Hammerstone Markets Early Look

Tuesday, March 1, 2022

U.S. markets are looking lower with S&P futures slipping -0.75% to 4,335 (overnight high 4,399 and low 4,328) as investors digest the ongoing news of additional sanctions to Russia and worry about its potential global unintended implications. Overnight the EU said it seeks to block seven Russian banks from SWIFT, including VTB, Britain passed a law that would ban all ships that have any connection to Russia from entering its ports, and shipping giant Maersk will temporarily halt all container shipping to and from Russia. The news comes a day after the U.S. and its allies imposed heavy restrictions on Russia to close off its economy and block it from the global financial system, effectively making it "uninvestable." The curbs have closed airspace to Russian aircraft, shut out some Russian banks from the SWIFT global financial network, and restricted Moscow's ability to use its $630 billion in foreign reserves – all in response to Russia’s invasion of the Ukraine that started last week. U.S. stocks fell in volatile trading on Monday as investors monitored developments in the Russian invasion of Ukraine, including a new batch of sanctions from the U.S. and its allies. The Dow fell 0.50%, the S&P 500 lost 0.25% while the Nasdaq gained 0.41%. For February, major averages ended lower as the S&P 500 declined -3.15%, the Dow dropped -3.57% and the Nasdaq fell -3.43%.

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In Asian markets, The Nikkei Index gained 317 points or 1.2% to 26,844, the Shanghai Index rose 0.77% to 3,488, and the Hang Seng Index advanced 48 points to 22,761. In Europe, the German DAX tumbles over -2.3% to 14,125, while the FTSE 100 is down about -70 points to 7,390. Global risk off as Treasury yields tumble with the U.S. 10-year treasury yields extend fall to 5-week low at 1.74%, last down about 10 bps on day and Germany's 10-year yield extends fall, now set for biggest daily fall since 2011. China PMI manufacturing was 50.2 vs 49.8 est., services PMI 51.6 vs 50.7 est.; Caixin China Feb manufacturing PMI rises to 50.4 vs 49.1 estimate. Gold and oil prices extend gains with brent up 5%, WTI crude 4%.

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Market Closing Prices Yesterday

·??????The S&P 500 Index?dropped -10.71 points, or 0.24%, to 4,373.94

·??????The Dow Jones Industrial Average?fell -166.15 points, or 0.49%, to 33,892.60

·??????The Nasdaq Composite?gained 56.78 points, or 0.41%, to 13,751.40

·??????The Russell 2000 Index?advanced 7.16 points, or 0.35% to 2,048.09

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Economic Calendar for Today

·??????7:45 AM ET?????????ICSC Weekly Retail Sales

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

·??????9:45 AM ET?????????Markit Manufacturing PMI, Feb-F

·??????10:00 AM ET???????Construction Spending MoM for January…est. +0.2%

·??????10:00 AM ET????????ISM Manufacturing PMI, February…est. 58.0

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

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Earnings Calendar:

·??????Earnings Before the Open: ADT, AGEN, ALBO, AMRS, AXSM, AZO, BLDR, BSY, CHS, DOUG, DPZ, EHTH, EVRI, FET, FOUR, FSTR, GOLF, HGV, HOV, HRL, HTA, HZNP, IGT, ITCI, KSS, KTB, MCRB, OB, PAYA, PX, RDNT, REGI, RYTM, SJM, TGT, TILE, TWNK, UWMC, VRTV, WEN, WKHS, XHR, XXII

·??????Earnings After the Close: AMC, ARLO, AVID, BGFV, BGS, BNFT, BODY, BROS, CARA, CELH, CRM, DOMO, FSLR, GO, GRWG, HCAT, HPE, IDEX, INO, IPAR, JAMF, JWN, NSTG, ORGO, PAR, PETQ, PLBY, PRCH, PRTS, RIGL, ROST, RPAY, SENS, SGMS, SNDX, SOFI, SRPT, SWX, TTEC, URBN, WISH, WW, XL, ZIP

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Other Key Events:

·??????BMO Capital Global metals & Mining Conference, 2/27-3/2, in Florida

·??????Credit Suisse Annual Energy Summit, 2/27-3/2 in Colorado

·??????Credit Suisse London Global Healthcare Conference, 2/28-3/2, in London, England

