges Credit Suisse (CS) helped Americans commit tax fraud – CNBC reported. Wyden investigation finds Credit Suisse complicit in ongoing tax evasion by ultra-wealthy Americans -united states Senate committee on finance. https://cnb.cx/40mQt9a

·     Invesco (IVZ) upgraded to Neutral from Underperform at Credit Suisse.

Healthcare

·     Arcturus Therapeutics (ARCT) Q4 EPS $4.33 vs. est. $0.98; Q4 revs $160.3M vs. est. $72.68M; increase in fourth quarter and year-over-year revenues primarily relates to the $200 million upfront payment we received from the CSL transaction.

·     Danimer Scientific (DNMR) 4Q EPS ($0.28) vs est. ($0.29) on revs $15.32Mm vs est. $16.44Mm; guides FY adj EBITDA $(31)Mm-$(23)Mm vs est. $(25.6)Mm, sees revenue growth accelerate starting 2Q and expect improving op mgn and op cash flow as move thru yr.

·     Medtronic (MDT) assumed at UBS with a double downgrade, cuts PT to $79 from $127 saying lacks the conviction that Medtronic will resume to reliable, single-digit top-line growth.

·     Corvus Pharmaceuticals (CRVS) files $100M mixed securities shelf.

Technology, Media & Telecom

·     Micron Technology (MU) 2Q adj EPS ($1.91) vs est. ($0.86) – Net loss was $2.3B, compared with a profit of $2.26B a year earlier – on revs $3.69B down 53% y/y vs est. $3.71B; guides 3Q revs $3.5-3.9B vs est. $3.7B, gross mgn guide (21.0%) plus/minus 2.5%, adj EPS ($1.65)-($1.51) vs est. ($0.90); says smartphone shipments to be down slightly in 2023; says has cut annual capex budget by 40% to $7B; expect our overall headcount reduction to approach 15%.

·     Progress Software (PRGS) 1Q adj EPS $1.19 vs est. $1.05 on revs $165.6Mm vs est. $158.7Mm, ARR $569Mm, adj op mgn 44%; guides 2Q adj revs $168-172Mm vs est. $169Mm and adj EPS $0.88-0.92 vs est. $0.99; sees FY adj revs $680-688Mm vs prior $675-685Mm and est. $679.4Mm, adj EPS $4.09-4.17 vs prior $4.09-4.17 and est. $4.14, adj op mgn 38-39% vs prior 38%.