Hammerstone’s Early Look

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Wednesday, July 29, 2020

FuturesUp/Down%Last
DJ Industrials13.000.05%26,310
S&P 5005.500.18%3,218
Nasdaq49.500.47%10,589

 

 

Stock futures are pointing to a slightly higher open ahead of a busy day on earnings (and busier on Thursday with 64 S&P 500 companies, or about 13% of the index reporting earnings – those 64 companies represent 29% of the S&P 500’s market cap) a Fed announcement at 2:00 and press conference with Fed Chair Powell at 2:30, CEOs from Amazon, Apple, Alphabet and Facebook at a virtual House antitrust hearing, and hopes for the stimulus measures to get through Washington. The central bank is expected to keep interest rates at near zero to support the economy still struggling with the coronavirus pandemic. On Tuesday, the Fed announced it would extend all its emergency lending programs through the remainder of 2020. Stocks ended lower Tuesday, weighed down by weakness in technology shares, while defensive Consumer Staples, Utilities and REITs outperformed. The S&P closed down 0.6%, the Dow fell 0.8% and the Nasdaq ended down 1.3%, while pandemic related names outperforming and recent winners (stay-at-home names) slipped. Stimulus concerns remained a drag on sentiment after Majority Leader Mitch McConnell said the Senate would not pass any bill without liability protection, which Democrats oppose. A busy day remains. After struggling early, spot gold moved higher into record territory, up 0.9% on Tuesday. In Asian markets, The Nikkei Index fell -260 points to 22,397, the Shanghai Index gained 66 points to 3,294 and the Hang Seng Index rose 110 points to 24,883. In Europe, the German DAX is down a few points to 12,825, while the FTSE 100 is higher by around 20 points to 6,150.

Market Closing Prices Yesterday

  • The S&P 500 Index dropped -20.97 points, or 0.65%, to 3,218.44
  • The Dow Jones Industrial Average fell -205.49 points, or 0.77%, to 26,379.28
  • The Nasdaq Composite slumped -134.18 points, or 1.27%, to 10,402.09
  • The Russell 2000 Index declined -14.90 points, or 1.00% to 1,469.76

 

Economic Calendar for Today

  • 7:00 AM EST       MBA Mortgage Applications Data
  • 8:30 AM EST       Advance Goods Trade Balance for June…est. (-$75.4B)
  • 10:00 AM EST     Pending Home Sales MoM for June…est. 15.0%
  • 10:30 AM EST     Weekly DOE Inventory Data
  • 2:00 PM EST        FOMC Rate Decision Expected

 

Earnings Calendar:

  • Earnings Before the Open: ADP, ANTM, APRN, AXTA, BA, BDC, BG, BSX, CHEF, CME, DIN, DT, EPD, ETN, ETR, FLOW, GD, GE, GM, HES, HESM, IPG, MGLN, MNRO, NSC, NYCB, R, ROL, SC, SHOO, SIX, SMG, STRA, TROW, TUP, UTHR, WING, WNC
  • Earnings After the Close: ADM, AM, APA, AR, AVB, CAKE, CCI, CDE, CERN, CGNX, CHDN, CHE, CONE, CTSH, CXO, DRE, EQIX, FB, FBHS, GNW, HOLX, HOME, KN, LRCX, MANT, MKSI, NLY, NOW, ORLY, PI, PS, PYPL, QCOM, QRVO, RGR, RIG, SANM, SFM, SKY, TDOC, TYL, URI, VAC, WERN

 

Other Key Events:

  • FOMC Rate Decision Expected – no change anticipated – Powell press conference 2:30 PM

 

 

MacroUp/DownLast
WTI Crude0.4341.47
Brent0.5643.78
Gold6.101,970.00
EUR/USD0.00331.1749
JPY/USD-0.15104.94
10-Year Note+0.0080.587%

 

 

