Early Look

Wednesday, November 2, 2022

Futures	Up/Down	%	Last
Dow	-58.00	0.18%	32,637
S&P 500	-3.25	0.08%	3,863
Nasdaq	3.50	0.03%	11,335

 

 

As expected, U.S. futures are little changed with so much riding on today’s FOMC meeting, as S&P futures are trading in a narrow range overnight (3,881.50 hi and 3,861,50 low), the 10-year yield steady at 4.05% and the dollar index down slightly. Stocks faded on the open Tuesday and never recovered, finishing just off the lows of the session as markets await today’s FOMC monetary policy rate meeting. The Fed is expected to deliver a fourth consecutive 75bp rate hike, bringing rates up to 3.75-4.0% – the highest since Q4 2007. The focus remains the forward guidance given the rate hike is priced in and with no updated DOT plots, guidance will be limited to the statement & Powell’ press conference. While Powell may indicate 50bps is more likely in December, he is expected to maintain maximum flexibility and stress that policy will remain data dependent as we head into the New Year. Outside of the macro story, bad news in Asia last night after China ordered a seven-day lockdown of the area around Foxconn’s main plant in Zhengzhou, a move which will choke shipments in and out of the world’s largest iPhone plant for Apple. In Asian markets, The Nikkei Index dipped -15 points to 27,663, the Shanghai Index rose 34 points back to the 3,000 level, and the Hang Seng Index gained 371 points or 2.4% to settle at 15,827. In Europe, the German DAX is down about -10 points to 13,325, while the FTSE 100 is down about -10 points to 7,175.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -15.88 points, or 0.41%, to 3,856.10

·     The Dow Jones Industrial Average fell -79.75 points, or 0.24%, to 32,653.20

·     The Nasdaq Composite slumped -97.30 points, or 0.89%, to 10,890.85

·     The Russell 2000 Index advanced 4.53 points, or 0.25% to 1,851.39

 

Economic Calendar for Today

·     7:00 AM ET          MBA Mortgage Applications Data

·     8:15 AM ET          ADP Employment Data for October

·     10:30 AM ET        Weekly DOE Inventory Data

·     2:00 PM ET           FOMC rate decision – 75-bps rate hike expected

 

Earnings Calendar:

·     Earnings Before the Open: ACIW APO ASTE ATI AVNS BDC BGCP BR BRY CDW CHRW CRL CVS DFIN DNOW DT EAT EDIT EL EMR ENOV ENTG ETR FDP FUN GNRC HUM HZNP LIND LL MBI MLM NNN NYT ODP OMCL PMI PARA ROK SABR SBGI SHOO SITE SMG TEL THRM TUP UTHR VMC VSH YUM ZBH

·     Earnings After the Close: ACAD ACLS AFG ALB ALL ANSS APA ARAY ATUS AVNW BBSI BNL CCRN CDAY CF CFMS CLH CLR CPE CPK CRC CSGS CTSH CW CXW DHX EBAY ELP EPR EQH EQIX ERII ETSY EVA EVGO EVH FARO FC FLY FSLY FTNT GHL GKOS HCC HOOD HPP HST HUBS INFN INN IPI IR IRBY IVAC IVR KD KMPR KW LAZR LCI LHCG LNC LSI LUMN MATX MC MGM MKSI MOD MRO MTG NARI NE NUS NVRO NYMT O ORA PAA PAGP PDCE PK POWI PTC QCOM QDEL QLYS RCII RCKY RDN RGLD RGR ROKU RPD RRGB RUN RVLV SIGI SKLZ SKT SRPT STAA SUM TNDM TPL TTMI TWNK UDMY VAPO VMEO VNDA WERN WES WSC WTTR WWE YELL ZG

 

 

Macro	Up/Down	Last
Nymex	-0.50	87.87
Brent	-0.49	94.16
Gold	8.80	1,658.50
EUR/USD	0.0024	0.9898
JPY/USD	-1.17	147.11
10-Year Note	-0.002	4.051%

 

 

World News

·     China Locks down area around ‘iPhone city’ in blow to Apple (AAPL) as local government ordered a 7-day lockdown starting noon. China has ordered a seven-day lockdown of the area around Foxconn Technology Group’s main plant in Zhengzhou, a move that will severely curtail shipments in and out of the world’s largest iPhone factory https://bloom.bg/3sOMnYa

 

