Mid-Morning Look

Wednesday, August 28, 2024

U.S. stocks were softer into the open and continued to fade early, perhaps reflecting caution ahead of NVDA earnings after the close tonight. Early trading saw Nasdaq underperformance with QQQ -0.47% versus SPY -0.12%. Small caps generally held up well with IWM -0.17%. Early S&P sector ETF leaders were Heath Care, Utilities and Financials (all up modestly) while Energy, Technology and Consumer Discretionary were early laggards in the red. In Consumer Discretionary, JWN and KSS bucked the trend with 5% gains. The Dollar index (DXY) enjoyed modest gains, while 10-yr yields held flattish.

• US MBA 30-yr Mortgage Rate dipped slightly from a prior 6.50% to 6.44%.

• AVAV +10%; said the U.S. Government approves foreign military sale of Switchblade 300 to Taiwan for $60.2M, promoting an upgrade on Wall Street by one analyst.
• ELF +3%; reports $500M share buyback program.
• JWN +5%; shares rise after last night’s strong EPS beat and narrow revs beat along with raised forward guidance. Several analysts adjusted their price targets nominally in response.
• KSS +5%; Q2 beat, while raises FY operating margin 3.4% to 3.8% above prior forecast 3% to 3.5% and upped its yearly EPS view to $1.75-$2.25 from prior $1.25-$1.85 but lowers FY net sales view to down -4% to -6%, vs. prior forecast -2% to -4% as still forecasts FY CAPEX about $500M.
• BRK +1% as Warren Buffett’s investment holding company tops the $1 trillion market cap level for the first time ever.
• CHWY +14%; the online pet food seller’s shares rose following this morning’s EPS beat and matched sales despite muted guidance. A bullish conference call focused on Chewy’s potential growth for its mobile app.
• NN +6%; shares of the navigation systems makers rose after a large insider buy was filed a board director last night.
• WEST +9.50%; Westrock Coffee began a warrant exchange offer and consent solicitation.
• BOX +9% following last night’s earning’s beat and guidance raise along with several upward price target changes this morning.

• SMCI -22% shares fell after Super Micro issued a PR stating that they would be delaying their Form 10-K filing for FY24 just day a after Hindenburg Research published a short report.
• FL -10%; shares dropped after earnings beat, but left year outlook expectations unchanged; Q2 adj EPS loss (-$5.00) vs. est. loss (-$7.70) on better comps +2.6% vs. -9.4% y/y, and est. +1%, while sales rose 1.9% y/y to $1.90B vs. est. $1.88B, but affirmed its full-year guidance for adj EPS of $1.50-$1.70, for sales growth of negative 1% to positive 1%.
• NBIX -16%; shares declined after saying a 20-milligram dose of the drug candidate, NBI-1117568, helped significantly reduce severity of symptoms compared to placebo in adult patients with schizophrenia, and was generally safe, but the 7.5-point improvement on PANSS score was stat significant but no improvement was seen with higher doses.
• NCNO -12%; reported better Q2 revenue but Barclays noted it sounds like new logos internationally are taking longer to close which is making bookings more 2H-weighted.
• PDCO -14%; reported Q1 adj EPS $0.24 missing the $0.32 estimate on weaker revs of $1.54B vs. est. $1.59B saying profit was negatively impacted by the cybersecurity attack on Change Healthcare but did reaffirm its yearly guidance.
• PVH -7%; posted Q2 EPS beat on in-line revs of $2.07B, but shares declined as Wedbush said was likely due to a negative inflection in DTC, Q3 guidance coming in below consensus, and a lack of flow-through of Q2 upside to FY guidance.
• DKS shares were mixed after the sports retailer reported that they uncovered unauthorized third-party access to their information systems.
• BYDDY -1%; shares of the Chinese EV maker and Tesla competitor were lower after reporting their 1H24 profit rose on strong EV sales despite slowing China demand.
• RILY -2%; the troubled investment bank’s shares rose, were halted & then fell after news that they were in talks for a loan amendment to ease the company’s debt burden.
• GCI -5%; Gannett Co was downgraded by Citigroup to Sell with a $5.10 PT this morning.