18/05/23 Briefing

The S&P 500 futures are up 8 points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 37 points and are trading 0.3% above fair value. The Dow Jones Industrial Average futures are up 18 points and are trading fractionally above fair value.

Stock futures are modestly higher driven by carryover momentum from yesterday's rally, continued strength in regional bank stocks, and a positive response to Walmart's (WMT) earnings results. Ongoing optimism about the debt ceiling discussions is also helping.

Treasuries are little changed from yesterday's settlement levels. The 2-yr note yield is up three basis points to 4.18% and the 10-yr note yield is up three basis points to 3.60%.

Market participants will receive the following economic data today:

• 8:30 ET: Weekly Initial Claims (Briefing.comconsensus 259,000; prior 264,000), Continuing Claims (prior 1.813 mln), and May Philadelphia Fed Survey (Briefing.comconsensus -16.0; prior -31.3)

• 10:00 ET: April Existing Home Sales (Briefing.comconsensus 4.30 mln; prior 4.44 mln) and April Leading Indicators (Briefing.comconsensus -0.5%; prior -1.2%)

• 10:30 ET: Weekly natural gas inventories (prior +78 bcf)

In corporate news:

• Walmart (WMT 151.96, +2.43, +1.6%): beats by $0.15, beats on revs; guides Q2 EPS below consensus, revs in-line; raises FY24 EPS guidance; Q1 Wal-Mart US comps +7.4%

• Snowflake (SNOW 177.88, +3.86, +2.2%): jumping on reports it is in talks to buy Neeva, which develops software combining search with large-language models, according to The Information

• Alibaba (BABA 89.77, -0.88, -1.0%): beats by RMB1.24, reports revs in-line

• Cisco (CSCO 45.85, -1.78, -3.7%): beats by $0.03, beats on revs; guides JulQ EPS above consensus, mid-point of revs above consensus; Total product orders were down 23%.

• Bath & Body Works (BBWI 37.35, +3.33, +9.8%): beats by $0.07, reports revs in-line; guides Q2 EPS in-line, revs in-line; guides FY24 EPS in-line, reaffirms FY24 revs guidance

• Take-Two (TTWO 141.03, +16.01, +12.8%): misses by $2.37, beats on revs; guides JunQ EPS below consensus, bookings below consensus; guides FY24 EPS below consensus, bookings below consensus; expects next phase of growth in FY25 with over $8.0 bln in net bookings

• Synopsys (SNPS 384.31, +7.23, +1.9%): beats by $0.07, reports revs in-line; guides Q3 EPS above consensus, revs in-line; guides FY23 EPS above consensus, revs in-line

• Netflix (NFLX 345.50, +5.54, +1.6%): President of worldwide advertising Jeremi Gorman at conference last night said that ad supported tier now has 5 million global monthly active users

• Canada Goose (GOOS 23.35, +2.91, +14.2%): beats by CAD0.07, beats on revs; guides Q1 EPS below consensus, revs in-line; guides FY24 EPS in-line, revs above consensus

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note with Japan's Nikkei (+1.6%) approaching its high from September 2021. Japan's Nikkei: +1.6%, Hong Kong's Hang Seng: +0.9%, China's Shanghai Composite: +0.4%, India's Sensex: -0.2%, South Korea's Kospi: +0.8%, Australia's ASX All Ordinaries: +0.5%.

  • In economic data:

    • Japan's April trade deficit JPY1.02 trln (expected deficit of JPY1.08 trln; last deficit of JPY1.21 trln). April Imports -2.3% yr/yr (expected -0.3%; last 7.3%) and Exports 2.6% yr/yr (expected 3.0%; last 4.3%)

    • Australia's April Employment Change -4,300 (expected 25,000; last 61,100) and full employment change -27,100 (last 82,500). April Unemployment Rate 3.7% (expected 3.5%; last 3.5%) and April Participation Rate 66.7%, as expected (last 66.8%)

    • New Zealand's Q1 Input PPI 0.2% qtr/qtr (expected 0.5%; last 0.5%) and Output PPI 0.3% qtr/qtr (expected 0.8%; last 0.9%)

    • Hong Kong's April Unemployment Rate 3.0% (expected 2.9%; last 3.1%)

  • In news:

    • Several large chipmakers announced their intentions to invest in Japan after executives met with Prime Minister Kishida.

