US EARLY MORNING: Equity futures flat ahead of US jobs data

US equity futures are trading around unchanged, giving up gains on news that China will sanction House Speaker Pelosi after her recent visit to Taiwan, but index futures are on course for a third week of gains. Yields are higher along the Treasury curve by 1-3bps, with the shape of the curve modestly narrowing. The Dollar Index is up around 30bps, which is resulting in activity currencies trading lower, though the EMFX landscape is more mixed. Crude benchmarks are higher. Overnight, APAC stocks traded mostly higher but gains were capped by lingering geopolitical concerns; the European start was mixed amid a heavy slate of corporate updates; participants continue to contend with growth fears after the Bank of England Thursday forecast that the UK would enter a protracted recession, while there are also anxieties over European growth dynamics too given the ongoing energy crisis; ABN AMRO became the latest to predict that recession is coming. Stateside, however, Q3 metrics have been constructive in wake of the growth contraction in Q1 and Q2, and the ISM surveys this week both surprised to the upside. The Fed is now in data-dependent mode, meaning that today’s jobs data will be framed in the context of how the FOMC will set policy at its September meeting (our detailed NFP preview is here); the street expects the headline to continuing easing (which traders will use as a growth proxy), while average hourly earnings (used as an inflation proxy) is seen easing on an annual basis – this concoction might provide a ‘Goldilocks’ scenario for the Fed, where growth is holding up and inflation pressures are easing, which might be seen to favour a smaller 50bps rate hike in September, rather than a 75bps move. Money market pricing currently implies that there is a greater probability of a smaller move, but not by a great deal. Much will depend on how other incoming data looks, and next week’s US CPI might be more important in that regard, particularly since the Fed has impressed that tackling soaring consumer prices is taking priority over supporting growth. Full Day Ahead here.

EQUITY NEWS:

COMMUNICATIONS:

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  Meta Platforms (META) - Will issue USD 10bln four-parter: USD 2.75bln 5yr, USD 3bln 10yr, USD 2.75bln 30yr, USD 1.5bln 40yr.


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  Warner Bros. Discovery, Inc. (WBD) - Q2 EPS with items -1.50 (exp. -0.03), Q2 revenue USD 9.83bln (exp. 11.84bln). Lowered FY22 adj EBITDA outlook to USD 9.0-9.5bln (prev. guidance 10bln). Announced a deal with AT&T (T) that allows it to continue offering internet and mobility customers access to HBO Max, and separately, The Verge reported that WBD will combine the HBO Max and Discovery+ platforms next summer.


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  Zillow Group, Inc. (Z) - Q2 EPS of 0.47 (exp. 0.33), Q2 adj. EBITDA USD 164mln (vs 183mln Y/Y), Q2 revenue USD 1.0bln (exp. 984.6mln). Announced a multi-year partnership with Opendoor (OPEN), which allows home sellers on Zillow to seamlessly request an Opendoor offer to sell their home. On housing market trends, exec said “today, homes are even harder to afford. Rapidly rising mortgage rates have compounded the existing affordability challenges created by unprecedented home price appreciation. This has driven buyer sentiment to a 20-year low, and reduced buyer demand, which has cooled the previously red-hot seller’s market.” CEO said that it was seeing price growth meaningfully soften on pending sales and new mortgage applications across the industry, with for-sale inventory levels rising as homes spend more time on the market. “Although demand indicators stabilized in July compared to June, we expect second-half 2022 total industry transaction dollar volume to meaningfully contract year over year.”


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  AMC Entertainment Holdings, Inc. (AMC) - Q2 adj. EPS -0.20 (exp. -0.19), Q2 revenue USD 1.17bln (exp. 1.18bln). CEO Said “looking ahead, we could not be more bullish about the probability of significantly improving operating results for AMC, beginning with Q4 of 2022 and continuing in 2023.” CEO added that attendance in July saw the highest number of guests visit AMC’s US theatres since December of 2019, where prelim July food and beverage revenue numbers appeared to be the biggest single-month figure at its US theatres. Notes that there is a dearth of new big movie titles being released in August and September, so things will slow for several weeks. CEO said current internal forecast was that the 2023 domestic box office will be billions of dollars larger than that of 2022.


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  Live Nation Entertainment, Inc. (LYV) - Q2 EPS 0.66 (exp. 0.51), Q2 revenue USD 4.43bln (exp. 3.96bln). Exec said that “every key operating metric is at an all-time high, as we promoted more concerts, had more fans attend shows where they spent more money, sold more tickets and enabled brands to connect with fans at a scale we have never seen before.” Company notes that momentum has remained strong in recent months and weeks.


