Mid-Morning Look: August 04, 2021

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Mid-Morning Look

Wednesday, August 04, 2021






DJ Industrials




S&P 500








Russell 2000






Stocks looking for direction early with the S&P 500 slipping off record highs the day prior and the Nasdaq Composite little changed as investors continue to digest the impact of tremendous corporate quarterly earnings results. Treasury yields seeing a little pop following better a record high July ISM reading and Fed Clarida comments on rates saying Federal Reserve should be in the position to begin raising interest rates in 2023. WTI oil prices fall further, dropping over 3% to a 2-week-lows around the $68 level before paring losses on slowing demand fears as the spread of the coronavirus Delta variant in top consuming countries outweighed Mideast geopolitical tensions and a fall in U.S. inventories. In virus news, NVAX shares jump after Europe contract for covid vaccine approved, while the NY Times reported the FDA plans to give full approval to PFE/BNTX coronavirus vaccine by the start of the next month. Roughly 70% of the S&P 500 has posted earnings this quarter, with another flurry of reports again tonight and tomorrow. Semiconductors higher, banks rebound with higher yields and energy names again slip after the roll I oil prices.


Economic Data

·     Private companies added 330,000 jobs in July, according to ADP, far short of the 653,000 estimates; data for June was revised slightly down to show 680,000 jobs added instead of the initially reported 692,000

·     Markit July U.S. PMI Composite (Final) 59.9 vs. 59.7 consensus and 63.7 prior, while the Markit Services PMI also 59.9 vs. 59.8 consensus and 64.6 prior

·     ISM non-manufacturing sector PMI rises to record high in July of 64.1, topping the consensus 60.5 and was above the 60.1 in June; ISM non-manufacturing business activity index 67.0 in July vs. 60.4 in June, prices paid index 82.3 in July (highest since Sept 2005) vs 79.5 in June; new orders index 63.7 in July vs 62.1 in June and employment index 53.8 in July vs 49.3 in June







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; BGFV Q2 EPS $1.63 vs est. $1.08 on revs $326M vs est. $291.65M, same-store sales +31.2% vs. guidance of +22-27%, raised its dividend to 25c/share from 18c, sees Q3 EPS $0.95-1.15 vs est. $0.86; TUP Q2 adj EPS 95c vs est. 57c on sales $464.7M as sales rose YoY in North America +26%, Europe +26%, and South America +45%, but fell in the Asia-Pacific region by 7%; RCKY Q2 EPS 99c vs est. 83c on revenue $131.6M (up 134.2% Y/Y) that beat ests. by $2.7M, and said will raise prices to offset costs and margin pressures; ODP Q2 adj EPS 51c vs est. 52c on sales $2.29B vs est. $2.24B and continued its plan to spin-off into 2 separate companies, and remain on track for the separation to occur in 1H22; VSCO (which started trading yesterday after a split of LB) was initiated by Wells at OW with a $100 PT as they see it as an underappreciated asset with a more compelling story, and it replaces LB as one of their Top 5 picks in retail, and MKM initiated the stock with a Buy rating and $88 target; Cowen upgraded CPRI to OP as current valuation is attractive and their $75 price target implies upside of over 25%; JPMorgan upgraded UAA to OW with a $30 target given its strong top-line growth in 1H21, the forecasted growth in sportswear, and favorable risk/reward after shares have underperformed the retail sector by 75% over the past 18 months; GME, VSCO were both added to the S&P MidCap 400 index

·     Software movers; ATVI rises after better Q2 results and guidance; AYX slides as reported mixed 2Q21 results as revenue and EPS were well ahead of consensus, but guidance for FY21 revenue was lowered – a key driver of this change is the headwind created from shortening contract duration; NEWR reported solid 1QFY22 results as revenue and EPS were ahead of consensus and including higher FY22 guidance metrics; PAYC delivered beat-and-raise Q2 results on broad-based strength in the core business and signaled an early recovery in pandemic-related unemployment headwinds; SKLZ reported Q2 results that missed expectations on the top and bottom lines; ZI 20M share Spot Secondary priced at $55.25; MIME reported a strong quarter with upside to revenue/profitability and took FY/22 guidance up, slightly higher than the beat

·     Industrial & Machinery; for monthly class 8 truck data, ACT released July preliminary Class 8 net order figures of 25,800 units, which compared to last month 25,700 units (shares of CMI, PCAR, ALSN among names leveraged to data); IR 29.79M share Spot Secondary priced at $49.25 KKR as sells its remaining 7% stake; EMR reported Q3 adj EPS $1.09 vs est. $0..98 on revs $4.7B vs est. $4.6B, in-line gross margin 42.2%, and raised its full-year forecast for adj EPS to $4.06-4.08 from $3.85-3.95 and net sales +9-10% from +6-9%

