US EARLY MORNING: US index futures are lower, but still above pre-FOMC levels

US equity futures are lower by 0.3-0.7%, but remain higher than levels seen as we went into Wednesday’s FOMC meeting (YM -0.3%, RTY -0.4%, ES -0.5%, NQ -0.6%). Index futures are now back towards the top-end of the range since late April. Shares were comforted after the Fed updated policy in line with the market’s expectations (50bps rate hike, QT to start in June in a phased fashion), and crucially, Chair Powell leaned-back against calls for the central bank to move in 75bps increments, instead expressing a preference for 50bps moves for the next “couple” of meetings as the Fed “expeditiously” normalises policy to tackle inflation. Money markets continue to expect that the Federal Funds Rate target will be lifted to 2.50-2.75% by the end of the year, with some risks of 2.75-3.00% – little changed vs pre-FOMC levels. Given that Powell reinforced the central bank’s inflation targeting credentials, the key question is whether the Fed can engineer a soft landing for the US economy as it retains optionality for raising rates above neutral (FOMC March forecasts sees this rate at 2.4%, Powell this week said it was somewhere between 2-3%), which economists say would take policy into restrictive territory; ING’s analysts said that this was “wishful thinking”. Treasury yields are wider this morning, up by around 4-10bps, as the shape of the curve flattens and the short-end underperforms, though yields along the front-end of the curve are still lower than pre-FOMC levels. Writing after the FOMC meeting, UBS’ CIO still thinks equities will finish the year higher vs current levels, despite its base case of moderating growth and inflationary pressures. “With inflation high and interest rates rising, we think the economic and market environment is favourable for value investing,” the bank writes, “we recommend investors, who have been under-allocated to value after a long period of underperformance, to add to long-term positions in value stocks or value-oriented sectors and markets including global energy and the UK.”

KEY US EQUITY LEVELS (via Credit Suisse):

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  SPX: 4072, 4099, 4115, 4128, 4170, 4191, 4208, 4232/35, 4270, 4284/88.


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  NDX: 12592, 12628, 12722/17, 12815/10, 12948, 13318, 13428/56, 13542/43, 13607, 13690.


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  RUT: 1825, 1839, 1850, 1870, 1889, 1915, 1928, 1940, 1954, 1969.

CONSUMER STAPLES:

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  AB InBev (BUD) - Topped expectations in Q1 amid beer price hikes in US and Europe. Q1 revenue USD 13.24bln (exp. 13.17bln), adj. EPS 0.67 (exp. 0.61). Q1 adj. EBITDA USD 4.49bln (exp. 4.40bln). Sees FY adj. EBITDA growth between +4-8% (exp. 5.92%), sees 2022 CapEx at USD 4.5bln to USD 5.0bln.


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  Costco Wholesale Corporation (COST) - April Sales +13.9% Y/Y in April to USD 17.33bln (prev. +18.7% Y/Y to USD 21.6bln in March). April US comp sales +8.1% (exp. +7.7%).

CONSUMER CYCLICAL:

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  Booking Holdings Inc (BKNG) - Rose 10.9% after results topped expectations. Q1 adj. EPS 3.90 (exp. 0.90), Q1 revenue USD 2.70bln (exp. 2.54bln). Q1 gross travel bookings +129% Y/Y to USD 27.3bln (exp. 25bln), Q1 room nights booked +100% Y/Y. Exec said it has seen continued strengthening of global travel trends so far in Q2, and is preparing for a busy summer travel season.


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  eBay Inc (EBAY) - Tumbled 6.5% after weak guidance. Q1 adj. EPS 1.05 (exp. 1.03), Q1 revenue USD 2.5bln (exp. 2.46bln). Q1 Gross Merchandise Volume -20% at USD 19.4bln. Q1 quarterly active buyers 142mln. Q2 adj. EPS view 0.87-0.91 (exp. 1.02). FY Adj. EPS view 3.90-4.10 (exp. 4.34), FY Revenue view USD 9.6-9.9bln (exp. 10.39bln).


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  EssilorLuxottica (ESLOY), Meta Platform (FB) - Meta reportedly teased a glasses concept with EssilorLuxottica.


