Mid-Morning Look: February 15, 2022

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Mid-Morning Look

Tuesday, February 15, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks rally with today’s focus remaining on the prospect of de-escalation on the Ukraine border after Russia’s Defense Ministry said it had pulled back some troops from near Ukraine, instead of higher wholesale prices as the January producer-price index (PPI) comes in near record highs and well above economist estimates. Futures jumped more than 1% overnight (holding gains thus far) on reports Russia announced a pullback of forces on the Ukraine border amid a new round of shuttle diplomacy. The news boosted U.S. stocks while sunk oil prices (which jumped to fresh 7-year highs yesterday on news of increased tensions) and gold prices as traders bailed on safe-haven assets. Treasury yields resumed the upward climb with the 10-year back above 2.04%. Meanwhile, inflation showing no signs of easing up after the January PPI came in at 1% m/m, more than double estimates while y/y rose 9.7%, just shy of its record high of +9.8%, while rising on a core basis as well. The S&P 500 at a crucial level after the overnight spike, trading back near its 200-day moving average level around 4,454.


Economic Data

·     Producer Price Index (PPI) for January shows headline and core readings “hotter” than expected – PPI headline m/m rises +1.0% vs. est. +0.5% and headline y/y rises +9.7% vs. est. +9.1%; on a core basis (ex food & energy) Jan PPI rises +0.8% m/m vs. rest. +0.5% and rises +8.3% vs. est. $7.9% y/y

·     Empire state current business conditions index +3.1 in February vs -0.7 in January; new orders index +1.4 in February vs -5.0 in January; prices paid index +76.6 in February vs +76.7 in January; employment index at +23.1 in February vs +16.1 in January; and the six-month business conditions index +28.2 in February vs +35.1 in January







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; GPS downgraded underperform from Neutral at bank America and cut tgt to $14 from $26 as expect Old Navy (55% of sales) to be disproportionately hurt by its exposure to the low-income consumer and by worsening supply chain challenges which puts estimates at risk: our 1H22E and FY22E EPS estimates are 28% and 16%; Cowen said in department stores, its top pick is Macy’s (M) given greater upside potential on category strength, merch margins, and digital innovation as see 4Q21 EPS of $1.99 vs the Street’s $1.96, primarily driven by a slightly higher sales outlook and expense leverage (also lowers JWN tgt to $25 from $27); KSS unveils locations of 400 new Sephora at kohl’s shops opening this year; WHR raises quarterly dividend 25%, raises share repurchase plan by $2B

·     Utilities & Solar rise; UBS upgraded HASI to Buy given its attractive valuation and relatively stable underlying earnings, CNP to Buy as it trades in-line with average regulated utilities valuation despite being one of the fastest growing utilities with a misunderstood ESG position, and SPWR to Neutral on a more balanced risk/reward with shares having declined 68% since its Jan. 2021 peak, while downgrading NI to Neutral after its outperformance over the past 6 months has pushed the stock to price in its above-average EPS growth; Bank of America double-upgraded DTE to Buy from Underperform after last week’s earnings report included an FY21 beat on already raised guidance, a raise of its FY22 EPS range, and strong affirmation of its long-term growth trajectory; ARCH Q4 EPS $11.92 vs est. $12 on revenue $805.7M vs est. $691.5M, plans to relaunch cap return program in Q2 with 50% of discretionary cash flow being returned to shareholders via a variable dividend on top of its current 25c/shr dividend and the remaining 50% retained for buybacks, special dividends, and capital preservation

·     Consumer Finance; ADS reported delinquencies for January of 4.2% vs. 4.3% y/y, while delinquencies were 4.2% vs. 4.3% y/y; COF reported charge-offs for January of 2.03% vs. 2.54% y/y and delinquencies at 2.4% vs. 2.49% y/y; DFS reported charge-offs for January of 1.76% vs. 2.57% y/y and delinquencies 1.75% vs. 2.08% y/y; SYF reported charge-offs for January of 2.05% and delinquencies 1.49%; reported charge-offs for January of 1.02% and delinquencies 0.7%; MA said expands consulting with practices dedicated to crypto, open banking and ESG