·??????Deutsche Bank ESG Conference (virtual), 2/28-3/2

·??????Jefferies Fintech & Payments Summit (virtual), 3/1-3/2

·??????KBW Fintech Payments Conference, 3/1-3.3, in New York

·??????Stephens West Coast Bank Trip (virtual), 2/28-3/2

·??????UBS Semiconductor Bus tour, 3/1-3/2, in California

?Sector News Breakdown

Consumer

·??????Target Corp (TGT)?Q4 EPS $3.19 vs. est. $2.86; Q4 revs $30.62B vs. est. $31.39B; Q4 comp sales rose 8.9% vs. est. 10.2%; qtrly gross margin rate was 25.7% vs 26.8%; said qtrly gross margin rate reflects pressure from increased supply chain costs due to increased compensation, headcount, higher costs; sees 2022 low- to mid-single digit revenue growth, sees high-single digit growth in adjusted eps

·??????Hormel (HRL)?Q1 EPS $0.44 in-line w ests; Q1 sales rose 24% to $3.04B vs. est. $2.93B as the company benefited from higher prices and it managed through supply-chain constraints; backs its year EPS and revenue outlooks

·??????Canoo Inc. (GOEV)?Q4 EPS ($0.60) vs est. ($0.51), adj EBITDA ($120.3M) vs est. ($102.4M), cash and cash equivalents $224.7M; sees Q1 operating expenses $95M-$115M, capital expenditures $60M-$80M

·??????Darlington Ingredients (DAR)?4Q EPS $0.94 vs est. $0.87 on revs $1.3B vs est. $1.22B

·??????Freshpet, Inc. (FRPT)?Q4 EPS ($0.21) vs est. ($0.16) on revenue $115.9M vs est. $116.5M; sees FY22 revenues greater than $575M vs est. $562.4M

·??????Lucid (LCID)?cuts 2022 EV production Target to 12,000 to 14,000 - ad previously targeted output of 20,000 EVs this year citing "extraordinary" supply chain pressures in outlook; Q4 EPS ($0.64) vs est. ($0.35) on revenue $26.4M vs est. $36.7M, reservations now exceed 25,000

·??????Luminar Technologies (LAZR)?4Q adj EPS ($0.12) vs est. ($0.11) on revs $12.3Mm vs est. $11.8Mm; guides FY revs $40+Mm vs est. $40.2Mm and expects net cash spend moderately higher vs 2021

·??????Nio Inc. (NIO)?reported February deliveries rose 9.9% from a year ago to 6,131 electric vehicles. The deliveries in the month consisted of 1,084 ES8 six- or seven-seat smart electric SUVs, 3,309 ES6 five-seat SUVs and 1,738 EC6 five-seat coupe SUV.

·??????Trex Company (TREX)?Q4 adj EPS $0.55 vs est. $0.53 on revenue $304M vs est. $302.5M; sees Q1 revenue $320M-$340M vs est. $316.6M, expects double-digit revenue growth rates for the full year

·??????Velodyne Lidar Inc (VLDR)?4Q adj EPS ($0.16) vs est. ($0.17) on revs $17.5Mm vs est. $16.7Mm; guides 1Q revs $10-12Mm vs est. $19Mm

·??????XPeng Inc. (XPEV)?said it delivered 6,225EVs in February, up 180% from a year ago, while?Li Auto Inc.'s stock (LI)?said February deliveries rose nearly four-fold (265.8%) to 8,414 Li ONE

·??????Six Flags Entertainment (SIX)?announced that Sandeep Reddy, Executive Vice President and Chief Financial Officer, has notified the company that he has accepted a position at another company and plans to resign

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Energy, Industrials and Materials

·??????Chevron Corp (CVX)?raised its share buyback program to between $5B-$10B vs. prior tgt of $3B-$5B and forecast for operating cash-flow through 2026, benefiting from cost cuts and a recent surge in energy prices.

·??????Crane Co. (CR)?said it plans to reorganize into a wholly-owned subsidiary of Crane Holdings in a move that will convert the company from a Delaware corporation into a Delaware limited liability company

·??????AES Corp. (AES) files automatic mixed securities shelf

·??????ONEOK (OKE)?4Q adj EBITDA $846.6Mm vs est. $870Mm; guides FY adj EBITDA $3.62B vs est. $3.6B

·??????Rocket Lab (RKLB)?Q4 revenue $27.5M vs. est. $24.17M; backlog increased from $183 million at September 30, 2021 to $241 million as of December 30, 2021; sees Q1 GAAP Net Loss between $32.5 million and $34.5 million, and Adjusted EBITDA of negative $3 million to negative $5 million

·??????Steel Dynamics (STLD)?announces first quarter 2022 cash dividend increase of 31% and an additional $1.25 billion share repurchase authorization

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Financials

·??????Visa (V)?and?Mastercard (MA)?block Russian banks from their networks after sanctions

