Early Look

Friday, May 27, 2022

Futures	Up/Down	%	Last
Dow	31.00	0.10%	32,631
S&P 500	11.25	0.29%	4,067
Nasdaq	57.50	0.47%	12,337

 

 

U.S. futures are looking good early, trying to build on this week advance with S&P futures +0.3% to 4,068, looking to close the week out strong and snap its 7-week losing streak (comes into the day with a 4% weekly rise). All eyes on inflation data later, as the Federal Reserve’s preferred price gauge is projected to show a 6.2% climb in April from a year ago. Coming up at 8:30 AM ET, investors will digest personal income, and spending for April, PCE and Core PCE inflation data, Advance Goods trade balance for April and UoM confidence data at 10:00 Am (est. 59.1) – so a lot can change. A handful of earnings results again in the retail space, with shares of ULTA indicated higher, but shares of AEO, COST, BIG, and GPS all looking notably lower after results and guidance. In the biotech sector, abstracts were released yesterday post market close (for MGNX, XNCR, VCYT, ACET among others) ahead of next week’s American Society of Clinical Oncology (ASCO) 2022 meeting, 6/3-6/7, in Chicago. Stocks are on pace for their best weekly gain in two months, as investors bet that the Federal Reserve’s suggestion of an autumn pause in rate hikes, paired with what could be a peak in inflation readings, will lift markets from one of their worst starts to the year since the 1930s. Bloomberg reported Bank of America’s Flow Show shows nearly $22 billion has poured into U.S. equity funds this week, the most in more than 10 weeks. In Asian markets, The Nikkei Index gained 0.66% to 26,781, the Shanghai Index rose 7 points to 3,130, and the Hang Seng Index advanced 581 points or 2.89% to 20,697. In Europe, the German DAX is u about 100-points to 14,335, while the FTSE 100 is flat around 7,565. Bitcoin trading lower at $28.8k, down around 2% (on track for 8^th straight weekly decline), while the dollar slips to 1-month lows and Treasury yields are at morning lows, with the 10-year at 2.735%.

Economic Calendar for Today

·     8:30 AM ET         Personal Income M/M for April…est. +0.5%

·     8:30 AM ET         Personal Spending M/M for April

·     8:30 AM ET         PCE Price Index M/M for April

·     8:30 AM ET         PCE Price Index Y/Y for April

·     8:30 AM ET         Core PCE Price Index M/M for April…est. +0.3%

·     8:30 AM ET         Core PCE Price Index Y/Y for April…est. +4.9%

·     8:30 AM ET         Advance Goods Trade Balance for April

·     10:00 AM ET       University of Michigan Confidence, May-F…est. 59.1

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

 

Market Closing Prices Yesterday

·     The S&P 500 Index gained 79.11 points, or 1.99%, to 4,057.84

·     The Dow Jones Industrial Average rose 516.91 points, or 1.61%, to 32,637.19

·     The Nasdaq Composite surged 305.91 points, or 2.68%, to 11,740.65

·     The Russell 2000 Index advanced 39.07 points, or 2.17% to 1,838.24

 

 

Macro	Up/Down	Last
Nymex	-0.81	113.28
Brent	-0.51	116.89
Gold	8.50	1,856.10
EUR/USD	-0.0011	1.0713
JPY/USD	-0.08	127.06
10-Year Note	-0.018	2.74%

 

 

World News

·     Russia has about $100 mln in interest on debt coming due on Friday but will be facing difficulties as U.S. investors no longer allowed to accept Russian bond payments. If Russia’s obligations aren’t fulfilled, a 30-day grace period ensues – Bloomberg

·     China industrial profits YoY YTD for April rose 3.5%. Fairly sizable drop compared to the previous, industrial profit increase drops 5ppts from the March reading of 8.5%,

·     Aussie retail sales for April rose 0.9% vs 0.8% previously

 

