Mid-Morning Look
Thursday, October 08, 2020
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
95.86 |
0.34% |
28,399 |
|||
S&P 500 |
20.14 |
0.59% |
3,439 |
|||
Nasdaq |
43.21 |
0.38% |
11,405 |
|||
Russell 2000 |
12.11 |
0.75% |
1,624 |
|||
U.S. stocks add to Wednesday’s gains as stimulus hopes continue to be the main market driver, with futures popping this morning after President Trump told Fox stimulus talks are “productive”. The President referred to aid for airlines ($25B) and $1,200 stimulus checks – looking more achievable with Steve Mnuchin and Nancy Pelosi talking, but Pelosi has dismissed this week a standalone bill for checks. Economic data slightly better but still disappointing as weekly jobless claims remain stubbornly high. Oil prices get a bounce after OPEC Secretary General Mohammad Barkindo said the worst was over for the oil market, following a price and demand collapse this year due to the coronavirus pandemic. It was a very busy morning of updates with IBM jumping as it plans to separate one of its businesses, vaccine names jumped (REGN, LLY, JNJ) on more positive updates, transports touch a record high for a second day as airlines rise on expected government additional aid and asset managers surge after Morgan Stanley agrees to acquire Eaton Vance (EV) for $7 billion.
Economic Data
Macro |
Up/Down |
Last |
|
||
WTI Crude |
1.16 |
41.11 |
|||
Brent |
1.22 |
43.21 |
|||
Gold |
2.30 |
1,893.10 |
|||
EUR/USD |
-0.021 |
1.1739 |
|||
JPY/USD |
-0.00 |
105.96 |
|||
10-Year Note |
-0.012 |
0.774% |
|||
Sector Movers Today
· Asset managers; sector very active today after MS to acquire EV in cash-and-stock deal with equity value of about $7 billion as Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833x of Morgan Stanley common stock, for a total consideration of $56.50 per share https://on.mktw.net/30GZDk4 (shares of other asset managers such as TROW, IVZ, BEN, JHG were also active in sympathy (note MS just completed acquisition of ETFC recently)
· MedTech and Equipment; MDT was upgraded to buy at Stifel ahead of its October 14th Analyst Day, which they think will be a positive stock catalyst, as raises tgt to $125 from $110; XENT, IART, GKOS, TMDX were all downgraded at JPMorgan in medical devices citing rally in shares; CDNA reported preliminary 3Q20 revenue of ~$53.0M, well above consensus of $45.0M, driven by testing revenue while AlloSure and AlloMap volume for the quarter was ~21,800; ATEC reports Q3 preliminary revenue of $40.7M-$41.1M vs. consensus of $30.98M; said U.S. revenue of $39.7M-$40M, rose 31-43% YoY; FLDM to offer millions of Advanta covid-19 tests at low cost to U.S. colleges and universities
· Bank movers; Citi (C) downgraded to Neutral from Overweight with an unchanged price target of $57.50 at JPMorgan after the Federal Reserve and Office of the Comptroller of the Currency announced consent orders against the company and its lead U.S. bank; Wells Fargo upgraded Midcap banks ASB, UMPQ to overweight, and upgraded TBK to equal weight with top picks BANC, FHN and SNV; SBNY was initiated overweight and $120 tgt at Piper citing an attractive entry point, company should continue to grow well above industry averages and think NYC will continue to be one of the most economically vibrant cities; FHN was upgraded to buy at Jefferies with $12 tgt as see an oppty following the July 1 close of the merger with IBERIABANK; NTB upgraded to buy at Goldman finding the bank is well positioned to offset margin compression with a few idiosyncratic tools enabling 17-17.5% ROTCE over the next few years while maintaining attractive capital return profiles
· Consumer Finance; SQ has purchased ~4,709 bitcoins at $50M, representing ~1% of company’s total assets at the end of 2Q20; Wells Fargo raised Q3 estimates for all the card issuers by 10-33% and well above consensus, reflecting lower provision – said COF is the most levered to a recovery among the issuers while AXP has the most balanced risk/reward and prefers MA vs. Visa (V); PYPL raising estimates and PT to $230 at KeyBank as ecosystem growth and FinApp initiatives could extend growth runway next year; GDOT tgt raised to $70 from $62 as believe that GDOT is the most likely strategic buyer of Netspend given the company’s sizable prepaid card business and the presence of a banking license
