Early Look

Tuesday, November 1, 2022

Futures	Up/Down	%	Last
Dow	199.00	0.61%	32,974
S&P 500	35.25	0.91%	3,917
Nasdaq	133.00	1.16%	11,580

 

 

U.S. stock futures are currently at overnight highs, with the S&P rising nearly 1% to 3,920 (off lows 3,881) a day ahead of the FOMC, getting a boost from a sliding dollar and Treasury yields as Australia’s Central bank stuck with a slower pace of interest rate rises for a second month while revising up its inflation outlook (delivered a 25-bps hike). Markets also getting a boost from positive sentiment in China on reports of possibly loosening up its zero-Covid policy. Markets are widely anticipating a 75-bps hike from the Fed tomorrow with a more dovish tone at Powell’s speech following. Yesterday, U.S. stocks declined, paring some of its monthly gains amid disappointing China data, Black Sea grain deal concerns, hot Eurozone inflation and weak Chicago PMI/Dallas Fed survey data providing headwinds for risk. Big gains still on track for major averages heading into the final trading day of the month with the S&P 500 on track for a monthly gain of +8.0%, the Dow +14.0%, the Nasdaq +3.9% and the Russell 2000 +11%. The Dow remains on track for its biggest monthly percentage gain since 1976. Energy prices rise and stocks on track for early gains, as energy has been leading the S&P. In Asian markets, The Nikkei Index gained 91 points to 27,678, the Shanghai Index jumped 2.6% or 75 points to 2,969, and the Hang Seng Index surged 5.2% or 768 points to 15,455. In Europe, the German DAX is up 153 points to 13,405, while the FTSE 100 rises over 100-points to around 7,200. Shares in Chinese companies were rallying amid renewed optimism that the country would loosen its strict Covid-19 measures which have dampened growth. Hong Kong’s Hang Seng Index surged 5.2% on Tuesday, led by the Hang Seng Tech Index, which gained 7.8%. Dollar/yen down 1.17% to session low of 147.00; dollar index (DXY) down 0.66% to 110.78 01; Sterling up 0.70% to $1.1546 01 and Euro up 0.57% to $0.9938.

 

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… prior 49.9

·     10:00 AM ET          Construction Spending for September…est. (-0.5%)

·     10:00 AM ET          ISM Manufacturing PMI for October…est. 50.0

·     10:00 AM ET          JOLTs Job openings for September…est. 10.0M

·     4:30 PM ET             API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ABMD AGCO AJRD AME ARNC AVA BCOR BCRX BEN BLD BPMC CEIX CNP CTLT DEA ECL EPD ETN FOXA HAYW HLNE HRMY HSC HSIC ICPT IDXX INCY IPGP IT KKR KOPN LCII LDOS LEA LGIH LLY LPX MPC MPLX MYGN NBIX NEM PFE PINC PSX RGEN RGS SAFE SEE SIRI SOFI SPG SUN SYY TAP TGH UBER VAL WAB WAT WEC XYL ZBRA

·     Earnings After the Close: ABNB ACT ADC AEIS AIG AIZ AMD ANDE APAM ATEN AYX BAND BFAM BGFV BLKB BXC CACC CAKE CDLX CHCT CHGG CHK CLX CNDT CPS CRK CRUS CWH CZR DENN DVN EA EIX ENVX ET EVER EXEL EXR FCPT FRPT FRSH GAIN GNW HRB HRZN HURN INSP IRTC JBSS KAMN KAR LFUS LTHM MCK MDLZ MSTR MTCH OI OKE OSPN PARR PAYC PEAK PRO PRU PSA PUMP RM RYAM SCI SKY SMCI SPNE TA TCS UNM VOYA VRSK WU ZI

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -29.08 points, or 0.75%, to 3,871.98

·     The Dow Jones Industrial Average fell -128.85 points, or 0.39%, to 32,732.95

·     The Nasdaq Composite sunk -114.31 points, or 1.03%, to 10,988.15

·     The Russell 2000 Index edged lower -0.06 points, or 0.01% to 1,846.86

 

 

Macro	Up/Down	Last
Nymex	1.27	87.80
Brent	1.59	94.40
Gold	13.10	1,653.80
EUR/USD	0.0047	0.993
JPY/USD	-1.57	147.15
10-Year Note	-0.132	3.945%

 

 

World News

·     U.S. Rents fell 0.8% in October, the second straight monthly decline. The year-over-year % increase has now moved down for 11 consecutive months after peaking at 18.1% last November. At 5.8%, this is the smallest YoY increase since May 2021, as per Charlie Bilello

·     The RBA delivered 25bpts rate hike as expected to 9-year high of 2.85%; Australia’s central bank stuck with a slower pace of interest rate rises for a second month while revising up its inflation outlook, saying more rate hikes would be needed as it struggles to keep the economy afloat