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  DoorDash, Inc. (DASH) - Q2 EPS -0.72 (exp. -0.41), Q2 revenue USD 1.61bln (exp. 1.52bln), Q2 orders +23% Y/Y at 426mln (exp. 419mln). Exec said though it has noticed several external indications of shifts in consumer discretionary spending, it has not yet seen changes to consumer engagement on its US marketplace that are distinguishable from normal seasonal patterns. It raised its guidance for FY: expects Q3 Marketplace GOV to be between USD 13.0-13.5bln, Q3 adj. EBITDA seen between USD 25-75mln.


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  TripAdvisor, Inc. (TRIP) - Q2 adj. EPS 0.37 (exp. 0.27), Q2 revenue USD 417mln (exp. 393mln). Exec said it continued to see robust improvement due to the strong demand in leisure travel in Q2. European travel saw a “strong” uptick. Exec said that “although travel is possibly also impacted by the macro trends of inflation and consumer sentiment, we point out that travel and our business have performed strongly throughout Q2 and the recovery versus 2019 has continued regardless of any macro factors. In fact, we anticipate revenue to continue to improve versus 2019 in Q3”. Revenue expected to continue improving in Q3 relative to 2019 levels by low to mid-single digits. Expects a seasonal step down in its consolidated adj. EBITDA margin in Q4 vs Q3.


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  Twilio Inc. (TWLO) - Q2 adj. EPS -0.11 (exp. -0.20), Q2 revenue USD 943.4mln (exp. 919.4mln). Sees Q3 adj. EPS between -0.43 and -0.37 (exp. -0.10), and sees Q3 revenue between USD 965-975mln (exp. 977.9mln).


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  WPP (WPP) - H1 revenue GBP 6.76bln (prev. 6.13bln Y/Y), H1 PBT GBP 562mln (prev. 502mln). Raises FY comp sales guidance on a strong H1 performance.

TECH:

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  Microsoft Corporation (MSFT) - Microsoft is giving Xbox Series S game developers more control over memory on the console, The Verge reports, and has recently released a new Xbox software development kit for developers recently.


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  Lyft, Inc. (LYFT) - Q2 revenue USD 990.7mln (exp. 990.5mln), Q2 adj. EBITDA USD 79.1mln (vs 23.8mln Y/Y). Q2 active riders +15.9% at 19.86mln, Q2 revenue per active rider +11% at USD 49.89. On call, exec noted increased demand in Q2, and ride-share volumes are seen exceeding pre-COVID levels in the medium-term. Exec also noted a pull back on discretionary spending in Q2. It also said that insurance costs had been affected by inflation. Sees Q3 revenue between USD 1.040-1.06bln (exp. 1.12bln). FY22 revenue growth seen lower than FY21 levels.


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  Block, Inc. (SQ) - Q2 adj. EPS 0.18 (exp. 0.16), Q2 revenue USD 4.4bln (exp. 4.34bln). Ex-Bitcoin, Q2 total net revenue +34% Y/Y at USD 2.62bln. In terms of the start to Q3, it said GPV was +18% Y/Y in July (vs +22% in Q2), and on a three-year CAGR basis, GPV growth is expected to be 23% in July.


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  Skyworks Solutions, Inc. (SWKS) - Q3 adj. EPS 2.44 (exp. 2.35), Q3 revenue USD 1.233bln (exp. 1.23bln). Sees Q4 revenue between 1.375-1.425bln (exp. 1.42bln). Boosts quarterly dividend +11% to 0.62/shr.


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  Cloudflare, Inc. (NET) - Q2 EPS 0.00 (exp. 0.00), Q2 revenue USD 234.5mln (exp. 227.3mln). Sees Q3 EPS between 0.00-0.01 (exp. 0.01), and sees Q3 revenue between USD 250-251mln (exp. 247mln). FY22 EPS seen between 0.03-0.04 (exp. 0.03), and FY22 revenue raised to between USD 968-972mln (exp. 958mln, prev. guidance 955-959mln).


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  Dropbox, Inc. (DBX) - Q2 EPS 0.38 (exp. 0.37), Q2 revenue USD 572.7mln (exp. 570.4mln). Q3 revenue (FXN) seen between USD 597-660mln (exp. 589mln), and sees FY22 revenue (FXN) between USD 2.34-2.35bln (exp. 2.32bln). Reiterates long-term gross margin targets of between 80-82%, operating margin between 30-32%, forecast of USD 1bln FCF by 2024.


