Early Look

Monday, January 10, 2022

Futures	Up/Down	%	Last
Dow	-5.00	0.02%	36,100
S&P 500	-5.25	0.13%	4,661
Nasdaq	-53.50	0.34%	15,527

 

 

U.S. futures are pointing to a slightly lower open as treasury yields remain near multi-year highs (10-yr topped 1.8% before paring gains) ahead of a busy week of economic data, including key inflation reports mid-week. This morning we are already seeing several company updates in the retail and healthcare world ahead of the ICR Conference 2022, 1/10-1/12, in Orlando, FL and the JPMorgan 40th Annual Healthcare Conference (virtual), 1/10-1/13 as well as the Needham 24th Annual Growth Conference (virtual), 1/10-1/14. Rising yields at the start of 2022 have sent a shudder through tech stocks on fears they are indications that the Federal Reserve could raise short-term interest rates in March and begin to shrink its holdings of bonds and other assets soon afterwards. Stocks dropped last week as the S&P 500 fell 1.87%, the Dow lost 0.29%, the Russell 2000 fell -2.87%, and the tech heavy Nasdaq declined -4.53%. A rough week for gold down -2.1% and Bitcoin which tumbled over -10%, while oil prices jumped 5.65%. Concerns about looming U.S. interest-rate hikes amid more hawkish commentary out of the December FOMC minutes and unfolding Omicron news created the market uncertainty as treasury yields hit their highest levels in well over a year. A mixed U.S. jobs report showed the jobs market was at or near maximum employment even though employment rose far less than expected in December while the unemployment rate slipped. Banks have been helped by rising U.S. Treasury yields as the 10-year yield hit its highest since January 2020. In Asian markets, The Nikkei Index dipped a few points to 28,478, the Shanghai Index rose about 14 points to 3,593, and the Hang Seng Index gained 250 points to 23,746. In Europe, the German DAX is down over -50 points to slip below 15, 900, while the FTSE 100 is little changed at 7,480. Bitcoin’s recent weakness reflects the Federal Reserve’s decision to withdraw the massive liquidity that has been pumped into markets since the coronavirus pandemic hit, falling 0.8% to $41,540, having reached a three-and-a-half-month low of $40,470 on Friday.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -19.03 points, or 0.41%, to 4,677.02

·     The Dow Jones Industrial Average dipped -4.81 points, or 0.01%, to 36,231.66

·     The Nasdaq Composite slumped -144.96 points, or 0.96%, to 14,935.90

·     The Russell 2000 Index declined -26.57 points, or 1.20% to 2,179.81

 

Events Calendar for Today

·     10:00 AM ET                Wholesale Inventory MoM for November

 

Earnings Calendar:

·     Earnings Before the Open: AZZ, CMC

·     Earnings After the Close: ACCD, IZEA, LMNR, VOXX

 

Other Key Events:

·     ICR Conference 2022, 1/10-1/12, in Orlando, FL

·     Jefferies 2022 Software Bus Tour (virtual), 1/10-1/14

·     JPMorgan 40^th Annual Healthcare Conference (virtual), 1/10-1/13

·     Needham 24^th Annual Growth Conference (virtual), 1/10-1/14

 

 

Macro	Up/Down	Last
Nymex	-0.16	78.74
Brent	-0.09	81.66
Gold	4.10	1,800.65
EUR/USD	-0.003	1.1328
JPY/USD	-0.14	115.41
10-Year Note	+0.004	1.773%

 

 

Sector News Breakdown

Consumer

·     Lululemon athletica Inc. (LULU) shares slip -5%; sees Q4 adjusted non-GAAP $3.25-$3.32 vs. est. $3.34 and now expects company’s net revenue to be toward low end of its range of $2.125B-$2.165B vs. est. $2.17B

·     Coca-Cola (KO) mentioned positively in Barron’s saying the stock finally has its “fizz back” after reclaiming its Covid-era highs and says its shares should keep climbing. Barron’s noted Coca-Cola has had a good start to 2022, gaining 1.9% to close the first week of January at $60.33, finally busting through to a new high. It’s also outpaced Pepsi, which gained just 0.2% this past week.

·     MGM Resorts International (MGM) mentioned positively in Barron’s noting shares jumped 42% last year on optimism over a resurgence in Las Vegas tourism, while Macquarie analyst says it has further to gain

·     Proterra (PTRA) mentioned positively in Barron’s saying shares look like a buy after a 20% tumble last year when it got caught up in a larger SPAC-wide sell-off; it also generates revenue from its battery systems business and its electric-charging stations for commercial fleet operators.

·     Tesla (TSLA) CEO Elon Musk said on Twitter Friday that the pricing for its full self-driving feature (FSD) is rising to $12,000 on January 17. The premium driver assistance package currently costs $10,000 up-front, or $199 per month for most customers.

