Market Review: December 07, 2020

Auto PostDaily Market Report

Closing Recap

Monday, December 07, 2020





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks finished mixed on Monday as the Nasdaq Composite surged to another all-time high as investors piled into technology stocks, while the blue-chip Dow Jones Industrials fell after a four-day winning streak and the S&P 500 closed lower. Large cap tech leading the way as Apple (AAPL), Facebook (FB) Netflix (NFLX) and Tesla (TSLA) outperformed, as the so-called stay-at-home winners paced the gains after tighter restrictions in California and New York due to the rate of surging Covid-19 cases. Energy prices dropped with oil pulling back from March highs, while the electric vehicle sector and biotech space were active. Failure to reach an agreement on government funding and no new developments on the stimulus relief efforts also led to some modest profit taking as stocks slipped from record highs on Friday. The House will vote on Wednesday on a one-week CR to keep government open while negotiations continue. Wall Street tracked a more cautious move in global stocks earlier after Washington imposed financial sanctions and a travel ban on some Chinese officials over their alleged role in Beijing’s disqualification last month of elected opposition legislators in Hong Kong. Promising vaccine updates from major drug makers have raised investor hopes for an economic recovery next year and eased worries over a surge in U.S. infections, powering the latest market rally. News that the U.S. is preparing to sanction at least a dozen more Chinese officials over their role in the recent disqualification of Hong Kong legislators and ongoing Brexit concerns failed to dent optimism.

·     There is a heavy IPO calendar this week with two attention grabbing names: Airbnb (ABNB), and DoorDash (DASH) both recently boost their price ranges ahead of mega week for IPOs (DASH expected to trade 12/9 and ABNB 12/11). DoorDash upped the 33M share IPO price in a filing on Friday to a range of $90-95 a share — already raised from between $75-85, Airbnb boosted its 51.55M shares IPO price to $56-60 from $44-50, which would give them a valuation as high as $42B. Other new issues include: AbCellera Biologics, Inc. (ABCL) 23M share IPO expected to trade 12/11 – price range $14-$17, Inc. (AI) 15.5M share IPO expected to trade 12/11 – price range $36-438, Certara (CERT) 24.4M share IPO expected to trade 12/11 – price range $19-$22, 4D Molecular Therapeutics (FDMT) 4.8M share IPO expected to trade 12/11 – price range $20-$22, Hydrofarm (HYFM) 8.67M share IPO expected to trade 12/10 – price range $14-$16 and PubMatic (PUBM) 5.9M share IPO expected to trade 12/9 – price range $16-$18.



·     Oil futures edged lower, as WTI crude slipped 50c or 1.08% to settle at $45.76 per barrel, pulling back from its highest settlement in nine-months in about of profit taking and as the rise in U.S. COVID-19 cases fed expectations for lower fuel demand. The decline follows a rally last week after OPEC and its allies agreed to add 500,000 b/d of output from January to a market that is showing signs of recovery. Natural gas prices slid 6.6% to a 2-month-low of $2.406 mln btus on warmer-than-normal weather forecasts.

·     Gold prices no let-up, rising 1.4% or 426 to $1,866 an ounce, a 5% bounce from the 5-month Nov 30th lows and to fresh 2-week highs on rising expectations of fresh fiscal stimulus in the United States and a retreat in the dollar (hovering near 2 ½ year lows). The further spread of COVID-19 in the U.S., as well as a breakdown in Brexit talks between the U.K. and the Eurozone, lifted safe-haven demand






WTI Crude















10-Year Note





Sector News Breakdown


·     Auto sector; TSLA momentum continues to the upside, reaching fresh all-time highs, gaining as much as 7% late day; XPEV the latest name in the EV space to announce a secondary offering (joins LI) as files to sell 40M in common stock; LYFT was upgraded at Piper to overweight with $61 tgt from $39 saying while ridership remains depressed due to COVID, LYFT has nonetheless demonstrated an improving ability to extract revenue from each incremental mile traveled in the United States; Ford (F) is delaying the launch of its upcoming Bronco SUV from spring to summer of next year due to coronavirus-related problems in its supply chain

·     Consumer Staples; poultry stocks active after Chick-fil-A initiates a lawsuit against chicken suppliers TSN, PPC, SAFM and others alleging the group coordinated to artificially raise prices on billions of dollars of its purchases by sharing bidding and pricing details; LW was upgraded to overweight from neutral at JPMorgan saying with ~85% of pre-pandemic sales going to food-away-from-home customers, LW is one of the few companies they cover that fits the recovery narrative; CAG will sell its Peter Pan peanut butter brand to POST, though didn’t disclose financial information regarding the agreement

