Mid-Morning Look: November 02, 2021

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Mid-Morning Look

Tuesday, November 02, 2021

Index

Up/Down

%

Last

 

DJ Industrials

28.80

0.08%

35,942

S&P 500

11.57

0.25%

4,625

Nasdaq

34.26

0.21%

15,627

Russell 2000

1.29

0.06%

2,359

 

 

U.S. stocks at it again, with another record high for the S&P 500, Dow Jones Industrials and Nasdaq Composite, and now the Dow Transports, which surges above the prior record high of 16,170 (trades above 17,000), boosted solely by strength in Avis (CAR) following its earnings blowout (pushing shares up over 100% in very unusual trading – and boosting the transport index by over 1,000 points). Note major averages trade record highs for a 3rd straight day ahead of FOMC policy meeting results tomorrow. No major U.S. economic data Tuesday as all eyes on the FOMC two-day meeting where the Federal Reserve is expected to approve plans to scale back its $120 billion monthly bond-buying program on Wednesday (but no expectations for talk about interest rate hikes anytime soon – fed fund futures indicate could be late summer 2022). Philly semiconductor index (SOX) touching new all-time highs above the 3,520 level on better earnings in space and general upward momentum. The Treasury yield curve steepened before the Fed meeting as the dollar edged up. On the spending bills, House Speaker Nancy Pelosi plans to push forward with plans to vote this week on the two bills that comprise President Joe Biden’s economic agenda despite moderates echoing Senator Joe Manchin’s complaint about not knowing the full cost and economic impact. Market action gets odder by the day, with Bitcoin and other crypto names surging again, the move in the Dow Transports today unheard of, Treasury yields remain little changed despite all the volatility in stock markets.

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.48

83.55

Brent

-0.58

84.13

Gold

-6.90

1,791.00

EUR/USD

-0.0024

1.1583

JPY/USD

-0.19

113.79

10-Year Note

-0.021

1.552%

 

 

Sector Movers Today

·     Retailers; UAA shares rose after posting a quarterly beat with raised guidance, as Q3 adj EPS 31c more than doubled est. 15c on revs $1.55B vs est. $1.48B, and now sees FY adj EPS about 74c from 50-52c (est. 55c) on revenue growth of about 25% from low-20s%; RL Q2 adj EPS $2.62 vs est. $2 on revs $1.5B vs est. $1.47B, total comp sales +23% vs est. +10.7%, sees Q3 revs +14-16% YoY vs est. +12.3% with FY growth now expected to be +34-36% from +25-30%, expects to resume buybacks in 2H; SKX downgraded to Hold from Buy at Argus based on current supply-chain challenges; OTTR raises FY21 EPS view to $4.05-$4.20 from $3.50-$3.65 after mixed Q3 results (EPS beat but sales missed); Wells said earnings season is so far showing almost all companies missing Q3 revenues with Q4 top-line outlooks reflecting supply chain headwinds, though the market is shrugging off misses, with Top Picks consisting of SIG, BBWI, TDUP, FTCH in their secure supply chain bucket and CPRI, GPS who are too cheap to ignore; AEO acquired Quiet Logistics for $350M in cash to further enhance its supply chain capabilities

·     Pharma movers; A California judge said he would rule against several large counties that accused four drugmakers (TEVA, JNJ, ENDP, ABBV) of fueling an opioid epidemic, saying they had failed at trial to prove their $50 billion case; Dow component PFE raised full-year expectations for sales of its Covid-19 vaccine after Q3 sales topped estimates (also lifted Covid vaccine maker partner BNTX initially); BHC reports earnings and said it plans to spin off its medical aesthetics business in the next three months; NBIX reported Ingrezza 3Q21 sales of $286.5MM, slightly above consensus as it saw its largest Ingrezza TRx total (52,000, +6% Q/Q) and highest NRx number since last March and guides Q4 Ingrezza sales of >$300MM, in-line with ests; ACHV announced FDA clearance of its IND for ORCA-V1, the planned study of cytisinicline as a cessation treatment for vaping/e-cig use

·     Internet; GRPN announced a new U.S. distribution arrangement with GOOGL as the new distribution partnership will make Groupon’s local experiences and travel inventory available in the Google Pay mobile app; in online travel, EXPE downgraded to Neutral at Atlantic Securities as expect stock performance to be primarily driven by operational execution, creating a higher risk profile for the stock; SABR 3Q adj EPS ($0.50) vs est. ($0.55) on revs $441Mm vs est. $445.9Mm, not giving guidance at this time; YY double downgraded to Sell from Buy at Goldman Sachs saying it is likely to see its growth rate fall sharply into the low double digits starting 3Q21E from 140% five quarters ago