·??????Nerdy (NRDY)?Q4 revenue $42M vs. est. $41.64M; guides Q1 revs $45M-$48M vs. est. $46M and year revs $196M-$200M vs. est. $198.3M

·??????TaskUs, Inc. (TASK)?Q4 adj EPS inline $0.34 on revenue $226.8M vs est. $216M; sees Q1 revenue $229M-$232.2M vs est. $217M, FY22 revenue $980M-$1B vs est. $956.2M

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Healthcare

·??????Intellia Therapeutics (NTLA)?and?Regeneron Pharmaceuticals (REGN)?issued updated interim data for CRISPR gene editing candidate NTLA-2001 from a Phase 1 trial in transthyretin (ATTR) amyloidosis, a rare but fatal disease that can cause complications in multiple tissues. Said the single-dose therapy led to a sustained effect in reducing the disease-causing protein called transthyretin (TTR) in blood.

·??????Novavax (NVAX)?4Q revs $222.2Mm vs est. $331.8Mm; guides FY revs $4.0-5.0B vs est. $4.7B; as of December 31, 2021, co had $1.5 bln in cash, cash equivalents, marketable securities, and restricted cash; says company has shipped 9 mln doses of its Covid vaccine to Indonesia, 6 mln doses to Australia and 2 mln doses to South Korea

·??????Acadia Healthcare (ACHC)?Q4 adj EPS $0.81 vs est. $0.68 on revs $593.5Mm vs est. $588Mm; sees 1Q revs $600-610Mm vs est. $595.1Mm and adj EPS $0.62-0.66 vs est. $0.64; guides FY revs $2.55-2.6B vs est. $2.48B and adj EPS $2.85-3.15 vs est. $2.91

·??????Apellis Pharma (APLS)?4Q EPS ($1.61) vs est. ($1.54) on revs $60.3Mm vs est. $8.8Mm (reported revs incl $9.2Mm product revs and 51.1Mm associated with $50Mm milestone and additional licensing and other revs associated with Sobi collaboration)

·??????Denali Therapeutics (DNLI)?files $400M ATM automatic mixed securities shelf

·??????Endo Pharma (ENDP)?Q4 EPS $0.84 vs. est. $0.67; Q4 revs $789.4M vs. est. $731.4M; sees Q1 EPS $0.35-$0.45 vs. est. $0.48; sees Q1 revs $595M-$635M below consensus $685.5M; q4 2021 branded pharmaceuticals segment rev was $228M, up 2% y/y

·??????FibroGen, Inc. (FGEN)?discloses receipt of SEC subpoena requesting documents relating to Roxadustat’s pooled cardiovascular safety data

·??????GoodRx (GDRX)?shares fell -20%; Q4 adj EPS inline $0.10 on revs $213.3M vs est. $217.5M; approved a share repurchase program for up to $250M; sees Q1 revenues approx. $200M vs est. $227.9M, full-year revenue growth of approx. +23% (implies ~$916.8M vs est. $1.02B)

·??????Mirati Therapeutics, Inc. (MRTX)?4Q EPS loss ($3.72) vs est. ($3.00)

·??????Oak Street Health, Inc. (OSH)?Q4 EPS loss (-$0.62) vs. est. loss (-$0.58); Q4 revs $394.1M vs. est. $390.8M; sees FY22 revs $2.1B-$2.135B vs. est. $2.27B

·??????Surgery Partners (SGRY)?Q4 adj EPS $0.23 vs est. $0.19 on revenue $610.2M vs est. $621.7M; projects FY22 revenues at least $2.5B vs est. $2.48B, adj EBITDA $370M-$380M vs est. $371.4M

·??????Tenet Healthcare Corporation (THC)?said based on ongoing shareholder value creation opportunities and improved business fundamentals – the Company will no longer pursue a spinoff of its Conifer Health Solutions subsidiary.

·??????Veracyte, Inc. (VCYT)?4Q EPS ($0.15) vs est. ($0.16) on revs $67.3Mm vs est. $61.8Mm; guides FY revs $260-275Mm vs est. $268Mm

·??????SmileDirectClub, Inc. (SDC)?Q4 diluted EPS ($0.25) vs est. ($0.27) on revenue $126M vs est. $127.7M, aligner shipments 66,133; said macroeconomic headwinds impacting the spending of our core demographic and our business have continued from early in the summer and through the fourth quarter; sees FY22 sales $600M-$625M vs est. $667.5M; took actions in January to reduce costs to optimize operating structure

·??????Progyny Inc. (PGNY)?4Q EPS $0.15 vs est. $0.04 on revs $127.6Mm vs est. $136Mm; guides 1Q revs $165-170Mm vs est. $180.3Mm and adj EBITDA $23.5-24.5Mm vs est. $25.9Mm; sees FY revs $730-775Mm vs est. $758.8Mm and adj EBITDA of $110-120Mm vs est. $111.8Mm

