Mid-Morning Look: September 25, 2020

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Mid-Morning Look

Friday, September 25, 2020






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are slightly higher to start the day, but major averages are on pace for their 4th straight weekly decline, as the S&P 500 index is down more than 2.4% this week amid growing concerns over the U.S. election, the lack of additional stimulus to support the economy, and rising COVID-19 case counts around the globe that could slow the pace of the economic recovery. Alongside the dip in stocks has been a sizable correction in the price of gold to its weakest level in about two months following a resurgence in the U.S. dollar, up over 1.5% this week (while euro tumbles on weaker data and surging COVID-19 cases in several regions). Bottom line, a stock market pause was likely overdue a following an astounding run higher since late March pandemic lows. In data today, orders for durable goods rose 0.4% in August, missing estimates and signaling slowing momentum in the economy. Markets have been waiting (hoping at this point) for signs of progress on additional U.S. stimulus spending from the government but many fear a deal is unlikely before the election (recall Goldman Sachs lowered its Q4 GDP growth forecast from 6% to 3% on a quarterly annualized basis due to lack of further fiscal support). The U.S. reported about 44,000 new coronavirus cases Thursday, up from about 37,000 a day earlier.


Economic Data

·     Durables orders for August rose +0.4%, missing the 1.5% estimate and compared to July +11.7%; Durables ex-transportation orders +0.4% vs. est. 1.2% and July 3.2% while durables ex-defense orders +0.7% vs. July +10.4%; nondefense cap orders ex-aircraft +1.8% vs. est. 0.5%







WTI Crude















10-Year Note





Sector Movers Today

·     Casinos and Gaming; British betting firm William Hill (WIMHY) shares jumped after saying it had received separate cash proposals from buyout firm APO and casino operator CZR about a possible takeover, giving no indications of the offer value. William Hill confirmed the receipt of the two offers and has until Oct 23 to strike a deal or walk away. https://on.mktw.net/32ZANNQ (shares of other gambling names bounced); PENN 14M share Secondary priced at $61.00; CHDN was upgraded from Neutral to Positive at Susquehanna to take advantage of the stock’s (10%) sell-off yesterday afternoon (equates to ~50% of the value attributable to the HRM contribution) following news of the KY Supreme Court ruling, which after weighing likely scenarios outlines in our view little-to-no risk of out-year EBITDA disruption; DKNG initiate buy and $65 tgt at Argus

·     Leisure sector; cruise lines CCL, NCLH and RCL were all upgraded to overweight from equal weight at Barclays as believes the risk/rewards are the most attractive under universe saying sees a catalyst for the industry in the next few days when the CDC and Prevention will address the September 30 no-sail date; in towables/RVs (CWH, THO, WGO, LCII), RV shipments increased 17.3% last month to 39,489 from 33,674 a year earlier, according to the RV Industry Association’s survey and shipments of all-towable vehicles rose 20.8% while motorhomes dropped 7.1%; MTN reports Q4 EBITDA ($103.8M) vs consensus ($95.6M) and revenue $77.2M vs consensus $138.3M (Mountain much worse, Lodging worse)

·     Pharma: BMY announced that in an interim analysis its CM274 Ph3 trial, evaluating Opdivo vs. placebo in the adjuvant setting in patients with high-risk MIUC, (a type of bladder cancer) met the primary endpoint of disease-free survival for patients regardless of PD-L1 expression levels, as well as in the subset of patients with PD-L1 expression >1%; ENDP rises after entering into a non-exclusive agreement with NVAX to provide fill-finish manufacturing services for NOVX COVID-19 vaccine candidate; PRLD 8.325M share IPO priced at $19.00; PMVP 11.765M share IPO priced at $18.00; BHC and ETON said FDA approves Alaway Preservative Free ophthalmic solution antihistamine eye drops as the first OTC preservative-free formulation eye drop

·     Consumer Staples; SAM tgt raised to $1,142 from $977 at Guggenheim, revising sales and margin estimates to incorporate the planned launch of Truly Iced Tea Hard Seltzer as continue to think there is plenty of room for new innovations to expand the broader hard seltzer segment; GIS upgraded to outperform at Credit Suisse saying it has become one of the most sophisticated e-commerce vendors in the consumer packaged goods industry; COTY was upgraded to neutral at Citigroup after an 80% drop this year



·     CCL +4%; along with gains in NCLH and RCL after all upgraded to overweight from equal weight at Barclays as believes the risk/rewards are the most attractive under universe

·     CLNY +16%; rises after announcing the sale of six of its hospitality portfolios to real estate investment and hospitality management firm Highgate in deal valued at $2.8B

·     ENDP +12%; after entering into a non-exclusive agreement with NVAX to provide fill-finish manufacturing services for NOVX COVID-19 vaccine candidate

·     FITB +2%; two positive analyst calls as Wedbush adds to Best ideas List and Morgan Stanley upgraded to overweight saying market is not properly valuing FITB’s new expense initiatives, outlook for much lower provision expense and aggressive capital return post pandemic

·     NVAX +7%; started a late-stage trial of its experimental COVID-19 vaccine in the UK as study is expected to enroll up to 10K people and data from the trial expected over the next 4-6 weeks

·     SPLK +3%; was upgraded to outperform and $240 tgt at Baird noting strong growth in ARR as indicative of strong underlying business fundamentals

·     WGO +2%; August recreational vehicle shipments rise 17.3% to 39,489 units, compared with a year earlier, helped by strong demand for towables amid the coronavirus crisis, data from RV Industry Association shows



·     COST -3%; despite topped profit estimates with its FQ4 report $3.04 vs. est. $2.84 amid higher-than-anticipated COVID-19 expenses with core comp growth of 14.1%

·     EXPE -1%; and BKNG weak after cautious analyst comments this morning: Piper said cautious on the travel space following the bookings collapse in 2Q of ~90% y/y and BTIG said recovery appears to be topping out and estimates for 4Q could be at risk

·     FLR -5%; finishes financial restatement and said it will exit competitive engineering, procurement and construction (EPC) lump-sum bidding for energy and chemicals segment

·     NOV -4%; along with FTI, MRO, APA all sharply lower as energy again the top decliner in the S&P – common theme all week

·     MTN -2%; reports Q4 EBITDA ($103.8M) vs consensus ($95.6M) and revenue $77.2M vs consensus $138.3M (Mountain much worse, Lodging worse)



·     Graybug Vision (GRAY) 5.625M share IPO priced at $16.00

·     Greenwich LifeSciences (GLSI) 1.26M share IPO priced at $5.75

·     Penn National (PENN) 14M share Secondary priced at $61.00

·     Prelude Therapeutics (PRLD) 8.325M share IPO priced at $19.00

·     PMV Pharmaceuticals (PMVP) 11.765M share IPO priced at $18.00

·     VIA Optronics (VIAO) 6.25M share IPO priced at $15.00


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.

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