·     Energy stock movers; in earnings: OXY Q2 adj earnings topped expectations as revenues doubled Y/Y to $5.96B due to higher oil prices, higher sales volumes across all products and lower operating expenses, while Q2 GAAP loss narrowed to $97M from a Q1 loss of $346M and production rose 7.7% Q/Q; DVN Q2 earnings and revenue topped estimates as core EPS swung to a $0.60 per share profit from a year-ago loss of $0.18 and Q2 operating cash flow jumped 85% Q/Q to $1.1B; BRY EPS $0.07 above consensus due mainly to lower cash costs. 2Q21 capex was $9M above consensus due to more wells being drilled, including eight in Utah. 2Q21 production was in line with consensus; CDEV EPS was 11% above consensus. 2Q21 production was 3.4% above consensus, and 2Q21 oil production was 0.4% above consensus. However, 2Q21 capex was $3M above consensus; CRK EPS was 6% above consensus on higher production and slightly lower cash costs, but 2Q21 capex was 23% above consensus and CRK raised its 2021 capex budget by 2.4%. 2Q21 production was 2.3% above consensus



·     BYSI +129%; shares surge after saying its Dublin-3 registrational trial of plinabulin in combination with docetaxel met the primary endpoint showing statistically significant improvement in overall survival for the combination versus docetaxel alone (also met secondary endpoint)

·     DVA +8%; 2Q EPS $2.64 vs est. $2.17; says total US dialysis treatments for 2Q were 7,413497 (avg 95,045/day); guides FY adj EPS $8.80-9.40 vs es.t $8.63

·     HOOD +26%; upside momentum continues in shares of the recent IPO that priced 55M shares at $38 last week (shares fell to lows below $34 last week) – touched highs above $84 briefly

·     MGP +5%; shares jump after VICI to acquire the company for a total consideration of $17.2B, including the assumption of ~$5.7B of debt

·     NVAX +18%; as the European Commission (EC) said Member States will be able to purchase up to 100M doses of the NVAX vaccine, with an option for 100M additional doses over the course of 2021, 2022, and 2023

·     NVTA +11%; raised revenue forecast for 2021 to $475M-$500M from prior $476.4M after Q2 revs rose 152% y/y to $116.3M, driven by billable volumes of 287,000

·     PAYC +8%; delivered beat-and-raise Q2 results on broad-based strength in the core business and signaled an early recovery in pandemic-related unemployment headwinds

·     UA +4%; building on recent earnings momentum – upgraded to Overweight at JPMorgan with a $30 target given its strong top-line growth in 1H21



·     AKAM -7%; downgraded to Hold at Needham after earnings citing a lack of catalysts to drive shares higher/notes Edge’s 3–5-year CAGR of 2%-5% is unlikely to inspire the next leg of growth

·     AYX -12%; as reported mixed 2Q21 results as revenue and EPS were well ahead of consensus, but guidance for FY21 revenue was lowered – a key driver of this change is the headwind created from shortening contract duration

·     CDLX -26%; after the company reported second-quarter results that missed expectations;

·     CHNG -7%; shares fell on a report that the U.S. Dept. of Justice is considering a lawsuit to block the company’s $8B sale to UNH https://bit.ly/3yA4Etu

·     GM -7%; Q2 adj EPS $1.97 missed est. $2.23 on revs $34.17B that topped est. $29.9B and worldwide vehicle sales 1.757M vs est. 1.467M, and now sees FY21 adj EPS $5.40-6.40 vs prior $4.50-5.25 but still below est. $7.31

·     MRCY -15%; downgraded by Baird and Truist as the co’s updated FY22 outlook was revised lower from its preliminary view and this marks two quarters in a row of disappointing results/guidance

·     SPWR -5%; after posting a Q2 revenue miss ($308.9M vs. est. $327.31M) and guides Q3 revs $325M-$375M below the est. $400.83M – report follows recently better earnings/guidance from rival solar names FSLR and SEDG



·     Avidity Biosciences (RNA) 8M share Secondary priced at $18.00

·     Ingersoll-Rand (IR) 29.79M share Spot Secondary priced at $49.25

·     LivaNova (LIVN) 3.64M share Secondary priced at $82.50

·     Option Care Health (OPCH) 18M share Spot Secondary priced at $20.25

·     Tellurian (TELL) 35M share Spot Secondary priced at $3.00

·     ZoomInfo (ZI) 20M share Spot Secondary priced at $55.25


Market commentary provided by Hammerstone Markets, Inc, 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.

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