· Transports; Transport index rises to all-time record highs for a second day; airlines (AAL, DAL, UAL) are moving higher after House Speaker Pelosi spoke with Treasury Secretary Mnuchin by phone Wednesday night about a potential standalone bill for $25B in aid to airlines; Credit Suisse raises truckers KNX, CHRW, WERN, SNDR estimates and tgts given continued strength in demand and tight capacity, noting that the Market Demand Index has reached historical highs, while dry van spot rates are tracking up 34% y/y in the most recent week; The Baltic Exchange’s main sea freight index fell as Capesize rates slumped as the overall index, was down 74 points, or 3.6%, at 1,970 points (EGLE, DSX, GNK, SB)
· Pharma movers; PFE announces positive phase 3 top-line results for once-weekly investigational long-acting human growth hormone to treat children with growth hormone deficiency as results demonstrated improved treatment burden with once-weekly injection; BHC reported Q2 revenue declined 23% YoY and sees Q3 revenue to decline approximately 3% compared to q3 of 2019; ALKS 3831 FDA Advisory Committee briefing documents seen as encouraging by Mizuho for the product’s potential approval for treating schizophrenia and bipolar I disorder; JNJ announced the European commission approved an advance purchase agreement in which its Janssen unit will supply 200 million doses of its covid-19 vaccine candidate to EU member states
Stock GAINERS
· ATEC +29%; reports Q3 preliminary revenue of $40.7M-$41.1M vs. consensus of $30.98M; said U.S. revenue of $39.7M-$40M, rose 31-43% YoY
· CDNA +15%; reported preliminary 3Q20 revenue of ~$53.0M, well above consensus of $45.0M, driven by testing revenue while AlloSure and AlloMap volume for the quarter was ~21,800
· EV +45%; MS to acquire EV in cash-and-stock deal with equity value of about $7 billion as Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833x of Morgan Stanley common stock, for a total consideration of $56.50 per share https://on.mktw.net/30GZDk4
· GTN +2%; helps broadcasters after guiding Q3 revenue expected to be between $590M and $600M, up from consensus of $552.28M.
· IBM +7%; shares jumps after saying to separate the managed infra services unit of its Global Technology Services division into a new public company while issues Q3 EPS and revenues of $17.6B and EPS of $2.58 which were both mostly in-line with ests
· PPG +3%; guided Q3 EPS to be between $1.90-$1.94 vs. $1.67 YoY and anticipates that sales volumes will be down about 5%, which is below the lower-end of the previously communicated guidance range of down 6% to 11%
· REGN +4%; after the company asked federal regulators to authorize its antibody cocktail for Covid-19 for emergency use and U.S. President Donald Trump hailed the treatment in a video posted on Twitter
· ROKU +5%; tgt raised to $255 from $190 at Needham saying health crisis is growing Roku’s installed base, generating more revenue and driving higher monetization as advertising demands
Stock LAGGARDS
· ANGI -8%; shares slip, giving back some of the recent gains fueled by Yippit data after IAC Sept monthly trends – while this is not a negative there was more hype recently – 3Q ANGI revenue +10% y/y vs. 2Q’s +9%, which is in line with Street estimates
· CCL -2%; said its unable to provide a guidance numbers due to the uncertainty of when cruises will restart for the full fleet, but provided some general business updates
· CYTK -42%; along with weakness in AMGN after a pivotal phase III study of Omecamtiv Mecarbil in patients with heart failure met its primary composite endpoint but missed its secondary endpoint (AMGN shares fell 4%)
· SEDG -6%; falls along with CSIQ, ENPH as solar takes a breather after a week of gains
Syndicate:
· Aziyo Biologics (AZYO) 2.94M share IPO price $17.00
· NanoString (NSTG) 5M share Secondary priced at $40.00
· nCino (NCNO) 6.7M share Secondary priced at $72.00
· SpringsWorks Therapeutics (SWTX) 4.9M share Secondary priced at $51.00
Market commentary provided by Catena Media Financials US, LLC, 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.