Hammerstone Markets Early Look

Wednesday, February 23, 2022

U.S. futures are pushing higher along with gains in Europe and Asia as investors continue to weigh the implications of limited sanctions against Russia by the U.S. and its allies amid continuing tensions around Ukraine. The sanctions, announced yesterday by President Biden, stopped short of sweeping measures, though officials warned they could be scaled up. U.S. Secretary of State Antony Blinken canceled plans for a meeting Thursday in Geneva with his Russian counterpart, Foreign Minister Sergei Lavrov. Stocks slumped on Monday as all major U.S. indexes finished the day lower by over 1% and the S&P 500 index closes more than 10% down from its record close, confirming correction territory. All eleven of the S&P 500 sectors end in negative territory with consumer discretionary the weakest, and utilities down the least. Commodity prices advanced Monday as gold and crude gain as the United States prepared a first tranche of sanctions against Russia, which President Joe Biden said was due to "the beginning of a Russian invasion of Ukraine. Oil prices eases back as traders weigh U.S. sanctions, Iran talks. In Asian markets, The Nikkei Index fell -461 points to 26,449, the Shanghai Index rose 32 points to 3,489, and the Hang Seng Index gained 140 points to 23,660. In Europe, the German DAX is up +0.78% to 14,800, while the FTSE 100 gains about +0.35% to 7,520.

Market Closing Prices Yesterday

·??????The S&P 500 Index?dropped -44.21 points, or 1.02%, to 4,304.66

·??????The Dow Jones Industrial Average?fell -482.05 points, or 1.41%, to 33,597.13

·??????The Nasdaq Composite?tumbled -166.55 points, or 1.23%, to 13,381.52

·??????The Russell 2000 Index?declined -29.16 points, or 1.45% to 1,980.18

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Events Calendar for Today

·??????7:00 AM ET?????????MBA Mortgage Applications Data

·??????8:55 AM ET?????????Johnson/Redbook Weekly Sales

·??????4:30 PM ET?????????API Weekly Inventory Data

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Earnings Calendar:

·??????Earnings Before the Open: ALIT, ARKO, AVA, BCO, BCRX, CLH, CLVS, DAN, DOC, ETR, FDP, GTHX, HFC, IART, IHRT, KOP, LL, LOW, MFA, NEO, NETI, NI, ODP, OMI, OPCH, OSTK, PLAB, PLYM, PSN, ROCK, SBGI, SSYS, TAP, TJX, TNL, TUP, VRT, WWW

·??????Earnings After the Close: AN, ACA, AHT, AMED, AMSWA, ARNA, ATNI, BAND, BBWI, BMRN, BRD, BKNG, CCAP, CCRN, CDEV, CHDN, CHK, CLOV, CMLS, CPE, CPK, CTRA, CW, DCO, DH, DK, DKL, EBAY, ECPG, EVH, EXR, FIVN, FLGT, FLS, FNF, FUBO, GBT, GH, GSHD, GTY, HEI, HLF, HTZ, IIPR, INN, IR, IRTC, KALU, KW. LHCG, LMND, LUNG, LYV, MANT, MAPS, MED, MGNI, MNRL, NARI, NDLS, NEWT, NGVT, NOVA, NTAP, NUVA, NVRO, OLED, ONEM, ORA, ORCC, OSUR, OUT, PODD, PUMP, RCII, REAL, RGR, RMAX, ROOT, RTLR, RVLV, RYAM, SKLZ, SNBR, SPXC, STAA, SUM, TMDX, TPL, UCTT, VAC, VICI, WES, WLL, XNCR, XPER, Y

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Other Key Events:

·??????Barclay’s Industrial Select Conference, 2/23-2/24, in Florida

·??????Citigroup Healthcare Conference (virtual), 2/23-2/24

·??????RBC Capital Global Environmental, Social and Governance Conference, 2/23-2/24

·??????Wells Fargo Real Estate Securities Conference (virtual), 2/23-2/24

·??????Wolfe Research Global Auto, Auto Tech & Mobility Conference (virtual), 2/23-2/24