Sector News Breakdown

Consumer

·     AirBnB (ABNB) Q3 EPS $1.79 vs. est. $1.47; Q3 revs $2.88B vs. est. $2.84B; Q3 gross bookings value $15.6B, average daily rate $156; sees Q4 revenue $1.8B-$1.88B vs. est. $1.85B; expect Q4 adjusted ebitda margin to be in-line to modestly higher than last year’s margin of 22%

·     Caesar’s Entertainment (CZR) 3Q EPS $0.24 vs est. $0.14 on revs $2.9B vs est. $2.82B, adj EBITDA $1.0B vs est. $929.2Mm

·     Cheesecake Factory (CAKE) Q3 adj EPS loss (-$0.03) vs. est. $0.28; Q3 revs $784M vs. est. $799.38M; Q3 comp sales rose +1.1% y/y; authorizes increase of 5M shares to buyback program

·     Chegg (CHGG) 3Q adj EBITDA $50Mm vs est. $37.1Mm on revs $164.7Mm vs est. $158.3Mm, Chegg Services subs +9% y/y; guides 4Q net revs $200-203Mm vs est. $204.8Mm, gross margin 74-76%, adj EBITDA $71-74Mm vs est. $62.8Mm

·     Clorox (CLX) Q1 adj EPS $0.93 vs. est. $0.75; Q1 revs $1.74B vs. est. $1.69B; Q1 gross margin decreased 110 bps to 36% from 37.1% in the year-ago quarter, due to higher manufacturing and logistics costs, higher commodity costs, and lower volume; backs FY22 adj EPS view $3.85-$4.22 (est. $4.07) and reaffirms FY23 revenue down 4% to up 2%

·     Denny’s (DENN) 3Q adj EPS $0.12 vs est. $0.14 on revs $117.5Mm vs est. $114.1Mm; domestic system-wide comps +1.5% (+1.1% franchise, +7.1% company); guides 4Q comps +1-3%, consolidated total G&A exp $17-18Mm, consolidated adj EBITDA $21-23Mm vs est. $22.1Mm

·     Freshpet (FRPT) 3Q EPS ($0.39) vs est. ($0.26) on revs $151.3Mm vs est. $148.3Mm; FY guide net sales over $575Mm vs est. $579.5Mm and adj EBITDA over $15Mm (no longer adds back approx $29Mm plant start-up and $4.0Mm launch expense in prior guide)

·     Mondelez International (MDLZ) Q3 adj EPS $0.74 vs. est. $0.69; Q3 revs $7.76B vs. est. $7.44B; raised its full-year sales forecast as sees 2022 organic net revenue to increase more than 10%, compared with its prior estimate for a more than 8% jump; estimates currency translation would decrease 2022 net revenue growth by approximately 6.4%

 

Energy

·     Cenovus Energy Inc (CVE) reported a nearly three-fold jump in Q3 profit on Wednesday, benefiting from higher energy prices due to rising demand as global supplies were hit by Russia’s invasion of Ukraine; said its upstream production fell to 777,900 barrels of oil equivalent per day (boepd) in the quarter, from 804,800 boepd a year earlier.

·     Devon Energy (DVN) Q3 EPS $2.18 vs. est. $2.13; Q3 revs $5.43B vs. est. $4.95B; Q3 production averaged 614,000 oil-equivalent barrels (boe) per day, exceeding guidance by 2%; revising Q4 production forecast higher to a range of 640,000 to 660,000 boe per day; adjusted the midpoint of its upstream capital outlook to $835 million for the upcoming quarter

·     Edison International (EIX) Q3 EPS $1.48 vs. est. $1.52; Q3 revs $5.23B vs. est. $5.02B; narrows FY22 EPS view from $4.40-$4.70 to $4.48-$4.68

·     ONEOK (OKE) Q3 EPS $0.96, in-line with estimates; adj EBITDA $902.4Mm vs est. $916.2Mm; affirmed FY guide

 

Financials

·     AIG Inc. (AIG) Q3 adj EPS $0.66 vs. est. $0.46; book value per common share was $51.58 as of september 30, 2022, a decrease of 11% from June 30, 2022; total consolidated net investment income for Q3 was $2.7B, down 28%; adj book value per common share $73.28, an increase of 1% from June 30, 2022; Q3 general insurance net premiums written were down 3% to $6.40B

·     H&R Block (HRB) Q1 adj EPS loss (-$0.99) vs. est. loss ($1.08); Q1 revs $180M vs. est. $181.76M; sees 2023 adjusted EPS $3.70-$3.95 (est. $3.76), 2023 revs $3.535B-$3.585B (est. $3.54B) and sees EBITDA to be in the range of $915 to $950M

