Mid-Morning Look: January 10, 2022

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Mid-Morning Look

Monday, January 10, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks extend last week losses, with major averages breaching key technical support levels to start the week as 2022 is off to a rocky start with the Nasdaq down about -7% to start the Year amid rising interest rate hike fears. The rising rate fears from the Fed (three hikes expected this year, including potentially the first in March) are finally starting to take hold in U.S. equities with interest rate sensitive sectors among the hardest hit to begin the year (high growth like tech, homebuilders, telecom, REITs), while sectors that tend to do better in a rising rate environment (banks, insurance) have outperformed.

This morning, Goldman Sachs joined Bank America’s call last Friday call for four (not three) rates hikes in 2022, which is gaining traction on Wall Street. Bitcoin tumbled below $40,000 for the first time since September before rebounding, while ethereum dropped over 8% to below $2,950 before paring losses as well. The global crypto market cap declines nearly 4% to 1.87T, according to data from CoinMarketCap. To start the year, Bitcoin is down about 15%. Several sectors hit especially hard today, mostly growth sectors with tech, biotech crushed as the IBB now in bear market drawdown (-21%). Blood beath early overall, with stocks, bonds, commodity prices all tumbling.







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; LULU shares slip after guiding Q4 adjusted non-GAAP $3.25-$3.32 vs. est. $3.34 and now expects company’s net revenue to be toward low end of its range of $2.125B-$2.165B vs. est. $2.17B; CROX issues prelim Q4 revenue growth ~42% vs est. 36.4% with OM ~28% and guides FY21 revs to grow ~67% vs prior ~62%-65% while reaffirms FY22 outlook; FIGS Q4 prelim revs $128M vs. est. $120.4M as active customers are expected to total 1.9M, an increase of 46% y/y; AOV expected to be $113, an increase of 15% y/y; CAL raises guidance; FXLV prelim FY21 revs $133M-136M vs prior $132M-137M and consensus $133.3M and prelim Q4 – same store sales increased by 6% globally and 53% in the U.S.; PRTY reaffirms Q4 outlook ahead of presentation at the ICR Conference – revenue $685-700M vs. est. $705M; TLYS net sales of $173.3M increased by 16.5% for the 2021 holiday period and comps increased by 14.1% for the 2021 holiday period compared to an increase of 2.7% for the 2020 holiday period; GCO Q4-to-date sales – total overall sales +18% vs FY21 +18% and +9% vs FY20; guides FY22 EPS to be above midpoint of $6.40-6.90 (est. $6.72); HSBC downgrades NKE and ADDYY to Hold from Buy citing sustained supply chain issues saying Western brands are still facing production issues with the sector not completely out of “the woods” with supply chain problems

·     Utilities & Solar; Mizuho downgraded AGR to Underperform on a weaker earnings outlook with growth challenged in 2022 and 2023 and upgraded XEL to Buy after Friday’s Colorado rate case settlement and also named it as a 2022 Top Pick in the space along with LNT, CNP, CMS, NEE, DTE, ETRand PCG; BMO downgraded ES to Market Perform as they see better opportunities in the space given its current premium relative to peers and upgraded CNP to Outperform as they offer best-in-class EPS and DPS growth at an attractive valuation; RBC lowered their estimates and price targets on RUN, NOVA after the market took an unfavorable view of the proposed decision by the ALJ for net metering in California; UBS upgraded SEDG to Neutral following the release of the CPUC’s Proposed Decision over NEM 3.0 in CA that removes a potential overhang on valuations across residential solar names, and it also replaced NOVA on Goldman’s Conviction List; Seaport downgraded TPIC to Neutral as they prefer quality OFS names and beaten-down clean tech for 2022, and this stock is neither

·     Casinos, Gaming, Lodging & Leisure sector; in online betting (DKNG, CZR), shares active as the co’s took mobile sports bets over the weekend after the New York State Gaming Commission approved the respective sportsbook; FUBO said paid subscribers at year-end are expected to exceed 1.1 mln, up more than 100% Yoy while sees Q4 revs up 105%-109%; Gaming at Bank America changes: GLPI downgraded to Underperform from Buy, LVS downgraded to Underperform from neutral and trim tgt to $40 from $46; in leisure/travel, EXPE upgraded to Overweight at Piper and up tgt to $216 from $197 citing data sets on traditional lodging, air traffic, Omicron coronavirus variant and increasing vaccination rates , while ABNB downgraded to Neutral from OW and cut tgt to $169 from $215; in lodging REITs, PK, PEB downgraded to Neutral from Buy at Bank America, SHO double downgrade to Underperform from Buy saying they are now torn between early cycle stock fundamentals and a late cycle stock market (characterized by rising rates, and slowing overall cyclical growth) and think this warrants a more neutral overall sector view



·     APR +24%; OMI agreed to acquire APR in a deal with an equity value of about $1.45 billion, where APR holders will receive $37.50 per share in cash, a 26% premium to Friday’s closing price https://on.mktw.net/3Gf9ikz

·     CMC +5%; big headline beat (EPS $1.62 vs. est. $1.24), driven by better-than-expected margins globally while outlook encouraging as volumes solid supported by backlog and strength across key N.A and European markets

·     HUM 3%; rebounds after tumbling over 20% last week on lowered membership growth estimate for individual Medicare Advantage products for the year to 150K-200K from prior 325K-375K

·     MRNA +4%; to offer a dose specific to Omicron; also raises 2022 vaccine sales forecast to $18.5B

·     SWAV +3%; PEN is said to be exploring a potential deal with SWAV according to a Bloomberg report Friday https://bit.ly/34pFvrm

·     TLRY +15%; after swung back to profits to exceed Street forecasts with its earnings for Q2, though despite a ~20% YoY growth, the quarterly revenue at $155.2M fell short of expectations; said net cannabis revenue grew ~7% YoY to $58.8M making up ~38% of the topline

·     ZNGA +48%; TTWO to acquire ZNGA for a total value of $9.861 per share – $3.50 in cash and $6.361 in shares of Take-Two common stock, implying an enterprise value of $12.7 billion https://on.mktw.net/34DvS8L



·     CAH -10%; said it now expects additional inflationary impacts and lower volumes resulting primarily from global supply chain constraints, and a lower-than-expected offset from pricing actions/ests incremental impact will be approximately $150M-$175M to medical segment profit

·     FIVE -7%; guides Q4 EPS $2.36-$2.48 below est. $2.49 and sees Q4 revs $985M-$1.005B also below consensus $1.01B, with Q4 comp sales up 2%-4%

·     FRPT -7%; guides Q4 net sales $115.9M below est. $120.3M at conference today

·     HALO -4% pre mkt after guidance and outlook

·     LULU -6%; after guiding Q4 adjusted non-GAAP $3.25-$3.32 vs. est. $3.34 and now expects company’s net revenue to be toward low end of its range of $2.125B-$2.165B vs. est. $2.17B

·     SI -6%; was removed from Wedbush best ideas list given a “near 100%” likelihood that the U.S. will adopt a central bank digital currency, which could negatively impact the addressable market for the company’s planned stablecoin


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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