Mid-Morning Look: March 03, 2021

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Mid-Morning Look

Wednesday, March 03, 2021






DJ Industrials




S&P 500








Russell 2000






Stocks tumble on the open, pulling back from overnight strength as market participants watch Treasury yields inching to their highest levels of the week (up 8 bps to 1.48%), renewing inflation fears and sparking an early sell-off, especially in richly valued growth names in technology. Weaker economic data not helping matters either as private payrolls from ADP missed estimates and ISM services misses views and came in below the prior month while prices paid jumps to 12 1/2 year highs (boosts inflation concerns) – prices paid index 71.8 in February vs 64.2 in January, while new orders tumbled to 51.9 from 61.8 in January (not a strong round of data today). In retail sector, shares of URBN higher after better quarterly results, while JWN and ROST decline following their disappointing results; energy among early leaders in the S&P and Russell 2000 as oil prices rebound. Investors watching key technical levels again for major averages as the Nasdaq Comp drops over 1.5%, now well below its 50-day MA support (stands at 13,343), while the S&P 500 remains slightly above its 50-day moving average (at 3.822). The U.S. Senate is expected to take up President Biden’s $1.9 trillion coronavirus relief package, with fellow Democrats seeking to advance key priorities and boot some pieces such as the minimum wage increase. Bitcoin prices surging this morning, topping the $52,000 level before paring gains, while the dollar rises and gold prices decline back near lowest levels in 8-months.


Economic Data

·     The ISM non-manufacturing activity index fell to a reading of 55.3 last month from 58.7 in January, which was the highest since February 2019. U.S. services industry activity unexpectedly slowed in February amid winter storms, while a measure of prices paid by companies for inputs surged to the highest level in nearly 12-1/2 years (71.8 from 64.2 in Jan), bolstering expectations for faster inflation in the near term.

·     ADP Feb payrolls reported at 117K below est. 177K while Jan payrolls revised to 195K from 174K – recap (data comes ahead of the nonfarm payroll report this Friday)

·     Markit Feb final composite PMI at 59.5 vs 58.7 prior and Feb. services PMI at 59.8 vs 58.3 last month







WTI Crude















10-Year Note





Sector Movers Today

·     Semiconductors; AMBA reported Q4 results with revenue and gross margins coming in above guidance while F1Q22 revenue guidance came in far better than expected and said still expects to generate >25% of its FY22 sales from CV products; MU reiterate Buy/Top Pick at Citigroup and raising estimates and price target (to $116) due to stronger than expected DRAM pricing; Chinese chip maker Semiconductor Manufacturing Int’l said it has placed an order with ASML for more than $1.2 billion in chip-making equipment; SSNLF is considering two sites in Arizona and another one in New York in addition to Austin, Texas, for a new $17 billion chip plant, according to documents filed with Texas state officials – Samsung says the expected tax abatements form the city of Austin and Travis County would total $1.48B over 20 years, up from the $805.5M prior

·     Software movers; VEEV delivered a strong finish to the year in F4Q21 with billings, revenue, and margins all coming in well ahead of Street estimates and elevated investor expectations. Billings were ~$47M above consensus ($688M vs. $641M) driven by strong demand; RPD was upgraded to Overweight at Piper and up tgt to $100 saying the Street doesn’t fully appreciate the security software company’s comprehensive portfolio, which can drive sustainable ARR strength; MSFT disclosed a ‘highly skilled and sophisticated’ China-linked hacker group has targeted Exchange mail; new attacks no way connected to the separate SolarWinds-related attacks

·     Utilities & Solar; BKH was downgraded to Neutral from Buy at Mizuho and cut tgt to $60 from $66 based on additional leverage associated with Winter Storm Uri as believe the company may need to take credit-supportive measures to maintain its bond ratings at Baa2/BBB+; PNM downgraded to Neutral at Citigroup after the company received shareholder approval for its sale to Avangrid; ITRI upgraded to Buy from Hold with $140 tgt at Argus after the company recently reported 4Q EPS results that declined year-over-year but topped the consensus forecast; SPI said its SolarJuice Co unit has entered into a contract with a government department of New South Wales, to supply solar photovoltaic (PV) systems to up to 2,600 properties