World News

·??????New Zealand?bond yields jump after the RBNZ hikes rates and projects even more aggressive tightening cycle than previously seen; RBNZ raises interest rates for third time, signals higher peak

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Sector News Breakdown

Consumer

·??????Lowe’s (LOW)?Q4 adj EPS $1.78 vs. est. $1.71; Q4 revs $21.34B vs. est. $20.9B; reports consolidated comparable sales up 5% and U.S. comparable sales up 5.1%; said comparable sales will likely be close to flat in the 2022 fiscal year vs. est. +0.7%; guides year EPS $13.10-$13.60, up from prior $12.25-$13.00 and vs. est. $12.93; raises year revs view

·??????Caesars Entertainment (CZR)?4Q EPS ($2.03) vs est. ($0.92) on revs $2.6B vs est. $2.59B; expects to continue to reduce debt in 2022 through receipt of asset sale proceeds and significant FCF

·??????Camping World Holdings (CWH)?Q4 EPS $0.90 vs. est. $0.84; Q4 revs a record $1.4B, up 21.5% y/y vs. est. $1.3B; vehicle inventories were $1.5 billion, an increase of $645.8 million; new vehicle inventories were $1.1 billion, an increase of $417.8 million, and used vehicle inventories were $406.4 million, an increase of $228.1 million.

·??????Danone (DANOY)?pledged further productivity gains and price increases this year to offset cost inflation after the French food maker beat fourth-quarter sales forecasts

·??????Esports Entertainment Group (GMBL)?2Q adj EBITDA ($6.8Mm) vs est. ($3.38Mm) on revs $14.5Mm vs est. $21.3Mm; guides FY revs $70-75Mm vs est. $99.2Mm

·??????LL Flooring (LL)?Q4 adj EPS $0.35 vs. est. $0.24; Q4 revs $285.3M vs. est. $295.5M; Q4 total comp store sales decreased 6.7% y/y but increased 3.8% on a two-year stack basis. Gross margin of 37.3% decreased 150 bps; raises share repurchase authorization to $50M; expect comparable store sales to improve for q2 vs q1 of 2022, and to show growth for full year 2022

·??????Overstock.com (OSTK)?Q4 EPS $0.68 vs. est. $0.32; Q4 revs fell -9% to $613M vs. est. $643.99M

·??????Texas Roadhouse (TXRH)?Q4 EPS $0.76 vs est. $0.69 on in-line revenue $895.6M; comp sales at company restaurants +33.1% vs 4Q20, +21.2% vs 4Q19; raised its dividend to 46c/share from 40c; YTD comp sales +20.6% vs 2021, +37.8% vs 2020, +18.3% vs 2019

·??????The Beauty Health Company (SKIN)?adj net Inc $1.6Mm vs est. ($3.0Mm) on sales $77.9Mm vs est. $71.1Mm; guides FY net sales $320-330Mm vs est. $314Mm

·??????Toll Brothers (TOL)?1Q EPS $1.24 vs est. $1.15 on home sales revs $1.7B, backlog $10.8B and qtr-end; guides 2Q deliveries 2,350 units and FY deliveries 11,250-12,000 units

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Energy

·??????Diamondback Energy (FANG)?Q4 adj EPS $3.63 vs. est. $3.37; Q4 adjusted EBITDA $1.19 billion vs. $475 million y/y; total revenue $2.02 billion; average realized price crude oil equivalent per BOE $56.47 vs. $27.41 y/y, vs. estimate $56.04

·??????Laredo Petroleum, Inc. (LPI)?Q4 EPS $3.39 vs. est. $3.34; Q4 revs $470.2M vs. est. $360.06M; in Q4, produced 41,080 barrels of oil per day & 85,240 barrels of oil equivalent per day, increase of 87% and 3%, respectively

