US EARLY MORNING: Equity futures continue upside after Monday's late bounceback

Monday's session was choppy, illiquid, influenced by closures in markets like the UK and China, but equities still managed to close higher after a late bounce back, and in spite of yields climbing higher ahead of the Wednesday FOMC meeting, with 10yr yields topping 3.00% for the first time since 2018. US equity index futures are currently trading higher by 0.1-0.4% (RTY +0.4%, ES +0.2%, YM +0.2%, NQ +0.1%) amid cautious overnight trade in Asia, but a brighter start in Europe, where earnings have been a focus. The market continues to eye this week's risk events (overnight the Aussie RBA surprised hawkishly with a larger than expected rate rise; FOMC Wednesday, where a 50bps hike and QT are likely; BoE on Thursday; OPEC+ is expected to hold policy steady this week; ISM services on Wednesday, and the US jobs report on Friday). JPMorgan's strats say markets are continuing to contend with three concerns: China, geopolitics and the Fed. The bank argues that, given it does not expect a recession, not even in Europe (an argument premised on resilience in Q1 corporate earnings, low stock valuations, China credit impulse turning, much of the Fed repricing is done), geopolitics is the wildcard. It observes that the Growth style has lost 19% vs Value over the past few months, and the performance beneath the surface was even more dramatic. "Almost half of Nasdaq constituents are down at least 50% from the rolling highs, and many pockets of Growth have derated meaningfully." The bank notes that its key call this year was for higher yields, and to overweight Value vs Growth; "we believe the convergence trade remains relevant longer term, but there could be some stabilisation given the recent moves."

KEY US EQUITY LEVELS (via Credit Suisse):

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  SPX: 4,026, 4,044, 4,061/57, 4081, 4115, 4158/63, 4178/89, 4208, 4225, 4241/42.


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  NDX: 12592, 12628, 12722, 12798, 12825, 12936/48, 13242, 13542/43, 13,607.


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  RUT: 1817/13, 1825, 1839, 1850, 1864/60, 1889, 1908, 1940, 1954, 1969.

TECH:

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  NXP Semiconductors NV (NXPI) - Added 1.1% after hours. Q1 diluted EPS 2.48 (may not compare vs exp. 3.17), Q1 revenue USD 3.14bln (exp. 3.10bln). Q2 22 revenue view 3.18bln-3.38bln (exp. 3.15bln). Q1 automotive revenue USD 1.56bln, +27% Y/Y (exp. 1.55bln), Q1 Industrial & IoT revenue 682mln, +19% Y/Y (exp. 661.5mln), Q1 mobile revenue USD 401mln, +16% Y/Y (exp. 383.4mln), Q1 communications infrastructure revenue USD 496mln, +18% Y/Y (exp. 510.5mln). Q1 adj. gross margin 57.6% (prev. 54.2% Y/Y, exp. 57.3%), Q1 adj. operating margin 35.7% (prev. 30.9% Y/Y , exp. 35%), Q1 inventory USD 1.31bln, +24% Y/Y (exp. 1.29bln), Q1 adj. FCF USD 577mln, -0.9% Y/Y (exp. 548.7mln). Exec notes that it continues to see robust customer demand, especially in its company-specific accelerated growth drivers, adding that overall, demand continues to outstrip increased supply, and inventory across all end markets remains very lean. Sees adjusted gross margin 57.1%-57.6% (exp. 57.3%), and sees adjusted operating margin 34.8%-35.7% (exp. 34.9%).


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  Logitech (LOGI) - Reported a 20% drop in sales in Q4 2021. Q4 EPS 0.81 (exp. 1.10), Q4 revenue USD 1.23bln (exp. 1.27bln). Lowers FY23 revenue growth guidance to between +2-4% (prev. 'mid-single-digits'), and cut its FY23 operating income view to USD 875-925mln (prev. 900-950mln).


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  Softbank (SFTBY), LSE Group (LNSTY) - LSE executives commence charm offensive to persuade SoftBank to reconsider its preference for a NY IPO for its Arm unit. UK PM Johnson has reportedly written to executives at SoftBank on the matter, according to sources cited by the FT.


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  Amkor Technology, Inc. (AMKR) - Slipped 0.2% after hours on soft guidance. Q1 EPS 0.69 (vs 0.49 Y/Y), Q1 revenue USD 1.60bln (vs 1.33bln Y/Y). Performance was driven by continued demand for its Advanced packaging solutions, which grew +26% Y/Y. Sees Q2 revenue at USD 1.52bln (exp. 1.63bln), reflecting the estimated impact from a temporary, government mandated COVID-19 lockdown of its Shanghai operations. Anticipates that the Shanghai factory will return to normal production in H2.


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  Monolithic Power Systems, Inc. (MPWR) - Rose 6.4% after hours. Q1 EPS 2.45 (exp. 2.26), Q1 revenue USD 377.7mln (exp. 360.5mln). Sees Q2 revenue between USD 420-440mln (exp. 378.3mln).


