Daily US Equity Opening News - NFLX rallies on earnings beat; PG CFO warns of weak China demand ahead; AXP slips on revenue miss

TODAY'S AGENDA:

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  DAY AHEAD: On the speaker's docket, remarks are due from the Fed's Bostic (2024 voter), Fed's Kashkari (2026 voter), and Fed's Waller (voter). In energy, Baker Hughes will publish its weekly rig count data in the afternoon. On the CRA slate, S&P will review UK's credit rating (currently AA), Italy's (BBB), and the Netherlands (AAA); Fitch Ratings will review Italy's (BBB), Switzerland's (AAA), and Sweden's (AAA).


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  BROKER MOVES: NOW upgraded at OTR global; BSX downgraded at Needham on slow revenue growth in 2025. For the full list, please click here.
  


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  REVIEW - UK RETAIL SALES: Retail Sales rose +0.3% M/M in September (exp. -0.3%), lifting the annual rate to 3.9% Y/Y (exp. 3.2%, prev. 2.3%). Capital Economics said the data was strong, and suggests that while households may be concerned about possible tax rises in the Budget on October 30th, those fears are not feeding through to their spending decisions yet, adding that even though tax rises will weigh on real incomes, it still expects retail activity to continue to recover. "That said, if taxes rise in the Budget by more than we expect, real household incomes and consumer spending growth may be a little softer, but any adverse impact on consumer spending will likely be offset by higher government spending."

US EQUITY NEWS:

TECHNOLOGY

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  TSMC (TSM) - The US Commerce Department is investigating whether TSMC has supplied AI or smartphone chips to Huawei, potentially violating US export restrictions, The Information reports. The department recently contacted TSMC to inquire about any involvement in producing chips for Huawei. Since 2020, the US has banned Huawei from accessing American technology for chip manufacturing due to national security concerns. TSMC responded to the report and said it is a law-abiding company committed to complying with all applicable regulations, including export controls. The company assured that if any potential issues arise, it will take prompt action, conduct investigations, and engage proactively with customers and regulatory authorities to ensure compliance.


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  Intel (INTC) - Reportedly seeking to sell a minority stake in its Altera unit, aiming to raise billions of dollars, with the business valued at around USD 17bln, according to CNBC citing sources. The move marks a shift from Intel’s previous stance, where it considered Altera a core part of its future. CNBC said it is in talks with private equity and strategic investors, with the possibility of selling a majority stake. Intel had earlier hinted at a potential IPO for Altera by 2026 but it now appears to be accelerating those plans as it faces declining stock and competition from rivals like Nvidia (NVDA) and AMD (AMD).
  


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  Qualcomm (QCOM), Microsoft (MSFT), Arm Holdings (ARM) - Qualcomm has abruptly cancelled the Snapdragon X Elite Developer Kit, refunding customers who purchased the USD 899.00 mini PC designed for Windows on Arm development, Tom's Hardware reports. Co. cited failure to meet its quality standards as the reason for the cancellation. It is unclear if refunds apply to those who already received their kits.


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  Samsung Electronics (SSNLF), ASML Holding (ASML) - Samsung has reportedly postponed deliveries of ASML chipmaking equipment for its Texas factory due to a lack of major customers. The setback impacts the USD 17bln Taylor project, part of Samsung's strategy to expand into contract chip manufacturing. Reuters adds that analysts are warning of potential further delays.


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  Apple (AAPL), Smartphones - DigiTimes reports that the smartphone outlook for Apple and its competitors is mixed. It writes that while some reports suggest potential growth, Largan Precision, a major supplier of phone camera lenses, remains cautious about the overall market conditions. Meanwhile, Bloomberg reports that Apple iPhone 16 sales were +20% vs the iPhone 15, and Pro and Pro Max sales were +44% Y/Y.


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  Coherent (COHR) - Downgraded to 'Neutral' from 'Buy' at B.Riley, noting "there isn't much room for an error" with Coherent at these valuation levels.


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  Microsoft (MSFT) - Financial pressures on OpenAI, concern about its stability, and disagreements between employees of the two companies have strained the 5-year partnership, the NY Times reports. Meanwhile, WSJ reports, Microsoft is working with banks to determine its equity stake in OpenAI.


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  ServiceNow (NOW) - Upgraded to 'Positive' from 'Mixed' at OTR global, citing that checks have found channel partners met or exceeded their Q3 expectations and pipelines and sentiment have become more optimistic.

