Mid-Morning Look: July 23, 2021

Auto PostDaily Market Report

Mid-Morning Look

Friday, July 23, 2021

Index

Up/Down

%

Last

 

DJ Industrials

112.29

0.32%

34,935

S&P 500

20.24

0.46%

4,387

Nasdaq

57.42

0.39%

14,739

Russell 2000

-10.83

0.48%

2,188

 

 

Stocks on track for a 4th straight day of gains, as the S&P 500 (up 1.2% WTD), Dow Jones Industrials (up 0.7% WTD), and Nasdaq (up 2% WTD) all trading just shy of recent all-time highs. Earnings grabbing most of the headlines today with social media giants SNAP, TWTR rising after better results/guidance, ahead of FB earnings next week. China stocks getting crushed, led by declines in online education names (EDU, GOTU, TAL) following reports on China cracking down on Chinese tutoring companies The news just the latest on a crackdown by China on U.S. listed companies as DIDI plunges again on recent report that China is weighing serious penalties for the ride-hailing giant. Economic data light but macro picture taking a back seat to earnings as recent coronavirus variant spreading concerns, inflation fears, and lack of deal progress on infrastructure package failing to dent any market optimism following the strong start to earnings season (over 85% beat rate). Treasury yields remain off early week lows (10-yr touched 1.13%) but remain depressed with 10-yr hovering at 1.3%. The U.S. dollar on course for a second week of gains after turbulent few days. Huge week of earnings coming up with AAPL, AMZN, FB, GOOGL, TSLA, MSFT, V, BA among those next week.

 

Economic Data

·     Markit July U.S. PMI Composite Flash reading at 59.7 vs. 63.9 prior, the Manufacturing PMI at 63.1 vs. 62.1 consensus and 62.6 prior while Services PMI 59.8 vs. 64.6 estimate and 64.8 prior.

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.07

71.84

Brent

-0.27

73.52

Gold

-6.50

1,798.90

EUR/USD

-0.0012

1.1759

JPY/USD

0.32

110.45

10-Year Note

0.016

1.283%

 

 

Sector Movers Today

·     Auto sector; MGA to acquire VNE for $31.25 per share in cash, representing a total value of $3.8 billion, and an enterprise value of $ 3.3 billion, inclusive of Veoneer’s cash, net of debt and other debt-like items as of March 31, 2021; NKLA files to sell 1.68M shares of common stock for holders; VWAGY said it expects July sales In China to be impacted by chip shortage, which might ease toward end of Q3; DIDI plunges again as recent report that China is weighing serious penalties for the ride-hailing giant, as regulators considering a fine, suspension of certain operations or introduction of a state-owned investor; GNTX drops as 2Q net sales miss ests; CCIV stockholders approve Lucid merger; GM issued a new recall for nearly 69,000 Chevrolet Bolt electric vehicles (EVs) worldwide for fire risks after reports of two new fires.

·     Restaurants; Baird upgraded SBUX to Outperform and raised their PT to $142 from $117 as recent U.S. coffee category data points have strengthened confidence that it can show upside to near-term comps/EPS estimates; JPMorgan downgraded DPZ to Neutral, saying it is time to lock-in profits with shares up ~117% (vs ~54% SPX) since March 2019 and about 60% (vs SPX up ~15%) since 2/26; TACO reported Q2 adj EPS 16c vs est. 11c on revs $125M vs est. $122.79M, system-wide comp sales +17.8%, company-operated comps +18.3%, franchise comps +17.2% for the quarter, and expects system-wide new unit growth to achieve 5% in 2023 led by franchising; PF Chang’s in early talks regarding an IPO in a potential $1B deal as soon as this year, Bloomberg reported, while also noted California Pizza Kitchen’s owners considering potential sale or IPO.

·     Internet; social media stocks jump on better results as TWTR posted higher revenue growth than expected, as ad revs rose 87% YoY to $1.05B, topping the $909M est. and reported 206Mmn monetizable daily active users (mDAU) for Q2, in-line with ests; SNAP surges as qtrly rev and user growth beat analysts’ estimates, with Q2 revs jumping 116% to $982M, topping the $846M estimate as daily active users rose 23% to 293M (vs. est. 290M) and guided Q3 revs above views ($1.07B-$1.09B vs. est. $1.01B); shares of PINS, FB rise ahead of earnings next week

·     Services; China education sectors crushed (TAL, EDU, GOTU) on reports China will turn its vast private tutoring industry largely into a not-for-profit sector in a harsher-than-expected crackdown. News of the policy change, which also restricts foreign investment in the sector, threatens to decimate China’s $120 billion private tutoring industry; the recent crackdown from China on U.S. listed stocks continues to depress China ADRs (BIDU, BABA, JD, TCEHY)

 

Stock GAINERS

·     ACBI +2%; to be acquired by SSB in an all-stock transaction valued at $542M that values ACBI at $26.43 per share (ACBI holders will receive 0.36 share of SouthState)

·     AXP +4%; hits record highs after Q2 EPS $2.80 easily tops the $1.66 consensus estimate as qtrly total provisions for credit losses benefit of $606M vs provision expense $1.56B and says card member spending exceeded pre-pandemic levels in June

·     NRXP +13%; posting a second day of double-digit gains, on plans to make a commercial formulation of a still experimental Covid-19 therapy in million dose quantities

·     NWHM +82%; to be acquired by funds managed by affiliates of Apollo Global Management with a purchase price of $9.00 per share in cash in deal valued at $173M

·     SCKT +63%; shares spike after reported EPS of $0.27 vs year-ago loss of $0.13 while revenue more than doubled to $5.95M vs $2.7M in year-ago quarter

·     SNAP +23%; as qtrly rev and user growth beat analysts’ estimates, with Q2 revs jumping 116% to $982M, topping the $846M estimate as daily active users rose 23% to 293M (vs. est. 290M) and guided Q3 revs above views ($1.07B-$1.09B vs. est. $1.01B)

·     SKX +3%; rises in footwear space as Q2 profit and sales easily top consensus and guides both Q3 and year EPS/revs above views while also posted a record gross margin of 51.2%

·     TWTR +1%; posts fastest revenue growth since 2014; posted higher revenue growth than expected, as ad revs rose 87% YoY to $1.05B, topping the $909M est. and reported 206Mmn monetizable daily active users (mDAU) for Q2, in-line

·     VNE +55%; after MGA agrees to acquire for the auto supplier for $31.25 per share in cash, representing a total value of $3.8B in the auto supplier industry https://on.mktw.net/3kOvXwu

 

Stock LAGGARDS

·     ADVM -20%; after saying late yesterday it will no longer develop its experimental gene therapy, ADVM-022, for treatment of diabetic macular edema (DME) – downgraded at Cantor with $3 tgt

·     BOOM -10%; after posting Q2 sales and profits below Street consensus, and guides Q3 revs $70-$73M, missing the $73.2M estimate as expects gross margin of 24%-26%, down from 26% in Q2, saying potential decline relates to expected increase in N.A. sales vs higher margin int’s sales

·     DIDI -16%; plunges again as recent report that China is weighing serious penalties for the ride-hailing giant, as regulators considering a fine, suspension of certain operations or introduction of a state-owned investor (general weakness in China ADRs

·     EDU -58%; China education sectors crushed (TAL, GOTU as well) on reports China will turn its vast private tutoring industry largely into a not-for-profit sector in a harsher-than-expected crackdown. News of the policy change, which also restricts foreign investment in the sector, threatens to decimate China’s $120 billion private tutoring industry

·     INTC -5%; reported beat/raise results as 2Q Sales/EPS topped Street by 4%/20%, respectively; upside was led by DCG, as 3Q edged consensus by 1% on both top/bottom lines; raised 2021 outlook to $73.5B/$4.80 (vs. prior $72.5B/$4.60), largely reflecting the 2Q beat

·     KMB -3%; lowers its forecasts for 2021 adjusted earnings per share to between $6.65-$6.90, from $7.30-$7.55 per share, as it faces higher raw material costs and consumers reduce at-home usage of tissues from the levels seen last year – now expects input costs to rise $1.2B-$1.3B

·     SAM -23%; on wide Q2 EPS/sales miss (EPS $4.75 vs. est. $6.69; Q2 revs $602.8M vs. est. $657.6M) and lowers year EPS outlook to $18.00-$22.00 vs. est. $24.66 due primarily to slowing growth in the hard seltzer category

·     TPIC -15%; after co sees hit to FY21 adj. EBITDA from higher raw material costs, policy uncertainty saying sees Q2 Ebitda $70 mln-$85 mln vs previous estimate of $110 mln-$135 mln

 

Syndicate:

·     Caribou Biosciences (CRBU) 19M share IPO priced at $16.00

·     Core & Main (CNM) 34.884M share IPO priced at $20.00

·     Cytek Biosciences (CTKB) 16.7M share IPO priced at $17.00

·     Gambling.com (GAMB) 5.25M share IPO priced at $8.00

·     Outbrain (OB) 8M share IPO priced at $20.00

·     Sophia Genetics (SOPH) 13M share IPO priced at $18.00

·     U.S. Century Bank (USCB) 4M share IPO priced at $10.00

·     Xponential Fitness (XPOF) 10M share IPO priced at $12.00

_________________________________________________________________

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

Register