Mid-Morning Look: February 14, 2020

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Mid-Morning Look

Friday, February 14, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. equities off to a mixed start on Friday, but remain on track for weekly gains, in what has been a volatile week of rising coronavirus cases (and deaths), as well as another heavy dose of corporate earnings, testimony from Fed Chairman Powell this week in Washington (on monetary policy and the economy), while the Fed also announced its tapering of Repos yesterday (will lower max on term repo offerings to $25B starting mid-February and $20B in March). Stocks remain cautiously higher after a busy morning or mixed economic data and contrasting data on the coronavirus this week, as Treasury prices rose, sending yields lower, while oil prices bounced. Somewhere around 400 S&P companies have reported thus far for the quarter, with an earnings beat rate of around 70%.


Economic Data

·     Retail Sales for January rose 0.3% (while prior month revised to 0.2% from 0.3%), in-line with estimates while retail sales less autos rose 0.3% in January, also matching estimates; auto dealer YoY sales rose $5.3b in Jan. to $98.3B

·     Import Prices for January were unchanged, better than the expected (-0.2%) decline after rising 0.2% prior month (down from prior reading of +0.3%); Import prices ex-fuels rose 0.2% m/m after rising 0.2% in December; export prices rose 0.7% MoM, well above the expected (-0.1%) decline after falling 0.2% in December

·     Industrial production for January fell (-0.3%) MoM, slightly more than the (-0.2%) decline estimate and after falling (-0.4%) in the prior month (which was downwardly revised). Capacity utilization fell to 76.8% (in-line with estimate) from 77.1% in Dec., revised up from 77%

·     University of Michigan preliminary sentiment rose to 100.9, topping the est. of 99.5 after a 99.8 reading in the prior month (highest level since March 2018), as the current economic conditions index fell to 113.8 vs. 114.4 last month and expectations index rose to 92.6 vs. 90.5 last month.

·     Business Inventories rose 0.1% MoM, in-line with estimates while business sales fell (-0.1%) in December after rising 0.5% the prior month


Treasuries, Currencies and Commodities

·     In currency markets, the euro bounces off its worst levels in over 2-years following mixed U.S. economic data, though flat GDP data in Germany a concern; commodity prices are generally higher, with gold moving back above the $1,580 an ounce level, and oil prices also extend recent gains after falling to 13-month lows earlier in the week on slowing demand fears due to the impact of the coronavirus hitting China. Treasury market’s resume upward momentum, as yields decline, with the 10-yr down over 4 bps to 1.575% (lows of the week remain 1.54% on Monday).







WTI Crude















10-Year Note





Sector Movers Today

·     Chemicals; Citigroup downgraded shares of CF, MOS, and NTR to neutral from buy (as prefer FMC, CTVA) noting fertilizers are pure commodities and are getting buffeted by additional supply, while also noting the impact of coronavirus seems negative for demand in China and had expected 2020 to be a bounce-back year in NAM, but the curtailed capacity in P and K is likely to come back soon capping any upside; CC shares jumped after Q4 EP and Ebitda easily topped consensus with mixed guidance (helping boost shares of TiO2 names TROX, VNTR, KRO)

·     Software movers; AYX issued a revenue forecast for 2020 that exceeded highest expectations, prompting analysts to raise their tgts (Goldman Sachs raised by $35 to the Street-high $170 on the back of the company’s impressive business momentum); BL reported better-than-expected 4Q19 non-GAAP EPS on better-than-expected revenue of $80.3M, up 29% y/y, and better-than-expected billings of $98.7M, up 35% y/y; SVMK among top gainers on earnings after narrower Q4 EPS loss and upside to its outlook going forward; DDOG shares slump despite posting beats for the quarter and higher guidance as analysts warn on valuation and upcoming lock up expiration

·     Cannabis stocks got a boost after CGC shares rally after Q3 results, as revs rose to C$123.8M from C$83.05B same period a year earlier (est. $C$105M) while also posting a smaller than expected quarterly loss (shares of CRON, APHA, TLRY moved in sympathy)

·     Transports; 52-week highs for a few names in the transport index, with JBLU, LUV, CAR among them; in hail riding sector, UBER and LYFT shares fell after an article by the Street.com noted neither has turned a profit — and changing laws in New York and California (gig worker debate) could place that goal further out of reach