·??????Matador Resources (MTDR)?Q4 adj EPS $1.26 vs. est. $1.09; Q4 revs $566.36M vs. est. $434.78M; estimated 2022 total oil equivalent production of 37.3 mln boe or average daily oil equivalent production of about102,000 boe/day; estimated 2022 total oil production of 21.5 mln barrels, or an average daily oil production of about 58,900 barrels of oil per day

·??????Ovintiv (OVV)?is looking to hire an investment bank to consider options for its acreage in Utah's Uinta Basin, as it seeks to advantage of high energy prices to cut debt, Reuters reported

·??????ProPetro Holding Corp. (PUMP)?Q4 EPS loss (-$0.20) vs. est. loss (-$0.01); Q4 revs $246.1M vs. est. $242.5M; Adjusted Q4 EBITDA decreased 12% to $37 million compared to $42 million for the third quarter of 2021; effective utilization for the fourth quarter was 12.5 fleets compared to 13.8 fleets for the third quarter of 2021

·??????Range Resources (RRC)?Q4 EPS $0.96 vs. est. $0.98; Q4 revs $1.57B vs. est. $1.02B; Q4 production averaged approximately 2,198 Mmcfe per day, and fourth quarter 2021 all-in capital spending totaled $92.3 million; announced that year-end 2021 proved reserves increased to 17.8 Tcfe and SEC PV10 increased to $14.9B

·??????Transocean (RIG)?Q4 revs $671M vs. est. $652M; contract drilling revenues for three months ended December 31, 2021 decreased sequentially by $5 mln to $621M; after consideration of net unfavorable item, q4 2021 adjusted net loss was $126 mln, $0.19 per diluted share; contract backlog was $6.5 bln as of February 2022 fleet status report

·??????Warrior Met Coal (HCC)?4Q adj EPS $3.17 vs est. $2.36 on revs $415.5Mm vs est. $302.6Mm; says without a new contract, believes production and sales volume for 2022 could be between 5.5-6.5Mm short tons; has continuity plans in place but strike may still cause production and shipment disruptions

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Financials

·??????American Campus Communities (ACC)?Q4 FFO $0.75 vs. est. $0.71; Q4 revs $272.3M vs. est. $249.1M; sees 2022 FFO $2.46-$2.56 vs. est. $2.41; Grew same store net operating income (NOI) by 14.8% in Q4 y/y as revenues increased 10.2% and operating expenses grew 4.1%

·??????CoStar Group, Inc. (CSGP)?4Q EPS $0.24 vs est. $0.29 on revs $507Mm vs est. $501.3Mm; sees 1Q revs $510-515Mm vs est. $520.7Mm and adj EPS $0.27-0.28 vs est. $0.32; guides FY revs $2.145-2.165B vs est. $2.22B and adj EPS $0.95-1.02 vs est. $1.35

·??????Intercontinental Exchange, Inc. (ICE)?announced that it is making a strategic investment in tZERO, a leader in blockchain innovation and liquidity for digital assets (note?OSTK?is an original investor in tZERO)

·??????Nu Holdings (NU)?Q4 net loss $66.2M; total revenue for Q4′21 reached $635.9 million, increasing year-over-year (yoy) by 224.3% FXN

·??????Public Storage (PSA)?Q4 core FFO $3.54 vs est. $3.44 on revenue $924.3M vs est. $908.7M; sees FY22 revenues +12-15%, core FFO $14.75-$15.65

·??????Sunstone Hotel (SHO)?4Q adj FFO/shr $0.08 vs est. $0.10, 14 hotel portfolio REVPAR +421.2% to $136.50, revs $173.9Mm vs est. $277.7Mm

·??????Verisk Analytics, Inc. (VRSK)?4Q adj EPS $1.47 vs est. $1.41 on revs $766Mm vs est. $770Mm; board approved an additional $1B to repurchase pact

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Healthcare

·??????Kodiak Sciences (KOD)?plunges over -60% after saying its experimental drug KSI-301 failed to meet the primary goal of a mid-to-late-stage study testing it in wet age-related macular degeneration (AMD) patients; the drug did not meet the main goal of showing non-inferior visual acuity gains compared to?Regeneron Pharmaceuticals' (REGN)