·     Intuit (INTU) guides Q1 adjusted EPS $1.14-$1.20 below consensus $1.19 and sees Q1 revenue growth 23%-25% vs. est. $2.49B; backs FY23 adjusted EPS view $13.59-$13.89 (est. $13.74)

·     MicroStrategy (MSTR) Q3 EPS loss (-$2.39) vs. est. $0.27; Q3 revs fell -2.1% y/y to $125.4M vs. est. $127.3M; Product licenses and subscription services revenue +5.5% y/y to $38.7M; acquired approximately 301 additional bitcoins this quarter & remains the world’s largest publicly traded corporate owner of bitcoin, with total holdings of 130,000 bitcoins

·     Paycom Software (PAYC) Q3 EPS $1.27 vs. est. $1.18; Q3 revs $334.2M vs. est. $327.6M; sees Q4 revenue $366M-$368M vs. est. $356.4M; sees Q4 adjusted EBITDA $144M-$146

·     Prudential (PRU) Q3 adjusted EPS $2.13 vs. est. $2.01; qtrly book value per common share of $44.15 versus $160.29 per share for year-ago quarter; assets under management of $1.350 trillion at qtr end

·     Public Storage (PSA) 3Q core FFO/shr $4.13 vs est. $4.04 on revs $822.5Mm vs est. $1.065B; same-store direct net op Inc +16.5% on same-store revs +14.7%

·     Voya Inc. (VOYA) 3Q adj EPS $2.30 vs est. $1.05, says on track to achieve 12-17% adj op EPS growth ex items in 2022

·     Unum Group (UNM) Q3 adj EPS $1.51 vs. est. $1.41; Q3 revs $2.96B vs. est. $2.99B; expects positive operating trends in core business during 2022; continues to anticipate an increase in after-tax adjusted operating income per share of 40% to 45% relative to full-year 2021

 

Healthcare

·     GSK (GSK) raised its 2022 guidance after stronger-than-expected sales in Q3; reported sales of 7.83 billion pounds ($8.99 billion), beating a company-provided consensus of GBP7.32 billion; said it now expects 2022 growth in sales 8%-10% at constant exchange rates, from 6%-8%

·     Novo Nordisk AS (NVO) raised full-year guidance and reported a Q3 net profit that beat expectations amid strong demand for its diabetes care and obesity treatments; sales rose 28% to DKK45.57 billion, against analysts’ expectations of DKK44.5 billion

·     McKesson (MCK) Q2 adj EPS $6.06 vs. est. $6.03; Q2 revs rose 5.4% y/y to $70.1B vs. est. $70.14B; raises adjusted FY EPS $24.45-$24.95, from $23.95-$24.65 (est. $24.24)

·     iRhythm (IRTC) cuts FY22 revenue view to $407M-$411M from $415M-$420M (est. $418.72M); Q3 adj EPS loss (-$0.63) vs. est. loss (-$0.83) and revs miss at $103.8M vs. est. $106.1M; Adjusted EBITDA for the full year 2022 is expected to range from negative $10 to negative $12 million

·     Emergent BioSolutions (EBS) presents data from phase 2 study evaluating safety and immunogenicity of chikungunya vaccine candidate in prior recipients of other alphavirus vaccines

·     CVS Health (CVS), Walgreens (WBA), and Walmart (WMT) are in a tentative pact to pay $12B to resolve state and local government lawsuits that accused the companies of mishandling opioid painkillers – Bloomberg https://bit.ly/3Wnq4qh

 

Industrials & Materials

·     Amcor Plc (AMCR) Q1 EPS $0.18 vs. est. $0.18; Q1 sales rose 9% y/y to $3.71B vs. est. $3.54B; backs FY23 adjusted EPS growth of 3%-8%, and reaffirmed adjusted EPS growth on a comparable constant currency basis of 3%-8%

·     DuPont (DD) terminated its $5.2 billion buyout of Rogers Corp (ROG), after DuPont said the termination of the deal was agreed with Rogers as they have been unable to obtain timely clearance from all the required regulators. https://bit.ly/3Wmvr90

·     Enovix Corp. (ENVX) 3Q adj EPS ($0.53) vs est. ($0.16); says signs MOU with one of world’s largest consumer electronics companies

·     FMC Corp. (FMC) Q3 adj EPS $1.23 vs. est. $1.12; Q3 revs $1.38B vs. est. $1.34B; sees Q3 EPS $2,05-$2.55 and revs up 8%; narrows FY22 adj EPS view to $7.10-$7.60 from $7.00-$7.70, boosts FY22 revenue view to $5.6B-$5.8B from $5.5B-$5.7B and lowers FCF outlook to $440M-$560M