·     BTAI +60%; after having its tgt raised to $150 from $24 at SunTrust highlighting the huge opportunity in opioid withdrawal; says data coming early 2H20

·     DXCM +11%; after closing at a fresh record Thursday as quarterly sales topped the highest analyst estimate on better operating margin while affirming its year outlook – had its price tgt raised to $300 by several analysts (Gugg, Stifel, Piper)

·     EXPE +11%; reported in-line room night growth and beat EBITDA modestly by 4% ex-Trivago while saying plans to cut expenses $300-500M in FY20 leading to EBITDA growth guidance of double digits vs. 8% in FY19/quarter was mixed with EPS beat and in-line revs

·     IMGN +16%; after Q4 rev beat of $44.9M vs. est. $29.3M (and well above revs of $13.8M year ago period) – also guides year revs $60M-$65M vs. est. $44.6M

·     NVDA +6%; new record highs after quarterly results as handily beat consensus estimates as better data center results (up 33% sequentially) drove revenue (~$150M) and GM (~100 bps) upside, while EPS of $1.89 topped the $1.67 est.); gaming revs rose but less than expected

·     NWL +3%; as beats on top and bottom line, though did offer a weaker outlook for the year (EPS $1.46-$1.56 on revs $9.4B-$9.6B vs. est. $1.53 and $9.67B)

·     ROKU +8%; shares rise after Q4 top/bottom line beat, noting average rev per user rises 29% YoY to $23.14, while guides next quarter revs $300M-$310M vs. est. $297M; also noted active customer accounts grew 36% YoY to 36.9M



·     AEM -8%; after the gold miner lowered its full-year 2020 production outlook, citing slower-than-expected ramp up of production at its Nunavut operations in Canada – cuts production forecast to 1.87 mln ounces compared with its previous outlook of 1.9 mln to 2.0 mln ounces

·     ALKS -2%; downgraded at Bank America and JPMorgan noting operating expenditure outlook was higher than anticipated, while the other cited expectations for slowing volume growth for the company’s core brands – Vivitrol in addiction and Aristada in schizophrenia

·     ANET -11%; reported slightly better than expected 4Q19 results with revenue of $552.5M and $2.29 EPS vs. consensus at $551.0M and $2.10, respectively, Stifel noted the company’s Cloud-leveraged revenue remains muted, disappointing investors who had been hoping for a more constructive guide

·     AZN -3%; said core operating profit fell in the final quarter of the year, missing analysts’ expectations, and guided for growth in the year ahead; said core operating profit slid 29% to $1.55B vs. est. $1.80B and total revenue rose 3.9% to $6.66B vs. est. $6.73B at the top line

·     CARG -24%; downgraded to neutral from buy after the co issued weak 1Q20 and FY20 guidance as FY20 revenue guidance of $664- $676MM suggests revenue will only grow 12-14% organically vs. consensus that called for 20.5% growth to $709MM (weighs on CARS, TRUE)

·     LPSN -24%; announced another step up in opex to build out its Payments solution (+$16M in CY20 opex) while also announcing a CFO transition

·     PLSE -36%; downgraded to neutral at HC Wainright after company disclosed it received an NSE from the FDA regarding its CellFX system marketing application – previously, the Company submitted a 10(k) to FDA seeking clearance to commercialize its CellFX System

·     SDC -11%; after NBC News reported the co promises to fix customers’ smiles for about a third of the cost of traditional braces with at-home teeth straightening, but a number of patients say the aligners instead caused painful problems https://nbcnews.to/2u2VbPG

·     TEX -3%; as Q4 results came in below expectations, as challenging markets at the end of 2019 drove underperformance with revenue of $885M missing estimates by 4% on weaker adjusted operating profit as well

·     YELP -9%; downgraded at RBC and Barclay’s after its quarterly revenue growth of 10% fell below its target of 11% to 13% and also missed consensus estimates, as more businesses cut down on advertisement spending during the holiday period; Q1 sales growth outlook also missed estimates

·     YNDX -3%; as reports Q4 misses with downside FY20 guidance that has revenue of RUB 214-221B compared to the RUB 228.58B consensus; Q4 adjusted EBITDA was RUB 13.2B vs. est. 14.21B


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.

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