US EARLY MORNING: Equity futures pause after recent upside; consumer earnings in focus with WMT, M, BABA all due to report today

US PRE-MARKETS: US equity futures are meandering around unchanged in Thursday’s pre-markets, consolidating after the sharp upside seen in wake of the softer-than-expected US CPI data this week, with newswires citing some profit taking ahead of key consumer earnings (BABA, WMT, M, BBWI - see below), weekly jobless claims data, and another round of Fedspeak featuring influential policymakers (Barr, Williams, Waller, Cook, Mester). Yields are lower across the Treasury curve, with the belly outperforming as the curve modestly bull-flattens. The Dollar Index is trading around unchanged. Crude futures are extending to the downside after weekly inventory data showed builds, which also comes amid some concerns about the demand outlook from China.

CONSUMER COMPANY EARNINGS: Today's corporate earnings slate features consumer heavyweight Walmart (WMT), as well as Macy's (M) and Bath & Body Works (BBWI), which analysts will look to for insight into holiday spending trends amid consumer pressure due to inflation. Expectations surrounding Walmart's earnings have been supported after a solid update from Target (TGT) this week. Analysts look for WMT's sales to be underpinned by demand for cheaper groceries and household staple items, while there will also be attention on how its supply chains are faring. Analysts at Jefferies are upbeat in their expectations, stating that they have the most conviction in WMT, and lifted its estimates for comp store sales (sees comp sales growth of +7.4% in 3Q vs the consensus +3.6%). "We attribute market share gains to increased mid-week shopping and GLP-1 tailwinds," Jefferies said, and in addition, "we also slightly raise our operating margin estimate based on PPI data, and forecast 3Q EPS of USD 1.59/shr, ahead of the consensus forecasts of USD 1.51." Meanwhile, there is some suggestion that the likes of Bath & Body Works (BBWI) may struggle given it sells pricier products, while consumers are cutting back on non-essentials. In the pre-market, UK luxury heavyweight Burberry (BRBY LN) reported slightly better than expected sales, although retail comps missed expectations as it was hit by a slowdown in luxury spending, and it warned it was unlikely to achieve previously issued revenue guidance if weak demand persists. Elsewhere, China consumer giant Alibaba (BABA) is also due to report in the US pre-market.

TODAY’S AGENDA:

• Our interactive calendar is here, a pdf version can be downloaded here.


• The European morning sees the release of the Norges Bank Expectations Survey for Q4, and Italian trade data. ECB President Lagarde, outgoing supervisory chief Enria, BoE's Ramsden are due to speak. The US pre-market data slate includes trade, weekly initial jobless claims data, the Philly Fed manufacturing report; shortly afterwards, industrial production and manufacturing output data for October. The Fedspeak slate is heavy, with Fed's Williams (voter), Waller (voter), Barr (voter), Cook (voter) and Mester (2024 voter) all due to speak.


• Today's US corporate earnings releases will include WMT, AMAT, NTES, BABA; our Daily US Earnings Estimates sheet can be accessed here.

EQUITY NEWS:

TECH:

• 
  Cisco Systems (CSCO) - Tumbled by over 10% in afterhours trade on weak guidance. Q1 adj. EPS was reported at 1.11 (exp. 1.03), Q1 revenue USD 14.7bln (exp. 14.61bln). Exec said it saw a slowdown of new product orders in Q1, believes the primary reason is that customers are currently focused on installing and implementing products in their environments following exceptionally strong product delivery over the past three quarters. Estimates there are one to two quarters of shipped product orders still waiting to be implemented by its customers. Cisco said it saw a slowdown of new product orders in Q1. CEO said lead times were back to normal, adding Cisco is not immune to macro environment, but the primary issue is onboarding. Cuts FY guidance amid slowing orders due to high customer inventories. Sees Q2 Adj. EPS USD 0.82-0.84 (exp. 0.99). Sees Q2 revenue USD 12.6bln-12.8bln (exp. 14.2bln). Lowers FY ADJ EPS guidance to USD 3.87-3.93 from USD 4.01-4.08 (exp. 4.06). Lowers FY revenue guidance to USD 53.8bln-55.0bln from USD 57.0bln-58.2bln (exp. 57.84bln).


• 
  Palo Alto Networks (PANW) - Q1 adj. EPS 1.38 (exp. 1.16), Q1 revenue USD 1.88bln (exp. 1.84bln). Q1 Billings USD 2.02bln (exp. 2.08bln), Q1 product revenue USD 341.1mln (exp. 346.4mln). Sees Q2 adj. EPS between USD 1.29-1.31 (exp. 1.25), and sees Q2 revenue between USD 1.96-1.99bln (exp. 1.97bln). Affirms FY24 revenue view 8.15-8.2bln (exp. 8.18bln). Sees FY24 total billings between USD 10.7-10.8bln (exp. 10.98bln). CEO told CNBC that it had a great quarter, noting "tremendous demand".


• 
  Sonos (SONO) - Q4 adj. EPS -0.07 (exp. -0.18), Q4 revenue USD 305.1mln (exp. 299.4mln). Announced a USD 200mln share buyback programme. Sees FY24 revenue between USD 1.6-1.7bln (exp. 1.71bln), adding that its guidance assumes weak consumer demand in Q4 persists throug FY2024, with the low end assuming trends soften somewhat further. Expects to exit Q1 in better inventory position. Sees H1 representing 51-53% of total FY24 revenue.


• 
  Alphabet (GOOG) - Google's Bard AI opens to teens globally, meeting age criteria. Initially in English, more languages to follow. Safety features introduced to educate on AI and block inappropriate content.


