Mid-Morning Look
Friday, October 22, 2021
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
114.63 |
0.32% |
35,717 |
|||
S&P 500 |
2.96 |
0.06% |
4,552 |
|||
Nasdaq |
-53.32 |
0.36% |
15,162 |
|||
Russell 2000 |
2.24 |
0.10% |
2,298 |
|||
U.S. market resiliency remains astounding, with the S&P 500 making new all-time highs and the Nasdaq only down slightly despite margin concerns from chip maker INTC that sent shares lower after mixed earnings/guidance. Also, seeing social media weakness after SNAP lowers guidance, along with a revenue miss for industrial conglomerate HON, and weaker earnings in auto suppliers (GNTX, ALV) among them. Positive focus turns to commodities as CLF earnings beat lifts industrial metals and financials rise with Dow component AXP trading record highs on its results. Higher Treasury yields also remain supportive of financials. Bitcoin prices now down roughly $5K from its midweek record highs of $67K; oil prices rise again lift names in the energy complex; gold prices jump lifting miners. The S&P 500 index comes into the day sporting a 7-day wing streak off record highs just 2-weeks removed from market weakness on inflation concerns and Fed asset tapering as early as November. Earnings season more than 20% over, but the biggest week in terms of S&P components and pure volume coming up the next two weeks as investors will look for comments pertaining to supply chain issues and rising costs. In D.C. Democrats in the House, Senate and White House hope that reaching agreement on a framework of $2 trillion or less in coming days will allow the House to move forward next week on a $1 trillion bipartisan infrastructure bill and set the stage for passage of Biden’s larger “Build Back Better” social package.
Macro |
Up/Down |
Last |
|
||
WTI Crude |
0.44 |
82.94 |
|||
Brent |
0.46 |
85.07 |
|||
Gold |
29.10 |
1,807.80 |
|||
EUR/USD |
0.0022 |
1.1643 |
|||
JPY/USD |
-0.37 |
113.59 |
|||
10-Year Note |
-0.018 |
1.657% |
|||
Sector Movers Today
· Semiconductors; INTC shares fell after the chip maker’s revenue and data-center sales fell just short of estimates amid a big earnings beat but a lower-than-expected earnings and gross margins forecast; INTC delivered mixed Q3 results & Q4 guidance, prompting downgrades from Mizuho, UBS and Morgan Stanley after co announced a significant 100% ramp in foundry investment, resetting gross margins lower over next couple of years WDC talks to merge with Japanese chipmaker and partner Kioxia Holdings Corp have stalled over the last few weeks, Reuters reported overnight; NVDA upgrade from Hold to Buy after checks at Summit Insights; STX outperforms after the disk-drive maker posted better-than-expected profits for Q1 and Non-GAAP gross margin improved to 31%, from 29.6% in Q4 and 26.5% a year ago
· Internet; Social media names pressure, led by declines in SNAP which posted a beat on EPS/revs for Q3 and DAU’s that rose 23% YoY to 306M, but guidance for Q4 DAUs at 316-318M and revs $1.165B-$1.205B below est. $1.36B pressured shares, saying it missed the lower end of guidance due to changes to advertising tracking on Apple’s iOS that did not scale as expected, making it more difficult for ad partners to measure and manage campaigns (shares of FB, ROKU, ETSY, TWTR among names that fell in reaction to SNAP)
· Metals and Mining; gold mining stocks (AEM, NEM, AU, GOLD) moved higher early as gold prices moved back above $1,800 an ounce; CLF Q3 results topped estimates as revs rose to $6B from $1.65B a year ago and topped ests $5.64B and expects its average sales price next year to be higher than in 2021; FCX downgrade from Buy to Hold at Deutsche Bank post the recent outperformance (stock is up 18% MTD and 48% YTD) saying while the outlook for copper remains solid, the near-term micro data points have worsened
· Retailers; MAT reported a Q3 EPS/sales beat (EPS $0.84/$1.76B vs. est. $0.72/$1.68B), raises FY21 revenue growth view to up about 15% from 12%-14% and boosts FY21 adj EBITDA view to $900M-$925M from $875M-$900M (HAS, FNKO toy retailers active); VFC posted Q2 EPS and revs that missed estimates ($1.11/$3.19B vs. est. $1.15/$3.49B) and sees FY international rev. +24% to +26%, below prior +25% to +27% citing delays impacting supply chain; URBN upgraded from Neutral to Buy at Citigroup saying despite reducing ests and tgt to reflect more conservative assumptions for F22, they can’t ignore the more favorable risk/reward
· Auto sector; auto parts companies GNTX and ALV weaker results, as GNTX Q3 EPS misses by $0.05 on lower revs $399.6M vs. $434M est. and lowers 2H revs view to $770M-$840M from $970M-1.07Bm while ALV also posted a miss on the top and bottom line for Q3 and posted adj profit that was half of last year’s – comes as no surprise given other supplier warns (MGA) as shortages of semiconductor supplies and other components have led to lower production; NSANY cuts its planned production for October and November by 30% as the worldwide semiconductors shortage continues, reports Nikkei Asia.
