Mid-Morning Look: December 12, 2022

Auto PostDaily Market Report

Mid-Morning Look

Monday, December 12, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks open higher to start as investors prep for a pivotal week for markets that will include consumer-price data and a Federal Reserve policy update, Tuesday and Wednesday respectively. On Friday, all three indexes ended the week lower as stronger-than-expected producer-price data prompted jitters about the inflation outlook. The European Central Bank and the Bank of England are due to meet and decide on interest rates Thursday as well in a big week for central banks. Several stocks active early in a “Merger Monday” with north of $40B of M&A deals announced in Biotech, Software and Retail (details below). Sector leaders early to the upside include energy, technology, and industrials while consumer discretionary and REITS to decliners. Yields on the 10-year U.S. Treasury note hold steady around 3.57%, while the dollar is little changed (DXY 104.75) with no big bets into tomorrow CPI. No major U.S. economic data today and no Fed speakers until Fed meeting. ORCL earnings tonight.







WTI Crude















10-Year Note





Sector Movers Today

·     Industrial & Machinery: Bank America downgraded TT, JCI, VNT, ROK, upgrade MEG saying investors are already cautious on residential HVAC demand but paying a premium for non-residential exposure. However, cracks are appearing in US non-residential demand, which historically follows residential trends. As a result, they downgrade TT to Underperform and JCI to Neutral. Downgrade ROK to Neutral on a lack of execution visibility and supply chain risk next year. Also downgrade VNT to Neutral on a combination of leverage and declining earnings in 2023. Upgrade MEG to Buy as we forecast accelerating earnings growth in 2023; RRX mentioned positively in Barron’s saying shares could soar over 40%; LEG downgraded to underweight on normalizing margins and market share losses at Piper

·     Retailers: UAA upgrade from Hold to Buy at Stifel and raise tgt to $12 from $9 saying relative inventory management discipline leaves Under Armour with better margin certainty and in a better position to bring newness to market in CY23; RH downgraded to Sell at Goldman Sachs with $215 tgt; WEBR taken private by BDT Capital Partners for $8.05 per share in deal valued at $3.7B – deal has $5.5M termination fee https://on.mktw.net/3iJIv99 ; RL tgt raised to $148 from $132 and named top idea for 2023 at Cowen as top-line momentum accelerated in CY 2022 despite a challenging macro; GPS upgraded to Buy at Goldman Sachs and raise tgt to $18 from $10 as believes has an “idiosyncratic opportunity” to demonstrate sequentially strengthening execution and better margins into 2023; LEVI downgraded to Neutral from Buy at Goldman Sachs

·     MedTech Equipment: two analyst research calls in space as Citigroup upgraded PKI and QDEL to Buy from Hold and said FY23 setups and numbers appropriately set for the year with more compelling current valuations such as AVTR (top pick), BIO, and PKI (upgrade to Buy) and in Diagnostics and CROs, name QDEL (upgrade to Buy) and ICLR our respective top picks for FY23. Wells Fargo downgraded NVRO to Equal weight as 2023 ests appear high, and see headwinds, downgraded SWAV to Equal weight, significant growth runway priced in and cut RXST to equal weight on economic sensitivity – are cautiously optimistic, top picks are BSX, DXCM and GMED

·     Semiconductors: QCOM downgraded to Underweight at Wells Fargo as think shares will trade at a discount to peers because investors will assign lower multiples to chip co’s serving the no-growth mobile handset market; Deutsche Bank said “incrementally more cautious” on memory market, as believes the current downturn will last longer and be more severe than we previously forecasted, as downgraded both MU and KLAC to Hold from Buy while upgraded LRCX to Buy with $520 tgt saying while still see some risks to memory WFE in the near term, expectations are already low enough and should not have a significant impact on LRCX’s share price; GFS added to the Nasdaq 100 index as of 12/19

·     Aerospace & Defense: CAE and CR upgraded to Overweight from EW, TDY upgraded to Equal Weight from UW at Morgan Stanley and downgraded HEI and CW to Equal Weight from OW and MOG.A cut to Underweight from EW saying aircraft scarcity amid strong demand makes Aerospace both a growth and defensive industry in 2023. In our outlook, they identify opportunities after scrubbing valuation. Top Aero stock pick is HWM is a value play



·     APA +4%; as energy stocks lead early after recent pullback; EQT, HES, BKR higher

·     APVO +63%; after saying a combo of its experimental therapy with azacitidine and venetoclax produced a clinical benefit in 16 patients with acute myeloid leukemia who haven’t been previously treated with venetoclax in an early-stage clinical trial

·     COUP +26%; acquired by Thoma Bravo, a leading software investment firm in an all-cash transaction with an enterprise value of $8.0 billion, with Coupa shareholders to receive $81.00 per share in cash https://on.mktw.net/3iJI12P

·     HZNP +14%; to be acquired by AMGN for $116.50 a share in cash as total value of the deal is valued at about $27.8 billion https://on.mktw.net/3FMrJiZ

·     WEBR +21%; to be taken private by BDT Capital Partners for $8.05 per share in deal valued at $3.7B – deal has $5.5M termination fee https://on.mktw.net/3iJIv99



·     ACET -38% after reports data from ongoing ADI-001 phase 1 trial in patients with relapsed or refractory aggressive B-cell Non-Hodgkin’s Lymphoma

·     LH -2%; downgraded to Neutral at Citigroup

·     LNC -2%; falls back near 52-week lows, while insurance stocks broad weakness PRU also falls

·     NOTV -22%; said it is delaying the release of 4Q and fiscal 2022 results as the company assesses the impact of a government probe into a supplier

·     RH -8%; downgraded to Sell at Goldman Sachs with $215 tgt on view that sales will likely remain pressured, given purchases are discretionary and larger ticket

·     RIVN -4%; said it has paused its joint venture to build commercial vans with Mercedes-Benz Group in Europe just three months after it was announced

·     TROX -3%; said expects Q4 EBITDA to come in below guided range – presentation slides in 8K


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.

Live Trading

Open an Account

Paper Trading