Sector News Breakdown

Consumer

  • EBAY (EBAY) Q2 adj EPS $1.08 vs. est. $1.06 and revs $2.87B vs. est. $2.8B; Q2 GMV $27.1B, up 26% on an as-reported basis; sees Q3 adjusted EPS 81c-87c on revs $2.64B-$2.71B above est. 81c/$2.55B; expects net revenue between $10.56B-$10.75B, representing Organic FX-Neutral growth of 12% – 14%, with GAAP earnings per diluted share from continuing operations in the range of $2.85-$3.00 and non-GAAP earnings per diluted share from continuing operations in the range of $3.47-$3.59; added approximately 8M buyers in Q2
  • Mondelez (MDLZ) 2Q adj EPS $0.63 vs. est. $0.56 on revs $5.9B vs. est. $5.9B, says organic net revs +0.7%; estimates currency hit to 2020 net revs about 3% with ($0.05) impact to adj EPS; announces 11% qtrly dividend raise
  • Starbucks (SBUX) Q3 revs $4.2B vs. est. $4.06B; Q3 comp sales down (-40%) vs. est. (-42.8%); Q3 America comp sales (-41%), int’l comps (-37%) and China comps -19%; sees Covid impact to moderate meaningfully in Q4
  • Big 5 Sporting Goods (BGFV) +47%; after the sporting goods retailer reported a jump in Q3 same-store sales to date in spite of widespread store closures; reinstated quarterly dividend at previous rate of 5c per share and declared cash dividend of 10c per share to be paid on Sept. 15
  • Boyd Gaming (BYD) Q2 EPS loss (98c) on revs $209.9M vs. est. loss ($1.50)/$130.74M
  • Denny’s (DENN) Q2 adj EPS ($0.25) vs. est. ($0.19) on revs $40.2Mm vs. est. $43.6Mm, comps -56.9%; says cannot provide updated outlook at this time

 

Energy

  • The American Petroleum Institute (API) showed a draw of 6.83M barrels of oil for the week ending July 24, while gasoline inventories show a build of 1.08M barrels, distillate inventories show a build of 187K barrels and Cushing inventories show a build of 1.14M
  • Bloom Energy (BE) prelim Q2 revenue of $187.9M vs. est. $171.2M; excluding stock-based compensation, Bloom achieved 16.5% gross margin; Q2 adj. core earnings of $2.1M in Q2 better than an expected loss
  • Helmerich & Payne (HP) Q3 EPS loss (43c) on revs $254.4M vs. est. loss (69c); incurred a restructuring charge of $15M related to its cost saving measures; now sees FY depreciation about $475M, gross capex about $150 to $165
  • Matador Resources (MTDR) posted smaller Q2 loss, as oil and natural gas revenues plunged 44% Y/Y to $119M; Q2 adjusted EBITDA was $107.6M, down from $140.6M in Q1 and $144.1M YoY; says Q2 lease operating expenses of $3.92/boe fell 18% Q/Q and 17% Y/Y
  • ONEOK (OKE) posted misses for both Q2 earnings and revenues and guiding full-year net income and adjusted EBITDA at the low end of respective April guidance ranges of $500M-$900M and $2.6B-$3B; Q2 adjusted EBITDA slid 16% Y/Y to $534M; distributable cash flow fell 40% to $300M, and the dividend coverage ratio fell to 0.78x from 1.51x a year ago.
  • Tullow Oil PLC said it expects to report lower revenue and significant impairment and exploration write-offs for the first half of the year after reducing its long-term oil price assumptions; anticipates pretax impairments of between $1.4 billion and $1.7 billion

 