·??????Agilent Technology (A)?1Q adj EPS $1.21 vs est. $1.18 on revs $1.67B vs est. $1.65B; guides 2Q revs $1.595-1.625B vs est. $1.63B and adj EPS $1.10-1.12 vs est. $1.11; sees FY revs $6.67-6.73B vs est. $6.715B

·??????Exact Sciences (EXAS)?4Q EPS ($1.28) vs est. ($1.04) on revs $473.8Mm vs est. $449Mm; guides FY revs $1.975-2.027B vs est. $1.985B

·??????Glaukos (GKOS)?Q4 EPS ($0.47) vs est. ($0.37) on revenue $73.2M vs et. $67.3M; expects FY22 sales $265M-$275M vs est. $268.2M

·??????Halozyme Therapeutics, Inc. (HALO)?Q4 EPS $0.42 vs. est. $0.41; Q4 revs $102M vs. est. $100.3M; sees 2022 non-GAAP EPS $2.05-$2.20 vs. est. $2.18; sees 2022 revs $530M-$560M vs. est. $554.2M, represents 205-26% growth

·??????HealthEquity (HQY)?total number of HSAs as of Jan. 31, 2022 grew 25% YoY to 7.2M and total accounts rose 12% to 14.4M; narrowed FY22 adj EPS range to $1.30-$1.33 (est. $1.33) from $1.30-$1.35 and raised revenue outlook to $754M-$756M (est. $751.5M) from $750M-$755M; sees FY23 revenue $815M-$830M vs est. $827.4M

·??????Hims & Hers Health, Inc. (HIMS)?Q4 EPS loss (-$0.15) vs. est. loss (-$0.07); Q4 revs $84.7M vs. est. $76.7M; sees Q1 revenue $90M-$93M vs. est. $77.92M; sees Q1 adjusted EBITDA ($12M)-($10M); Q4 2021 ending member subscriptions grew 95% year-over-year to 609,000

·??????Penumbra, Inc. (PEN)?4Q adj EPS $0.10 vs est. $0.22 on revs $204Mm vs est. $194.3Mm; guides FY revs $860-875Mm vs est. $862.4Mm

·??????PTC Therapeutics (PTCT)?Q4 EPS ($2.03) vs est. ($1.65) on revenue $165.2M vs est. $150.8M; reaffirmed FY22 guidance, including revs $700-$750M vs est. $715.5M, net product revs for DMD franchise $475M-$495M, adj R&D and SG&A expense $800M-$850M from $723M in FY21

·??????Tactile Systems (TCMD)?4Q EPS ($0.38) vs est. $0.10 on revs $61.7Mm vs est. $58Mm; guides FY revs $235-240Mm vs est. $245.3Mm

·??????Tandem Diabetes (TNDM)?Q EPS $0.16 vs est. $0.21 on revs rose 25% to $210Mm vs est. $198.7Mm; guides FY sales $845-860Mm vs est. $827.2Mm

·??????Teladoc (TDOC)?Q4 EPS loss (-$0.07) vs. est. loss (-$0.56); Q4 revs rose 45% to $554.24M vs. est. $546.6M; average revenue per U.S. paid member increased to $2.49 in Q4; Q4 adjusted Gross margin was 68.4% compared to 67.9% y/y; sees Q1 EPS loss (60c)-(50c) vs. est. loss (51c); sees Q1 revenue $565M-$571M vs. est. $588.94M

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Industrials & Materials

·??????Boise Cascade (BCC)?Q4 EPS $4.26 vs. est. $2.35; Q4 revs $1.78B vs. est. $1.58B; sees year capex $110M-$130M and expects firm pricing environment to continue in 2022

·??????Kratos Defense (KTOS)?4Q adj EPS $0.11 vs est. $0.09 on revs $211.6Mm vs est. $208.8Mm; guides 1Q revs $190-200Mm vs est. $194.2Mm and adj EBITDA $10-13Mm vs est. $16.5Mm; sees FY revs $880-920Mm vs est. $879.9Mm and adj EBITDA $85-89Mm vs est. $93Mm