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  HubSpot, Inc. (HUBS) - Q2 adj. EPS 0.44 (exp. 0.43), Q2 revenue USD 421.8mln (exp. 409mln). Lowers outlook for revenue and EPS; sees Q3 adj. EPS between 0.50-0.52 (exp 0.52), Q3 revenue USD 425-426mln (exp. 438.3mln). Sees FY22 adj. EPS between 2.28-2.30 (exp. 2.36), and sees FY22 revenue between USD 1.69-1.695bln (exp. 1.72bln).


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  Atlassian Corporation Plc (TEAM) - Q4 EPS 0.27 (exp. 0.27), Q4 revenue USD 759.8mln (exp. 724mln). Q4 cloud revenue +55% Y/Y. Exec notes “great momentum”. Sees Q1 EPS between 0.37-0.38 (exp. 0.37), and Q1 revenue seen between USD 795-810mln (exp. 773.5mln). Announced that Joe Binz will join from Microsoft as new CFO, effective September.


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  Appian Corporation (APPN) - Q2 EPS -0.46 (exp. -0.35), Q2 revenue USD 110.1mln (exp. 103.9mln).


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  BigCommerce Holdings, Inc. (BIGC) - Q2 EPS -0.19 (exp. -0.24), Q2 revenue USD 68.2mln (exp. 66.2mln). Sees Q3 revenue between USD 68.3-71.2mln (exp. 71.5mln), and sees Q3 adj. operating loss between USD 14.4-16.4mln. FY22 revenue seen between USD 277-282.9mln (exp. 281mln), and FY22 adj. operating loss of between USD 48.9-52.9mln.

CONSUMER STAPLES:

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  Beyond Meat, Inc. (BYND) - Q2 EPS -1.53 (exp. -1.18), Q2 revenue USD 147.04mln (exp. 149.7mln). Announced a 4% workforce reduction, which will generate annual savings of USD 8mln ex one-off costs of around USD 1mln, expected to be incurred in Q3. Lowered FY22 revenue outlook to USD 470M-520mln (exp. 560mln, prev. guidance 560-620mln). Elsewhere, BYND sees a reduction in warehouse costs after reductions in inventory


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  Monster Beverage Corporation (MNST) - Q2 diluted EPS 0.51 (exp. 0.70), Q2 revenue USD 1.66bln (exp. 1.61bln). Exec said “following many quarters of supply chain challenges, we have been able to rebuild inventories on a global basis, while at the same time meeting strong customer demand, despite operating in an extremely challenging, unprecedented and costly supply chain environment.” On input costs, it said that “significant increases in freight-in and fuel costs, including costs relating to the importation of aluminium cans, as well as other input costs continue to impact costs of sales.” MNST believes that some of the increased costs are likely to be transitory, as it decreases reliance on the use of imported aluminium cans. The sharp run-up in aluminium commodity pricing appears to be currently moderating. Increases in distribution costs, particularly freight and fuel, continued to adversely impact operating expenses. Has implemented measures to mitigate the impact of increased costs via reductions in promotions and other pricing actions. Is implementing a market-wide increase in pricing, effective September.


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  Ahold Delhaize (ADRNY) - Reportedly to postpone IPO of bol.com amid market conditions.


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  B&G Foods, Inc. (BGS) - Q2 adj. EPS 0.07 (exp. 0.27), Q2 revenue USD 479mln (exp. 479mln). Sees FY22 adj. EPS between 1.08-1.28 (exp. 1.68), and FY22 revenue between USD 2.1-2.14bln (exp. 2.1bln). Exec noted continued pressure from inflation in Q2 ahead of recovering pricing actions. “Although we expect some inflation into 2023, we are cautiously optimistic that the spikes in major commodity and input costs have peaked or moderated.”


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  Chegg, Inc. (CHGG) - Q2 EPS 0.37 (exp. 0.33), Q2 revenue USD 194.7mln (exp. 189.5mln). Exec noted an increase of over 100bps in its ‘Chegg Study and Study Pack’ retention rate Y/Y, bodes well for future increases in ARPU. Sees Q3 revenue between USD 156-160mln (exp. 162.5mln); sees FY22 revenue between USD 745-770mln (exp. 762mln)

CONSUMER CYCLICAL:

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  Tesla (TSLA) - Shareholders approve a 3-for-1 stock split. CEO said Model Y was on course to be its top-selling model by 2023. CEO said it might be able to announce an additional factory this year, adding that it was interested in acquiring manufacturing technology and AI companies. CEO also said that a share buyback programme was possible, depending on future cash flow.