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Technology, Media & Telecom

·??????Ambarella (AMBA)?shares fall -15%; Q4 adj EPS $0.45 vs est. $0.42 on inline revenue $90.2M; total cash on hand $171M, down from $440.7M YoY due to liquidating debt security investments to finance the acquisition of Oculii Corp; sees Q1 revenue $88.5M-$91.5M vs est. $90.1M

·??????The U.S. Federal Trade Commission is said to be preparing for a potential lawsuit to challenge?Amazon's (AMZN)?planned $8.5B acquisition of MGM Studios. Amazon is said to be exploring options including hiring expert witnesses and will decide in the next few weeks if it will pursue a block of the transaction, according to report from The Information

·??????BigCommerce Holdings Inc. (BIGC)?Sees Q1 Adj. Operating Loss $13.5M-$11.5M, Sales $61.9M-$65.1M vs $63.8M Estimate; FY22 Adj. Operating Loss $53.9M-$45.9M, Sales $271.6M-$283.6M vs $277.8M Est

·??????Groupon (GRPN)?4Q adj EBITDA $37Mm vs est. $28Mm on revs $223Mm vs est. $224Mm; guides 1Q adj EBITDA break-even vs est. $38.8Mm and revs $160-170Mm vs est. $243.75Mm

·??????HP Inc. (HPQ)?Q1 EPS $1.10 vs. est. $1.02; Q1 revs rose 8.8% to $17B vs. est. $16.52B; sees Q2 EPS $1.02-$1.08 vs. est. $1.02; raising its previous estimate of FY non-Gaap diluted net eps to be in range of $4.18 to $4.38 vs. est. $4.17

·??????SailPoint Technologies (SAIL)?Q4 EPS loss (-$0.09) vs. est. loss (-$0.06); Q4 revs $135.6M vs. est. $113.7M; sees Q1 EPS loss (11c)-(10c) vs. est. loss (5c); sees Q1 revs $110.5M-$112.5M vs. est. $108.12M; sees total ARR in the range of $393M-$395M; for full year 2022, expects: total ARR in range of $516.0 mln to $524.0 mln

·??????Sea Limited (SE)?Q4 EPS loss ($1.12) vs. est. loss (59c); Q4 revs $3.22B vs. est. $2.91B; for full year of 2022, we currently expect bookings for digital entertainment to be between $2.9B-$3.1B and expect 2022 GAAP revenue for e-commerce to be between $8.9B-$9.1B

·??????Workday (WDAY)?shares rose 7% after results/guidance; 4Q EPS $0.82 vs est. $0.71 on revs $1.38B vs est. $1.36B; raising our guidance for fiscal 2023 subscription revenue to be in a range of $5.530 billion to $5.550 billion

·??????Zoom Video (ZM)?Q4 EPS $1.29 vs. est. $1.07; Q4 revs $1.07B vs. est. $1.05B; sees Q1 revenue $1.07B-$1.08b vs. est. $1.1B and EPS $0.86-$0.88 vs. est. $1.03; guides year revs $4.53B-$4.55B vs. est. $4.75B and EPS $3.45-$3.51 vs. est. $4.40; at qtr end, 2,725 customers contributing more than $100,000 in trailing 12 months revenue, up about 66%

·??????3D Systems (DDD)?4Q adj EPS $0.09 vs est. $0.03 on revs $150.9Mm vs est. $143.9Mm; guides FY revs $570-630Mm vs est. $574.7Mm, adj gr margin 40-44% and adj op exp $225-250Mm

·??????PubMatic, Inc. (PUBM)?shares fell -12%; Q4 EPS $0.50 vs. est. $0.27; Q4 revs rose 34% to $75.6M vs. est. $75.5M; sees Q1 revs $53M-$55M vs. est. $56.7M; sees year revs $282m-$286M vs. est. $$283.5M

·??????SBA Communications (SBAC)?Q4 AFFO $2.81 vs. est. $2.79; Q4 revs $595.3M vs. est. $591.27M; sees 2022 AFFO $1.48-$11.85 vs. est. $11.57; sees 2022 revs $$2.42b-$2.46B vs. est. $2.43B

·??????Vroom Inc. (VRM)?Q4 adj EPS ($0.94) vs est. ($0.77) on revenue $934.5M vs est. $901.9M; sees Q1 revenues ~$875M vs est. $1.04B, adj EBITDA~($138M) vs est. ($85.8M)

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