Sector News Breakdown

Consumer

·     American Eagle Outfitters (AEO) Q1 EPS $0.16 vs. est. $0.25; Q1 revs $1.05B vs. est. $1.14B; qtr-end total ending inventory at cost increased 46% to $682M compared to $467M last year; for Q2, expects top-line growth to trend similarly to Q1 with gross margin rate of about 33%; qtrly consolidated store rev up 2%; qtrly total digital revenue declined 6%

·     Big Lots (BIG) shares -24%; reports unexpected Q1 EPS loss of (-$0.39) vs. est. $0.93; Q1 revs $1.37B misses the $1.46B estimate; 3-year comparable sales growth of 2% with significant slowdown in April; expects that promotional activity will drive its second quarter gross margin rate into the low-30’s and that SG&A dollars will be slightly up to 2021

·     Costco (COST) Q3 EPS $3.04 vs. est. $3.02; Q3 sales rose 16.3% Y/Y to $51.61B vs. est. $51.5B; Total company comp sales ex: fuel, in c/c +10.8% vs. +15.1% Y/Y and vs. estimate +9.37%; U.S. comp sales ex: fuel, c/c +10.7%, vs. estimate +9.56%

·     Farfetch (FTCH) 1Q adj EPS ($0.24) vs est. ($0.30) on revs $514.8mm vs est. $560.3Mm; guides FY digital platform GMV +5-10%, brand platform GMV +10-15%, adj EBITDA margin 0-1%

·     Gap Stores (GPS) shares fall -15%; 1Q EPS ($0.44) vs est. ($0.13) on sales $3.5B vs est. $3.46B; comps -14%, gross margin 31.5% vs est. 35.3%, qtr ending inventory +34%; guides FY adj EPS $0.30-0.60 vs est. $1.34, EBIT margin 1.8-2.8%, revs -low-to-mid-single digit % vs est. -2.3%; sees FY CAPEX about $700Mm, expects to open about 30-40 stores each for ON and Athleta, plans to close about 50 Gap and BR in N. America

·     Red Robin Gourmet (RRGB) shares rose 11%; Q1 adj EPS loss (-$0.12) vs. est. loss (-$0.73); Q1 revs $380.6M vs. est. $381.2M; reiterates guidance for full year 2022; Comparable restaurant revenue increased 19.7% compared to 2021; Restaurant level operating profit margin decreased by 170 basis points driven primarily by commodity and labor cost inflation

·     Ulta Inc (ULTA) shares rose 8%; Q1 EPS $6.30 vs. est. $4.46; Q1 sales $2.3B vs. est. $2.12B; Q1 comp sales rose 18%; at end of q1 of fiscal 2022, company operated 1,318 stores totaling 13.9 mln square feet; sees FY EPS $19.20-$20.10 and sales $9.35B-$9.55B vs. est. $17.18 and $8.59B respectively; boosted FY22 comp store sales view to 6%-8% from 3%-4%

·     Didi Global (DIDI) rises after a Bloomberg News report that state-owned automaker China FAW Group is considering acquiring a significant stake in the ride-hailing company

·     Nio (NIO) is looking to hire for vehicle manufacturing-related positions in the U.S., suggesting that it may be planning a new plant in the country according to local media outlet

 

Energy, Industrials & Materials

·     Maxeon Solar (MAXN) reports Q1 EPS loss ($1.45) vs est. ($1.30) on revs $223Mm vs est. $213Mm; guides 2Q revs $215-230Mm vs est. $274.3Mm; files $100M mixed securities shelf

·     General Dynamics (GD) unit Dynamics Mission Systems and Iridium Communications (IRDM) received a $324.5M contract from the US Space Development Agency

·     French construction materials group Saint-Gobain said on Friday it would divest several glass processing businesses in Germany and Austria which combined employ over 320 staff.