Financials

  • Aflac (AFL) Q2 adjusted EPS $1.28 on revenue $5.4B vs. est. $1.07/$5.48B; sees year sales in US and Japan significantly affected and sees potential for modest sales recovery in 2H
  • Visa Inc. (V) Q3 EPS $1.06 on net revs $4.8B vs. est. $1.03 and $4.84B; Q3 cross border volumes at constant currency 37%; Q3 payments down (-10%);
  • H&R Block (HRB) said that, based on preliminary results, U.S. tax returns prepared by or through H&R Block were 21.2 million for the period of May 1, 2019 through July 17, 2020, an increase of 0.7 million, or 3.3%, when compared to May 1, 2018 through July 17, 2019.
  • EastGroup Properties (EGP) raises FY20 FFO view to $5.23-$5.33 from $5.11-$5.23 (est. $5.17); raises same PNOI growth on cash basis to 2.0%-3.0% from 0.5%-1.5%.
  • RenaissanceRe (RNR) Q2 operating EPS $4.06 vs. $4.78 YoY; 2Q net premiums written $1.18 billion, +15% YoY, 2Q net investment income $89.3 million, -23% YoY
  • Unum Group (UNM) Q2 adjusted EPS $1.23/$3.02B vs. est. $1.20/$2.95B
  • STAG Industrial (STAG) Q2 core FFO $0.47 vs. est. $0.46 on revs $117.6Mm vs. est. $117.4Mm, same-store cash NOI +2.1%, collects 98% of 2Q rents
  • Veritex (VBTX) 2Q EPS $0.48 vs. est. $0.38, NII before provision $65.8Mm vs. est. $66.3Mm, says 2Q was dominated by pandemic and economic challenges

 

Healthcare

  • Amgen (AMGN) Q2 adjusted EPS $4.25 on revs $6.2B vs. est. $3.84/$6.18B; raises FY20 adjusted EPS view to $15.10-$15.75 from $14.85-$15.60 (est. $15.64) and year total revenues guidance reaffirmed at $25B-$25.6B vs. est. $25.45B; stops development of its CD38-CD3 XmAb as rights revert back to XNCR
  • Amedisys (AMED) 2Q adj EPS $1.34 vs. est. $0.81 on revs $485Mm vs. est. $469Mm; guides FY20 net svc revs $2.04-2.07B vs. est. $2.04B, sees FY20 adj EPS $4.84-5.06 vs. est. $4.54
  • Community Health (CYH) Q2 adj EPS 85c on revs $2.51B vs. est. loss (62c)/$2.64B; Q2 Ebitda $454M vs. est. $343.6M; not providing guidance
  • DexCom (DXCM) Q2 adjusted EPS 79c on revs $451.8M vs. est. 35c/$415.74M; – sees 2020 revenue of approximately $1.850B and sees 2020 adjusted Ebitda margin to meet or exceed 24%; held $2.51B in cash and marketable securities and revolving credit facility remains undrawn
  • Krystal Biotech (KRYS) announces initiation of pivotal phase 3 study of beremagene geperpavec in patients with dystrophic epidermolysis bullosa
  • PerkinElmer (PKI) Q2 adjusted EPS $1.57/$811.7M vs. est. 88c/$726.35M; sees Q3 adjusted EPS $1.18-$1.53 on revs $760M-$860M vs. est. $1.11/$764.43M
  • TCR2 Therapeutics (TCRR) 8M share Secondary priced at $15.50

 

Industrials & Materials

  • General Electric (GE) Q2 adjusted EPS loss (15c) on revs $17.75B vs. est. loss (10c)/$17.12B; 2Q Power revenue $4.16 billion, -11% YoY, 2Q Aviation revenue $4.38 billion, -44% YoY and 2Q healthcare revenue $3.89 billion, -21% YoY
  • Eaton (ETN) Q2 adjusted EPS 70c on revs $3.9B vs. est. 53c/$3.69B; backs FY20 free cash flow view $2.3B-$2.7B; qtrly organic sales were down 22%
  • Avis Budget (CAR) Q2 adj EPS loss ($5.60) on revs $760M vs. est. loss ($6.05) and $690.8M; removes over $1B in expenses in Q2; targeting over $2.5B in cost savings on annual basis; says liquidity at end of quarter was $1.5B
  • Celanese (CE) Q2 adj EPS $1.30 on sales $1.2B vs. est. $1.05 and $1.08B
  • CH Robinson Worldwide (CHRW) 2Q EPS $1.06 vs. est. $0.60 on revs $3.63B vs. est. $3.46B, says end 2Q with $1.6B liquidity; guides FY20 CAPEX low end of $60-70Mm range
  • Packaging Corp. (PKG) Q2 EPS $1.38 on revs $1.54B vs. est. $1.28/$1.63B

 