·     Chinese Caixin manufacturing PMI actual 49.2 (forecast 48.5, previous 48.1)

 

Sector News Breakdown

Consumer

·     Victoria’s Secret (VSCO) is paying $400 million to buy Adore Me, an online lingerie brand known for inclusive sizing and marketing

·     Avis Budget (CAR) Q3 adj EPS $21.70 vs. est. $14.64; Q3 revs $3.55B vs. est. $3.49B; 3 adjusted EBITDA in the Americas was $1.2 billion driven by record demand

·     Goodyear Tire (GT) Q3 adj EPS $0.40 vs. est. $0.54; Q3 sales rose 7.6% y/y to $5.31B vs. est. $5.3B; Unit volume down 3% versus 2021 reflecting weaker replacement industry; Revenue per tire (excluding currency impact) up 16% versus third quarter of 2021

·     Imax (IMAX) 3Q adj EPS ($0.05) vs est. $0.03 on revs $68.8Mm vs est. $68.4Mm

·     Leggett & Platt (LEG) 3Q EPS $0.52 vs est. $0.50 on sales $1.29B vs est. $1.24B, EBIT margin 8.7%; says FY sales and EPS guide unchanged from October 10 announcement

·     Marriott Vacations (VAC) Q3 adj EPS $2.53 vs. est. $2.60; Q3 revs $1.25B vs. est. $1.14B; raises FY22 adjusted EPS to $10.20-$10.64 from prior $9.47-$10.35 (est. $9.94); Consolidated Vacation Ownership contract sales were $483 million, a 27% increase y/y and VPG increased 1% to $4,353

·     Toyota Motor (TM) profit plunges 25% on chip shortages and surging costs

·     Carvana (CVNA) upgraded to Neutral from Underweight at JPMorgan

·     Monster Beverage (MNST) upgraded to Overweight from Neutral at JPMorgan

 

Energy

·     American Water Works (AWK) 3Q EPS $1.63 vs est. $1.51; guides FY EPS $4.39-4.49 vs est. $4.45; sees FY23 EPS $4.72-4.82 vs est. $4.82 and long-term EPS growth projection +7-9%

·     Civitas Resources (CIVI) 3Q EPS $4.74 vs est. $3.52 on avg daily sales 176.3 thousand barrels of oil equiv. per day (oil 45% of total volume); sees FY total production 166 – 170 MBOE/D; raises qtrly base dividend to $0.50/shr and declares fixed-plus-variable dividend to be paid in December

·     Williams Energy (WMB) 3Q adj EPS $0.48 vs est. $0.44 on revs $3.02B vs est. $2.9B; guides FY leverage ratio about 3.6x vs original guide 3.8%; reaffirms maintenance CAPEX $650-750Mm

·     First Solar (FSLR) upgraded to Equal Weight from Underweight at Barclays and raises price target to $162 from $89

 

Financials

·     Aflac (AFL) Q3 adj EPS $1.15 vs. est. $1.21; Q3 revenue $4.8B vs. est. $4.57B; in yen terms, Aflac Japan’s net earned premiums were ¥309.9 bln for quarter, down 4.1%; average yen/dollar exchange rate in Q3 was 137.08, or 19.7% weaker than the average rate of 110.11 y/y

·     Cincinnati Financial (CINF) Q3 non-GAAP EPS $0.73 vs. est. $0.67; Q3 revs $1.408B vs. est. $1.61B; reports $60.01 book value per share at September 30, down $21.71 since year-end; Negative 24.0% value creation ratio for the first nine months of 2022, compared with positive 12.4% for the same period of 2021

·     Ryman Hospitality (RHP) 3Q AFFO/shr $1.72 vs est. $1.74; guides FY adj EBITDA midpoint $538.5Mm vs prior $526Mm and est. $525.3Mm

 

Healthcare

·     Johnson & Johnsons (JNJ) to acquire Abiomed (ABMD) for an upfront payment of $380.00 per share in cash, corresponding to an enterprise value of approximately $16.6 billion which includes cash acquired. Abiomed shareholders will also receive a non-tradeable contingent value right (CVR) entitling the holder to receive up to $35.00 per share in cash if certain commercial and clinical milestones are achieved

·     Eli Lilly (LLY) Q3 EPS $1.98 vs. est. $1.96; Q3 revenue $6.94B vs. est. $6.89B; sees FY Adj EPS $7.70-$7.85, vs. prior $7.90-$8.05; sees FY revs $28.5B-$29.0B, vs. prior $28.8B-$29.3B and still sees FY R&D Expenses $7.1B-$7.3B