 

Healthcare

·     Adicet Bio (ACET) reports positive clinical update from ADI-001 Phase 1 Trial in relapsed/refractory Non-Hodgkin’s Lymphoma (NHL)

·     Axcella Therapeutics (AXLA) said it was suspending a phase 2 trial of AXA1665 in Overt Hepatic Encephalopathy and completed enrollment for a phase 2a study of AXA1125 to treat long COVID

·     23andMe Holding (ME) Q4 EPS loss (-$0.16) vs. est. loss (-$0.13) on revs +14% Y/Y to $101M vs. est. $102.7M; sees FY revs $260M-$280M vs. est. $275.4M

·     Iovance Biotherapeutics, Inc. (IOVA) reported clinical results from its C-144-01 clinical study in patients with advanced (unresectable or metastatic) melanoma who progressed on prior anti-PD-1/L1 therapy, and if BRAF mutation positive, also on prior BRAF or BRAF/MEK inhibitor therapy.

·     UnitedHealth (UNH) downgraded to Market Perform at Bernstein on valuation, CVS Health (CVS) downgraded to Market Perform from Outperform w/ $112 PT at Bernstein and HCA upgraded to Outperform from Mkt Perform, $271 PT at Bernstein

·     Veracyte (VCYT) announces new data to be presented at ASCO 2022 showing Immunocore IC Assay’s ability to identify patients with NSCLC who may benefit from immune checkpoint inhibitors

 

Technology, Media & Telecom

·     Autodesk (ADSK) 1Q adj EPS $1.43 vs est. $1.34 on revs $1.17B vs est. $1.145B, adj EBIT margin 34%; guides 2Q revs $1.22-1.235B vs est. $1.22B and adj EPS $1.54-1.60 vs es.t $1.60; guides FY revs $4.96-5.06B vs est. $5.04B and adj EPS $6.43-6.66 vs est. $6.69

·     Dell Inc. (DELL) Q1 adj EPS $1.84 vs. est. $1.40; Q1 revs rose 16% Y/Y to $26.1B vs. est. $25B; infrastructure solutions group delivered record Q1 revenue of $9.3 bln, up 16%; Client Solutions group delivered record Q1 revenue of $15.6 bln, up 17%

·     Domo Inc. (DOMO) 1Q adj EPS ($0.23) vs est. ($0.40) on revs $74.5Mm vs est. $74.1Mm; guides 2Q adj EPS ($0.35) to ($0.31) vs est. ($0.37) and revs $76-77Mm vs est. $76.6Mm; sees FY adj EPS ($1.34) to ($1.26) vs est. ($1.48) and revs $315-319Mm vs est. $317Mm

·     Lions Gate (LGF) Q4 adj EPS $0.06 on revs $929.9M vs. est. loss (-$0.13) and $905.8M; qtrly studio business increased revenue by 30.8% to $658.3M compared to $503.1M in prior year quarter; global subscribers grew to 35.8M, including Starz play Arabia; global streaming subscribers grew 47% year over year to 24.5M

·     Marvell Technologies (MRVL) 1Q adj EPS $0.52 vs est. $0.51 on revs $1.447B vs est. $1.427B, gr margin 51.9%; guides 2Q net revs $1.515 +/-3% vs est. $1.487B and adj EPS $0.53-0.59 vs est. $0.55

·     Sumo Logic (SUMO) 1Q adj EPS ($0.13) vs est. ($0.16) on revs $67.9Mm vs est. $70.5Mm; sees 2Q adj EPS ($0.15) vs est. ($0.16) and revs +21-22% vs est. +19.5%; sees FY revs $289-292Mm vs est. $290.6Mm and adj EPS ($0.64) to ($0.62) vs est. ($0.67)

·     Workday (WDAY) 1Q adj EPS $0.83 vs est. $0.86 on revs $1.43B vs est. $1.43B, subscription revs $1.27B, subscription revs backlog $12.65B +25.5%

·     Zscaler (ZS) Q3 EPS $0.17 vs. est. $0.11; Q3 revs rose 63% Y/Y to $286.8M vs. est. $271.4M; sees Q4 revs $304M-$306M vs. est. $291M and EPS $0.20-$0.21 vs. est. $0.17; Q3 Calculated billings grows 54% Y/Y to $345.6 million; deferred revenue grows 65% Y/Y to $818.7 million