COMMUNICATIONS

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  Netflix (NFLX) - Shares rally in premarket as Q3 earnings topped estimates, driven by a 35% increase in ad-tier memberships. Q3 2024 (USD): EPS 5.40 (exp. 5.12), Revenue 9.82bln (exp. 9.76bln). Streaming paid memberships 282.72mln (exp. 281.92mln), Streaming paid net change +5.07mln (exp. +4.52mln); By region: UCAN +690k (exp. +697k), EMEA +2.17mln (exp. 1.44mln), LatAm -70k (exp. +975k), APAC +2.28mln (exp. +1.56mln). Guidance: Q4 revenue 10.13bln (exp. 10.05bln), EPS 4.23 (exp. 3.90). For the FY24, sees revenue +15% (exp. +14.9%, prev. +14-15%). And for the FY25 period, sees revenue between USD 43-44bln (exp. 43.4bln). Commentary: Exec said it was making good progress in its advertising business, and projects ad revenues will roughly double Y/Y in FY25. It announced that its 2025 programming slate will showcase ambitious and diverse storytelling, with new seasons of popular shows set to debut. Co. also tested a new intuitive homepage and plans to expand into gaming and live programming, including WWE and boxing events.


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  United States Cellular (USM) - Said TDS delivered its written consent approving Verizon transaction (VZ). The deal with Verizon is to sell 663mln mhz pops of cellular spectrum licenses, and 11mln mhz pops of AWS & 19mln mhz pops of PC licenses.


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  Meta Platforms (META) - Chief legal officer Jennifer Newstead sold 905 shares on October 15th at USD 589.97/shr.


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  Walt Disney (DIS) - Merged Disney and Reliance entity in India to move all live sports content, including IPL cricket, to the Disney+ Hotstar app, according to Reuters sources.

CONSUMER DISCRETIONARY

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  Tesla (TSLA) - Has not yet received approval to launch its Full Self-Driving system in China, according to sources cited by China Daily. Authorities are reviewing the proposal, particularly regarding data security. Tesla seeks permission to access non-sensitive video data, but the approval process remains ongoing, with partial support for trials in select cities. Elsewhere, NHTSA opens preliminary evaluation into estimated 2.4mln Tesla (TSLA) vehicles over self-driving collisions.


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  Crown Holdings (CCK) Q3 2024 (USD): Adj. EPS 1.99 (exp. 1.80), Revenue 3.07bln (exp. 3.07bln). Commentary: Exec highlighted strong performance in global beverage can businesses, with shipments up +5% Y/Y; combined segment income rose +10%, aided by robust manufacturing. Guidance: Q4 adj. EPS 1.45-1.55 (exp. 1.51). Lifted FY24 adj. EPS to 6.25-6.35 (exp. 6.15, prev. 6.00-6.25); said that after deducting the 100mln pension contributions in Q3, the adj. FCF for the year is still projected to be at least USD 750mln, with capex at USD 450mln.


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  Autoliv (ALV) Q3 2024 (USD): Adj. EPS 1.84 (exp. 1.95), revenue 2.56bln (exp. 2.53bln).


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  Amazon (AMZN) - AWS CEO defends new 5-day-per-week-in-office policy, arguing those who don't support it can leave the company.

CONSUMER STAPLES

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  MGP Ingredients (MGPI) - Shares in the distilled spirits and food ingredients producer tumbled in premarket following a negative preannouncement for Q3; sees Q3 EPS 1.29 (exp. 1.44), with revenue of USD 161.5mln (exp. 185.3mln). CEO expressed disappointment, citing soft trends in the alcohol spirits category and high whiskey inventories. Now sees FY24 EPS between 5.55-5.65 (exp. 6.24).


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  British American Tobacco (BTI), Philip Morris (PM), Imperial Brands (IMB LN) - A court-appointed mediator proposed a plan to resolve tobacco-product related claims and litigation in Canada; Philip Morris said Imperial Brand, Japan Tobacco (2914 JT) and RBH would pay an aggregate settlement amount of ~USD 23.5bln+. The issue of allocation of the aggregated settlement amount remains unsolved.


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  Procter & Gamble (PG) Q1 2025 (USD): EPS 1.93 (exp. 1.90), Revenue 21.7bln (exp. 21.96bln); affirms FY25 guidance. Commentary: CFO said the China market continues to be weak and will be weak for a number of quarters to come


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  Lamb Weston (LW) - Activist investor Jana Partners has built a stake of roughly 5% in Lamb Weston and plans to push the struggling french-fry maker to explore a sale, according to WSJ citing sources.

