Mid-Morning Look

Friday, November 10, 2023

U.S. stocks are rebounding after pulling back Thursday for the first time in over a week, led by usual suspects with Technology (XLK) up around 1% (MSFT, AAPL, META, AMD strong), while Energy (XLE) seeing a bounce (still down -5% YTD) and Healthcare (XLV) extends losses, now down over -8% YTD with Biotech (XBI) down about 9% from last Friday highs. The Smallcap Russell 2000 remains on track for weekly losses of just under 4% as it continues to lag. Not much in way of data outside of the University of Michigan sentiment which came in below views and prior readings (see below), while inflation expectations for both 1-yr and 5-yr come in above prior readings; yields little saw a bounce post data. The Philly semiconductor index (SOX) outperforms broader tech, +1.5% at 3,500, topping its 50-day MA recently of 3,435 and heads towards 100-day MA higher at 3,5404. Oil prices rose on Friday but are set to fall for a third week amid signs of slowing demand and as market attention turns to a key meeting of OPEC and its allies this month. Earnings season is nearing an end with over 90% of S&P components having been reported and attention turns to retail next week with HD, TGT, WMT results due. The dollar is flat, yields are lower along with gold prices and Bitcoin holds above $27K after hitting fresh 18-month highs yesterday around $38K.

Economic Data

·     University of Michigan surveys of consumers sentiment prelim Nov 60.4 well below consensus 63.7 and Oct final 63.8; current conditions index prelim Nov 65.7 vs final Oct 70.6 and consumers expectations index prelim Nov 56.9 vs final Oct 59.3

·     University of Michigan surveys of consumers 1-year inflation outlook prelim Nov 4.4% vs final Oct 4.2% and 5-year inflation outlook prelim Nov 3.2% vs final Oct 3.0%.

Sector Movers Today

·     In Casinos/Gaming: WYNN posted Q3 results that topped views, but shares fell while Macau casino stocks sank, led by slump in Wynn Macau Ltd. after Q3 earnings missed estimates, dragged by higher-than-expected operating expenses. LNW Q3 AEBITDA was +8%/+10% ahead of US/Street, with strength across all segments – but Truist noted roughly half of the beat was one-timers/pushed out litigation costs – co reiterated its 2025 $1.4B AEBITDA target.

Stock GAINERS

·     AMD +3%; as semiconductors broadly outperform technology early; shares of ON, QRVO, LRCX, KLAC all trading up 2% or more.

·     BLNK +32%; posted a smaller-than-expected Q3 adj EPS loss of (-$0.16) vs. est. loss (-$0.49) on better revs $43.4M and raised FY revs to $128M-$133M from $110M-$120M.

·     DOCS +14%; reported a top/bottom-line beat, with profit margins of 47.7% topping consensus of 40.7% and issued F3Q guidance that was 3.5% above consensus on revenues and ~9% above on adj. EBITDA and raised its FY outlook by 1.3% on the top line and ~6.0% on the bottom line.

·     HOLX +5%; Q4 EPS $0.89 vs. est. $0.84; Q3 revs $945.3M vs. est. $940.0M; sees FY24 EPS $3.90-$4.10 vs. est. $3.95 and enters $500M accelerated buyback.

·     SYNA +10%; posted strong F1Q results, which beat, and guided F2Q slightly lower, as Enterprise & Auto continues to undergo inventory destocking – firm said sees F2Q as the bottom.

Stock LAGGARDS

·     GRPN -32%; as Q3 revs $126.5M vs. est. $129.6M; Q3 adj EBITDA $18.2M vs. est. $22.7M; Co-founder Lefkofsky resigns from board; said plan to raise ~$100M via equity offering, asset sales.

·     HE -10%; after delays 10-Q filing due to contribution towards the fund to compensate victims of Maui wildfires; to contribute $75M-$150M fund announced by Hawaii’s governor.

·     ILMN -14%; reported Q3 beat (vs moderated forecasts) though Q4 guide was well below consensus as the new COE sets low bar and said for FY24, set ‘flat YY’ as the initial guide despite (3%) of headwinds going away; expect FY23 revs to decrease 2% to 3% y/y.

·     PLUG -37%; weak 3Q results due to a series of adverse events led by acute H2 shortages across the country; gross margin declined; cash burn rate remains elevated & the 10Q has going concern language according to Wells Fargo.

·     TKO -8%; after prices 8.4M shares of Co’s Class A common stock at $79.80 per share.

·     TTD -20%; as delivered Q3 beat but offered Q4 revenue and EBITDA guidance well below expectations saying saw some cautiousness from advertisers starting in the second week of October, but it has since stabilized (sees Q4 revs about $580M vs. est. $610M).

·     TWOU -34%; reported slightly better Q3 revenue and EBITDA, though it is lowering its 2023 revenue guidance on coding boot-camp weakness and timing impact from its portfolio management strategic initiatives.

·     U -2%; shares fall as Q3 revs $544M, missing the $553.7M est. and suspended guidance as it begins a comprehensive assessment of its product portfolio and cost structure.

Syndicate:

·     Cargo Therapeutics (CRGX) 18.75M share IPO priced at $15.00.

·     Cencora (COR) 1.9M share Block Trade priced at $196.00.

·     Chesapeake Utilities (CPK) 3.86M share Secondary priced at $85.50.

·     Fortress Biotech (FBIO) 5.88M units priced at $1.70.

·     Hamilton Insurance (HG) 15M share IPO priced at $15.00.

·     TKO Group (TKO) 8.4M share Spot Secondary priced at $79.80.

·     Diebold Nixdorf (DBD) filed for offering of up to 19.5M shares of common stock.

·     Lemonade Inc. (LMND) said in addition, offering of up to 12M shares of common stock by selling securityholder.