    • Japan and the U.K. signed The Hiroshima Accord, formalizing their partnership on defense and technology collaboration.

    • China will resume imports of Australian timber after halting most shipments in late 2020.

    • Australia reported its sharpest fall in jobs since January.

• Major European indices trade on a firmly higher note with Germany's DAX (+1.7%) reaching its best level since January 2022. STOXX Europe 600: +0.6%, Germany's DAX: +1.7%, U.K.'s FTSE 100: +0.5%, France's CAC 40: +0.9%, Italy's FTSE MIB: +1.1%, Spain's IBEX 35: +0.7%.

  • In economic data:

    • Spain's March trade deficit EUR160 mln (expected deficit of EUR720 mln; last deficit of EUR2.46 bln)

  • In news:

    • European Central Bank policymaker de Guindos said that the bulk of policy tightening has been done already but services inflation remains worrisome for the ECB. Meanwhile policymaker Muller said that it is premature to expect a rate cut in early 2024.

    • The EU and U.K. are reportedly looking to boost cooperation on regulation of financial services.

U.S. equity futures:

• S&P 500 Futures: +6 @ 4,165

• DJIA Futures: -10 @ 33,411

• Nasdaq 100 Futures: +33 @ 13,622

Overseas:

• Europe: DAX +1.7%, FTSE +0.5%, CAC +0.9%

• Asia: Nikkei +1.6%, Hang Seng +0.9%, Shanghai Composite +0.4%

Commodities:

• Crude Oil -0.14 @ 72.69

• Nat Gas +0.044 @ 2.409

• Gold -7.90 @ 1977.05

• Silver -0.199 @ 23.698

• Copper -0.0385 @ 3.716

Earnings/Guidance:

• Advanced Drainage Systems (WMS) beats by $0.26, beats on revs; guides FY24 revs below consensus; raises total annual cash dividend 17% to $0.56/share

• Alibaba (BABA) beats by RMB1.24, reports revs in-line

• Archrock (AROC) detailed guidance in presentation; Trending toward the high-end of 2023 Adjusted EBITDA guidance range of $400-430 mln

• Bath & Body Works (BBWI) beats by $0.07, reports revs in-line; guides Q2 EPS in-line, revs in-line; guides FY24 EPS in-line, reaffirms FY24 revs guidance

• Boot Barn Holdings (BOOT) beats by $0.09, misses on revs; guides Q1 EPS below consensus, revs below consensus; guides FY24 EPS below consensus, revs below consensus

• Bowlero (BOWL) reports Q3 (Mar) results, beats on revs

• Brady (BRC) beats by $0.06, misses on revs; raises bottom end of FY23 EPS above consensus

• Canada Goose (GOOS) beats by CAD0.07, beats on revs; guides Q1 EPS below consensus, revs in-line; guides FY24 EPS in-line, revs above consensus

• Canadian Solar (CSIQ) beats by $0.46, reports revs in-line; guides Q2 revs above consensus; raises bottom end of FY23 guidance

• Cisco (CSCO) beats by $0.03, beats on revs; guides JulQ EPS above consensus, mid-point of revs above consensus

• Copart (CPRT) beats by $0.08, beats on revs

• dLocal Limited (DLO) reports EPS in-line, beats on revs

• Dole plc (DOLE) beats by $0.16, misses on revs

• Eagle Materials (EXP) beats by $0.49, beats on revs

• Grab (GRAB) beats by $0.01, beats on revs; reaffirms FY23 revs guidance

• KE Holdings (BEKE) beats by RMB1.20, beats on revs; guides Q2 revs above consensus

• Kimbell Royalty Partners (KRP) raises FY23 production guidance

• Lightspeed (LSPD) beats by $0.03, reports revs in-line; guides Q1 revs below consensus; guides FY24 revs in-line

• Madison Square Garden Entertainment (MSGE) beats single estimate on top and bottom lines