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  Arista Networks, Inc. (ANET) - Gained 2.3% after hours. Q1 EPS 0.84 (exp. 0.81), Q1 revenue USD 877.1mln (exp. 854mln). Sees Q2 revenue between USD 0.95-1.0bln (Exp. 0.920bln), sees Q2 margins of 61% (exp. 63.8%), and Q2 operating margins at 37.5% (exp. 38%).


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  Fabrinet (FN) - Q3 EPS 1.50 (exp. 1.52), Q3 revenue USD 564.4mln (exp. 575.3mln). Sees Q4 EPS between 1.52-1.59 (exp. 1.56), and sees Q4 revenue between USD 570-590mln (exp. 595.8mln).


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  BigCommerce Holdings, Inc. (BIGC) - Rose 1.7% after hours. Q1 EPS -0.18 (exp. -0.17), Q1 revenue USD 66.1mln (exp. 63.9mln). Sees Q2 revenue between 64.6-67.5mln (exp. 66.3mln) and a Q2 operating loss between USD 16-17mln. Raises FY22 revenue guidance to between USD 277.8-286.6mln (exp. 279mln, prev. 271.6-283.6mln).


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  Sanmina Corporation (SANM) - Was up 3.8% after hours. Q2 adj. EPS 1.14 (exp. 1.01), Q2 revenue USD 1.9bln (exp. 1.8bln). Sees Q3 adj. EPS between 1.05-1.15 (exp. 1.05), and sees Q3 revenue between USD 1.825-1.925bln (exp. 1.8bln). Announced an additional USD 200mln share repurchase plan.


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  SolarEdge Technologies, Inc. (SEDG) - Rose 1.9% after the bell. Q1 adj. EPS 1.20 (exp. 1.27), Q1 revenue USD 655.1mln (exp. 636mln). Sees Q2 revenue between USD 710-740mln (exp. 687mln).

FINANCIALS:

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  Citigroup Inc. (C) - A flash crash in European shares Monday was reportedly caused by a single sell order trade by Citigroup, according to sources cited by Reuters. The trade is said to have involved an erroneous calculation relating to a Nasdaq index involving Swedish companies. Citi has not commented on the report.

CONSUMER CYCLICAL:

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  Amazon.com, Inc. (AMZN) - Slipped 0.4% after hours. Workers at a Staten Island facility rejected plans to unionise.


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  Alibaba Group Holding Limited (BABA) - Shares slid overnight on reports that China authorities had taken action against an individual with the surname "Ma", though recovered as it emerged that this was not referring to the company's founder, Jack Ma.

Rivian (RIVN) - Announced it had secured an incentive packaged worth up to USD 1.5bln for an upcoming EV plant in Georgia.

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  Expedia Group, Inc. (EXPE) - Rose 1.7% after hours. Q1 adj. EPS -0.47 (exp. -0.64), Q1 revenue USD 2.25bln (exp. 2.23bln). Q1 adj. net income USD -74mln (exp. -79mln), Q1 gross bookings 24.4bln, room nights stayed +52% (exp. +64.8%). Said that there was an early impact from Omicron leftover from late last year, which faded as a turnaround in demand reached new highs since the start of COVID. Continues to see positive indicators for a strong recovery in leisure travel this summer. War in Ukraine did slow some of the recovery in Europe, they do see travel at new highs since start of pandemic in Europe.


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  Leggett & Platt, Incorporated (LEG) - Rose 2.2% after hours. Q1 EPS 0.66 (exp. 0.56), Q1 revenue USD 1.32bln (exp. 1.26bln). Noted that volume was down 4%, primarily from demand softness in US and European bedding markets, partially offset by growth in its Work Furniture, Aerospace, and Hydraulic Cylinders businesses. Reiterates FY22 EPS guidance of between 2.70-3.00 (exp. 2.74), and FY22 revenue between USD 5.3-5.6bln (exp. 5.32bln).


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  MGM Resorts International (MGM) - Gained 1.5% after hours. Q1 adj. EPS 0.01 (exp. -0.07), Q1 revenue USD 2.9bln (exp. 2.8bln). Q1 consolidated adjusted EBITDAR USD 670mln (margin 23.5%). Exec noted that its midweek business was improving.

CONSUMER STAPLES:

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  Chegg, Inc. (CHGG) - Tumbled by 32% after the close as it slashed guidance. Q1 adj. EPS 0.32 (exp. 0.24), Q1 revenue USD 202.2mln (exp. 201.3mln). Sees Q2 revenue between USD 188-192mln (exp. 209.3mln), and lowered its FY22 revenue outlook to USD 740-770mln (exp. 844mln, prev. 830-850mln). Exec noted continued industry headwinds but expects these challenges to be temporary.