·     Acadia Healthcare (ACHC) Q3 adj EPS $0.86 vs. est. $0.79; Q3 revs rose 13.5% y/y to $666.7M vs. est. $657.5M; sees FY22 adjusted EPS $3.00-$3.10 (est. $3.08) and sees FY22 revenue $2.58B-$2.6B vs. est. $2.59B; sees FY adj EBITDA $595M to $605M, vs. prior $575M to $610M

·     Chemed Corp (CHE) Q3 adj EPS $4.74 vs. est. $4.65; Q3 revs fell -2.3% y/y to $526.47M, vs. consensus $527.05M; raises FY22 adj EPS view to $19.60-$19.70 from $19.30-$19.50

·     Hologic (HOLX) 4Q adj EPS $0.82 vs est. $0.62 on revs $953.3Mm vs est. $863.9Mm, gross margin 54%; sees FY adj EPS $3.30-3.60 vs est. $3.43

·     Stryker (SYK) 3Q adj EPS $2.12 vs est. $2.23 on revs $4.5B vs est. $4.46B, adj gross margin 62.6%; sees FY organic net sales +8.5-9.0% and adj EPS $9.15-9.25 vs est. $9.36; says if foreign currency exchange rates hold near current levels, expect FY sales to be adversely impacted by about 4%

·     Axonics (AXNX) 3Q EPS ($0.34) vs est. ($0.48) on revs $70.4Mm vs est. $63Mm; sees FY revs $262Mm vs prior $253Mm and est. $254Mm

 

Industrials & Materials

·     Flowserve Corp. (FLS) Q3 adj EPS $0.29 vs. est. $0.23; Q3 revs $872.9M vs. est. $868.1M; EXPECTS Q4 EPS of at least $0.40 y/y quarterly revenue growth of approximately 8-10% (vs. est. $0.64 and $1.04B)

·     Kennametal (KMT) Q1 EPS $0.34 vs. est. $0.37; Q1 revs rose 2% y/y to $495M vs. est. $488.12M; sees Q2 sales $480M-$500M vs. est. $492.2M and sees FY23 revenue $2B-$2.08B, including a currency headwind of approximately $130M vs. consensus $2.03B

·     Sonoco (SON) Q3 EPS $1.60 vs. est. $1.39; Q3 revs rose 34% y/y to $1.9B vs. est. $1.91B; says increasing our full year 2022 base earnings guidance as at the midpoint, our full year earnings guidance now represents growth of 63% from 2021

·     Trex Inc. (TREX) 3Q EPS $0.14 vs est. $0.14 on revs $188Mm vs est. $189.9Mm; reaffirms 4Q revs and EBITDA margin guide; sees FY CAPEX $170-180Mm

 

Technology, Media & Telecom

·     Arista Networks (ANET) Q3 adj EPS $1.25 vs. est. $1.04; Q3 revs $1.175B vs. est. $1.06B; sees Q4 revs $1.175B-$1.2B vs. est. $1.09B; Q3 Non-GAAP gross margin of 61.2%, compared to non-GAAP gross margin of 61.9% in Q2

·     Harmonic Inc. (HLIT) 3Q adj EPS $0.13 vs est. $0.10 on revs $155.7Mm vs est. $152.3Mm; guides 4Q revs $151-165Mm vs est. $161.7Mm, op Inc $11-18Mm vs est. $18.9Mm and EPS $0.06-0.11 vs est. $0.14

·     Lattice Semiconductor (LSCC) 3Q adj EPS $0.48 vs est. $0.44 on revs $172.5Mm vs est. $166.3Mm; guides 4Q revs $170-180Mm vs est. $169.5Mm

·     NXP Semiconductor (NXPI) Q3 EPS $2.79 vs. est. $3.63; Q3 revs rose 20.4% y/y to $3.45B vs. est. $3.42B; sees Q4 revs $3.2B-$3.4B vs. est. $3.41B; Q3 GAAP gross margin was 57.1 percent, and GAAP operating margin was 29.1 percent

·     Rambus (RMBS) Q3 EPS $0.01 vs. est. $0.41; Q3 revs $112.2M vs. est. $130.9M; delivered record quarterly product revenue driven by memory interface chips; generated $80 million in cash from operations; initiated $100 million accelerated share repurchase program

·     SBA Communications (SBAC) 3Q AFFO/shr $3.10 vs est. $3.03 on revs $675.6Mm vs est. $651Mm; guides FY AFFO/shr $12.12-12.34 vs est. $12.13 and total revs $2.616-2.636B vs est. $2.581B

·     Varonis Systems (VRNS) 3Q adj EPS $0.05 vs est. $0.06 on revs $123.3Mm vs est. $124.4Mm; guides 4Q revs $139-142Mm vs est. $155.5Mm and adj EPS $0.17-0.18 vs est. $0.22; sees FY revs $470-473Mm vs est. $487.7Mm and adj EPS $0.14-0.15 vs est. $0.20; announces $100Mm share repurchase authorization