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  Etsy, Inc. (ETSY) - Dropped 11% after hours. Q1 EPS 0.60 (exp. 0.60), Q1 revenue USD 579.3mln (exp. 575.4mln). Consolidated GMS +3.5% Y/Y at USD 3.3bln, marketplace GMS -2.0% Y/Y at USD 2.8bln. Said marketplace GMS performance was impacted by headwinds related to consumer discretionary spending, continued reopenings, and geopolitical events, adding that consumers had less disposable income and many more places to spend it, creating a short-term headwind for Etsy sales. Sees Q2 revenue between USD 540-590mln (exp. 627.8mln), and sees Q2 GMS between USD 2.9-3.2bln.


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  Playtech (PYTCY) - Trading update noted its excellent start to the year continued, but board remains cautious due to macro backdrop.


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  TripAdvisor, Inc. (TRIP) - Gained over 7% after the bell. Q1 adj. EPS -0.09 (exp. -0.08), Q1 revenue USD 262mln (exp. 251.3mln). Announced Matt Goldberg will succeed Stephen Kaufer as CEO. Exec said that after an Omicron-impacted January, business picked up strongly in February and March, resulting in exceeding our own expectations for the quarter, adding that it is optimistic about the remainder of 2022 and the increasing demand for travel.

INDUSTRIALS:

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  Airbus (EADSY) - Confirmed it was delaying its A321XLR over safety talks, but was ramping production of the A320 jets. Q1 EPS 1.55 (prev. 0.46 Y/Y), Q1 revenue EUR 12bln (exp. 11.99bln, prev. 10.5bln Y/Y); Adj. EBIT 1.3bln (exp. 708.9mln, prev. 694mln Y/Y); FY22 guidance unchanged. Said the situation in China is difficult.


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  BAE Systems (BAESY) - Reaffirmed 2022 guidance.


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  BMW (BMWYY) - Despite supply chain disruptions, earnings were up, supported by China JV and higher car prices. Q1 revenue EUR 31.14bln (exp. 30.84bln), EBIT EUR 3.39bln (exp. 2.9bln), Automotive Revenue EUR 26.73bln (exp. 27.08bln). Affirms FY22 outlook. Says the chip shortage is not expected to ease until H2 2022 at the earliest.


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  Deutsche Lufthansa (DLAKY) - Saw a recovery in Q1 but warns on 2022.


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  Ingersoll-Rand Plc (IR) - Q1 adj. EPS 0.49 (exp. 0.45), Q1 revenue USD 1.34bln (exp. 1.3bln). Backs FY22 revenue growth view of between +11-13% (exp. 5.74bln), and raised FY22 organic revenue growth view by 100bps to +8-10%, raised adj. EBITDA range to USD 1.385-1,425bln (+16-20% Y/Y).


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  Siemens Gamesa (GCTAY) - Maintains outlook despite uncertainty. Q2 revenue EUR 2.18bln (prelim. 2.2bln). Net EUR -377mln (prev. -66mln). Order intake EUR 1.2bln (prev. 5.5bln Y/Y).


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  Stellantis (STLA) - Revenues rise despite chip shortages. Q1 revenue EUR 41.5bln (prev. 37.0bln Y/Y). Sees FY22 operating margin in double-digit-percentage (prev. 5.5-5.7%). Guides FCF as positive. Worldwide unit sales 1.37mln (prev. 1.62mln Y/Y).

MATERIALS:

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  Albemarle Corporation (ALB) - Rose over 15% after reporting its results and raised guidance. Q1 adj. EPS USD 2.38 (exp. 1.63), Q1 revenue USD 1.13bln (exp. 1.02bln). Raised guidance due to increased prices in its lithium and bromine businesses; FY22 adj. EPS view lifted to 9.25-12.25 (exp. 6.22, prev. 5.65-6.65), and FY22 revenue view raised to USD 5.2-5.6bln (exp. 4.4bln, prev. 4.2-4.5bln).


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  ArcelorMittal (MT) - Cut FY global steel consumption outlook, increasing share buyback programme. Q1 revenue USD 21.84bln (exp. 20.88bln). EBITDA USD 5.08bln (exp. 4.56bln). Cuts FY global apparent steel consumption outlook. Is to increase its share buyback programme to USD 2.0bln from USD 1.0bln.


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  CF Industries Holdings, Inc. (CF) - Fell 1 after hours. Q1 EPS 4.21 (exp. 4.35), Q1 revenue USD 2.9bln (exp. 2.6bln). Exec said global grains stocks remained extremely low, an issue that has become amplified because of Russia's invasion of Ukraine. CF thinks it will take at least 2-3 years to replenish global grains stocks.