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  The Clorox Company (CLX) - Fell 2.1% in after hours. Q3 adj. EPS USD 1.31 (exp. 0.97), Q3 revenue USD 1.8bln (Exp. 1.79bln). Q3 gross margin -760bps to 35.9% (vs 43.5% Y/Y) due to higher manufacturing, logistics and commodity costs, partially offset by the benefits of pricing and cost savings initiatives. Lowered its FY22 adj. EPS guidance to 4.05-4.30 (prev. 4.25-4.50). FY22 net sales still expected to decrease 1-4%. Sees FY22 gross margin -800bps due to higher than previously anticipated commodity and manufacturing and logistics costs.

ENERGY

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  BP (BP) - Q1 revenue USD 51.2bln (exp. 53.1bln). Adj. net USD 6.25bln (exp. 4.4bln). Q1 post-tax charge of USD 24.4bln related to the Russian exit, classified as an adjusted item, total charge USD 29.3bln. Announced a USD 2.5bln share buyback programme. Sees Q2 underlying upstream production lower than Q1. Continues to see CapEx of between USD 14-15bln in 2022. Said it expects elevated risk from oil price volatility.


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  Devon Energy Corporation (DVN) - Added 2.7% after hours. Q1 EPS 1.88 (exp. 1.75), Q1 revenue USD 3.81bln (exp. 3.81bln). Q1 avg. production 575k BOEPD (oil accounting for 50% of the volume). Sees Q2 BOEPD between 585-604mln, and sees FY22 production averaging 570-600mln BOEPD. Exec said its pursuit of value over volume was further reinforced by the steep backwardation in commodity prices, supply chain constraints and the economic uncertainty arising from recent geopolitical events. Raises quarterly dividend +27% Q/Q to 1.27/shr, expands share-repurchase authorisation +25% to USD 2bln.


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  Diamondback Energy, Inc. (FANG) - +0.4% after hours. Q1 EPS 5.20 (exp. 4.51), Q1 revenue USD 2.41bln (exp. 1.91bln). Raised quarterly to USD 0.70/shr (prev. USD 0.60/shr). Exec said it does not feel that today is the appropriate time to begin spending dollars that would not equate to additional barrels until multiple quarters from today given the uncertainty and volatility currently in the market.

MATERIALS:

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  Mosaic Co (MOS) - Q1 adj. EPS 2.41 (exp. 2.41), Q1 adj. EBITDA 1.45bln (exp. 1.43bln), Q1 revenue USD 3.9bln (exp. 4.08bln). Sees persistent tight markets for both phosphates and potash.


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  FMC Corporation (FMC) - Gained 0.9% after hours. Q1 adj. EPS 1.88 (exp. 1.71), Q1 revenue USD 1.35bln (exp. 1.29bln). Sees Q2 adj. EPS between 1.70-2.00 (exp. 2.00), sees Q2 revenue between USD 1.31-1.39bln (exp. 1.33bln). Keeps FY22 revenue view unchanged at USD 5.25-5.55bln (exp. 5.41bln), but sees FY22 adj. EPS between 6.70-8.00 (exp. 7.78, prev. 8.60-8.10).

INDUSTRIALS:

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  EVs - Biden administration plans to make USD 3bln from the USD 555bln infrastructure law available to companies working to boost US manufacturing of batteries used in electric vehicles, NBC reported citing officials.


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  Stellantis NV (STLA), BMW (BMWYY), Mercedes-Benz Group (MBG) - Stellantis will acquire BMW/Mercedes' car-sharing JV 'Share Now', Bloomberg reported. No price was detailed in the report.


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  Avis Budget Group, Inc. (CAR) - Rose almost 7% after hours. Q1 adj. EPS 9.99 (exp. 3.45), Q1 revenue USD 2.43bln (exp. 2.1bln). Rental days in the Americas +52%, revenue per day +21%. Exec said that "despite the impact of Omicron on the first half of the quarter, our team was able to quickly pivot to manage the significantly increasing demand during the back half of the quarter."


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  Flowserve Corporation (FLS) - Fell 2.7% after hours. Q1 adj. EPS 0.07 (exp. 0.21), Q1 revenue USD 821.1mln (Exp. 845.5mln). Recorded a USD 20.2mln charge due to Russia exit. Lowers FY22 EPS guidance to 1.50-1.70 (exp. 1.77, prev. 1.70-1.90), lowers FY22 revenue growth view to +5-7% (prev. +7-9%).


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  Kennametal Inc. (KMT) - Q3 adj. EPS 0.47 (exp. 0.42), Q3 revenue USD 512mln (exp. 510.6mln). Sees Q4 revenue between USD 510-530mln (exp. 543.3mln), and sees Q4 adj. operating income of at least USD 55mln. Exec noted broad-based demand in most of its end-markets, despite short-term challenges in China related to COVID-19 and ongoing headwinds in Transportation.

REAL ESTATE:

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  Boston Properties, Inc. (BXP) - Q1 FFO/shr 1.82 (exp. 1.74), Q1 revenue USD 754.3mln (exp. 700.6mln). Sees Q2 FFO/shr midpoint at 1.85 (exp. 1.83), and sees FY FFO/shr between USD 7.40-7.50 (exp. 7.40).

03 May 2022 - 09:24- EnergyResearch Sheet- Source: Newsquawk