US EARLY MORNING: Index futures continue lower ahead of US jobs report and heavy Fedspeak

APAC and European equities succumbed to Thursday’s negative lead from Wall Street, and US equity futures have been continuing in that direction overnight, but to a lesser extent, and are currently languishing by 0.3-0.5% (RTY -0.3%, YM -0.4%, ES -0.4%, NQ -0.5%). Treasury yields are mixed, although not more than 2bps away from neutral; curve spreads are biased towards steepening, although the magnitude isn’t huge. The Dollar Index has fallen to flat levels in recent trade, after hawkish commentary from ECB’s Villeroy, who said that there was potential for rates to be raised into positive territory this year, which weighed on EGBs and supported the EUR. The focus for today is the April jobs report, as well as a heavy slate of Fedspeak. The jobs numbers are expected to show a further cooling in the rate of payroll additions relative to recent trend rates. Given that the Fed is concentrating more on the inflation part of its mandate, rather than the labour market aspects, the wages data within the jobs report will perhaps be more interesting in informing the course of monetary policy through the end of the year. Desks note that some calendar effects may boost the wages metrics for the month, but any sign of a slowdown in wage pressures will give credence to some of the ‘peak inflation’ arguments made in wake of the slower March CPI and PCE inflation datasets. Chair Powell has already alluded to 50bps rate hikes at the next couple of meetings, so traders might express this in the profile of the hikes that are priced through the end of the year (markets price rates rising to 2.50-2.75% by year-end, with some risks of 2.75-3.00%). Our preview for the jobs data can be accessed here.

KEY US EQUITY LEVELS (per Credit Suisse):

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  SPX: 4200, 4226, 4244, 4262, 4274, 4308, 4316, 4341/51, 4370, 4386/94.


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  NDX: 12722/17, 12805/00, 12887, 12950/48, 13222, 13542/56, 13607, 13690, 13769/89, 13826.


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  RUT: 1839/37, 1850, 1875, 1907/06, 1928, 1954, 1969, 1977, 1985/91, 2012.

CONSUMER DISCRETIONARY:

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  Adidas (ADDYY) - Saw strong consumer from Western markets demand in Q1, expects this to continue for the rest of the year. Supply chain constraints due to lockdowns in Vietnam weighed on the top-line by approx EUR 400mln. Q1 revenue EUR 5.3bln (exp. 5.3bln), net income from cont. ops, EUR 310mln (prev. 502mln), operating profit EUR 437mln (prev. 704mln). FY22 net income from cont. ops now forecast to reach lower-end of EUR 1.8-1.9bln guided range. Expects net sales growth of over 20% in H2 due to unconstrained supply and strong momentum in Western markets.


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  Carnival (CCL) - Guests on a Carnival ship in Seattle have complained of significant numbers of COVID cases, with staff reportedly overwhelmed.


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  IHG (IHG) - Q1 results supported by travel recovery. Q1 RevPar +61% Y/Y, 82% of 2019 levels. Greater China trading in March was impacted by the tightening of localised travel restrictions. High levels of demand seen for leisure travel, continue to drive increased rates and occupancy.


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  MercadoLibre, Inc. (MELI) - Rose 5.7% after hours. Q1 EPS 1.30 (exp. 1.36), Q1 revenue USD 2.2bln (exp. 2bln). GMV was almost USD 7.7bln. Unique active users 81mln (vs 70mln Y/Y).


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  Peloton Interactive Inc. (PTON) - The fitness company is exploring a sale of 15-20% stake in an effort to shore up its business as its stock continues to sink, WSJ reported.

INDUSTRIALS:

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  Airbus (EADSY) - A senior executive and associate of a subsidiary reportedly bribed Saudi military officials to secure UK government contracts.


