Early Look

Tuesday, October 24, 2023

Futures	Up/Down	%	Last
Dow	125.00	0.38%	33,193
S&P 500	20.25	0.49%	4,262
Nasdaq	85.50	0.58%	14,797

 

 

U.S. futures bouncing back, with the S&P looking higher by about +0.5% after sliding in the final hour of trading Monday to push it back below its key 200-day moving average of 4,235 (for SPX). The S&P 500 index ended up stumbling for a fifth straight session, its longest streak of declines since October of 2022 as an attempt to rally lost steam in the final hour, although the tech heavy Nasdaq managed to snap a four-session skid as bond yields eased, boosting growth stocks. Equities were under pressure in the early stages of trading as the 10-year Treasury yield once again played with the 5% mark, but quickly reversed course as longer-dated yields dropped after billionaire investor Bill Ackman said his Pershing Square Capital Management covered its bond short position, on the belief it was too risky to remain short bonds at current long-term rates. Stocks are getting a boost this morning as Treasury yields remain lower at 4.85% for the 10-yr, while a handful of earnings results/guidance this morning is helping boost some stocks early (GE, MMM, GM, NUE, CNC just a few). In Asian markets, The Nikkei Index gained 62 points to 31,062, the Shanghai Index rose 22 points to 2,962, and the Hang Seng Index slipped -180 points to 16,991. In Europe, the German DAX is up 25 points to 14,827, while the FTSE 100 is down slightly at 7,368. Bitcoin prices are rocketing higher this morning, up nearly 9% to $34,375 to its highest in nearly a year-and-a-half, on mounting speculation that an exchange-traded bitcoin fund is imminent (shares of COIN, MARA, MSTR, COIN all higher pre mkt).

 

Market Closing Prices Yesterday

·     The S&P 500 Index dipped -7.12 points, or 0.17%, to 4,217.04.

·     The Dow Jones Industrial Average fell -190.87 points, or 0.58%, to 32,936.41.

·     The Nasdaq Composite gained 34.52 points, or 0.27%, to 13,018.33.

·     The Russell 2000 Index declined -14.91 points, or 0.89% to 1,665.88.

 

Economic Calendar for Today

·     7:45 AM ET                  ICSC Weekly Retail Sales

·     8:55 AM ET                  Johnson/Redbook Weekly Sales

·     9:45 AM ET                  S&P Global Manufacturing PMI, Oct-Flash

·     9:45 AM ET                  S&P Global Services PMI, Oct-Flash

·     10:00 AM ET                Richmond Fed manufacturing for October

·     1:00 PM ET                   US Treasury to sell $48B in 2-year notes.

·     4:30 PM ET                   API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABG ADM AWI BANC CBU CNC DGX DHR DOV DOW FELE FI GATX GE GLW GM HAL HCA HRI IBCP ITW IVZ KMB KO MMM NEE NEP NUE NVR ONB PACW PCAR PEBO PHM PII RTX SASR SFNC SHW SMPL SYF TRU VZ XYX

·     Earnings After the Close: AAT ADC BDN BUSE BYD CHX CSGP EGP ENVA FCF FFIV GOOGL HA HAFC HIW JBT LRN MANH MSFT MTDR NBTB RHI RNST ROIC RRC RUSHA SNAP TDOC TRMK TXN UMBF USNA V VBTX VICR WFRD WIRE WM

 

Other Key Events:

·     The European Society of Medical Oncology (ESMO) meeting, 10/20-10/24.

 

 

Macro	Up/Down	Last
Nymex	0.43	85.92
Brent	0.67	90.50
Gold	-11.90	1,975.90
EUR/USD	-0.0035	1.0633
JPY/USD	0.01	149.71
10-Year Note	+0.019	4.857%

 

 

Sector News Breakdown

Consumer

·     General Motors (GM) Q3 adj EPS $2.28 vs. est. $1.88; Q3 revs $44.13B vs. est. $43.68B; withdrew its previous guidance for 2023 profits and near-term electric vehicle production as costs related to the United Auto Workers strikes jumped to $200 million a week during October; GM said the UAW walkouts cost the company $200M in Q3 and $600M so far in Q4.

·     Monster Beverage (MNST) downgraded to Neutral from Overweight at Piper Sandler.

·     PulteGroup (PHM) Q3 EPS $2.90 vs. est. $2.84; Q3 revs $4B vs. est. $4.02B; Q3 new orders up 43% to 7,065 homes with value of $3.8B; Unit backlog totaled 13,547 homes with a value of $8.1B.