·     Leisure and Gaming; big week now IPO’s as Airbnb (ABNB), and DoorDash (DASH) both recently boost their price ranges ahead of mega week for IPOs. DoorDash upped the price for its stock in a filing on Friday to a range of $90-95 a share — already raised from between $75-85, while Airbnb boosted its price to $56-60 from $44-50, which would give them a valuation as high as $42B; for towables and RV’s (CWH, THO, WGO), Baird said retail trends remain strong in the offseason, limiting dealer ability to replenish inventory. Sentiment remains positive in a seasonally less relevant time of year, but the need to restock is top-of-mind for dealers; MTN was downgraded to hold from buy at Truist; IGT agreed to sell its Italian gaming machine, sports betting and digital gaming businesses to APO’s Gamenet Group for 950 mln euros ($1.2 billion) in cash



·     Energy stock movers; natural gas prices fall to their lowest levels since September amid more warm-weather forecasts that will continue to hurt demand for gas-fired heating as front-month gas contract down aroun6% at $2.41/MMBtu, adding to last week’s nearly 10% skid (shares of COG, EQT, RRC, SWN among names leveraged to natural gas)

·     Energy research; at Wells Fargo, CHX remains our top pick, downgrade RIG to underweight to account for challenging balance sheet issues, downgraded LBRT to equal weight on value, prefer SLB (tgt to $28 from $23) over BKR (tgt to $25 from $22) due to higher expected FCF Conversion; HP downgraded to Underperform from Neutral at Bank America; OXY was downgraded to neutral from buy at MKM Partners as shares have appreciated 100%+ since late October and now reflects our fair value estimate

·     Utilities & Solar; JKS Q3 EPS $1.06 vs. est. $0.85 on in-line revs $1.29B, quarterly shipments 5,117MW (+53.8% YoY), and see Q4 gross margin 13-15% and FY20 shipments to be 18.5-19GW; SOL to sell 16 MW ground-mounted solar parks in Poland to Modus Asset Management, an investment management firm; SUNW sold 3.8M shares to raise ~$20M, which strengthened its balance sheet and was used to fully repay its outstanding $2.7M debt to CrowdOut Capital; PCG cancelled its plan shutoff for 8,500 California customers in 5 counties due to more favorable weather conditions



·     Bank movers; GS is weighing plans for a new Florida hub to house its asset management division, potentially moving out of New York; RF, ZION, COF upgraded to outperform and FITB upgraded to in-line at Evercore ISI; MS tgt raised to $74 from $70 at UBS as believe MS shares are in the process of re-rating based on its pro-forma earnings mix shifting to roughly 60% from wealth and asset management; SIVB downgraded at Morgan Stanley to equal-weight from overweight; Wells Fargo said view of the broader banking landscape improved during the course of last week following NYCB and HBAN favorable credit updates, WBS expense initiative, and ISBC branch deal and buyback resumption saying these positive data points bode well for SBNY; online broker IBKR had technical issues in the morning, reporting several outages

·     Consumer Finance; FISV hosting Investor Day tomorrow 12/8; in research, Jefferies initiated FISV with a buy and $135 tgt saying stock too cheap at a discount vs. S&P and has unique scale, and breadth as FIs make FISV a FinTech stalwart; Jefferies also initiated FIS with a buy and $175 tgt driven by superior asset in core processing with edge among larger FIs and heavy recent investment cycle to develop its next-gen offerings, and leading position in cross-bord e re-Comm



·     Vaccine tracker – upcoming timeline/events – In the United States, PFE have an FDA meeting on 12/10 and MRNA has an FDA meeting on 12/17; authorizations could shortly follow. Chief Scientific Officer of Operation Warp Speed Moncef Slaoui remarked on 12/2 that 20 mil Americans could be vaccinated by yearend, and about 100 mil Americans could be vaccinated by the end of February 2021, assuming that Pfizer and Moderna’s vaccines are authorized. Vaccination numbers could further increase if JNJ, AZN vaccine candidates are authorized

·     Pharma movers; BLCM fell as the FDA placed an early-to-mid stage trial of its experimental cancer therapy on hold after death of a pancreatic cancer patient – says co and clinical investigator have classified death as unrelated to drug; TNXP said its experimental treatment for a chronic pain disorder meets main goal of a late-stage trial; PFE and SGMO announce updated phase 1/2 results showing sustained factor viii activity levels in 3×1013 vg/kg cohort through one year following hemophilia a gene therapy; Cowen said so far LLY and ABBV look to be the winners in big pharma from this weekend’s ASH conference; LYRA drops after saying it saw positive topline results from a Phase 2 study of LYR-210 for chronic rhinosinusitis, but it missed a primary endpoint for two doses; ONCT reports positive interim data from its early-stage trial of combination therapy in patients with mantle cell lymphoma and chronic lymphocytic leukemia

·     Biotech movers; a CRSP-based gene-editing therapy for sickle cell disease and beta-thalassemia is thus far quite effective in patients, according to interim data presented this weekend at the annual meeting of the American Society of Hematology; RARE downgraded to neutral from outperform at Wedbush saying the Friday presentation ofGTX-102 data in Angelman Syndrome reinforced the up/down nature of the preliminary Phase 1/2 study with lead investigator Dr. Elizabeth Berry-Kravis calling the study a "rollercoaster ride; SCPH slides after the FDA declined to approve its heart failure drug, Furoscix citing their need to conduct pre-approval inspections at two of SCPH’s third-party manufacturing facilities that could not be conducted due to travel restrictions – FDA also raised questions related to testing, labeling