·??????Fluor (FLR)?files automatic mixed securities shelf

·??????Element Solutions Inc. (ESI)?Q4 adj EPS $0.31 vs. est. $0.30; Q4 revs $647M vs. est. $603M; sees FY22 adjusted EPS $1.55-$1.60 s. est. $1.59; sees FY22 adjusted EBITDA $575M-$590M

·??????Maxar Technologies (MAXR)?Q4 EPS $0.94 vs est. $0.07 on revenue $468M vs est. $461.3M; backlog for the year ending Dec. 31, 2021, $1.893B

·??????Mosaic (MOS)?Q4 adj EPS $1.95 vs est. $1.98 on revenue $3.84B vs est. $3.9B; raises dividend to 60c/share from 45c, accelerated $400M buyback to be initiated in February followed by new $1B buyback

·??????Nordson (NDSN)?Q1 adj EPS $2.07 vs est. $1.91 on revenue $609.2M vs est. $607M; updates full-year guidance to the high-end of the ranges for revenue growth +7-10% and adj EPS growth +14-18% YoY

·??????Virgin Galactic (SPCE)?Q4 EPS ($0.31) vs est. ($0.35) on revenue $141K vs est. $300K; commercial service remains on track for 4Q22 and current fleet enhancement program on schedule to be completed 3Q22; cash, cash equivalents, marketable securities ~$931M as of Dec. 31, 2021; expect Q1 FCF ($85M)-($75M)

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Technology, Media & Telecom

·??????Palo Alto Networks (PANW)?Q2 adj EPS $1.74 vs. est. $1.64; Q2 revs $1.3B vs. est. $1.28B; sees Q3 adj EPS $1.65-$1.68 vs. est. $1.63; sees Q3 revs $1.345B-$1.365B vs. est. $1.35B; sees total billings in the range of $1.59B-$1.61B, representing y/y growth of between 24%-25%

·??????Cadence Design (CDNS)?Q4 EPS $0.82 vs. est. $0.76; Q4 revs $773M vs. est. $757.1M; sees Q1 EPS $1.00-$1.04 vs. est. $0.82; sees Q1 revenue $850M-$870M vs. est. $771.62M; sees FY22 EPS $3.70-$3.80 vs. est. $3.56; sees FY22 revenue $3.32B-$3.38B vs. est. $3.24B

·??????MercadoLibre, Inc. (MELI)?4Q EPS ($0.92) vs est. $0.99 on net revs $2.1B vs est. $2.02B, gr merch vol $8.0B +32.2%, unique active users 82.2Mm

·??????Rackspace (RXT)?Q4 EPS $0.25 vs. est. $0.24; Q4 revs 5c, consensus 24c $773.3M vs. est. $771.22M; record Q4 bookings of $329M; sees Q1 EPS $0.20-$0.22 vs. est. $0.26; sees Q1 revenue $768M-$778M vs. est. $789.48M; sees Q1 tax expense rate 26%.

·??????RingCentral (RNG)?4Q adj EPS $0.39 vs est. $0.37 on revs $448Mm vs est. $434.9Mm; sees 1Q revs $455-490Mm vs est. $450.6Mm and adj EPS $0.34 vs est. $0.33; guides FY adj EPS $1.69-1.72 vs est. $1.65 and revs $1.99-2.015B vs est. $1.982B

·??????Sierra Wireless (SWIR)?4Q adj EPS $0.03 vs est. ($0.15) on revs $149.9Mm vs est. $126.5Mm; sees 1Q revs $135-150Mm vs est. $121.7Mm

·??????Sprout Social (SPT)?Q4 EPS (5c) vs est. (7C) on revs $53.3M vs est. $51.3M both topped prior guidance ranges; sees Q1 adj EPS (5c)-(4c) vs est. (6c) on revs $56.1M-$56.2M vs est. $54.5M

·??????Intel (INTC)?upgraded to Market Perform from Underperform at Raymond James

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