 

Energy

·     Halliburton (HAL) Q3 EPS $0.79 vs. est. $0.77; Q3 revs $5.8B vs. est. $5.86B; sees continued demand growth for oilfield services in 2024.

·     Helix Energy (HLX) Q3 EPS $0.10 vs. est. $0.21; Q3 revs $395.67M vs. est. $346.1M.

 

Financials

·     Aaron’s Company (AAN) Q3 adj EPS $0.01 vs. est. $0.07; Q3 revs $525.7M vs. est. $536.1M; narrows FY23 adj EPS view to $1.00-$1.20 from $1.00-$1.40 (est. $1.24) and lowers the top end of FY23 revenue view to $2.12B-$2.17B from $2.12B-$2.22B.

·     Alexandria Real Estate (ARE) Q3 EPS $2.26 vs est. $1.14 on revs $713.8Mm vs est. $721.98Mm.

·     Brown & Brown Inc. (BRO) Q3 adj EPS $0.71 vs. est. $0.62; Q3 revs rose 15% y/y to $1.07B vs. est. $1.03B; CEO said the company won a large amount of new business in the quarter, which boosted results.

·     Cathay General (CATY) Q3 EPS $1.13 vs. est. $1.10; Q3 NII $185.6M vs. $197.5M last year; Q3 total deposits increased by $538.6M or 11.6% annualized to $19.6B; net interest margin declined slightly from 3.44%.

·     Herc Holdings (HRI) Q3 EPS $3.96 vs est. $4.15, adj EBITDA $410Mm vs est. $410.8Mm on revs $908Mm vs est. $896.77Mm; sees FY adj EBITDA +18-22% vs est. $21.24%.

·     Redfin Corp. (RDFN) said Apollo Capital Management LP and its affiliates have committed up to $250 mln in term loan; secured half the loan and the remaining will be drawn over 12 months.

·     Synchrony (SYF) Q3 EPS $1.48 vs. est. $1.43; Q3 book value per share $31.50; Q3 CET1 capital ratio 12.4%; Q3 net charge-offs 4.6%; net interest income for the quarter came in at $4.36 billion, compared to $3.93 billion in the year-ago quarter; recorded $1.49 billion as provision for credit losses in the quarter, compared to $929 million a year earlier.

·     TrueBlue (TBI) Q3 EPS $0.16 vs. est. $0.23; Q3 revs $473M vs. est. $488.9M; Q3 adj Ebitda fell -71% y/y to $9.94M vs. est. $12M; sees Q4 revenue $450M-$475M below consensus $500.96M and sees Q4 EBITDA adjustments $5M.

·     WR Berkley (WRB) Q3 operating EPS $1.35 vs. est. $1.18; Q3 revs $3.03B vs. est. $3.05B; Q3 premiums written $3.35B; said remain well positioned for continued success and very optimistic about remainder of 2023 and foreseeable future; Q3 combined ratio 90.2%.

 

Healthcare

·     Amneal Pharma (AMRX) raises FY adj. EBITDA $540M-$550M from prior $525M-$540M and boosts year rev’s view to $2.37B-$2.42B from prior $2.30B-$2.4B; reports preliminary Q3 revenue $610M-$620M above consensus $585.7M.

·     Centene (CNC) Q3 adj EPS $2.00 vs. est. $1.57; Q3 revs $38.04B vs. est. $36.18B; raises FY23 adj EPS view to at least $6.60 from at least $6.45 (est. $6.50); sees FY23 revenue $149B-$151B, above consensus $148.5B; sees FY23 adjusted effective tax rate 24.1%-25.1%.

·     HealthStream (HSTM) Q3 EPS $0.13 vs est. $0.09, adj EBITDA $16.2Mm vs est. $14.88Mm on revs $70.3Mm vs est. $70.66Mm; authorized $10Mm share repurchase program; guides FY revs $277.5-283Mm vs est. $280.84Mm, adj EBITDA $59-62Mm vs est. $59.4Mm.

·     Medpace Holdings (MEDP) Q3 EBTIDA $90.2Mm vs est. $86.53Mm on revs $492.5Mm vs est. $475.75Mm; guides FY revs $1.87-1.89B vs est. $1.864B, EBITDA $353-361Mm vs est. $353.31Mm; guides FY24 revs $2.15-2.2B vs est. $2.094B.

·     Novartis (NVS) delivers 12% sales and 21% core operating income growth from continuing operations; executes Sandoz spin-off, achieves important innovation milestones, and raises FY 2023 guidance.