·     Semiconductors; Philly semi index (SOX) came into the day at new record highs above the 3,500 level as chips still soaring; CRUS solid beat and raise driven by increased content from a higher attach of the camera controller and the power conversion IC and guidance mid-point above views (good for SWKS, QRVO other Apple suppliers; NXPI with a Q3 beat raise top and bottom and better GM+OM – Truist said delivered Q3 sales of $2,861m, 0.3% above consensus of $2,851m as all end markets were within a few percentage points of our model; RMBS weak Q3 results; HLIT reported 3Q eps, revs EBITDA Better, guided 4Q higher

·     E&P and Majors; COP Q3 EPS $1.77 vs est. $1.52 as it benefitted from a rebound in crude prices to pre-pandemic levels and its purchase of Concho Resources last October, and raised its dividend to 46c from 43c; FANG Q3 adj EPS $2.94 vs est. $2.77 on revs $1.91B vs. est. $1.53B, raised its full-year production guidance, and raised its quarterly dividend to 50c from 45c; BP Q3 underlying replacement cost profit $3.3B vs est. $3.06B, though it reported a quarterly loss due to an accounting issue related to hedges, on revenue $37.87B vs est. $38.95B, and said it plans to buyback $1.25B of shares; MGY Q3 EPS 67c vs est. 61c on revs $283.6M vs est. $274M; Truist downgraded XOM to Sell as forecasts suggest metrics could be less per share than other large operators, estimate shares trade at more than a 10% premium versus its closest peers

 

Stock GAINERS

·     ANET +24%; share surge following solid 3q21 results, 2022 growth well ahead of expectations as guided for ~30% revenue growth in 2022 vs Goldman Sachs forecast for 12%

·     CAR +110%; as 3Q:21 adjusted EBITDA of $1.06bn, crushing consensus of $741mm, while once again refrained from providing a formal 2021 financial outlook

·     FN +11%; posted a strong CY3Q (1QFY22) print with 24.4% Revenue growth driven by Optical up 7% ahead of forecast on a 29% increase in Telecom Optical products

·     OLB +150% after announces support for Mastercard Cryptocurrency Processing

·     ROG +28%; after the WSJ reported DD is nearing a deal to buy the electronics-materials specialist with a market value of nearly $4 billion https://on.mktw.net/3GL1CqQ

·     TEVA +6%; after a California judge said he would rule against several large counties that accused four drugmakers (TEVA, JNJ, ENDP, ABBV) of fueling an opioid epidemic, saying they had failed at trial to prove their $50 billion case.

·     UAA +18%; after posting a quarterly beat with raised guidance, as Q3 adj EPS 31c more than doubled est. 15c on revs $1.55B vs est. $1.48B, and now sees FY adj EPS about 74c from 50-52c (est. 55c) on revenue growth of about 25% from low-20s

·     ZI +2%; reported another strong quarter, its fifth consecutive period of top-line acceleration to 60% Y/Y (54% organic) from strong enterprise penetration, up-/cross-sales and international expansion

 

Stock LAGGARDS

·     CHGG -41%; after earnings show miss on sales and the holiday forecast, CEO says that enrollment did not bounce back as anticipated, and students are taking less rigorous courses

·     CLNN -20%; after saying its phase 2 trial evaluating a drug for people with early amyotrophic lateral sclerosis didn’t meet primary or secondary endpoints

·     EVER -8%; after posting a larger-than-expected Q3 EPS loss and guided next qtr revs $93.5M-$98.5M, below est. $105.8M and was downgraded at JPMorgan following results

·     LEGN -4%; after the FDA has extended the PDUFA target date by 3 months for the company’s lead asset Cilta-cel, from Nov. 29, 2021, to Feb. 28, 2022

·     MOS -10%; after Q3 EPS missed by $0.20 on light revs $3.4B vs. est. $3.66B, and warned of higher costs for raw materials

·     SAGE -6%; after earnings and as announced the resignation of its chief medical officer today

·     TSLA -1%; falling off a record high close of $1,208.59 – follows tweet from CEO Musk overnight saying there has been no contract signed yet with Hertz and that the Hertz deal has zero effect on Tesla’s economic

·     YY -4%; double downgraded to Sell from Buy at Goldman Sachs saying it is likely to see its growth rate fall sharply into the low double digits starting 3Q21E from 140% five quarters ago

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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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