·     Kaman Corp. (KAMN) 3Q adj EPS $0.32 vs est. $0.64 on revs $172Mm vs est. $191Mm; guides FY net sales $695-710Mm vs est. $707Mm and adj EPS $0.95-1.10 vs est. $1.78

·     Livent Corp. (LTHM) Q3 EPS $0.41 vs. est. $0.40; Q3 revs $231.6M vs. est. $251.92M; increasing midpoint of 2022 full year adjusted ebitda guidance to $350M-$375M from $325M-$375M and lowers revs view to $815M-$845M from $800M-$860M prior

·     MAERSK (AMKBY) reports Q3 underlying net income $8.82B vs consensus $7.96B; confirms FY22 guidance; but now sees global container demand falling by 2% to 4% this year, citing an unfolding economic slowdown expected to continue into 2023, down from prior view for an outcome towards the lower end of a range of minus 1% to plus 1%.

·     O-I Glass (OI) Q3 EPS $0.63 vs. est. $0.60; Q3 revs $1.7B vs. est. $1.67B; boosts Q4 EPS view to $0.28-$0.33 from prior $0.20-$0.30 (est. $0.30); and sees FY22 EPS at high end of guidance $2.20 $2.25 (est. $2.19) reflects favorable year-to-date results and solid momentum heading into Q4

 

Technology, Media & Telecom

·     Advanced Micro Devices (AMD) 3Q EPS $0.67 vs est. $0.65 on revs $5.6B vs est. $5.6B; sees 4Q revs $5.2-5.8B vs est. $5.85B and adj gr margin approx 51%; sees FY revs $23.2-23.8B vs est. $23.88B and adj gr margin approx 52%

·     Alteryx (AYX) Q3 non-GAAP EPS loss (-$0.05) vs. est. loss (-$0.11); Q3 revs $215.7M vs. est. $192.38M; sees FY22 non-GAAP EPS loss (37c)-(32c) vs. est. loss (52c); sees FY22 revenue $830M-$835M vs. est. $774.36M

·     Bandwidth (BAND) 3Q adj EPS $0.27 vs est. $0.03 on revs $148Mm vs est. $140.9Mm; guides 4Q adj EPS $0.03-0.05 vs est. $0.03 and revs $146-148Mm vs est. $145.2Mm

·     Benefitfocus (BNFT) rises after Voya Financial (VOYA) agreed to acquire the cloud-based benefits administration tech platform, in a $570 million deal, paying $10.50 per share in an all-cash transaction priced at around $570 million. https://bit.ly/3TX6L5x

·     Cirrus Logic (CRUS) 2Q adj EPS $1.99 vs est. $1.44 on revs $540.6Mm vs est. $462.7Mm; guides 3Q revs $520Mm and $580Mm vs est. $543.4Mm

·     Dish (DISH) Q3 EPS $0.65 vs. est. $0.56; Q3 revenue $4.1B vs. est. $4.15B; Q3 net Pay-TV subscribers increased approximately 30,000 in Q3 compared to a net decrease of approximately 13,000 y/y; closed the quarter with 10.02M Pay-TV subscribers, including 7.61M DISH TV subscribers and 2.41M Sling TV subscribers

·     EA Inc. (EA) 2Q EPS $1.07 vs est. $0.99 on revs $1.9B vs est. $1.8B, LTM net bookings $7.381B; guides 3Q net bookings $2.425-2.525B and net revs $1.825-1.925B vs est. $2.6B; sees FY EPS approx $3.11-3.34 vs est. $3.48 and revs $7.55-7.75B vs est. $7.97B

·     Match Inc. (MTCH) Q3 EPS $0.44 vs. est. $0.40; Q3 revs grew 1% y/y to $810M vs. est. $793M; qtrly payers increased 2% to 16.5 million, up from 16.3 million; Q3 Tinder direct revenue grew 6% (+16%) over the prior year quarter; sees Q4 revs $780M-$790M vs. est. $810.3M; says focused on delivering 5% to 10% revenue growth for the full year 2023

·     Verisk Analytics (VRSK) Q3 adj EPS $1.46 vs. est. $1.47; Q3 revs $745.3M vs. est. $754.39M

·     ZoomInfo Technology (ZI) Q3 EPS $0.24 vs. est. $0.20; Q3 revs rose 46% y/y to $441.3M vs. est. $426.4M; GAAP operating income margin of 18% and adjusted operating income margin of 41%; sees Q4 EPS 21c-22c on revs $298M-$300M vs. est. 21c/$297.7M