US EARLY MORNING: US equity futures are higher ahead of key CPI data; annual consumer prices seen cooling again in April

US equity futures are firmer by 0.4-0.7% (NQ +0.7%, RTY +0.6%, ES +0.5%, YM +0.4%), after a constructive APAC session, underpinned by hopes of stimulus and an improving COVID situation in Shanghai. The European day has gotten off to a solid start too amid lots of earnings reports and deal news. Data overnight showed Chinese CPI inflation rising (higher food and fuel prices, but core was pretty much unchanged), although factory gate inflation cooled. Final inflation data out of Germany this morning were unrevised. Attention will be on the US inflation metrics, released later today, amid an expectation that annual price pressures will ease again (we have a primer here). Treasury yields are lower by 3-5bps, with the rally most pronounced in the belly, while curve spreads are biased towards flattening. The choppy nature of stock performance in recent days has left many strategists scratching their heads, but the team at Bank of America argues that stocks have still performed somewhat predictably based on macro sensitivity. “Notably, the discount rate has explained much of the S&P 500’s behaviour,” BofA writes, “equity duration is close to a record high, and the smallest fluctuations in the cost of capital have driven outsized moves,” noting that a 10bps rise in the cost of equity usually translates to a 2% fall in the S&P 500 index, ceteris paribus. “It’s all about the discount rate,” the bank says, “rates sensitivity at an index level translates into beneficiaries and victims at a stock level, and real rates just flipped positive to 0.3% from -1.1% last December.” BofA sees US 10yr yields rising to 3.25% by year-end, which it says will be a negative for long duration assets. “But the magnitude of the move from here is likely to be lower (+22bps through year end vs. +152bps YTD) translating into lower rates volatility,” adding that “rates volatility is one of the biggest determinants of the S&P 500 equity risk premium, and a drop would be equity positive.” The bank highlights MPC, QRVO, LYV, LVS, NXPI, LYB, URI, EQIX, AKAM, CBRE as its top ten stocks most sensitive to rates (using a nominal interest rate beta), and APA, CZR, DVN, MRO, NCLH, RCL, PENN, HAL, WYNN, FANG as the top ten most sensitive stocks to changes in equity risk premia (using a 5yr price beta).

US EQUITY KEY LEVELS (per Credit Suisse):

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  SPX: 3984/81, 3993, 4014, 4026/21, 4034/31, 4057/63, 4158, 4174/75, 4199, 4210. 


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  NDX: 11878, 11980, 12090/45, 12208/193, 12299, 12523, 12805, 12927/82, 13267, 13345. 


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  RUT: 1715/13, 1755, 1764, 1787/85, 1805, 1817/13, 1852, 1868/79, 1895/96, 1914. 

CONSUMER STAPLES:

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  Ahold Delhaize (ADRNY) - Beat expectations in Q1, and raised its FY EPS view. Q1 revenue EUR 19.8bln (exp. 19.3bln). EPS 0.55 (exp. 0.50).


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  Grocery Outlet Holding Corp. (GO) - Rose 4.3% after hours. Q1 EPS 0.22 (exp. 0.20), Q1 revenue USD 831.4mln (exp. 810.4mln), Q1 comps +5.2% (exp. 3.2%), and +14.3% on a 3-year stacked basis. Exec said traffic trends in Q2 were strong, consumers are increasingly looking to stretch their shopping dollar in light of inflation. Exec added that it is encouraged by the health of its supply pipeline, and it continues to investment to support future growth.


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  Swedish Match (SWMAY), Philip Morris (PM) - Swedish Match confirmed Philip Morris will to acquire the company for SEK 106/shr in cash.

CONSUMER CYCLICALS:

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  Allbirds, Inc. (BIRD) - Skidded 17.7% after hours. Q1 EPS -0.15 (exp. -0.12), Q1 revenue USD 62.8mln (exp. 62mln). Exec said global tumult around since its last earnings report, including Russia’s invasion of Ukraine and China’s COVID-19 restrictions, impacted the performance of its international business in Q1, and is expected to persist for the remainder of 2022. Cut its FY22 revenue view to USD 335-345mln (exp. 362.4mln, prev. 355-365mln), and sees Q2 revenue between USD 75-79mln (exp. 88.2mln).


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  Boot Barn Holdings, Inc. (BOOT) - Rose 4% after hours as results topped expectations and guidance was decent. Q4 EPS 1.47 (exp. 1.32), Q4 revenue USD 383.3mln (exp. 355.2mln). Sees Q1 EPS at 1.14 (exp. 1.11), and sees Q1 revenue at USD 367mln (exp. 319.6mln), while Q1 SSS growth seen at +10%. For FY23, it sees EPS at 6.41 (exp. 5.56), and FY23 revenue at USD 1.74bln (exp. 1.54bln), with FY23 SSS growth projected at +4.8%.


