Mid-Morning Look

Tuesday, November 19, 2024

U.S. stocks markets are lower to start the day (already paring losses) as tensions between Russia and Ukraine intensify following a report that Ukrainian forces reportedly carried out their first strike on a border region in Russia using Western-supplied missiles. The strike reportedly took place at Karachev in Bryansk Oblast, Russia. The development follows the decision by outgoing US President Biden to lift restrictions on long-range strikes into Russia, purportedly using ATACMS missiles. Earlier, President Vladimir Putin approved an updated nuclear doctrine that expands the conditions for Russia to use atomic weapons, including in response to a massive conventional attack on its soil. Tensions are high and markets are watching, but major averages already recovering off the lows.

Gold and bonds rally and Treasury yields fall across the board in a slight to safety given the “risk off” sentiment amid geopolitical tensions between the US and Russia after Ukrainian forces reportedly carried out their first strike on a border region in Russia using Western-supplied missiles. Government bonds and the Japanese yen rallied, while stocks and the euro fell, as investors bought safe-haven assets in a sign of increased investor angst amid escalating geopolitical tensions. Outside of the macro issues plaguing market sentiment early, Dow component and retailing giant Wal-Mart (WMT) reported a quarterly beat and raised guidance, helping boost shares too all-time highs. In semis, NVDA rebounds after sliding on Monday, as Wall Street analysts raise ests and price tgts ahead of earnings on Wednesday night. Lone piece of economic data showed weaker housing data, but right now focus on macro and NVDA upcoming earnings.

• In Crypto: HOOD to buy TradePMR for $300M in new client push saying acquisition will accelerate Robinhood’s delivery of investment advisory capabilities to customers by bringing in a scaled RIA custodial platform with approximately 350 firms and more than $40B in assets under administration. BKKT extends Monday 162% advance after the Financial Times reported on Monday that DJT is in advanced talks to buy the crypto trading firm, citing people familiar with the matter. MSTR announces proposed private offering of $1.75B of convert senior notes.
• In Food: KHC was downgraded to Neutral from Overweight at Piper saying their thesis of improving retail momentum with a catalyst from incremental foodservice initiatives depended on improvement at retail that hasn’t materialized and is still likely 2-3 quarters away. Nestle (NSRGY) said it will boost advertising and marketing to 9% total ’25 sales, trim costs by at least $2.8 billion by 2027 and carve out its water and premium drinks businesses into a standalone global unit; Nestle forecasts medium-term organic sales growth of more than 4%.

• APLS +12%; benefits as FDA rejected an application from competitor Astellas seeking to change the prescribing label for its eye drug Izervay to allow less frequent injections and include data showing the effect of the drug over 2-years.
• BERY +4%; as AMCR agreed to buy the company in a roughly $8.4B stock swap saying it will issue 7.25 shares, worth about $73.59 based on Monday’s close, for each share of Berry, a nearly 10% premium to Monday’s $67.05.
• ENR +13%; Q4 EPS topped consensus on in-line revs of $805.7M, while guides Q1 EPS $0.60-$0.65 vs. consensus $0.66; sees FY25 adjusted EPS $3.45-$3.65, vs. consensus $3.52, FY25 adjusted EBITDA $625M-$645M and said expects FY organic revenue to be up 1% to 2%.
• SMCI +25%; named BDO USA as its auditor and said it has submitted a plan to Nasdaq, seeking additional time to regain compliance with the listing rules, sending shares higher. SMCI said it will be able to complete annual report for the year ended June 30 and quarterly report for period ended Sept. 30.
• SYM +22%; shares jumped on better Q4 results as Q4 operating Inc $23.091Mm vs est. ($3.21Mm), on revs $576.768Mm vs est. $470.3Mm; guides Q1 revs $495-515Mm vs est. $495.73Mm.
• VRT +6%; after Analyst Day as Mizuho raises PT to $145, Opco to $131, Citi to $141 – Vertiv’s issued long-term target of 12%-14% annual organic growth through 2029 versus expected market growth of 9%-12%.
• WMT +3%; as Q3 adj EPS $0.58 tops est. $0.53 and revs rose 5.5% y/y to $169.59B vs. est. $167.5B on better comps of 5.5% total vs. est. 3.8% (WMT only US stores comparable sales ex-gas +5.3%, est. +3.73%); also forecasts FY adj EPS $2.42-$2.47 above prior forecast $2.35-$2.43.

• INTU -5%; along with weakness in HRB after the Washington post reported noted Musk/Vivek DOGE commission eyes new app for Americans to file taxes.
• LOW -4%; Q3 adj EPS $2.89 and sales $20.2B topped consensus $2.81/$19.92B while Q1 comparable sales for the quarter decreased (-1.1%) due to continuing softness in do-it-yourself bigger-ticket discretionary demand.
• LULU -3.5%; dropping back below $300 for first time since Nov 1
• MDT -3%; following results and guidance.
• OMCL -7%; after announces $150M convertible senior notes offering.