• Monro Muffler (MNRO) misses by $0.24, misses on revs; guides Q1 EPS in-line, revs below estimate

• Moody's (MCO) provides medium-term guidance assumptions in presentation

• National Grid (NGG) reports FY23 results; beats on revs

• Sociedad Quimica y Minera (SQM) reports Q1 (Mar) results, misses on revs

• StoneCo (STNE) beats by $0.07, beats on revs; guides Q2 revs above consensus

• Synopsys (SNPS) beats by $0.07, reports revs in-line; guides Q3 EPS above consensus, revs in-line; guides FY23 EPS above consensus, revs in-line

• Take-Two (TTWO) misses by $2.37, beats on revs; guides JunQ EPS below consensus, bookings below consensus; guides FY24 EPS below consensus, bookings below consensus; expects over $8.0 bln in bookings in FY25

• Viasat (VSAT) reports Q4 (Mar) results, beats on revs; expects FY24 adjusted EBITDA to grow high single-digits to low double-digits yr/yr; expects to achieve FY25 target of doubling revs relative to FY20

• Walmart (WMT) beats by $0.15, beats on revs; guides Q2 EPS below consensus, revs in-line; raises FY24 EPS guidance; Q1 Wal-Mart US comps +7.4%

• ZTO Express (ZTO) beats by RMB0.25, misses on revs

News:

• Florida Governor Ron DeSantis is expected to launch his campaign for presidency next week, according to the Wall Street Journal

• Montana Governor signs bill banning TikTok in the state, according to the Wall Street Journal

• 10x Genomics (TXG) announces it has won an injunction in its patent litigation against NanoString Technologies (NSTG)

• Adicet Bio (ACET) Presents Positive Preclinical Data on ADI-270 at the American Society of Gene and Cell Therapy (ASGCT) 26th Annual Meeting

• Air Products (APD) extends Seifi Ghasemi's term as Chairman, President and Chief Executive Officer

• Alibaba (BABA) provides updates to business group spin-offs and capital raisings

• Amazon (AMZN): AWS to invest INR 1,05,600 crores (US $12.7 billion) into cloud infrastructure in India

• Apple (AAPL) getting involved with display production to lower dependence on Samsung (SSNLF), according to Nikkei

• Becton Dickinson (BDX) launches world's first spectral cell sorter with high-speed cell imaging

• Big Lots (BIG) announced that, by mutual agreement, Gene Eddie Burt, Executive Vice President, Chief Supply Chain Officer, would separate from the Company effective June 2, 2023

• Bio-Techne (TECH): Exosome Diagnostics releases interim results from clinical study of prostate cancer risk test

• Cara Therapeutics (CARA) announces Kapruvia (difelikefalin) recommended by England's NICE for the treatment of adults with moderate-to-severe CKD-associated pruritus

• Chubb (CB) increases quarterly cash dividend 3.6% to $0.86/share from $0.83/share

• Community Healthcare Trust (CHCT) appoints William Monroe as CFO, effective as of June 1, 2023

• CVS Health (CVS): The Federal Trade Commission seeking information from two companies associated with CVS Health and Cigna (CI) as part of probe into pharmacy benefit managers, according to Reuters

• Deutsche Bank (DB) will pay $75 mln to settle Jeffrey Epstein related lawsuit, according to the Wall Street Journal

• Ecolab (ECL) announces new partnership and multi-million dollar investment in Miso Robotics, the creator of the robotic kitchen assistant automating the fry station

• Elbit Systems (ESLT) awarded $305 million contract to supply PULS rocket artillery systems to the Royal Netherlands army

• Eli Lilly (LLY) peresolimab Phase 2a rheumatoid arthritis trial published in The New England Journal of Medicine; Peresolimab met the primary efficacy endpoint in patients with refractory rheumatoid arthritis

• Everest Re (RE) to rebrand, change name to Everest Group, Ltd. and trade under new symbol "EG" on July 10, 2023

