Mid-Morning Look

Monday, October 25, 2021

U.S. stocks are getting a boost to start the week, as investors brace for one of the busiest weeks of quarterly earnings, with over 160 S&P components expected for large caps. Truist notes we get the 5 largest companies to report this week that combine for 45.6% of the Nasdaq COMP and 24.1% of the SPX reporting this week – as names include AAPL, AMZN, MSFT, GOOGL, FB in tech along with GM, CAT, and other large caps. Energy stocks among top gainers in the S&P (APA, EOG, FANG, OXY) as oil prices extend gains, carrying an 8-straight weekly advance. Also boosting sentiment, House speaker Pelosi said this weekend around 90% of the spending Bill has been agreed to & she’s expecting final agreement this week. Not much hurting stocks early: coming into today, sentiment remains very positive as the AAII Bullish sentiment sits at 46.9% – the highest reading since the first week of July – and a climb of over 21% in the past two weeks alone. Meanwhile, VIX collapsed a little over 5% last week – the third straight negative week of losses for the index and its 4th losing week in the last 5 (and lower again to start the week). Treasury yields slip off highs, gold rises and crypto assets again surging to the upside (Bitcoin, Ethereum) – the same playbook over the last 2-weeks.

Sector Movers Today

·     Auto sector; TSLA shares jump after Hertz said it has ordered 100,000 Tesla Inc cars, marking the single-largest purchase ever for electric vehicles and represents about $4.2 billion of revenue for Tesla; Separately on TSLA, the company rolled back the latest version of its autonomous driving software, called full self-driving, or FSD; also TSLA increased the price of its Model X Long Range and Model S Long Range variants by $5,000, according to Reuters. The Model X Long Range and Model S Long Range now sell for $104,990 and $94,990, respectively; XPEV rises on reports it plans to upstage Tesla and domestic rivals on autonomous driving with a full-scenario driver-assistance system by the first half of 2023, South China Morning Post (SCMP) reported; Volvo Cars set the price for its IPO at the low end of its target range, or 53 Swedish kronor each, equivalent to $6.18, the bottom of its target range of up to 68 kronor which values Volvo at just over $18B – shares are set to begin trading on the Nasdaq Stockholm exchange on Oct. 29; LIDR initiated with a Buy and $15 tgt at Roth Capital

·     FinTech & Payments; Oppenheimer said entering 3Q, they’re incrementally positive on EPS expectations for V (V top pick) even as recent data points suggest some Delta impacts, particularly on travel spend; shares of PINS fall after PYPL said Sunday it is not pursuing an acquisition of digital pinboard site Pinterest “at this time” following reports last week it was in discussions in deal based around $70; MQ shares popped after Citron Research called it the next gen payment platform powering all major crypto platforms including today’s announced BKKT crypto partnership with MABread unit will offer its pay-over-time installment loan product through Sezzle’s merchant network system

·     Pharma movers; NVS slips after the company said its Phase 3 trial for experimental therapy canakinumab (ACZ885) in a group of patients with non-small cell lung cancer (NSCLC) did not meet primary endpoints; late Friday, Bloomberg reported that BMY has expressed interest in buying AUPH citing people familiar with the matter, though notes that no final decision has been made; MRK announces positive top-line results from pivotal phase 3 trials evaluating investigational, once-daily oral fixed dose combination of doravirine/islatravir for the treatment of people with hiv-1 infection; TTNP rises as receives funding from the Bill & Melinda Gates Foundation to develop combination HIV preventative therapeutic and contraceptive implant for women in low- and middle-income countries; EYEN said its MydCombi combination microdose formulation of tropicamide and phenylephrine for in-office pupil dilation has been reclassified as a drug-device combination product by the U.S. FDA in a Complete Response Letter for its NDA