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  Expedia Group, Inc. (EXPE) - Q2 adj. EPS 1.96 (exp. 1.58), Q2 revenue USD 3.2bln (exp. 2.99bln). Lodging gross bookings +8% vs Q2 2019. Exec said lodging bookings reached a record high, and it posted the highest ever Q2 revenue and adj. EBITDA. “Despite the disruptions during the summer travel season and an uncertain macroeconomic backdrop, travel demand has remained strong.” On call, exec noted spending was below historical levels, competition has been highly promotional.


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  Carvana Co. (CVNA) - Q2 EPS -2.35 (exp. -1.79), Q2 revenue USD 3.88bln (exp. 3.98bln). Exec said it had rapidly gained market share as a result despite several industry and economic headwinds, and remains on path to becoming the largest and most profitable auto retailer.


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  WW International, Inc. (WW) - Q2 EPS -0.07 (exp. 0.31, might not compare), Q2 revenue USD 269.5mln (exp. 284.8mln). WW said Q2 EPS negatively impacted by 0.47. Q2 subscribers -12.3% Y/Y, driven by declines in the Digital business in all major geographic markets. Cut FY22 EPS guidance to 0.25-0.30 (prev. guidance 0.72-0.78), and lowered its FY22 revenue view to USD 1.05-1.09bln (prev. 1.09-1.14bln).


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  Floor & Decor Holdings, Inc. (FND) - Q2 EPS 0.76 (exp. 0.73), Q2 revenue USD 1.09bln (exp. 1.07bln). Q2 SSS +9.2%. Sees FY22 EPS between USD 2.65-2.80 (exp. 2.83), and FY22 revenue between USD 4.29-4.33bln (exp. 4.32bln).

INDUSTRIALS:

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  Volkswagen (VWAGY) - Porsche is reportedly approaching Middle Eastern sovereign wealth funds in a bid to anchor investments, according to Bloomberg. The report added that advisers on the IPO were said to have approached major Canadian and Malaysian funds, alongside Norway’s sovereign wealth funds.


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  XPO Logistics, Inc. (XPO) - Q2 adj. EPS 1.81 (exp. 1.50), Q2 revenue USD 3.23bln (exp. 3.17bln). Raises FY22 outlook, now sees EPS between 5.55-5.90 (prev. guidance 5.20-5.60). Mario Harik to succeed Brad Jacobs as CEO.

HEALTH CARE:

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  Amgen Inc. (AMGN) - Q2 adj. EPS USD 4.65 (exp. 4.40), Q2 revenue USD 6.6bln (exp. 6.53bln). Reiterates its FY22 adj. EPS outlook of between USD 17.00-18.00 (exp. 17.40); FY22 revenue seen between USD 25.5-26.4bln (exp. 26.3bln, prev. guidance 25.4B-26.5bln).


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  AstraZeneca (AZN) - Received US FDA NDA Type-3 approval for Calquence.


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  Sanofi (SNY) - Sanofi and Innovent Biologics enter strategic collaboration to accelerate development of oncology medicines and expand presence in China. Sanofi to make an initial equity investment of EUR 300mln.


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  Doximity, Inc. (DOCS) - Q1 adj. EPS 0.14 (exp. 0.10), Q1 revenue USD 90.6mln (exp. 89.3mln). Sees Q2 revenue between USD 99.5-100.5mln (exp. 105.3mln). Lowers its FY23 revenue outlook to USD 424-432mln (exp. 455mln, prev. guidance 454-458mln).

FINANCIALS:

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  Allianz (ALIZY) - Q2 Revenue EUR 37.1bln (exp. 24.93bln), Q2 Operating profit EUR 3.59bln (exp. 3.33bln). Revenue was driven by the Property-Casualty business segment with broad volume growth and positive price effects.


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  LSE (LNSTY) - H1 total income GBP 3.735bln (prev. 3.113bln Y/Y). Expects to deliver at the top end of run-rate target. Commences a share buyback programme of GBP 750mln.


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  Rocket Companies, Inc. (RKT) - Q2 adj. EPS -0.03 (vs 0.46 Y/Y), Q2 revenue USD 1.392bln (exp. 1.49bln). Sees Q3 closed loan volume between USD 23-28bln, net rate lock volume USD 23-30bln.

UTILITIES:

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  EDF (ECIFY) - Said to mull sale of its Edison (EDNR IM) unit, could fetch up to EUR 6bln, according to Milano Finanza.

05 Aug 2022 - 09:25- Research Sheet- Source: Newsquawk