·     Retailers; JWN Q4 EPS 21c vs. est. 14c on revenue $3.65B vs. est. $3.6B, digital sales approximately $2B, and expect FY21 revs to grow more than 25% with digital representing about 50% of sales as they forecast this quarter’s margin pressures to reverse through the next year; ROST posted Q4 EPS $0.67 on sales $4.2B and comps -6%, each missing consensus ($1.00, $4.27B, -4.7%), guides Q1 EPS 74-86c, below expected 89c, and see Q1 comps -1% to -5%; URBN reported Q4 adj EPS 30c vs. est. 29c on in-line sales $1.09B; DLTR Q4 adj EPS $2.13 slightly topped est. $2.11 on net sales $6.77B that slightly missed est. $6.8B; BGFV posted Q4 EPS 95c (2c YoY) on sales $290.6M vs est. $244.1M, same-store sales +10.5%, sees Q1 EPS 47-53c and same-store sales increasing approximately 20%, and increased its dividend by 50% to 15c from 10c; REAL announces $250M convertible senior notes offering; Cowen said their checks across the apparel and footwear space appear to show consensus recovery estimates are conservative across the board, and they raised their target on COLM to $130 from $116 as it stands out for a strong 2H21, and on DECK to $435 from $365 given positive sentiment on Ugg and Hoka; CSFB ups target on KSS to $58 from $30 after its solid Q4 earnings showcased structural changes that can improve margins going forward as the company targets 7-8% EBIT margins by 2023



·     AA +7%; trades highest levels since April 2019 after being upgraded to buy from sell at Goldman Sachs with an updated 12-month price target of $32

·     AMBA +11%; Q4 revenue and gross margins coming in above guidance while Q1 rev guidance came in far better than expected and said still expects to generate >25% of its FY22 sales from CV products

·     DKNG +2%; announce a strategic agreement across DISH’s portfolio of brands to bring sportsbook and daily fantasy experiences directly to DISH customers nationwide.

·     KMPH +78%; FDA has approved the new drug application for Azstarys, a once-daily product for the treatment of attention deficit hyperactivity disorder in patients age six years and older

·     LVS +1%; to sell its Las Vegas real property and operations, including The Venetian Resort Las Vegas and the Sands Expo and Convention Center for ~$6.25B (sold to VICI and Apollo Funds)

·     LYFT 4%; said average daily rideshare rides increased in February from the previous month (up 4% MoM) and that rideshare ride volume during the week ending February 28 reached a new record level for 2021 and was the company’s best week since March 2020

·     MIK +22%; entered into an agreement with Apollo Global Management, taking the company private in a transaction value of $5 billion, with MIK holders getting $22 per share https://on.mktw.net/3bdXfqw

·     OCGN +31%; said its co-development partner Bharat Biotech released an interim analysis of its Phase 3 trial of its COVID-19 vaccine candidate, COVAXIN, which demonstrated efficacy of 81%

·     OVID +45%; TAK signs a deal with OVID to secure global rights from Ovid to develop and commercialize Soticlestat (TAK-935/OV935) for the treatment of developmental and epileptic encephalopathies, including Dravet syndrome and Lennox-Gastaut syndrome



·     BGS -8%; as posted a top and bottom line miss for Q4 (adj EPS 35c vs. est. 44c; Q4 revenue $510.2M below est. $531.12M) and unable to provide 2021 guidance at this time

·     FUBO -11%; sub results and guidance were above expectations and 4Q ARPU was strong; but 2021 revenue guidance implies more moderate ARPU growth than we previously modeled, and we also temper gross margin expectations as per BMO Capital

·     GO -5%; as Q4 results narrowly top estimates but said it anticipates that Q1 comp sales will decline in negative high-single digits

·     ROST -3%; posted Q4 EPS $0.67 on sales $4.2B and comps -6%, each missing consensus ($1.00, $4.27B, -4.7%), guides Q1 EPS 74-86c, below expected 89c, and see Q1 comps -1% to -5%

·     SSYS -13%; after 6.897M share Spot Secondary priced at $29.00

·     UTHR -3%; disclosed it was discontinuing development of Trevyent after it received written comments from the FDA regarding its previously received CRL in April 2020/to take up to a $107.3M write down

·     VIR -30%; as DSMB recommends that the VIR-7831 arm of the Phase 3 clinical trial be closed to enrollment while the data mature



·     Aslan Pharmaceuticals (ASLN) 15M share Secondary priced at $4.00

·     Cardlytics (CDLX) 3.85M share Secondary priced at $130.00

·     iCAD Inc. (ICAD) 1.222M share Spot Secondary priced at $18.00

·     Magnolia Oil & Gas (MGY) 17M share Spot Secondary priced at $10.50

·     Morphic (MORF) 3.5M share Secondary priced at $70.00

·     Orchid Island Capital (ORC) 8M share Spot Secondary priced at $5.55

·     Oscar Health (OSCR) 31M share IPO priced at $39.00

·     Stratasys (SSYS) 6.897M share Spot Secondary priced at $29.00


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.

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