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  Callaway Golf Company (ELY) - Gained 8.3% after the bell. Q1 adj. EPS 0.36 (exp. 0.24), Q1 revenue USD 1.04bln (exp. 1.02bln). Sees Q2 revenue between USD 1.105bln (exp. 1.01bln). Lifts FY22 revenue outlook to USD 3.935-3.97bln (exp. 3.83bln, prev. 3.78-3.82bln), and lifts FY22 adj. EBTIDA outlook to USD 535-555mln (prev. 490-515mln).


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  Continental (CTTAY) - Rising prices weighed on net income, which halved. Q1 revenue EUR 9.3bln (prev. 8.6bln Y/Y), Q1 net EUR 245.4mln (prev. 448mln). Affirms outlook.


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  GrowGeneration Corp. (GRWG) - Fell 16.9% after hours. Q1 EPS -0.09 (exp. -0.08), Q1 revenue USD 81.8mln (exp. 83.7mln). Company said it was taking an active approach to managing the business in a way that preserves cash through working capital optimisation and it is aggressively right-sizing its cost structure. Exec said it expects revenue and gross profit headwinds in Q1 to become more pronounced in Q2, and the remainder of 2022 facing more pressure than it initially planned. Exec also noted that the industry was experiencing a prolonged period of softer demand.


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  H&R Block, Inc. (HRB) - Rose 5.1% after hours after results topped expectations and it raised guidance. Q3 EPS from continuing ops 4.06 (exp. 3.75), Q3 revenue USD 2.1bln (exp. 1.94bln). Lifts FY22 revenue outlook to USD 3.375-3.425bln (exp. 3.3bln, prev. 3.25-3.35bln), FY22 EBITDA seen at USD 850-875mln (prev. 765-815mln).


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  Pirelli (PRLLY) - Reported higher profits, but lowered its margin forecast for the year. Q1 revenue EUR 1.52bln (exp. 1.44bln), Q1 adj. EBIT EUR 228.5mln (exp. 211mln). Cuts FY22 adj. EBIT margin view to 15% (prev. 16.0-16.5%). raises FY22 revenue view to EUR 5.9-6.0bln (prev. 5.6-5.7bln). Said 2022 macro outlook held back by geopolitical tensions, inflation and a fall in demand due to lockdown in China. Exec expects lockdown in China to last until the end of June, cautiously hopes situation will improve in H2.


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  Salvatore Ferragamo (SFRGY) - Q1 results were hit by China, but CEO promises a quick turnaround.


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  The RealReal, Inc. (REAL) - Rose 9.3% after the close. Q1 EPS -0.47 (exp. -0.51), Q1 revenue USD 146.7mln (exp. 136.8mln), Q1 GMV +31% Y/Y at USD 428mln. Confirmed FY22 guidance, and said it was on track to achieve the financial targets in its ‘Vision 2025’ plan.


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  TUI (TUIFY) - Expects profitability in 2022 amid travel demand, expects strong summer travel.


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  Wynn Resorts (WYNN) - Fell 1.1% after the bell. Q1 adj. EPS -1.21 (exp. -1.15), Q1 operating revenue USD 953.3mln (exp. 986.4mln). Exec said results “reflect continued strength at both Wynn Las Vegas and Encore Boston Harbor”, and in Macau, it “remain confident that the market will benefit from the return of visitation when travel restrictions subside.”

INDUSTRIALS:

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  Air France (AFLYY) - Said it was seeing a revival of business travel in some regions.


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  Alstom (ALSMY) - Profits topped expectations but cash flows were negative. FY21/22 revenue EUR 15.5bln (prev. 8.8bln Y/Y), adj. EBIT EUR 767mln (prev. 645mln). Affirms revenue guidance. Seperately, is said to be in talks to sell its 20% stake in Russia’s Transmashholdings.


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  Axon Enterprise, Inc. (AXON) - Q1 adj. EPS 0.45 (exp. 0.30), Q1 revenue USD 256mln (exp. 231.4mln). Lifted FY22 revenue guidance to between USD 1.05-1.1bln (exp. 1.05bln, prev. 1.04bln), and raised its FY22 adj. EBITDA view to USD 190-200mln (prev. 185-195mln).


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  Saint-Gobain (CODYY) - Activist Bluebell Capital reportedly calls on Saint-Gobain to reshape its business, replace Chair amid an underwhelming performance.


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  Tesla (TSLA), Volkswagen (VWAGY) - Tesla CEO said it was highly unlikely that it would buy another carmaker, while he did not see merit in combining Tesla, SpaceX, and other operations under one umbrella; separately, Musk said Volkswagen was making the most progress on EVs after Tesla.

