Closing Recap

Tuesday, November 19, 2024

U.S. stocks finish solidly higher, rebounding after losses on Monday/late last week, as investors “bought the dip” once again, boosted by strong earnings from Wal-Mart (WMT) lifting the retailing giant to record highs, while chip mega-cap Nvidia (NVDA) also approaches all-time highs ahead of its earnings results tomorrow night. Markets showed some anxiety overnight/this morning after tensions between Russia and Ukraine intensified following a report that Ukrainian forces reportedly carried out their first strike on a border region in Russia using Western-supplied missiles. The development follows the decision by outgoing US President Biden to lift restrictions on long-range strikes into Russia, purportedly using ATACMS missiles. Earlier, President Vladimir Putin approved an updated nuclear doctrine that expands the conditions for Russia to use atomic weapons, including in response to a massive conventional attack on its soil. U.S. futures may have been lower overnight following the reports, but stocks quickly rebounded, pushing higher throughout the trading day as NYSE breadth went from more than 2:1 decliners leading advancers initially to about flat late day. Technology (XLK), REITs (XLRE), Communications (XLC) and Utilities (XLU) were leaders while Energy (XLE), Financials (XLF) and healthcare (XLV) were the worst sector performers. In political news, President-elect Donald Trump’s said he plans to nominate Cantor Fitzgerald CEO Howard Lutnick to head the Department of Commerce. Stat of the day: @WallStreetMav “It was only July 28, 2024, we reached $35 trillion for the US national debt. Now about 100 days later we are at $36 trillion in debt. Interest on the national is on pace for $1.4 trillion for the 2025 fiscal year. About 25% of US govt revenue will go to pay interest on the debt.”

• Oil prices rebounded after falling yesterday and all last week after news Norway’s Johan Sverdrup oilfield restarted production (EQNR resumed partial production), Western Europe’s largest oilfield. U.S. WTI crude oil futures settle at $69.39/bbl, up 23 cents, or 0.33% as rising tensions between Moscow and Washington over Ukraine also supported the oil market as Ukraine used U.S. ATACMS missiles to strike Russian territory on Tuesday.
• Gold prices climbed for a second consecutive session, with December gold up +$16.40/oz, or +0.63%, to $2,631 an ounce, hitting a one-week high as mounting Russia-Ukraine tensions sparked a rush for safe-haven assets, while investors awaited key signals on the Federal Reserve’s interest rate plans. Silver hit a 1-week peak, palladium at a near 2-week high ahead of several Fed officials due to speak this week.

• In Food: KHC was downgraded to Neutral from Overweight at Piper saying their thesis of improving retail momentum with a catalyst from incremental foodservice initiatives depended on improvement at retail that hasn’t materialized and is still likely 2-3 quarters away. Nestle (NSRGY) said it will boost advertising and marketing to 9% total ’25 sales, trim costs by at least $2.8 billion by 2027 and carve out its water and premium drinks businesses into a standalone global unit; Nestle forecasts medium-term organic sales growth of more than 4%.
• In Other Retail: CTRN announces CEO Appointment Ken Seipel and Q3 Comparable Store Sales Above Guidance; Q3 2024 Preliminary Total Sales of $179.1M, comparable store sales increase of 5.7%.

• Household Products: ENR Q4 EPS topped consensus on in-line revs of $805.7M, while guides Q1 EPS $0.60-$0.65 vs. consensus $0.66; sees FY25 adjusted EPS $3.45-$3.65, vs. consensus $3.52, FY25 adjusted EBITDA $625M-$645M and said expects FY organic revenue to be up 1% to 2%.

• Online travel: SABR was downgraded to Underperform from Market Perform at Bernstein saying the recent increase in the share price is not matched by any changes in the company’s financial outlook. TCOM delivered another strong quarter, exceeding both Q3 results and Q4 guidance, implying accelerated growth driven by robust travel demand domestically and internationally; also achieved a record high OPM of 34%.
• In EV Charging: BLNK was Needham downgraded to Hold from Buy at Needham as sees minimal visibility into a sustained end market improvement for Blink and downgraded CHPT to Hold from Buy and removed the firm’s previous price target noting ChargePoint was the first to signal end market weakness, guiding down revenues in late 2023, and sees minimal visibility into a sustained end market improvement.