·     Tilly’s (TLYS) said based on our strong 2021 holiday period results, we expect to report our most profitable fourth quarter since becoming a public company and our most profitable full fiscal year on record

·     Yum Brands’ (YUM) Pizza Hut and Beyond Meat (BYND) announce the launch of plant based “Beyond Italian Sausage Crumbles” as a permanent offering at restaurants in Canada after a trial in Toronto and Edmonton last summer

 

Energy, Industrials and Materials

·     AZZ inc. (AZZ) Q3 EPS $0.65 vs. est. $0.82; Q3 sales rose 2.3% to $231.7M vs. est. $238.6M; reaffirms FY sales $865M-$925M vs. est. $913.7M; sees year EPS in range $3.00-$3.20

·     Commercial Metals (CMC) Q1 adj EPS $1.62 vs. est. $1.22; Q1 sales $2.0B vs. est. $2.06B

·     Cheniere Energy (LNG): The U.S. was the biggest exporter of liquefied natural gas (LNG) in the world last month for the first time, responsible for the single largest supply increase among exporting nations last year, with a 52% Y/Y jump of 25.3M metric tons to reach 73.6M tons total, according to a reported from IHS Markit

·     Privately owned shale producer Legacy Reserves is in search of a buyer for its oil and gas assets in the Permian and Haynesville basins, Reuters reported late Friday. Legacy has hired an investment bank to run the sale process for the assets and is valuing them at around $800 million

·     Air Lease (AL) announced an update on aircraft investments, sales, and new significant financing occurring in the fourth quarter of 2021. As of December 31, 2021, ALC’s fleet was comprised of 382 owned aircraft and 92 managed aircraft, with 416 new aircraft on order from Boeing (BA) and Airbus (EADSY) set to deliver through 2028.

·     AES Corp. (AES) increases ownership of AES Andes to 98.13%; AES Corp. announced the results of the tender offer by AES’ wholly owned Chilean subsidiary, for the shares of AES Andes S.A. held by minority shareholders

 

Financials

·     PayPal (PYPL) is considering launching its own stablecoin as part of its cryptocurrency push, according to the company – Bloomberg

·     JMP Securities downgraded lower Schwab (SCHW) and Raymond James (RJF) to Market Perform from Market Outperform; and increase quarterly estimates on 11 companies (MS, RJF, COWN, PIPR, EVR, HLI, LAZ, MC, BX, KKR, ENV), we reduce on six companies (GS, SF, LPLA, GHL, PJT, APO) and make no change on four (SCHW, COIN, MKTW, HOOD); We also provide additional valuation perspectives as we increase our price targets modestly for ENV to $101 from $97, for PIPR to $194 from $183, and for SF to $93 from $92. The biggest implied stock upside potential in our Market Outperform-rated stocks is 265% for HOOD, 136% for MKTW, 74% for COIN, 73% for COWN, 33% for PJT, 32% for KKR, and 30% for ENV

 

Healthcare

·     Owens & Minor Inc. (OMI) agreed to acquire Apria Inc. (APR) in a deal with an equity value of about $1.45 billion, where APR holders will receive $37.50 per share in cash, a 26% premium to Friday’s closing price https://on.mktw.net/3Gf9ikz

·     Exact Sciences (EXAS) announced it has acquired Prevention Genetics, a genetic testing laboratory for $190M; EXAS guides Q4 revs $472M-$475M vs. est. $440.3M; sees FY prelim revs $1.765B-$1.768B vs. est. $1.73B

·     Exelixis (EXEL) sees preliminary Q4 net product revenue $300M (total rev est. $348.72M); sees preliminary FY21 net product revenue of $1.08B, vs. total revenue est. at $1.33B, and preliminary FY22 net product revenue between $1.33B-$1.43B

·     Hologic (HOLX) guides Q1 revs $1.47B vs. est. $1.13B; expects Q1 non-GAAP diluted EPS to be significantly higher than the guidance of $1.15 to $1.25 provided in November

·     Biogen (BIIB) may have better luck this week with its Alzheimer’s disease therapy, Aduhelm according to Barron’s noting that the Centers for Medicare and Medicaid Services (CMS) is set to issue proposed guidelines that would determine whether Medicare will cover the drug.

·     Penumbra (PEN) is said to be exploring a potential deal with Shockwave Medical (SWAV) according to a Bloomberg report Friday https://bit.ly/34pFvrm

·     Pfizer Inc. (PFE) and Beam Therapeutics Inc. (BEAM) said they formed an exclusive four-year research collaboration focused on in-vivo base editing programs for three targets aimed at rare genetic diseases; PFE will make an upfront payment of $300 million to Beam

·     Moderna Inc. (MRNA) and Carisma Therapeutics Inc., entered into a strategic collaboration agreement to discover, develop, and commercialize in vivo engineered chimeric antigen receptor monocyte (CAR-M) therapeutics for the treatment of cancer.

·     Guardant Health (GH) reached an agreement to settle all pending litigation concerning its digital sequencing technology patents with Foundation Medicine which will pay GH $25M as well as future royalties for the remaining term of the licensed digital sequencing technology patents.

 

Technology, Media & Telecom

·     R1 RCM Inc. (RCM) said it is buying Cloudmed, a software company for healthcare providers, from New Mountain Capital in an all-stock transaction; the transaction values Cloudmed at $4.1 billion, including $857 million of net debt

·     ChipMOS TECHNOLOGIES (IMOS) has reported a 19.1% Y/Y increase in revenue for FY21 to NT$27.4B or $987.7M; Q4 revenue increased 7.6% Y/Y to $6.79B or $244.8M.

·     ViacomCBS (VIAC) upgraded to Buy from Hold at Deutsche Bank