HEALTHCARE:

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  Alcon Inc. (ALC) - Rose 4.2% after hours. Q1 EPS 0.68 (prev. 0.49 Y/Y), Q1 revenue USD 2.18bln (prev. 1.91B Y/Y). Exec said it saw a strong start to the year. Reiterates FY22 EPS guidance of between 2.35-2.45 (exp. 2.41), and sees FY22 revenue between USD 8.7-8.9bln (exp. 8.6bln)


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  AstraZeneca (AZN) - Said new Nirsevimab data reinforces efficacy.


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  Bayer (BAYRY) - Biden administration urged SCOTUS to reject a Bayer appeal, could open it up to billions of dollars in lawsuits.


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  Evotec (EVO) - Reported higher sales but lower EBITDA, and confirmed its outlook. Q1 revenue EUR 164.7mln (prev. 133.1mln). Q1 adj. EBITDA EUR 18.9mln (prev. 21.1mln). Affirms forecasts.


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  Roche (RHBBY) - A study evaluating tiragolumab plus Tecentriq did not meet its co-primary endpoints. Roche said the tiragolumab development programme continues as planned in non-small cell lung cancer and other cancer types.

FINANCIALS:

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  Allianz (ALIZY) - To book a provision in Q1 of EUR 1.9bln, will impact net income by EUR 1.6bln after tax.


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  Rocket Companies, Inc. (RKT) - Slipped 3% after hours. Q1 adj. EPS 0.15 (exp. 0.19), Q1 revenue USD 2.67bln (exp. 2.2bln). Q1 loan origination volume USD 54bln (exp. 52-57bln). Sees Q2 closed loan volume of USD 35-40bln, and sees Q2 net rate lock volume between USD 31-38bln.


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  Swiss Life (SZLMY) - Reported fee income rising in Q1. Q1 net fees and commission income CHF 579mln (prev. 527mln), Q1 premium income CHF 6.86bln (prev. 6.80bln).


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  Zurich Insurance (ZURVY) - Reportedly in talks to sell its USD 21bln German life insurance policies to Cinven’s Viridium Group.

TECH:

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  Coinbase Global, Inc. (COIN) - Dropped 15.7% after hours, as Q1 results broadly missed expectations. Q1 EPS -1.98 (vs 3.80 Y/Y), Q1 revenue USD 1.165bln (exp. 1.48bln), Q1 monthly transacting users (MTU) 9.2mln (exp. 9.5mln), Q1 trading volume USD 309bln (exp. 335bln). Sees Q2 MTU and trading volumes lower Q/Q; says subscription and services revenue to be similar/modestly lower in Q2 Q/Q. Outlook for FY22 was left “largely unchanged”; annual average MTU seen at between 5-15mln, with “strong” subscription and services growth. Coinbase filed for an automatic mixed securities shelf.


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  GlobalFoundries Inc. (GFS) - Added 3.5% after hours. Q1 EPS 0.42 (exp. 0.23), Q1 revenue USD 1.94bln (exp. 1.9bln). Exec noted revenue grew +37% Y/Y, it delivered record profitability, made progress towards long-term financial goals. Said despite global supply chain challenges, it continues to execute to plan, and remains on track to deliver a strong year of growth and profitability. Sees Q2 EPS between 0.43-0.48 (exp. 0.26), and sees Q2 revenue between USD 1.96-1.99bln (exp. 1.92bln).


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  Olo Inc. (OLO) - Fell 10% after hours. Q1 adj. EPS 0.01 (exp. 0.00), Q1 revenue USD 42.8mln (exp. 41.7mln). Exec said revenue and profitability momentum continued in Q1. Sees Q2 revenue between 45.5-46mln (exp. 45.5mln), sees FY22 revenue between 195-197mln (exp. 194mln). Appointed Diego Panama as chief revenue officer.


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  Paya Holdings Inc. (PAYA) - Rose 5.5% after the close. Q1 adj. EPS 0.09 (exp. 0.08), and Q1 revenue USD 66mln (exp. 65.4mln). Results driven by its integrated solutions and ACH businesses, which together represented nearly 80% of total revenue. Exec said it was starting to see favourable results from some of the modest incremental investments it made to accelerate growth. Reaffirms its FY22 revenue outlook of between USD 275-283mln (exp. 279.8mln), and FY22 adj. EBITDA view of USD 72-74mln.