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  Lanxess (LNXSY) - EBITDA up in Q1, sees Q2 profits higher on price hikes. Q1 revenue EUR 2.43bln (prev. 1.69bln Y/Y), adj. EBITDA EUR 320mln (prev. 242mln). Affirms FY22 adj. EBITDA to be significantly above the prior year.


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  Rio Tinto (RIO) - Said sanctions on Rusal (486 HK) would significantly disrupt the aluminium market and drive prices higher.

FINANCIALS:

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  Allstate Corp (ALL) - Fell 2.75% after the bell as EPS missed expectations. Q1 adj. EPS 2.58 (exp. 2.90), Q1 revenue USD 12.34bln (exp. 10.3bln). Q1 premiums +6.5% Y/Y to USD 11.0bln. Said it was addressing inflation by raising prices, reducing expenses and changing investment allocations.


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  Credit Agricole (CRARY) - Q1 earnings hit by Russia-Ukraine. Q1 revenue EUR 5.94bln (exp. 5.70bln). Net Income EUR 552mln (exp. 706.5mln). CET1 ratio 17%, -0.5ppts. Notes of a conservative provisioning of Russian exposures at EUR -389mln.


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  Credit Suisse (CS) - Recorded net litigation provisions of CHF 703mln in 2022.


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  Lincoln National Corporation (LNC) - Fell 3.5% after hours. Q1 adj. EPS 1.66 (exp. 1.81), Q1 revenue USD 4.687bln (exp. 4.8bln).


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  MetLife Inc (MET) - Q1 adj. EPS 2.08 (exp. 1.65), Q1 revenue USD 15.756bln (exp. 16.78bln). Announces new USD 3bln share repurchase programme.


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  SocGen (SCGLY) - Higher rates helped offset rising costs. Q1 revenue EUR 7.28bln (prev. 6.25bln Y/Y). Adj. net EUR 842mln (prev. 814mln). Operating profit EUR 1.39bln (prev. 1.22bln). Q1 Global Banking/Investor Solutions revenue +18.1% Y/Y.


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  Swiss Re (SSREY) - Sees loss in Q1 on Ukraine war. Q1 premiums and fee income USD 10.6bln (prev. 10.2bln). Net USD -248mln (prev. +333mln). P&C combined ratio 99.3% (prev. 96.6%).


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  UniCredit (UNCRY) - Profits hit by Ukraine/Russia, confirms buybacks. Q1 revenue EUR 5.02bln (exp. 4.43bln). Net Income EUR 247mln (exp. 405mln). Trading profit EUR 785mln (exp. 399.8mln). Loan provisions EUR 1.3bln, driven by Russia. Is confident it can deliver on its remaining EUR 1bln share buyback programme. CEO said Russian exposure had been reduced by EUR 2bln; most recent assessment of extreme loss scenario on Russia is EUR 5.2bln.

TECH:

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  ANSYS, Inc. (ANSS) - Slipped in after hours on soft guidance. Q1 adj. EPS 1.36 (exp. 1.14), Q1 revenue USD 425.1mln (exp. 408mln). Sees Q2 EPS between 1.46-1.64 (exp. 1.85), and sees Q2 revenue between USD 450-475mln (exp. 489mln). For FY22, it sees EPS between 7.53-7.94 (exp. 7.95), and sees FY22 revenue between 2.01-2.07bln (exp. 2.1bln)


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  Ceridian HCM Holding Inc. (CDAY) - Fell 3% after results. Q1 adj. EPS 0.13 (exp. 0.11), Q1 revenue USD 293.3mln (exp. 372.1mln). Sees Q2 revenue between USD 293-296 (exp. 373.9mln), and sees FY22 revenue between USD 1.208-1.23bln (exp. 1.55bln).


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  Cognizant Technology Solutions Corp (CTSH) - Fell 5% after hours following guidance cut. Q1 adj. EPS 1.08 (exp. 1.04), Q1 revenue USD 4.8bln (exp. 4.83bln). Cut its FY22 EPS view to 4.45-4.55 (exp. 4.56, prev. 4.46-4.60), FY Revenue view 19.80-20.2bln (exp. 20.22bln, prev. 20-20.5bln).