Media & Telecom

  • Altice USA (ATUS) announced it will sell 49.99% of its Lightpath fiber enterprise business to Morgan Stanley Infrastructure Partners (MS); the cableco will receive total gross cash proceeds of about $2.3B from the sale and related financing; net cash proceeds are about $1.1B
  • AMC Theatres (AMC) and Universal (owned by CMCSA) have come to a shocking deal shortening the number of days films have to run in theaters before moving to digital distribution – to just 17 days from a previous 75.
  • Imax Corp. (IMAX) 2Q EPS loss ($0.44) vs. est. ($0.52) on revs $8.9Mm vs. est. $9.8Mm, had $319Mm consolidated cash end of qtr, reduced avg monthly cash burn to about $10Mm, says seeing early signs of progress with about 40% of global network generating revenue; posted a 92% drop in revenues in what was essentially a shutdown Q2, with widespread theater closure orders amid the COVID-19 pandemic

 

Technology

  • Advanced Micro (AMD) shares jumped over 10%; Q2 EPS 18c/$1.93B vs. est. 16c/$1.86B; reports Q2 gross margin of 44%, Q2 operating expenses of $617M, and Q2 operating income of 233M; qtrly computing and graphics segment revenue was $1.37B, up 45% YoY, enterprise, embedded and semi-custom segment revenue was $565 mln, down 4% YoY; raises FY revenue to about +32%, from prior +20% to +30%; expects Q3 revenue to be approximately $2.55B, plus or minus $100M (est. $2.32B)
  • Akamai (AKAM) Q2 non-GAAP EPS $1.38 on revs $795M s. est. $1.21/$767.39M; said revenue from its Web division was $404M, up 7%, while Cloud Security Solutions revenue was $259M, up 27%. Internet Platform Customers revenue was $51M, up 10%. International revenue rose 22%
  • Lattice Semiconductor (LSCC) Q2 adj EPS $0.17 vs. est. $0.15 on revs $100.6Mm vs. est. $100Mm; sees 3Q revs $$96-106Mm vs. est. $99.7Mm, sees 3Q adj total op exp $36.5-37.5Mm
  • Juniper Networks (JNPR) 2Q adj EPS $0.35 vs. est. $0.34 on revs $1.09B vs. est. $1.06B; guides 3Q adj EPS $0.38-0.48 vs. est. $0.43, sees 3Q revs $1.075-1.175B vs. est. $1.1B; 2Q adjusted operating margin 14.3%; 2Q capital expenditure $22.0 million
  • Maxim Integrated (MXIM) Q4 adjusted EPS 58c on revs $545M vs. est. 57c/$542.79M
  • FireEye (FEYE) Q2 adj EPS 9c on revs $229.9M vs. est. loss (2c) and $214.7M; sees Q3 adjusted EPS 6c-8c on revs $225M-$229M vs. est. 2c/$220.11M; sees Q3 adjusted gross margin 70%-71%; sees FY20 adjusted EPS 22c-26c (up from prior 20c-24c) vs. est. 5c and guides FY20 revenue $905M-$925M vs. est. $889.87M
  • MicroStrategy (MSTR) $MSTR 2Q EPS $0.35 vs est $0.40 on revs $110.6Mm vs est $112.2Mm, says to return up to $250Mm to shareholders over next 12 months;
  • Seagate Technology (STX) 4Q adj EPS $1.20 vs. est. $1.20 on revs $2.52B vs. est. $2.62B; says expects demand to improve across end mkts within next 6 months, sees 2021 revs fairly flat YoY; guides 1Q revs $2.3B +/-$200Mm vs. est. $2.6B, sees 1Q adj EPS $0.70-1.00 vs. est. $1.27
  • SS&C Technologies (SSNC) 2Q adj EPS $1.04 vs. est. $0.90 on revs $1.138B vs. est. $1.109B, withdraws qtrly and FY20 guidance, announces renewal and increase of stock repurchase plan for $750Mm
  • Pegasystems (PEGA) Q2 adj loss/shr 28c, vs. est. loss/shr 23c; Q2 revs $227.4m, vs. est. $224.7m;  total acv up 21% to $738 million, powered by Pega cloud choice- Pega cloud acv up 56% to $211 million
  • Shopify (SHOP) files $7.5B mixed securities shelf

 

 

 

 

 

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