FINANCIALS

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  American Express (AXP) Q3 2024 (USD): Adj. EPS 3.49 (exp. 3.28), Revenue 16.64bln (exp. 16.67bln). Provision for credit losses 1.4bln; Billed business 387.3bln (exp. 386.91bln), +5.8% Y/Y; Effective tax rate 21.8% (exp. 22.5%). Guidance: FY adj. EPS 13.75-14.05 (prev. 13.80), maintains revenue growth guidance of 9%;


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  Fifth Third Bancorp (FITB) Q3 2024 (USD): EPS 0.78 (exp. 0.83), Average deposits 167.2bln (exp. 167.32bln), Net interest income 1.43bln (exp. 1.42bln), Net interest margin 2.9% (exp. 2.86%), Provision for credit losses 160mln (exp. 160.4mln). Q4 guidance: Revenue growth +1-2% Q/Q; NII +1% Q/Q; NCO ratio between 45-49bps.


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  Comerica (CMA) Q3 2024 (USD): EPS 1.33 (exp. 1.16), Average deposits 63.9bln (exp. 63.3bln), Provision for credit losses 14mln (exp. 22.9mln), NIM 2.8% (exp. 2.93%), NII 534mln (exp. 527.6mln). Guidance: Q4 NII +6% Q/Q and FY24 NII down 13-14% Y/Y; maintaining capital well above CET1 target of 10% through year-end.


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  Regions Financial (RF) Q3 2024 (USD): Adj. EPS 0.49 (exp. 0.52), Adj. Revenue 1.86bln (exp. 1.81bln). NIM 3.54% (exp. 3.51%), Non-interest income 572mln (exp. 579.5mln), Provision for credit losses 113mln (exp. 123.5mln), Net charge offs 117mln (exp. 122.4mln), Deposits 125.95bln (exp. 126.62bln), NII 1.23bln (exp. 1.22bln).


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  Western Alliance (WAL) Q3 2024 (USD): Adj. EPS 1.84 (exp. 1.89), Revenue 0.82bln (exp. 0.81bln); Net interest margin 3.61% (vs. 3.67% Y/Y), Provision for credit losses 33.6mln (vs. 37.1mln Q/Q, and 12.1mln Y/Y).


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  Ally Financial (ALLY) Q3 2024 (USD): Adj. EPS 0.95 (exp. 0.55), Revenue 2.06bln (exp. 2.03bln). Cuts FY24 NIM to 3.2% (prev. 3.3%), and raised FY24 net charge-offs. Commentary: Navigating a fluid operating environment.


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  Bank of America (BAC), Berkshire Hathaway (BRK.B) - Berkshire Hathaway has continued to reduce its stake in Bank of America, selling 8.7mln shares for USD 370mln on October 15th.


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  Nomura Holdings (NMR) - Several large financial institutions in Japan have halted trading with Nomura Holdings following the brokerage’s admission of market manipulation in 2021, Bloomberg reports. At least 10 firms have suspended equity or bond dealings, waiting for Nomura to provide further details on measures to prevent future misconduct. This pause in business reflects the broader fallout from the scandal as affected firms assess their trading relationships with Japan's largest brokerage. These institutions may resume activity once Nomura demonstrates concrete corrective actions.


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  New York Community Bancorp (NYCB), Flagstar Bank (FLG) - Flagstar Bank, a unit of New York Community Bancorp, will lay off around 1,900 employees amid efforts to restructure. This includes 700 initial layoffs, with an additional 1,200 expected after selling its mortgage servicing unit to Mr. Cooper for USD 1.4bln; the sale is set to close in late 2024, with most impacted employees moving to Mr. Cooper.


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  Coinbase (COIN) - CFO Alesia Haas sold 5,250 shares on October 15th at USD 195.2539/shr.


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  Robinhood Markets (HOOD) - Announced the launch of Robinhood Legend, a desktop trading platform designed specifically for active traders.

HEALTHCARE

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  Intuitive Surgical (ISRG) Q3 2024 (USD): Adj. EPS 1.84 (exp. 1.64), Revenue 2.04bln (exp. 2.01bln). Instruments and accessories revenue 1.26bln (exp. 1.24bln), +18% Y/Y. Commentary: Exec noted increasing headwinds in Asia; noted strong average selling price performance in Korea. Exec said placements in the U.S. will progressively shift towards trade-ins. And UK placements are being challenged by ongoing government measures impacting healthcare spending. Guidance: Raised FY24 procedure growth to +16-17% (prev. +15.5-17%), reiterated FY24 gross margin 68.5-69%, narrowed the range of its FY24 operating expense growth outlook to +10-12% (prev. 10-13%); continues to see FY24 capex between 1.0-1.2bln.


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  CVS Health (CVS) - Withdrew its previous guidance amid elevated medical costs; recorded a USD 1.1bln PDR charge in Q3; sees USD 1.2bln restructuring charge; confirms that David Joyner has been appointed President and CEO; sees Q3 adj. EPS of USD 1.05-1.10.