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  Fortinet, Inc. (FTNT) - Rose 5.5% after hours on decent results and guidance upgrade. Q1 adj. EPS 0.94 (exp. 0.79), Q1 revenue USD 954.8mln (exp. 884.8mln). Sees Q2 adj. EPS between 1.05-1.10 (exp. 1.13), and sees Q2 revenue between USD 1.005-1.035bln (exp. 1.01bln). Sees FY22 adj. EPS between 5.00-5.15 (exp. 4.96), and sees FY22 revenue between 4.35-4.4bln (exp. 4.3bln)


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  GoDaddy Inc. (GDDY) - Fell 2.6% after hours. Q1 EPS 0.41 (exp. 0.42), Q1 revenue USD 1.0bln (exp. 989.5mln). Q1 total bookings +6.2%, or +7.2% in constant currency. Announced additional USD 250mln share repurchases. Sees Q2 revenue between 1.01-1.02bln (exp. 1.02bln). Sees FY22 revenue at USD 4.15bln (exp. 4.16bln).


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  Qorvo, Inc. (QRVO) - Fell 4.9% after hours on weak guidance. Q4 EPS 3.12 (exp. 2.92), Q4 revenue USD 1.166bln (exp. 1.15bln). Exec notes challenges related to COVID lockdowns in China, the war in Ukraine and other disruptions. Sees Q1 EPS between 2.00-2.25 (exp. 2.78), and sees Q1 revenue between USD 1.0-1.05bln (exp. 1.13bln).


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  SAP (SAP), Alphabet (GOOGL) - SAP and Google launch a native integration between Workspace and S/4HANA Cloud.


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  Vimeo, Inc. (VMEO) - Tumbled 12% after hours on soft guidance. Q1 EPS -0.16 (exp. -0.15), Q1 revenue USD 108.35mln (exp. 106.4mln). Sees Q2 revenue up +12-14% (exp. +14%), and sees FY22 adj. EBITDA loss of between USD 25-30mln (exp. -29mln).

HEALTH CARE:

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  AstraZeneca (AZN) - Ultomiris met primary end points in a Champion-NMOSD Phase III trial in adults.

ENERGY:

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  Chesapeake Energy Corporation (CHK) - Rose 3.1% after hours. Q1 adj. EPS 3.09 (exp. 2.39). It increased the midpoint of its adj. FCF free cash flow projection.


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  Marathon Oil Corporation (MRO) - Down 1.4% after hours. Q1 adj. EPS 1.02 (exp. 0.92), Q1 revenue USD 1.75bln (exp. 1.71bln). FY22 production guidance unchanged, expects flat oil and oil-equivalent production vs 2021.


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  Norway - Norway's labour unions said initial wage talks with oil firms broke down and they will proceed with mediation.


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  Pioneer Natural Resources Company (PXD) - Q1 adj. EPS 7.74 (exp. 7.00), Q1 oil and gas revenue USD 3.93bln (exp. 3.6bln). Sees Q2 oil production averaging 342-357 MBOEPD, total production seen averaging 623-648 MBOEPD. Production costs seen averaging 11.00-12.50/BOE.


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  Shell (SHEL) - Higher energy prices helps it post record profit levels. Q1 adj. profit USD 9.13bln (exp. 8.2bln). Adj. EPS 1.20 (exp. 1.09). Revenue USD 84.20bln (prev. 85.28bln Q/Q). Raises dividend to 0.25 (prev. 0.24 in Q/Q). Distribution for H2 seen in excess of 30% of Cash Flow From Operations (CFFO).

UTILITIES:

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  EDF (ECIFY) - Hopes to seal a deal to equip six EPR nuclear reactors in India in the coming months.

COMMUNICATIONS:

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  Lumen Technologies, Inc. (LUMN) - Q1 adj. EPS 0.63 (exp. 0.45), Q1 revenue USD 4.67bln (exp. 4.68bln). Raised FY22 adj. EBITDA outlook to between USD 6.9-7.1bln (prev. 6.5-6.7bln), and raised FY22 FCF view to UDS 2-2.2bln (prev. 1.6-1.8bln).


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  Telecom Italia (TIIAY) - Core profit declined on easing demand.


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  Twilio Inc. (TWLO) - Rose 3.8% after hours. Q1 EPS 0.00 (exp. -0.22), Q1 revenue USD 875.4mln (exp. 863.6mln). Sees Q2 loss per share between -23c and -20c EPS (exp. -0.13), and sees Q2 revenue between 912-922mln (exp. 916mln).

05 May 2022 - 09:20- EquitiesResearch Sheet- Source: Newsquawk