• 
  3D Systems (DDD) - 3D Systems plans a restructuring to cut OpEx by between USD 45-55mln in 2024. The majority of the cost reduction will be completed by Q1 2024, with expected cash charges of between USD 4-6mln for severance. DDD said further charges possible as actions finalise.


• 
  Lenovo Group (LNVGY) - Q2 net USD 249mln (prev. 541mln Y/Y), revenue USD 14.4bln (prev. 17.1bln). Said SSG will launch new AI-embedded services in the areas of digital workplace, and hybrid cloud, among others.


• 
  Garmin (GRMN) - President and CEO Clifton Pemble sold 5,000 shares on November 15th at USD 120/shr.


• 
  Bill Holdings (BILL) - Director David Hornik purchased 17.7k shares on November 13th for a total USD 1.0mln.


• NetEase Inc (NTES) Q3 2023 (USD): EPS 1.84 (exp. 1.47), Revenue 3.7bln (exp. 3.82bln).

CONSUMER:

• 
  Burberry Group (BURBY) - Q2 revenue GBP 1.396bln (exp. 1.391bln), Q2 EBIT GBP 223mln (exp. 223mln). Retail Comp Sales +1% (exp. +4.2%). H1 Retail Comp Sales +10% (exp. +10.9%). Said the slowdown in luxury demand globally is having an impact on current trading, is unlikely to achieve previously issued revenue guidance if weak demand persists; adds that in that context, adj. operating profit would be towards the lower-end of the current consensus range (GBP 552-668mln). CEO said that while the macroeconomic environment has become more challenging recently, it is confident in its strategy, remains committed to achieving medium and long-term targets.


• 
  Automakers - An NTSB investigation on a fatal Nevada crash found excessive speed, drug impairment, and systemic flaws caused the accident; NTSB Board recommends mandatory intelligent speed assistance in new cars.


• 
  General Motors (GM) - GM's contract deal with the UAW faces surprisingly stiff opposition, NYT writes, with many longstanding GM workers voting against the tentative accord, which they feel insufficiently improves retirement benefits.


• 
  PepsiCo (PEP) - New York sues PepsiCo over Buffalo River plastic pollution, citing harm to water and wildlife, BBC reports. PepsiCo claims transparency in reducing plastic usage, despite being named top contributor in the lawsuit.

HEALTHCARE:

• 
  Agilent Technologies (A) - Raises quarterly dividend +5% to 0.236/shr.


• 
  Bristol-Myers Squibb (BMY) - FDA approves Augtyro (repotrectinib) for treating ROS1-positive NSCLC. Based on TRIDENT-1 trial, it showed a 79% objective response rate and 34.1 months median response duration in TKI-naive patients.

FINANCIALS:

• 
  Carlyle Group (CG) - Carlyle has reportedly lowered its PE fundraising target to USD 6bln (prev. 8.5bln), according to Reuters sources; aiming for final fundraising close in Q3 2024; will allocate up to 35% of capital to India and up to 20% to China.


• 
  American Express (AXP) - October card net write-offs 1.9% (prev. 1.7%); US small business card member loans write-offs 2.0% (prev. 1.7%).


• 
  American International Group (AIG) - Roshan Navagamuwa will join AIG in December as EVP and Chief Information Officer, effective January 1, 2024.

ENERGY:

• 
  Exxon Mobil (XOM) - On December 6th, Exxon plans to release additional details about its corporate plans, including its capital plans to 2027.


• 
  Tetra Tech (TTEK) - Q4 EPS 1.78 (exp. 1.43), Q4 revenue USD 1.06bln (exp. 990.8mln), Q4 backlog USD 4.79bln (+1.05bln Y/Y). Sees Q1 EPS between USD 1.30-1.38 (exp. 1.36), and sees Q1 revenue between USD 950-1.0bln (exp. 960.1mln). For FY24, sees EPS between USD 5.70-6.00 (exp. 5.79), and sees FY24 revenue between USD 4.05-4.25bln (exp. 4.16bln).

INDUSTRIALS:

• 
  Siemens (SIEGY) - Q4 revenue EUR 21.4bln (exp. 21.1bln); Q4 orders EUR 21.8bln (exp. 19.4bln), Q4 comparable revenue +10% (exp. +6%). Announces a share buyback of up to EUR 6bln for up to five years. Proposes a dividend increase to EUR 4.70/shr (prev. 4.25/shr). Said it is preparing standalone options for Innomotics unit. Sees FY comparable revenue growth between +4-8% (exp. +4.5%).


• 
  Hillenbrand (HI) - Q4 adj. EPS 1.13 (exp. 1.04), Q4 revenue USD 763mln (exp. 747.5mln). Sees Q1 adj. EPS between USD 0.66-0.71 (exp. 0.81); sees FY24 adj. EPS between USD 3.60-3.95 (exp. 3.43), and sees FY24 sales between 3.28-3.44bln (exp. 2.81bln).


• 
  LegalZoom.com (LZ) - Director Dipan Patel sold 15.1mln shares on November 13th for a total USD 163.7mln.


• 
  Leonardo DRS (DRS) - Leonardo DRS commences secondary offering of 16.5mln common stock shares by Leonardo US Holding, a Leonardo S.p.A. subsidiary. DRS won't sell shares or receive proceeds.


• 
  MAXIMUS (MMS) - Q4 EPS 0.96 (exp. 1.03), Q4 revenue USD 1.26bln (exp. 1.27bln). Sees FY24 EPS between USD 5.05-5.35 (exp. 4.14), and sees FY24 revenue between USD 5.05-5.20bln (exp. 5.18bln).

16 Nov 2023 - 09:30- Research Sheet- Source: Newsquawk