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  International Consolidated Airlines Group (ICAGY) - Q1 trading update noted a recovery in business travel. Q1 operating EUR -731mln (prev. -1.07bln), passenger capacity 65% of 2019, +58% Y/Y. Strong business travel recovery, premium leisure remains strong. Omicron had a short-term negative impact in January and February. Expects Operating Result to be profitable from Q2, and positive for the year. CEO says they are reducing mainly short haul capacity ramp-up at Heathrow, business traffic is 65-70% of 2019 level.


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  Rheinmetall (RNMBY) - Said its profits and margins improved in Q1. Revenue was EUR 1.27bln (exp. 1.28bln), Q1 operating income EUR 92mln (exp. 85mln).


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  Tesla (TSLA) - Outlines plan that would bring Shanghai plant back to output levels seen before COVID lockdowns.

TECH:

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  Bill.com Holdings Inc (BILL) - Q3 EPS -0.08 (exp. -0.16), Q3 revenue USD 166.9mln (exp. 157.9mln). Q3 processed transactions 9.5mln (exp. 10.5mln). Sees Q4 EPS between -14 and -13c (exp. -0.15), and sees Q4 revenue between USD 182.3-183.3mln (Exp. 168.8mln). Sees FY22 loss per share of -35c to -34c (exp. 0.46), sees FY22 revenue between USD 624-625mln (exp. 599.8mln).


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  BlackLine, Inc. (BL) - Q1 adj. EPS 0.01 (exp. -0.08), Q1 revenue USD 120.2mln (exp. 119.6mln). Sees Q2 adj. EPS between 0.00-0.01 (exp. 0.00), Q2 revenue seen between USD 126-127mln (exp. 125.2mln). Sees FY22 adj. EPS between 0.08-0.11 (exp. 0.09), and sees FY22 revenue between USD 524-528mln (exp. 522.6mln).


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  Block (SQ) - Rose over 8% after hours. Q1 adj. EPS 0.18 (exp. 0.21), Q1 revenue USD 3.96bln (exp. 4.2bln). GPV USD 43.5bln (exp. 44.7bln); sees Square GPV +29% in April. Q1 gross profit +34% Y/Y to USD 1.29bln, +55% on a two-year CAGR basis.


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  Cloudflare, Inc. (NET) - Tumbled almost 10% after hours. Q1 adj. EPS 0.01 (exp. 0.00), Q1 revenue USD 212.2mln (exp. 205.7mln). Added more than 14k new paying customers in the quarter, a new record. Sees Q2 adj. EPS between -1c and zero (exp. 0.00), and sees sees Q2 revenue between USD 226.5-227.5mln (exp. 217.9mln). Reiterates FY22 adj. EPS view of 0.03-0.04 (exp. 0.03), lifts FY22 revenue view to between USD 955-959mln (Exp. 932mln, prev. 927-931mln).         


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  Cognex Corporation (CGNX) - Fell 6.6% after hours on soft guidance. Q1 EPS 0.42 (exp. 0.38), Q1 revenue USD 282.4mln (exp. 276.3mln). Sees Q2 revenue between USD 265-285mln (exp. 292.7mln). Exec said higher revenue from consumer electronics will be offset by the timing of large projects in logistics and slower spending trends in the broader factory automation market. Sees FY22 revenue growing vs 2021 levels. Said Q2 gross margins expected to be below the company's mid-70% long-term target due to higher supply chain costs. Operating expenses are expected to be roughly flat on a sequential basis.


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  FleetCor Technologies, Inc. (FLT) - Rose 6.9% after hours. Q1 adj. EPS 3.65 (exp. 3.53), Q1 revenue USD 789.2mln (exp. 756.5mln). Raised its FY22 adj. EPS view to 15.45-15.75 (exp. 15.49), and raised its FY22 revenue view to USD 3.335-3.385bln (exp. 3.26bln). Exec said outlook for the rest of the year remains positive, expects Q1 fundamental trends to continue. Expects macro environment, specifically fuel prices and FX rates, to be a meaningful tailwind.