• FibroGen (FGEN) and its subsidiary, FibroGen Medical Technology Development, announce "positive" topline data from Company's Phase 3 clinical study of roxadustat for treatment of anemia in patients receiving concurrent chemotherapy treatment for non-myeloid malignancies in China

• Freshpet (FRPT) advances operational improvement plan through Board changes; Current Director Walt George will be named Chair to replace retiring Charles Norris

• Insight Enterprises (NSIT) approved the authorization of a new stock repurchase program pursuant to which the Company may purchase up to an aggregate of $300 million of the Company's common stock

• Intercept Pharma (ICPT) amends supply agreement

• Kaiser Alum (KALU): union members at Warrick rolling mill in IN ratify new four-year labor agreement

• Kymera Therapeutics (KYMR) presents "positive "Phase 1 clinical data from its lead program, KT-474

• Kyndryl (KD) expands strategic partnership with SAP (SAP) focused on accelerating IT and digital transformation projects

• MindMed (MNMD) Announces Enrollment Milestone in Phase 2b Trial of MM-120 in Generalized Anxiety Disorder

• Monro Muffler (MNRO) announces agreement to eliminate Class C Preferred Stock; announces plan to declassify Board

• NanoString (NSTG) responds to decision of the regional court of Munich

• Netflix (NFLX) President of worldwide advertising Jeremi Gorman at conference last night said that ad supported tier now has 5 million global monthly active users

• Ouster (OUST) confirms the ITC has voted to institute an investigation into the unfair trade practices of Hesai Group (HSAI) based in Shanghai, China, and related entities

• Panasonic (PCRFY) in slide presentation says it aims to establish stable production at Wakayama factory at the earliest point and to roll out new large-scale production capacity in North America by 2030

• Protalix BioTherapeutics (PLX) is eligible to receive a $20 million milestone payment from its commercial partner, Chiesi Global Rare Diseases

• Revvity (RVTY) announced a new license agreement with AstraZeneca (AZN) for the technology underlying its Pin-point base editing system

• Robinhood Markets (HOOD) reports operating data for April; monthly active users down about 300K from March 2023

• Sony (SONY) holds strategy meeting; assesses partial spin-off

• Tesla (TSLA) discusses car incentives with officials in India, according to Reuters

• Voyager Therapeutics (VYGR) Presents Robust, Multi-Species Results from Preclinical Studies of IV-Delivered, TRACER-Generated Novel Capsids at the ASGCT 26th Annual Meeting

• Zai Lab's (ZLAB) repotrectinib granted priority review by Center for Drug Evaluation (CDE) of China's National Medical Products Administration

M&A:

• EyePoint Pharmaceuticals (EYPT) sold YUTIQ (fluocinolone acetonide intravitreal implant) 0.18mg to Alimera Sciences (ALIM)

• Snowflake (SNOW) in talks to buy Neeva, which develops software combining search with large-language models, according to The Information

• Urstadt Biddle Prop (UBA): Regency Centers (REG) to acquire Urstadt Biddle Properties in all-stock transaction valued at approximately $1.4 billion

Syndicate:

• Applied Digital Corporation (APLD) files $175 mln mixed shelf securities offering

• Boston Properties (BXP) files mixed shelf securities offering

• Bowman Consulting Group (BWMN) files mixed shelf securities offering

• Cabaletta Bio (CABA) prices offering of 7.25 mln shares of common stock at $12.00 per share

• Caledonia Mining Corporation Plc (CMCL) Block Listing Application and "At The Market" Sales Agreement

• CenterPoint (CNP) files mixed shelf securities offering

• EVgo Inc. (EVGO) prices offering of 29,411,765 shares of common stock at $4.25 per share

• Gates Industrial (GTES) prices secondary offering of 22.5 mln shares of common stock at $11.75 per share

• GFL Environmental (GFL) announces upsizing and pricing of secondary offering by selling shareholders

• Intapp (INTA) prices offering of 6.25 mln shares of common stock at $36.50 per share

• P3 Health Partners (PIII) files for 139,847,114 shares common stock by selling shareholders

• Super Group (SGHC) files $450 mln mixed shelf securities offering

• Vivid Seats (SEAT) prices secondary offering of 16.0 mln shares of common stock at $8.00 per share

IPOs:

• No IPOs expected to price.