·     Consumer Staples; KMB posted Q3 adj EPS $1.62 vs est. $1.65 on in-line sales $5B, lowered its FY guidance for adj EPS to $6.05-6.25 from $6.65-6.90 (est. $6.70), the top end of its sales view as it now sees FY net sales growth +1-2% from +1-4%, negatively impacted by significant inflation and supply chain disruptions that increased costs more than anticipated; SJM boosts share buyback authorization by 5M shares, bringing its current authorization total to approximately 7.8M shares; SMPL upgraded to Buy at Stifel with a $42 PT on near-term growth and long-term growth driven by the growth in new users and increased household penetration; OLPX initiated at Raymond James with a Strong Buy rating and $37 PT, Buy ratings at Bank of America ($37 PT), Goldman ($34), Truist ($35), Cowen ($33), Telsey ($34), JPMorgan ($32), Piper ($34), and at Equal-Weight/Hold at Barclays ($32), Morgan Stanley ($31), and Jefferies ($30)

Stock GAINERS

·     AUPH +10%; after Bloomberg reported that BMY has expressed interest in buying AUPH citing people familiar with the matter, though notes that no final decision has been made

·     BKKT +52%; after CNBC reported that Mastercard is preparing to announce that any of the thousands of banks and millions of merchants on its payments network can soon integrate crypto into their products – noted to do so, the payments network is partnering with Bakkt, the crypto firm recently spun off by Intercontinental Exchange

·     COIN +4%; more strength in the crypto sector with Bitcoin, Ethereum prices jumping to start the week, above $63K and $4,100 respectively (MSTR, RIOT, MARA also higher)

·     KRBP +28%; said in combination with chemotherapy, co’s cell therapy cancer vaccine candidate – KiroVax/BSK01, demonstrated a significant progression free survival benefit of 7 months in a patient with metastatic pancreatic cancer

·     MQ +6%; shares popped after Citron Research called it the next gen payment platform powering all major crypto platforms including today’s announced BKKT crypto partnership with MA

·     OXY +5%; another rally in energy stocks, among top gainers in the S&P 500 index as energy and financials continue to pace gains in S&P in October (APA, EOG, FANG, MRO rally)

·     TSLA +4%; after Hertz said it has ordered 100,000 Tesla Inc cars, marking the single-largest purchase ever for electric vehicles and represents about $4.2 billion of revenue for Tesla

·     XERS +12%; after announcing a collaboration agreement with MRK for its suspension-based formulation technology XeriJect.

Stock LAGGARDS

·     CSPR -9%; downgraded to Neutral at Wedbush and cut tgt to $4 from $10.50 on decreasing financial stability as Casper filed an 8-K indicating that it had received a limited waiver and amendment regarding certain covenants in its debt agreement.

·     EYEN -31%; said its MydCombi combination microdose formulation of tropicamide and phenylephrine for in-office pupil dilation has been reclassified as a drug-device combination product by the U.S. FDA in a Complete Response Letter (CRL) for its new drug application.

·     HSKA -6%; mentioned negatively by SprucePoint with Strong Sell opinion saying has 50%-60% downside

·     KMB -4%; posted Q3 adj EPS $1.62 vs est. $1.65 on in-line sales $5B, lowered its FY guidance for adj EPS to $6.05-6.25 from $6.65-6.90 (est. $6.70), the top end of its sales view as it now sees FY net sales growth +1-2% from +1-4%,

·     PINS -15%; after PYPL said Sunday it is not pursuing an acquisition of digital pinboard site Pinterest “at this time” following reports last week it was in discussions in deal based around $70

·     QSR -3%; Q3 adj EPS 76c vs est. 74c on revs $1.5B that were slightly shy of consensus $1.52B, as comp sales for Tim Horton’s (+8.9%), Burger King (+7.9%), and Popeye’s (-2.4%) all missed respective estimates

·     TCOM -5%; weakness in China stocks – After warning of a winter surge in coronavirus infections in the coming weeks, China took another series of steps to limit travel and business activity in Ejin, near Inner Mongolia, a hotspot of infections in the world’s second-largest economy.