 

Industrials & Materials

·     3M (MMM) Q3 adj EPS $2.68 vs. est. $2.34; Q3 revs $8.31B vs. est. $7.98B; raised its full-year adjusted profit forecast as it looks to benefit from cost-cutting measures and price hikes; now expects adj EPS $8.95-$9.15 vs. prior forecast of $8.60-$9.10 per share.

·     Cleveland Cliffs (CLF) Q3 EPS $0.52 vs est. $0.43 on revs $5.6B vs est. $5.577B, adj EBITDA $614Mm vs est. $585.74Mm; expects Q4 will see end of UAW strike and more normal buying patterns from service centers; lowers FY CAPEX view to $670Mm from prior mid of $700Mm.

·     Crane Inc. (CR) Q3 adj EPS $1.03 vs. est. $0.87; Q3 revs $530M vs. est. $509.19M; boosts FY23 adj EPS view to $4.05-$4.20 from $3.80-$4.10 prior (est. $4.05) and raises FY23 revenue growth view to roughly 7.5% from 6%; acquires Baum lined piping GmbH for approximately $91M.

·     Crown Holdings (CCK) Q3 adj EPS $1.73, vs est. $1.71 with revs falling -5.8% y/y to $3.07B below consensus $3.24B; sees Q4 EPS $1.40-$1.50 vs. est. $1.58; said anticipate that cap expenditures will be significantly reduced to approximately $500 m in each 2024 and 2025; cuts FY23 adjusted EPS view to $6.00-$6.10 from $6.10-$6.30 (est. $6.20).

·     General Electric (GE) Q3 adj EPS $0.82 vs. est. $0.56; Q3 revs $17.3B vs. est. $15.7B; Q3 profit margin 1.7%, adj profit margin of 9.8%; Q3 total orders of $17.9B, up 19%, with organic orders up 18%; raises FY23 adjusted EPS view to $2.55-$2.65 from $2.10-$2.30 and boosts FY23 free cash flow view to $4.7B-$5.1B from $4.1B-$4.6B; spinoff of GE Vernova to occur at start of Q2 2024.

·     Hexcel Corp. (HXL) Q3 adj EPS $0.38 vs. est. $0.43; Q3 sales rose 15% y/y to $419.5M vs. est. $427.3M; reaffirms FY23 guidance; posted Q3 gross margin 21.8% vs. 22.4% y/y.

·     Nucor (NUE) Q3 EPS $4.57 vs. est. $4.22; Q3 sales $8.78B vs. est. $8.37B; Q3 average sales price per ton down 14%, total tons shipped to outside customers down 3% and Q3 steel mills total shipments 5.75m tons; expect Q4 earnings to decrease compared to Q3 due primarily to lower pricing across all three operating segments.

·     Packaging Corp. (PKG) Q3 adj EPS $2.05 vs. est. $1.93; Q3 revs $1.93M vs. est. $1.99B; said its expects Q4 EPS of $1.76 per share as operating and converting costs increase, driven by higher recycled fiber prices, seasonal energy costs and the re-start of its Wallula mill.

·     Simpson Manufacturing (SSD) Q3 EPS $2.43 vs est. $2.18 on revs $580.1Mm vs est. $559.07Mm, gr mgn 48.8%; guides FY op mgn 22.0-22.5%, effective tax rt 25-26%, CAPEX approx $100Mm.

 

Technology, Media & Telecom

·     Agilysys (AGYS) Q2 adj EPS $0.25 vs est. $0.19 on revs $58.6Mm vs est. $56.8Mm, gr mgn 59.9%, adj EBITDA $8.1Mm vs est. $6.476Mm; guides FY revs $235-238Mm vs est. $233.74, adj EBITDA mgn 14%.

·     Cadence Design (CDNS) Q3 adj EPS $0.26 vs est. $1.20 on revs $1.023B vs est. $1.002B, adj EBIT mgn 41%; sees Q4 revs $1.039-1.079B vs est. $1.072B and adj EPS $1.30-1.36 vs est. $1.37.

·     Calix Inc. (CALX) Q3 adj EPS $0.45 vs est. $0.36 on revs $263.8Mm vs est. $263.23Mm, adj gr mgn 53.8%; sees Q4 adj EPS $0.33-0.39 vs est. $0.35 and revs $261-267Mm vs est. $265.68Mm.

·     Spotify (SPOT) Q3 monthly active users and subscribers ahead of expectations as monthly active users rose 26% to 574M in Q3 topping analysts’ forecast of 565.7M; premium subscribers rose 16% to 226M topping ests 223.7M; Q3 revenue EUR 3.36B vs. EUR 3.04B last year.