Mid-Morning Look

Tuesday, March 02, 2021

U.S. stocks are pulling back partially after the S&P 500 posted its biggest daily percentage gain in 9-months and the Nasdaq and Russell 2000 ended up more than 3% as bond yields eased and investors were optimistic over news that Johnson & Johnson became the third authorized COVID-19 vaccine in the United States. Treasury yields were steady yesterday and are slipping in the early going, alleviating the growing inflation and higher yield concerns that sunk equities last week. After outperformance Monday, the dollar index (DXY) little changed just above the 91 level at 3-week highs – buck little changed vs. the euro, Pound, and yen. Earnings starting to slow, but a few standouts today included retailing giant Target (TGT), as shares rally behind a big beat, while shares of DDD, AI, SWCH slip in technology following their results. Markets still eager on stimulus, as the U.S. Senate will start debating the relief bill this week after the House passed the $1.9T bill. No major economic data today. Commodity prices are mixed as oil recovers following its Monday slide and gold prices edge down slightly.

Sector Movers Today

·     Retailers; TGT Q4 EPS $2.67 vs. est. $2.54 on revs $28.34B (+21.1% YoY) vs est. $27.48B, comp sales +20.5% (est. +16.4%), same-day deliveries and pickups +212% YoY, and full-year sales rose by over $15B, which is more than the combined growth of the last 11 years, though the company did not provide guidance; KSS reported Q4 Adjusted EPS $2.22 vs. est. 98c (range 69c to $1.05) on in-line sales $5.88B; CHS posted a Q4 EPS loss of (68c) on net sales $386.2M, missing expected $447.5M, as comp sales fell -24.9% vs +2.2% YoY; ANF reported Q4 adj EPS $1.50 (est. $1.24) on in-line sales $1.12B, and announced plans to resume share buybacks; KTB Q4 adj EPS $1.23 vs est $0.97 on revs $661M vs est $646.1M, guided FY21 adj EPS $3.50-3.60 (est $3.18), sees FY21 revs increasing low-double digits; LL Q4 adj EPS $1.06 more than doubled the 50c est. on revenue $304.21M vs. est. $296.51M, and did not provide FY21 guidance

·     Auto sector; LI delivered 2,300 Li ONEs in February 2021, representing an increase of 755.0% YoY; recorded 5,379 deliveries in January 2021; XPEV delivered a total of 2,223 Smart EVs in February, consisting of 1,409 P7s, the company’s smart sports sedan, and 814 G3s, its smart compact SUV. Vehicle deliveries in January and February combined represented a 577% increase year-over-year; TM said it plans to sell as much as 500 billion yen ($4.7 billion) in yen and foreign currency sustainability bonds, in what would be one of the biggest offerings globally in the booming market to fund environmental and social projects; NIO shares slip after co expects slowing EV sales growth in q1, posts wider-than-expected loss; Volvo said to sell only all-electric vehicles by 2030; in auto retail, AZO Q2 comparable sales +15.2% well above the estimate +8.20% along with EPS beat ($14.93 vs. $12.39 y/y, estimate $12.83)

·     Bank movers; JPMorgan added PNFP to its Analyst Focus List as a growth idea and one of their top overall ideas, lifting its price target to $100 from $87 as they see the bank as well-positioned for top-line growth compared to other regional banks and its entry into Atlanta as the biggest opportunity for growth in the company’s history; FRC 1.75M share Spot Secondary priced at $166.50; MS filed prospectus related to resale from time to time by selling stockholders up to 2.3M shares of common stock and was also upgraded by Daiwa to Outperform with a $86 target; Wedbush raised their target on SI to $175 from $150 after their meetings with management reinforced the view that the bank is building its moat as the go-to bank for cryptocurrency market participants, and they distinguish the bank aspiring to be the transactional-focused bank of crypto vs SBNY who is emerging as the go-to deposit-taking bank of the crypto market; In Canadian banks, Bank of America downgraded RY to Neutral and upgraded BMO to Buy, and CIBC upgraded BNS to Outperform, joining BMO, TD, CWB as banks they rate at OP in what they see as a buy-the-banking-sector moment at this point in the cycle; PACW filed mixed shelf