·     Pharma movers; IMGN announced a license agreement with LLY of its Novel Camptothecin ADC Platform for up to $1.7 billion in potential payments; IMGN will receive $13 million upfront and up to $32.5 million for meeting certain milestones; ZTS 4Q adj EPS $1.00 vs est. $0.96 on revs $2.0B vs est. $1.9B; guides FY22 revs $8.325-8.475B vs est. $8.41B and adj EPS $5.09-5.19 vs est. $5.21; AZN said that a Phase 3 trial of Lynparza plus abiraterone showed that the drug combination reduced risk of disease progression in patients with prostate cancer



·     ANET +5%; delivered positive results and outlook as sales beat +4%, EPS beat by +11% and the March quarter guidance for +27% y/y sales growth is also +2% better than expectations and guided to 1Q22 operating margin of 38% vs. est. 37%

·     CCL +6%; as airlines and cruise names (reopen plays) outperform early

·     MGI +19%; enters into agreement to be acquired by Madison Dearborn Partners for $11.00 per share in cash to accelerate advancement of digital growth strategy in a deal valued at $1.8B including debt https://on.mktw.net/3LDJHVu

·     MNST +2%; Bloomberg reported last night merger talks between MNST and STZ are progressing, and a merger agreement could be reached in the coming weeks if negotiations proceed smoothly https://bloom.bg/3Bp8rMt

·     QSR +4%; reported Q4 profit and revenue that rose above expectations, as Burger King same-stores sales beat forecasts to help offset misses by Tim Horton’s and Popeyes Louisiana Kitchen

·     RESN +249%; filed an 8-K announcing its definitive agreement to be acquired by Murata for $4.50/share in an all-cash transaction worth ~$285mn in enterprise value as the deal represents a ~266% premium to RESN’s closing price of $1.23

·     SABR +19%; Q4 adj EPS (47c) loss wider than est. (45c) on revs $500.6M vs est. $497.1M, its FY22 guidance is dependent on bookings recovery, but if bookings recover 50% the midpoint of FY22 total revs guidance range $2.4-2.7B

·     SE +6% after tumbling -18% Monday after India has banned 54 new apps, including SE’s game Free Fire

·     SPWR +5%; upgraded to Buy in the solar space at UBS; seeing broad strength with ENPH among top S&P leaders

·     TSEM +41%; as INTC confirmed a prior WSJ report overnight as it acquires Israeli chip company Tower Semiconductor (TSEM) for almost $5.4B, paying $53 per share



·     CAR -14%; posted strong quarterly results, but shares move lower

·     CIEN -3%; guides Q1 revs $840M-$850M vs. est. $895M and sees Q1 gross margins 44%-45%; continue to see an unprecedented level of demand for our products and services and continue to expect to achieve our revenue guidance of 11% to 13% annual growth

·     CYTK said data from late-stage study showed its experimental treatment, omecamtiv Mecarbil, had no effect on exercise capacity in patients with a type of heart failure

·     FIS -7%; after Q4 EPS and revs missed estimates and guided Q1 EPS $1.44-$1.47, below the $1.56 estimate and revs also falling short of consensus $3.42B-$3.45B vs. est. $3.49B

·     INTU-2%; after saying expects Q2 revenue to reflect slower forming tax season as sees $2.66B-$2.665B below prior $2.71B-$2.75B due to a slower forming tax season

·     IPGP -9%; after weaker guidance as sees Q1 revenue $320M-$350M below est. $370M and EPS 85c-$1.15, below estimate $1.32 – trades at 52-week lows

·     LEGN -3%; after the FDA places clinical hold on the co’s lymphoma trial

·     LRMR -62%; says the FDA is maintaining its clinical hold at this time on Larimar’s CTI-1601 program and that additional data is needed to resolve the clinical hold


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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