Stock GAINERS
· AXP +4%; Q3 results beat estimates with EPS $2.27 coming in above $1.80 and revenue $10.93B vs est. $10.54B driven by higher spending on goods and services by consumers and small businesses
· CLF +13%; Q3 results topped estimates as revs rose to $6B from $1.65B a year ago and topped ests $5.64B and expects its average sales price next year to be higher than in 2021
· DWAC +117%; shares halted on volatility several times as mentions on Reddit/social media lifting shares of the blank-check acquisition company that plans to publicly list former U.S. President Donald Trump’s new social media company soared again on Friday
· MAT +3%; reported a Q3 EPS/sales beat (EPS $0.84/$1.76B vs. est. $0.72/$1.68B), raises FY21 revenue growth view to up about 15% from 12%-14% and boosts FY21 adj EBITDA view to $900M-$925M
· SIVB +5%; Q3 EPS $6.24 topped est. $5.04, NII $859M, total revs $1.53B vs est. $1.3B, with deposits, loans, average earnings assets also coming in above estimates
· SMPL +4%; posted a top and bottom line Q3 beat; ahead of earnings
· STX +4%; outperforms after the disk-drive maker posted better-than-expected profits for Q1 and Non-GAAP gross margin improved to 31%, from 29.6% in Q4 and 26.5% a year ago
· ZM +2%; upgraded to Overweight at JPMorgan noting the stock is down over 33% since their downgrade back on December 9, 2020 as investors have factored in the growth slowdown post the pandemic tailwinds
Stock LAGGARDS
· AGEN -20%; after withdraws its BLA for its cervical cancer drug Balstilimab, which is expected to reduce R& expenses by over $100M
· BYND -13%; lowered its Q3 revenue forecast to about $106M, below prior view of $120M-$140M, citing a drop in demand from grocery stores and lingering effects of the Delta variant of the coronavirus
· CMBM -22%; lowers guidance as sees Q3 revs about $75M, down from prior view of $88-$92M which primarily reflects greater than anticipated global supply constraints impacting shipments of products which we expect to continue into the first half of calendar 2022
· INTC -9%; as delivered mixed Q3 results & Q4 guidance, prompting downgrades from Mizuho, UBS and Morgan Stanley after the company announced a significant 100% ramp in foundry investment, resetting gross margins lower over next couple of years
· MRNA -4%; initiated with a Sell and $250 tgt at Deutsche Bank based on $100B base case DCF of which COVID constitutes 1/3 with the pipeline and platform equal parts of the remainder
· MTCR -52%; to halt future development of FXR program in NASH; reports interim results for met642 phase 2a trial in patients with NASH and announces a strategic re-prioritization of its clinical development programs; downgraded to Hold at Jefferies, Canaccord and HC Wainwright
· OCUL -32%; after announces topline results for phase 2 clinical trial of OTX-CSI for the treatment of dry eye disease did not meet primary endpoint
· SNAP -23%; reported 3Q21 top-line results below expectations and the low end of its guidance, with EBITDA well ahead of expectations; more importantly, 4Q guidance was well below expectations on both the top line and EBITDA saying it missed the lower end of guidance due to changes to advertising tracking on Apple’s iOS that did not scale as expected
· SQ -2%; Australia’s central bank said buy now, pay later (BNPL) firms will no longer be able to prohibit merchants from passing on surcharges for their services (recall Square agreed to buy Australian BNPL pioneer Afterpay Ltd for $29 bln in August)
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.