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  Rackspace Technology, Inc. (RXT) - Rose 3.1% after the close. Q1 EPS 0.22 (exp. 0.21), Q1 revenue USD 775.5mln (exp. 774.5mln). Exec noted it recently completed a strategic review, and based on inbound interest for one of its businesses, it concluded that “a sum of the parts valuation of Rackspace Technology could be greater than our current enterprise value,” and accordingly, it is evaluating strategic alternatives and options, and will provide further information as appropriate. Sees Q2 EPS between 0.15-0.17 (exp. 0.23), and sees Q2 revenue between USD 780-790mln (exp. 800.7mln).


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  Switch, Inc. (SWCH), DigitalBridge (DBRG), Brookfield (BAM) - DigitalBridge reportedly outbids Brookfield, and is nearing a deal to buy Switch, according to Bloomberg. Switch reported Q1 adj. EPS 0.04 (exp. 0.06), and Q1 revenue between USD 164.6mln (exp. 163.6mln). Reiterates its FY22 revenue outlook at USD 660-674mln (exp. 670.7mln).


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  The Trade Desk, Inc. (TTD) - Shed 8% after hours. Q1 adj. EPS 0.21 (exp. 0.15), Q1 revenue USD 315.3mln (exp. 304.7mln). Sees Q2 revenue at least USD 364mln (exp. 360.3mln).


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  Unity Software Inc. (U) - Dropped 30% after the close on soft guidance. Q1 adj. EPS -0.08 (exp. -0.08), Q1 revenue USD 320.1mln (exp. 321.45mln). Sees FY22 revenue view between USD 1.35-1.43bln (exp. 1.49bln), and Q2 revenue between USD 290-295mln (exp. 359.7mln).

COMMUNICATIONS:

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  Electronic Arts Inc. (EA) - Rose 4.3% after hours following results. Q4 EPS 1.46 (exp. 1.43), Q4 net bookings USD 1.75bln (exp. 1.77bln). Boosts quarterly dividend by 2c to USD 0.19/shr. Sees Q1 EPS between 0.76-0.85 (exp. 0.83), and sees Q1 net bookings between 1.2-1.25bln (exp. 1.44bln). Sees FY23 EPS between 2.79-2.87 (exp. 7.43), and sees FY23 net bookings between 7.9-8.1bln (exp. 8.02bln).


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  ITV (ITVPY) - Reported a robust Q1, adding that ITVX was on track for Q4 launch. Total External Revenue GBP 834mln (prev. 709mln), Studios Revenue GBP 545mln (prev. 483mln), Total Advertising Revenue +16%. Q2 Total Advertising Revenue forecast to be down circa. 6%, vs strong comparatives.


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  Roblox Corporation (RBLX) - Fell 4.1% after hours. Q1 EPS -0.27 (exp. -0.21), Q1 revenue USD 537.1mln (prev. 387mln Y/Y), Q1 bookings -3% Y/Y at USD 631.2mln. Q1 DAUs +28% Y/Y at 54.1mln but eased to 53.1mln in the April month, Q1 Hours Engaged +22% Y/Y at 11.8bln (April was 3.8bln, +18% Y/Y), Q1 Average Bookings per DAU (ABPDAU) was USD 11.67 (and was between 4.16-4.22 in April). Exec noted that over the past two quarters, it has launched a number of innovations including spatial voice and layered clothing that will continue driving user growth, engagement and monetisation.


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  Telefonica Deutschland (TELDY) - Said Q1 started strongly, and confirmed its outlook. Q1 revenue EUR 1.95bln (prev. 1.85bln Y/Y). OIBDA EUR 602mln (prev. 562mln).


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  Ziff Davis, Inc. (ZD) - Q1 adj. EPS 1.23 (exp. 1.21), Q1 revenue USD 315.1mln (exp. 319.5mln). Reiterates FY22 EPS outlook between 6.52-6.79 (exp. 6.68), and FY22 revenue outlook between USD 1.497-1.535bln (exp. 1.52bln).

MATERIALS:

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  K+S (KPLUY) - Topped estimates in Q1 on higher fertiliser prices. Q1 revenue EUR 1.21bln (prev. 733mln Y/Y). Q1 EBITDA EUR 524mln (prev. 126mln).


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  Thyssenkrupp (TKAMY) - Beat expectations in Q2, lifted its sales view, but lowered its FCF outlook.  Q2 revenue EUR 10.6bln (exp. 9.44bln). Q2 adj. EBIT EUR 802mln (exp. 576.4mln).

ENERGY:

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  Occidental Petroleum Corporation (OXY) - Fell 1.4% after the bell. Q1 adj. EPS 2.12 (exp. 2.03). Exec noted that it met Q1 production guidance and, in accordance with its FY capital plan, it prepared OXY to deliver increased barrels of oil and natural gas to the market for the remainder of the year. OxyChem delivered its third consecutive record quarterly earnings.

11 May 2022 - 09:31- EnergyData- Source: Newsquawk