• In Industrials: SYM shares jumped on better Q4 results as Q4 operating Inc $23.091Mm vs est. ($3.21Mm), on revs $576.768Mm vs est. $470.3Mm; guides Q1 revs $495-515Mm vs est. $495.73Mm. FIX was upgraded from Neutral to Buy at UBS and raised PT to $525 from $396 as expected cyclical tailwinds in Manufacturing/Tech Datacenters (AI) – combined 60% of revenue – should support continued double-digit organic growth in the next two years. ACM reported mixed Q4 as EPS/Ebitda beat but revs miss and boosts buyback authorization to $1B
• In Paper & Packaging: AMCR agreed to buy BERY in a roughly $8.4 billion stock swap saying it will issue 7.25 shares, worth about $73.59 based on Monday’s closing price, for each share of Berry, a nearly 10% premium to Monday’s closing price of $67.05.
• In Energy: Oil retreated after its biggest gain in more than five weeks as Europe’s largest oilfield gradually restarted following a power outage. Equinor ASA (EQNR) restarted production at the Johan Sverdrup oil field in the North Sea after a power failure halted flows on Monday.
• In E&C Sector: Jacobs (J) guided FY25 adj EPS $5.80-$6.20 per share, below an estimate of $6.65 per share after Q4 EPS rose 28% y/y to $1.37 but was below consensus of $1.54. Jacobs in September completed the spin-off of its government consulting units with rival Amentum as part of a restructuring to streamline operations.
• In Materials: Sayona Mining (SYAXF) said it will buy U.S.-based PLL in an all-stock deal that will consolidate its Canadian operations and strengthen its exposure to the North American electric vehicle sector. Following separate capital raisings by each company, the combined entity will have an estimated pro-forma market capitalization of $623 million, with shareholders of the two companies owning it approximately evenly.
• In Metals & Mining: NEM was upgraded to Overweight from Neutral at JP Morgan with a price target of A$72.50, down from A$74 saying the company’s updated guidance rebases expectations, while news from additional asset sales remains positive share catalysts.

• In Financial Services: tax preparation stocks INTU, HRB were under pressure after a report in the Washington Post noted Musk’s ‘DOGE’ commission eyes new app for Americans to file taxes. President Joe Biden started a free IRS tax portal that Republicans resisted, but Trump allies are looking at a similar idea.
• In Crypto: HOOD to buy TradePMR for $300M in new client push saying acquisition will accelerate Robinhood’s delivery of investment advisory capabilities to customers by bringing in a scaled RIA custodial platform with approximately 350 firms and more than $40B in assets under administration. BKKT extends Monday 162% advance after the Financial Times reported on Monday that DJT is in advanced talks to buy the crypto trading firm, citing people familiar with the matter. MSTR announces proposed private offering of $1.75B of convert senior notes.

• ALGS shares fell after announced data from one late-breaker oral and three poster presentations at the American Association for the Study of Liver Disease’s (AASLD) The Liver Meeting (TLM) 2024, being held November 15 – 19, 2024 in San Diego, CA.
• APLS competitor Astellas’ attempt to add 24-month Phase 3 data to Izervay’s label has failed. FDA issued a CRL of the supplemental NDA ahead of the November 19 PDUFA. Apellis has been leaking market share to Izervay
• CYTK struck a deal with BAYRY potentially worth hundreds of millions of dollars to license its promising heart drug aficamten to Bayer in Japan; CYTK to receive an upfront payment of 50M euros ($52.8M) and is also eligible to receive up to EUR490M in commercial milestone payments, along with royalties on sales.
• INCY shares fell after saying it will pause enrollment in ongoing phase 2 study of MRGPRX2 in chronic spontaneous urticaria; decision was made following the observation of certain in vivo preclinical toxicology findings.
• MRK reported positive results for a new formulation of its blockbuster cancer drug Keytruda. Merck said a trial of the drug given under-the-skin and combined with chemotherapy proved to be as effective as when given intravenously. Merck said it would discuss the results with regulators worldwide.

• LH said Julia Wang to succeed Glenn Eisenberg as chief financial officer (CFO), effective Dec. 2, as current CFO retires after more than a decade in the position.
• MDT Q2 revs rose 5.2% y/y to $8.4B vs. est. $8.27B; Guides FY25 adj EPS $5.44 to $5.50, vs. prior view $5.42 to $5.50 (est. $5.45) and organic revenue +4.75% to +5%, vs. prior +4.5% to +5%.
• OSCR rises as form 4 filing shows Officer/Dir Kushner Buys 344,522 Of Oscar Health Inc on 11/14 @ $15.80 per share in transaction valued at $5.44M (follows purchases prior week from him) as per filing.

• In Electrical/Equipment: VRT shares jumped the day after Analyst Day as Mizuho raises PT to $145, Opco to $131, Citi to $141 – Vertiv’s issued long-term target of 12%-14% annual organic growth through 2029 versus expected market growth of 9%-12%.
• In Software: AI shares jumped after announcing a tie-up with MSFT to accelerate adoption of enterprise AI on Microsoft Azure. The agreement positions Microsoft as the preferred cloud provider for C3.ai offerings and establishes C3.ai as preferred AI application software provider on Microsoft Azure." SNOW and MSFT simplify AI app development and data collaboration with connector for Microsoft power platform and Microsoft dynamics 365

• MCHP announced that Ganesh Moorthy is retiring as CEO, president and as a member of the board of directors in connection with his 65th birthday at the end of November
• ON hosted an investor event to launch their new Treo analog and mixed-signal platform; expects Treo to generate $1B in sales by CY30 w/ initial rev rec in 1H’25 as ten products are in sampling right now with SKUs set to 2x by mid-CY25.
• NVDA shares surged over 4% ahead of earnings as it reports its FQ325 (Oct.) results after market on Wednesday, 11/20; several analysts raising tgts today.
• SMCI shares surged after naming BDO USA as its auditor and said it has submitted a plan to Nasdaq, seeking additional time to regain compliance with the listing rules, sending shares higher. SMCI said it will be able to complete annual report for the year ended June 30 and quarterly report for period ended Sept. 30