·     Hardware & Software movers; ZM rises after q4 results handily top consensus (Q4 EPS $1.22 vs. est. 79c; Q4 revenue $882.49M vs. est. $811.77M) with better q1 guidance (Q1 EPS 95c-97c vs. est. 72c and sees Q1 revenue $900M-$905M vs. est. $804.78M); PERI rises after raising its FY rev outlook to $370M-$380M and adjusted EBITDA guidance due to expected 31% year over year revenue growth in the first quarter of 2021; SWCH shares fell after Q4 revenue $127.7M missed the est. $131.3M (was downgraded at Raymond James following the Q4 results); UPLD acquired BlueVenn, a cloud-based customer data platform for $51.9M in cash; AI posted a smaller than expected Q3 EPS loss on better revenue, but shares pullback following strong run post IPO (narrow beat weighs on shares)

Stock GAINERS

·     NLSN +5%; after ROKU said it will buy Nielsen’s advanced video advertising business, which includes automatic content recognition and dynamic ad insertion technologies

·     PERI +25%; after raising its FY rev outlook to $370M-$380M and adjusted EBITDA guidance due to expected 31% year over year revenue growth in the first quarter of 2021

·     RKT +20%; rising for a 3rd day following better results last week

·     SE +4%; said its loss widened for Q4 as expenses rose, though revenue increased and the company expects 2021 e-commerce revenue to more than double from 2020 – revenue rose to $1.57 billion from $777.2 million

·     TGT ; Q4 EPS $2.67 vs. est. $2.54 on revs $28.34B (+21.1% YoY) vs est. $27.48B, comp sales +20.5% (est. +16.4%) – shares have reversed following comments on conference call

·     ZM +2%; after q4 results handily top consensus (Q4 EPS $1.22 vs. est. 79c; Q4 revenue $882.49M vs. est. $811.77M) with better q1 guidance (Q1 EPS 95c-97c vs. est. 72c and sees Q1 revenue $900M-$905M vs. est. $804.78M)

Stock LAGGARDS

·     AI -14%; posted a smaller than expected Q3 EPS loss on better revenue, but shares pullback following strong run post IPO (narrow beat weighs on shares)

·     DDD -11%; shares tumbled in 3D space after Q4 earnings missed estimates though sales of $172.7M beat the $168.5M estimate)

·     FGEN -30% as the co and partner AZN were expecting the FDA to make a final decision on a new anemia drug later this month, but the agency announced an Adcom will now be held for Roxa which means no NT approval and more pushout from 3/20 PDUFA

·     INO -10%; after saying it plans to respond to U.S. FDA’s questions related to a clinical hold on co’s late-stage COVID-19 vaccine trial in May, compared with its previous timeline of March

·     INSG -22%; on mixed results; Q4 EPS loss (14c) vs. est. 0c; Q4 revenue $86.1M vs. est. $83.81M (downgraded at both Stifel and Canaccord)

·     LMND -11%; headline numbers for the Q are mixed as is the guide…Gross Earned Premium is softer for 1Q and FY but IFP (In Force Premium) guide is strong, indicating pricing power, better upmarket trajectory, and retention said OPCO

·     NBIX -6%; Luvadaxistat did not meet primary endpoint in the Phase 2 INTERACT study while Luvadaxistat met secondary endpoints of cognitive assessment

·     NVAX -7%; slipped as reported a wider-than-expected fourth-quarter loss but its sales beat Wall Street expectations

·     SWCH -11%; shares fell after Q4 revenue $127.7M missed the est. $131.3M (was downgraded at Raymond James following the Q4 results)

Syndicate:

·     First Republic (FRC) 1.75M share Spot Secondary priced at $166.50

·     GrafTech (EAF) 30M share Spot Secondary priced at $11.88

·     Hamilton Lane (HLNE) 1.45M share Spot Secondary priced at $88.25

·     Jeld-Wen (JELD) 8M share Spot Secondary priced at $29.25

·     Karuna Therapeutics (KRTX) 2.08M share Secondary priced at $120.00

·     Site Centers (SITC) 15M share Spot Secondary priced at $13.20

·     WillScot Mobile Mini (WSC) 12.75M share Spot Secondary priced at $27.20