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  HubSpot, Inc. (HUBS) - Rose 2.3% after hours. Q1 EPS 0.58 (exp. 0.47), Q1 revenue USD 395.6mln (exp. 382.9mln). Sees Q2 EPS between 0.42-0.44 (exp. 0.51), and sees Q2 revenue between USD 409-410mln (exp. 412mln). Sees FY22 EPS between 2.40-2.42 (exp. 2.41), and sees FY22 revenue between USD 1.722-1.728bln (exp. 1.73bln).


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  NortonLifeLock Inc. (NLOK) - Q4 adj. EPS 0.46 (exp. 0.45), Q4 revenue USD 717mln (exp. 709.8mln). Sees Q1 EPS at 0.43 (exp. 0.46), Q1 revenue seen USD 705-715mln (exp. 728.5mln).

HEALTH CARE:

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  DaVita Inc. (DVA) - Fell 6.5% after hours. Q1 adj. EPS USD 1.61 (exp. 1.87), Q1 revenue USD 2.8bln (exp. 2.9bln). Sees FY22 adj. EPS between 7.50-8.50 (exp. 8.25).


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  Illumina, Inc. (ILMN) - Q1 adj. EPS 1.07 (exp. 0.90), Q1 revenue USD 1.22bln (exp. 1.22bln). Sees FY22 adj. EPS between 4.00-4.20 (exp. 4.15), and sees FY22 revenue growth of +14-16% (exp. 5.23bln). Core revenue still seen +13-15%, GRAIL revenue still seen USD 70-90mln.


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  McKesson Corporation (MCK) - Q4 adj. EPS 5.83 (exp. 6.04), Q4 revenue USD 66.1bln (exp. 63.61bln). Sees FY23 adj. EPS between 22.90-23.60 (exp. 23.10).

COMMUNICATIONS:

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  DoorDash, Inc. (DASH) - Rose 7.5% after hours. Q1 EPS -0.48 (exp. -0.41), Q1 revenue USD 1.456bln (exp. 1.38bln). Total Orders +23% Y/Y to 404mln. Marketplace GOV +25% Y/Y to USD 12.4bln. Sees Q2 GMV USD 12.1-12.5bln (exp. 12.1bln).


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  Live Nation Entertainment, Inc. (LYV) - Gained 2% after hours. Q1 EPS -0.39 (exp. -0.79), Q1 revenue USD 1.8bln (exp. 1.87bln). Said momentum had picked up for all businesses in Q1, and all leading indicators point to double-digit growth in fan attendance at our concerts this year relative to 2019; concert bookings +44% through late April vs 2019 levels.


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  Vivendi (VIVHY) - Vivendi's Canal Plus is reportedly working on a potential bid for a minority stake in Starz, FT reported.


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  Zillow Group, Inc. (ZG) - Skidded 10% after hours on weak guidance. Q1 consolidated adj. EBITDA of USD 220mln, Q1 revenue USD 4.257bln (exp. 3.4bln). Approved USD 1.0bln buyback. Sees Q2 revenue between USD 903-1.03bln (exp. 1.81bln).

FINANCIALS:

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  ING (ING) - Profits fell short of expectations after Russian provisions weigh. Q1 Total Income EUR 4.6bln (prev. 4.7bln), Net EUR 429mln (prev. 1.01bln), CET1 14.9% (prev. 15.5%), NII EUR 3.42bln (prev. 3.51bln). Additional capital distribution of EUR 1.25bln to shareholders. As of end-Q1, 2.5bln has been included in CET1 capital to cover for Russian-related exposure.

CONSUMER STAPLES:

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  Monster Beverage Corporation (MNST) - Q1 EPS 0.55 (exp. 0.61), Q1 revenue USD 1.518bln (exp. 1.43bln). Exec said that the global energy drink category continues its growth trend.

06 May 2022 - 09:23- EquitiesResearch Sheet- Source: Newsquawk