Gapping Up/Down

• Gapping up:

  • DLO +16.4%, TTWO +11.8%, BBWI +6.5%, CARA+4.6%, MNMD +4.4%, SONY +4.3%, EXP +4.2%, DOLE+4%, ZTO +3.9%, CSIQ +3.3%, ACET +2.1%, BOWL+2%, SNOW +1.6%, SNPS +1.6%, KD +1.1%, SAP+0.9%, BEKE +0.9%, HOOD +0.8%, CABA +0.7%

• Gapping down:

  • BOOT -14%, NSTG -7.1%, APLD -5%, CSCO -4.2%, OUST -3.9%, SQM -3.6%, GFL -3.2%, STNE -3.1%, VSAT -2.5%, NGG -2.2%, KALU -2.1%, FRPT -2%, EVGO -1.9%, LITE -1.4%, GTES -1.3%, TXG -1.2%, CB -1%, JNPR -0.8%, AVGO -0.7%, BWMN -0.7%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • Albemarle (ALB) upgraded to Buy from Neutral at UBS; tgt raised to $225

  • Cincinnati Fincl (CINF) upgraded to Buy from Neutral at BofA Securities; tgt raised to $117

  • Dynatrace (DT) upgraded to Buy from Neutral at BTIG Research; tgt $57

  • RB Global (RBA) upgraded to Outperform from Sector Perform at National Bank Financial; tgt $61

  • Snap-On (SNA) upgraded to Buy from Neutral at ROTH MKM; tgt raised to $298

  • WEC Energy Group (WEC) upgraded to Buy from Neutral at Mizuho; tgt $98

• Downgrades:

  • Amyris (AMRS) downgraded to Hold from Buy at Jefferies; tgt lowered to $0.65

  • Dr. Reddy's (RDY) downgraded to Mkt Perform from Outperform at Bernstein

  • Essential Utilities (WTRG) downgraded to Neutral from Buy at Northcoast

  • Futu Holdings (FUTU) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $46

  • Futu Holdings (FUTU) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $34

  • Hanover Insurance (THG) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $130

  • ICL Group (ICL) downgraded to Neutral from Buy at BofA Securities

  • Magellan Midstream (MMP) downgraded to Hold from Buy at Stifel; tgt raised to $64

  • Nu Holdings (NU) downgraded to Neutral from Buy at Citigroup; tgt lowered to $6.10

  • Procter & Gamble (PG) downgraded to Hold from Buy at Truist; tgt lowered to $155

  • Rambus (RMBS) downgraded to Hold from Buy at Jefferies; tgt raised to $65

  • Selective Insurance (SIGI) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $97

  • XP (XP) downgraded to Neutral from Outperform at Bradesco BBI; tgt lowered to $17

• Others:

  • Acumen Pharmaceuticals (ABOS) initiated with an Overweight at Cantor Fitzgerald; tgt $13

  • Arcellx (ACLX) initiated with a Buy at Truist; tgt $60

  • Array Tech (ARRY) initiated with a Buy at Seaport Research Partners; tgt $30

  • Dynatrace (DT) resumed with an Outperform at William Blair

  • Genelux (GNLX) initiated with a Hold at Brookline; tgt $25

  • PLAYSTUDIOS (MYPS) initiated with a Neutral at JP Morgan; tgt $5

  • Pliant Therapeutics (PLRX) initiated with a Buy at Canaccord Genuity; tgt $48

  • Tarsus Pharmaceuticals (TARS) initiated with a Buy at Guggenheim

  • Varonis Systems (VRNS) initiated with a Buy at DA Davidson; tgt $30

Econ Data:

• 08:30 ET: Initial Claims for May 13 (Briefing.comConsensus 259K; Prior 264K)

• 08:30 ET: Continuing Claims for May 6 (Briefing.comConsensus NA; Prior 1813K)

• 08:30 ET: Philadelphia Fed Index for May (Briefing.comConsensus -16.0; Prior -31.3)