·     In cancer NK cell antibody treatments data this weekend from FATE and GMDA helping boost the sector; Mizuho noted data released this weekend from both continue to help support both the safety and efficacy potential of NK cells in general as they upped their tgt on NKTX to $47 from $34, while AFMD shares also jump in reaction; FATE rises after the company provided a positive clinical update to FT516, an iPSC-derived NK cell therapy expressing a non-cleavable CD16 receptor, in combination with rituximab in patients with r/r B cell lymphomas; GMDA presented results for 19 patients with non-Hodgkin’s lymphoma with a median follow-up of 10 months, vs. 15 patients and 10.8 months in the abstract

·     Healthcare services and providers; KODK shares jumped after the stalled U.S. government loan to KODK was cleared by the inspector general of the U.S. International Development Finance Corp of any wrongdoing on Sunday – Company said in July it will get a $765 mln loan to produce pharmaceutical ingredients for COVID-19 treatments


Industrials & Materials

·     Transports; Dow Transports trade another record high initially as airlines were broadly higher (DAL, UAL, LUV), while rails remain strong (CSX) and package delivery (FDX, UPS) ahead of the holiday season; LUV upgraded to outperform from market perform with $59 tgt – note looks at what the market may be missing when using common approach to airline equity valuation and offers a method of correcting for it. We further update our target prices based on the prospect that a firmer recovery will take hold by the end of 2021, and as the airlines are at this point a sector call, we take up our rating on Southwest to Outperform; AAL a big outperformer in airlines early on no specific news

·     Aerospace & Defense; BA upgraded to buy from neutral and raise tgt to $300 from $150 at saying out-year free cash flow estimates have moved materially higher; SPR upgraded to Buy from Neutral at UBS with a price target of $50, up from $19 as sees the stock as the purest way to play the narrow body aircraft recovery; SPCE rises to 7-month highs with the launch window opening on Friday for the company’s test flight from New Mexico of the VSS Unity spacecraft

·     Metals & Materials; Citigroup remains bullish on mini-mills NUE and STLD, with STLD offering the best combination of growth and post expansion FCF; PKG upgraded from Underweight to Sector Weight at KeyBanc saying the Company’s balance sheet and returns are among the best of any company we cover, and N.A. containerboard industry fundamentals are suddenly the best they have been in 25 years; LIN upgraded to overweight from equal-weight and raise tgt to $285 from $275 at Barclays; Keybanc lifted its tgt to $25 from $15 on ATI post its unwind of its stainless business and upside from phase two of its structural cost cuts


Technology, Media & Telecom

·     Semiconductors; INTC shares slipped after Bloomberg reported AAPL is planning a series of new Mac processors for introduction as early as 2021 that are aimed at outperforming Intel fastest; QCOM tgt raised to $185 from $160 at JPMorgan and remain OW but remove from Analyst Focus List noting shares have reacted positively to the company successfully leveraging the 5G smartphone opportunity and investors have been rewarded by a 77% rise in the shares YTD; CREE downgrade from Overweight to Equal-weight w/ $93 pt at Morgan Stanley saying it is the best way to play EVs in our coverage, but after a big move in the stock has difficultly underwriting upside; AVGO earnings later this week (Thursday)

·     Media & Telecom movers; DISH downgraded to Neutral from Buy at Guggenheim and removing it from Best Ideas list saying while we had hoped asset value would have been realized through either a sale of spectrum, or a partnership with a deep-pocketed tech firm, those scenarios are seemingly becoming much less likely; PERI raises financial outlook amid recent acquisitions and higher demand across CTV and video offerings (raised its Q4 revenue to $100M-$105M from $81M-$91M vs. $86.14M consensus)

·     Hardware & Component news; ST downgrade from Buy to Hold at Jefferies given more balanced risk/reward following share recovery amid a broader auto industry rebound as believe consensus factors in double digit auto recovery while assumed best-in-class margin conversion through ’21 (+40%) limits upside surprise opportunity; UBS said they continue to view accommodative policy as a long-term tailwind for EV exposed coverage by pulling forward share gains & driving positive revisions. Expected beneficiaries include Buy-rated TEL (content gainers) plus KEYS (R&D + charging network)

·     IT, COMM Services; ACN downgraded to neutral from positive with $250 tgt at Susquehanna saying while there are some encouraging industry-level signs, with many IT Service companies resuming headcount growth, commentary from some key software partners seems muted – but mostly a valuation downgrade; NLOK agreed to buy the cybersecurity and privacy company Avira for about $360 million in cash from Investcorp Technology Partners, giving NortonLifeLock more market access in Europe and emerging markets.


Market commentary provided by Catena Media Financials US, LLC, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading