Mid-Morning Look

Tuesday, June 03, 2025

U.S. stock markets remain in an upward trend since the early April lows, as every stock market dip has been bought aggressively since on hopes of tariff/trade deals in the works, mixed economic data leading to hopes of potential Fed rate cuts, hopes of a big tax cut bill, and improving/resilient earnings from corporations in the face of tariff impact. Treasury yields have been trapped in a 10-bps range for the 10-yr recently 4.4%-4.5%, while the dollar has weakened and gold prices have surged. Bitcoin prices bouncing today along with crypto miners. AI related stocks/plays/chip names have outperformed since the beginning of May, helped by better NVDA results last week. Nuclear power stocks rise today after META signed an agreement to buy power generation of a CEG nuclear plant in Illinois under a 20-year deal. Data center names higher, semi chip plays ahead of AVGO results later this week. Discount retailers bouncing behind better results/guidance from Dollar General (DG). Technology, Energy, Consumer Discretionary early leaders while Materials, Financials, REITs and Consumer Staples lagging the most. Very busy day of Wall Street conferences, so possible big moves on any company updates/guidance provided. Among today conferences include, -Bank of America Global Technology Conference, Jefferies Global Healthcare Conference, Baird 24th Annual Global Consumer Technology & Services Conference, Deutsche Bank 22nd Annual dbAccess Global Consumer Conference, TD Cowen Future of the Consumer Conference and William Blair Growth Stock Conference, among others.

• April factory orders m/m fell (-3.7%) vs 4.3% previous and vs est. (-3.2%); factory orders ex-transportation (-0.5%) vs March (-0.5%); U.S. April factory orders ex-defense (-4.2%) vs March +3.9%; April nondurables orders (-0.9%) vs March (-0.7%); total manufacturing inventories (-0.1%) vs March +0.1%; U.S. April nondefense cap orders ex-aircraft revised to (-1.5%) from (-1.3%); April shipments unrevised at -0.1%

• In Metals: Copper prices/stocks (FCX, TECK, SCCO) were weak early as factory activity in top metals consumer China missed expectations. Chinese May Caixin Manufacturing PMI (final) was 48.3 below the 50.6 consensus; RIO was downgraded to Hold from Buy at Jefferies saying of the major diversified miners under coverage, they prefer Glencore (GLNCY), Anglo and VALE over RIO and BHP based on geopolitical factors, capital allocation and capex risks, strategic risks, and, at the margin, valuation.
• In Aerospace & Defense: KTOS and GE announced a formal teaming agreement to advance propulsion technologies for the next generation of affordable unmanned aerial systems and Collaborative Combat Aircraft-type aircraft; RTX was awarded $536M US navy contract for spy-6 family of radars; RKLB announced successful launch of Electron mission for BlackSky (also price target raised to $27 from $24 at Deutsche Bank); WWD was upgraded to Buy from Hold with $291 tgt at Deutsche Bank saying they have the exposure to the right submarkets of engine aftermarket and guided munitions; JOBY and Abdul Latif Jameel agree to explore opportunities for electric aircraft in Saudi Arabia with potential delivery of up to 200 electric aircraft and related services valued at approximately $1 billion over coming years.

• CRDO +25%; after beat and raise quarter as Q1 revs +25.9% q/q to $170M topping the $160M estimate on better EPS of $0.35 (vs. est. $0.28) and raised outlook, w/ rev guidance mid-point of $190.0M implying +11.7% q/q growth and well above the consensus $162.4M.
• CRWV +14%; extending recent gains in the AI data center space after IPO prior month.
• DG +12%; after Q1 earnings beat analysts’ estimates and the discount retailer raised its forecasts for fiscal-year same-store sales growth, while narrowing its yearly profit outlook; raises FY25 net sales growth view to about 3.7%-4.7%, vs. prior view of 3.4%-4.4% and comp sales 1.5%-2.5% vs. prior 1.2%-2.2%
• HIMS +3%; agreed to acquire Zava, a digital health platform in Europe that they say will expand its footprint into the United Kingdom and officially launch the company into Germany, France and Ireland. Exact terms of the deal weren’t disclosed, but Hims said it would be funded solely with cash.
• JOBY +8%; as signs MOU with Abdul Latif Jameel to distribute up to 200 aircraft in $1 bln deal.
• MLTX +15%; after the Financial Times reported MRK has held talks over an acquisition of more than $3 billion for the Swiss biotechnology company. Merck submitted a nonbinding offer for MoonLake earlier this year, the Financial Tines reported. https://tinyurl.com/57cyyvd8
• PINS +4%; was upgraded to Overweight at JP Morghan and raised its tgt to $40 (from $35) noting while shares outperformed YTD at +10% vs the SPX +1%, they remain down -18% from the February market highs compared to the SPX more fully recovered at -3%.
• SIG +10%; after the jewelry retailer raised its annual adjusted EPS forecast to between $7.70-$9.38, from the previous forecast range of $7.31-$9.10 and guides year sales $6.57B-$6.8B from prior $6.53B-$6.8B view after beating Q1 sales, profit estimates.
• STR +11%; as VNOM, a subsidiary of FANG announced that they have entered into a definitive agreement under which Viper will acquire Sitio (STR) in an all-equity transaction valued at approximately $4.1B, including Sitio’s net debt of approximately $1.1 billion as of March 31, 2025
• XYZ +1%; was upgraded from in line to Outperform at Evercore and raised its tgt from $58 to $75 saying they are less worried about Cash App lending being too aggressive, while understanding co’s risk/losses model.

• BMBL -5%; was downgraded to Underweight from Neutral at JP Morgan noting shares have traded up over 50% since Liberation Day and are now more than 10% above the firms price tgt as the move largely reflects significant profit upgrades.
• FDS -4%; said CEO Phil Snow is retiring after a decade at the helm, and the financial-data provider has hired JPMorgan Chase veteran Sanoke Viswanathan to succeed him
• NIO -2%; after the Chinese electric-vehicle maker reported a wider-than-expected Q1 loss of (-$0.45) vs. est. loss (-$0.35) on in-line sales of $1.7B partly due to rising competition, which has been pressuring prices for new EVs and profit margins for EV makers.
• SATS -4%; after missing $183M second interest payment amid FCC review.
• TECK -1%; along with weakness in other copper miners FCX, SCCO after top metals consumer China missed expectations. Chinese May Caixin Manufacturing PMI (final) was 48.3 below the 50.6 consensus