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  Bausch Health (BHC), Apollo Global (APO) - Bausch Health rejected recent debt-restructuring proposals from bondholders, including Apollo Global and GoldenTree, while exploring a potential sale of its Bausch + Lomb vision care unit, WSJ reports. The sale could generate billions to repay creditors and benefit shareholders, amidst ongoing financial challenges for the company.


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  Merck (MRK) - Reported positive outcomes from its Phase 2b/3 trial of clesrovimab, a monoclonal antibody aimed at protecting infants from respiratory syncytial virus. The trial met all prespecified endpoints, showing comparable adverse event rates between clesrovimab and placebo groups, with no treatment-related deaths.


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  Boston Scientific (BSX) - Downgraded at Needham to 'Hold' from 'Buy', noting the Cos. electrophysiology business is to slow "significantly" in 2025, resulting in overall revenue growth slowing. Needham adds, that while investor expectations for the ACURATE trial are low, the results are a catalyst that could swing shares up or down by 5-10%.


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  Cencora (COR) - AmerisourceBergen has received a USD 2.03bln contract modification from the Defense Logistics Agency, extending the option period for prime vendor pharmaceutical products and support.


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  EssilorLuxottica (ESLOY) - Slightly missed sales expectations amid worsening conditions in Chinese markets. Q3 2024 (EUR): Revenue 6.437bln (exp. 6.58bln). Regional performances were varied: North America +0.5% to 2.85bln, EMEA +5% to 2.43bln, LatAm -5.6% to 356mln, and APAC +4.5% to 794mln. It reported Direct-to-consumer revenue +3.1% to 3.42bln, while Professional Solutions +1.3% to 3.02bln. It anticipates revenue acceleration in Q4.


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  Gilead Sciences (GILD) - Is to voluntarily withdraw US accelerated approval for Trodelvy for the treatment of adults with locally advanced/metastatic urothelial cancer. Does not affect other approved Trodelvy indications within or outside of the US.

INDUSTRIALS

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  Fluor (FLR) - Department of Energy authorised its joint venture, Hanford Tank Waste Operations & Closure, to commence the Hanford Integrated Tank Disposition Contract. Valued at USD 45bln over ten years, Fluor will begin recognising its earnings share using the equity method from Q4 2024.


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  Volvo (VLVLY) Q3 2024 (SEK): Revenue 117bln (exp. 120bln), adj. operating income 14bln (exp. 14.7bln). Net truck orders fell to 43.2k from 47.2k. While bus demand remains strong, construction equipment demand has slowed, especially in Europe.


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  Spirit AeroSystems (SPR) - To introduce 21-day furloughs for 700 workers on 767 and 777 programmes starting Oct 28 due to Boeing (BA) strikes; will enact layoffs and additional furloughs if strikes continue beyond Nov, according to a spokesperson. Fully draws down USD 350mln bridge loan losses, via sources.

ENERGY

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  SLB (SLB) Q3 2024 (USD): EPS 0.89 (exp. 0.88), Revenue 9.159bln (exp. 9.28bln); board approved a quarterly cash dividend of 0.275/shr. Says with strong cash flows and visibility into continued strong cash flow generation, has accelerated its share repurchase programme. Now expects to exceed the 3.0bln return to shareholders commitment made earlier this year. In other news, selling its interests in the Palliser Block in Alberta, Canada, which includes oil and gas wells, surface facilities, and a pipeline network. The transaction is anticipated to close late in Q4 2024.


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  BP (BP) - Considering selling a minority stake in its offshore wind business as part of its strategy to scale back the Cos. focus on renewables. The move comes amid pressure from shareholders and aims to lessen the financial burden of developing offshore projects.


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  Centrus Energy (LEU) - Subsidiary American Centrifuge Operating received a Department of Energy award to enhance domestic production of High-Assay, Low-Enriched Uranium for next-generation nuclear reactors. The contract ranges from a minimum of USD 2mln to a maximum of USD 2.7bln over ten years, dependent on future task orders.


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  Energy Transfer LP (ET) - Signed a preliminary contract with a consortium to build its proposed Lake Charles LNG plant, a filing showed.

MATERIALS

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  WD-40 (WDFC) Q4 2024 (USD): EPS 1.23 (vs 1.21 Y/Y), Revenue 156mln (vs 140.5mln Y/Y). CEO noted double-digit revenue growth across all trading blocs; The WD-40 Multi-Use Product saw a +11% revenue increase. Said it plans to divest its homecare portfolio to focus on higher-growth maintenance products, aiming for continued growth in 2025. Guidance: FY25 EPS 5.20-5.45 (exp. 5.68), Revenue 600-630mln (exp. 617mln).

18 Oct 2024 - 14:07- Research Sheet- Source: Newsquawk