• 10:00 ET: Existing Home Sales for April (Briefing.comConsensus 4.30M; Prior 4.44M)

• 10:00 ET: Leading Indicators for April (Briefing.comConsensus -0.5%; Prior -1.2%)

• 10:30 ET: EIA Natural Gas Inventories for May 13 (Briefing.comConsensus NA; Prior +78 bcf)

Earnings:

• Monday (May 15)

  • Morning:  AZUL CTLT MNDY SFL TSEM TPG

  • Afternoon: NVTS

• Tuesday (May 16)

  • Morning: BIDU HD HUYA ONON PSFE SE SSYS TME

  • Afternoon:  AGYS CPRT DOCS KEYS KD NXGN

• Wednesday (May 17)

  • Morning:  DT JACK RSKD TGT TJX TGI WKME WIX

  • Afternoon:  BOOT CSCO DLO SQM STNE SNPS TTWO VSAT ZTO

• Thursday (May 18)

  • Morning: WMS BABA BBWI BRC GOOS CSIQ DOLE EXP GRAB BEKE MNRO WMT

  • Afternoon:  AMAT DXC FTCH FLO GLOB ROST

• Friday (May 19) 

  • Morning:  DE FL RBC

Asia & Europe detail:

Asia: Nikkei +1.6%, Hang Seng +0.9%, Shanghai Composite +0.4%

Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note with Japan's Nikkei (+1.6%) approaching its high from September 2021. Several large chipmakers announced their intentions to invest in Japan after executives met with Prime Minister Kishida. Japan and the U.K. signed The Hiroshima Accord, formalizing their partnership on defense and technology collaboration. China will resume imports of Australian timber after halting most shipments in late 2020. Australia reported its sharpest fall in jobs since January.

• In economic data:

  • Japan's April trade deficit JPY1.02 trln (expected deficit of JPY1.08 trln; last deficit of JPY1.21 trln). April Imports -2.3% yr/yr (expected -0.3%; last 7.3%) and Exports 2.6% yr/yr (expected 3.0%; last 4.3%)

  • Australia's April Employment Change -4,300 (expected 25,000; last 61,100) and full employment change -27,100 (last 82,500). April Unemployment Rate 3.7% (expected 3.5%; last 3.5%) and April Participation Rate 66.7%, as expected (last 66.8%)

  • New Zealand's Q1 Input PPI 0.2% qtr/qtr (expected 0.5%; last 0.5%) and Output PPI 0.3% qtr/qtr (expected 0.8%; last 0.9%)

  • Hong Kong's April Unemployment Rate 3.0% (expected 2.9%; last 3.1%)

---Equity Markets---

• Japan's Nikkei: +1.6%

• Hong Kong's Hang Seng: +0.9%

• China's Shanghai Composite: +0.4%

• India's Sensex: -0.2%

• South Korea's Kospi: +0.8%

• Australia's ASX All Ordinaries: +0.5%

---FX---

• USD/JPY: +0.1% to 137.75

• USD/CNH: +0.6% to 7.0462

• USD/INR: +0.1% to 82.53

Europe: DAX +1.7%, FTSE +0.5%, CAC +0.9%

Major European indices trade on a firmly higher note with Germany's DAX (+1.7%) reaching its best level since January 2022. European Central Bank policymaker de Guindos said that the bulk of policy tightening has been done already but services inflation remains worrisome for the ECB. Meanwhile policymaker Muller said that it is premature to expect a rate cut in early 2024. The EU and U.K. are reportedly looking to boost cooperation on regulation of financial services.

• In economic data:

  • Spain's March trade deficit EUR160 mln (expected deficit of EUR720 mln; last deficit of EUR2.46 bln)

---Equity Markets---

• STOXX Europe 600: +0.6%

• Germany's DAX: +1.7%

• U.K.'s FTSE 100: +0.5%

• France's CAC 40: +0.9%

• Italy's FTSE MIB: +1.1%

• Spain's IBEX 35: +0.7%

---FX---

• EUR/USD: -0.3% to 1.0813

• GBP/USD: -0.5% to 1.2428

• USD/CHF: +0.3% to 0.9007