Market Review: February 09, 2021

Closing Recap

Tuesday, February 09, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks finished little changed, as the S&P 500 and Dow snapped its 6-day win streaks (barely), while the Nasdaq Composite touched a record high for a 5th straight day, topping the 14,000 level for the first time. No news seems to dent the optimism in the marketplace that continues to churn higher on signs that President Joe Biden and congressional Democrats were pushing forward with a $1.9 trillion coronavirus stimulus package, while earnings this quarter were strong, and the Fed remains as dovish and accommodative as possible. Absolutely No market fear as the CBOE Volatility index (VIX) tumbles further, though Treasury yields slip off 1-year highs and the dollar falls to 2-week lows. Where the market mania a few weeks ago was the Reddit short interest stock squeeze (GME, KOSS, EXPR, AMC, BBBY – which have all come tumbling lower), attention has now turned to Bitcoin and the names that are leveraged to it regarding mining, investing and blockchain names as Bitcoin rose as high as $48,000 overnight. SmallCap stocks have led major averages as the Russell 2000 outperforms again trading at new record highs above 2,300. Oil prices rebound higher along with gold as the buck slipped.

·     Top sector movers/stories: cannabis higher, led by CGC eps and rev beats while TLRY agreement with Grow Pharma to distribute medical cannabis products in the UK lifts cannabis sector APHA, ACB GTBIF, CRLBF, etc.; crypto-leveraged names RIOT, MARA, SI, MSTR also soar again as Bitcoin makes new ATHs above $48k; SBNY also rises today after JPMorgan adds to its Analyst Focus List on its significant growth in digital banking deposits recently; HBI spikes as the top performer in the S&P after its beat-and raise, while COTY slumps as the worst stock in the S&P despite in-line revs as investors take profits in consumer (stock entered earnings report +24.65% in Feb alone and +173% since November); EA, GLUU rise after announcing a $2.1B merger, lifting ZNGA; TTWO also posts a strong quarter in video games with raised guidance, but the stock slides; airlines DAL, LUV, cruises RCL, CCL trade lower in reopen names, while stay-home stocks NFLX, PTON, NLS rise; CHGG jumps to record levels early after its earnings beat but then rolls to red intraday, while GT, SPG, GPN rise on its earnings/guidance, and FOXA slips despite topping estimates; short interest Reddit movers from weeks ago continue to plunge GME, AMC, EXPR, KOSS.


Commodities, Treasuries and Currencies

·     Oil prices recovered off earlier losses, with WTI crude rising 39c or 0.67% to settle at $58.36 per barrel (off earlier lows of $57.27) ahead of weekly inventory data tonight (API) and tomorrow (EIA data). Gold prices edged higher, up $3.30 or 0.2% to settle at $1,837.50 an ounce, rising a third session in a row and the highest levels in a week. After strong gains last week, the U.S. dollar slumped -0.5% to around 90.50, down 2 straight days and off about 100 bps from last week highs. The euro moved back above the 1.21 level after dropping below 1.20 last week.

·     U.S. Treasury yields dipped (10-yr 1.15% vs. 1.20% Monday and 30-yr yield down from one-year high of 2% Monday to 1.93% today) after a recent rise and ahead of the U.S. Treasury Departments due to sell $126 billion in new coupon-bearing supply (the U.S. Treasury sold $58 billion in three-year notes today, followed by $41 billion in 10-year notes on Wednesday and $27 billion in 30-year bonds on Thursday). The Treasury sold $68B in 3-year notes at a yield of 0.196% with indirect bidders awarded 52.74% and the bid-to-cover at 2.39. The next major U.S. economic focus will be U.S. inflation data for January on Wednesday.






WTI Crude















10-Year Note





Sector News Breakdown


·     Retailers; HBI beat on earnings and margins and sees Q1 revenue of $1.49B to $1.52B vs. $1.45B consensus and EPS of $0.24 to $0.27 while to provide a full-year 2021 outlook as well as three-year financial targets as part of its Investor Day scheduled for May; UAA reit sell but up tgt to $10 from $5 at BTIG saying with short interest having come down to 3% of the float, buyside expectations widely anticipating a good quarter, believe the stock could be poised to disappoint

·     Auto sector; Argus upgraded Ford (F) to Buy with a $14 tgt from Hold to reflect their expectations for stronger consumer spending helped by a new round of stimulus payments and wider vaccine distribution, low borrowing costs, and savings rates that have reached all-time highs; Barclays warns that GM is poised to report Q4 EPS below consensus with a cautious 2021 outlook in its earnings report tomorrow, but bumped their price target to $64 from $56 due to its Hydrotec truck potentially taking advantage of the emerging opportunity in fuel cell commercial trucks, and said potential weakness from tomorrow’s guide may provide a more attractive entry point; NSANY posted Q3 net loss of (Y37.76B), wider than its (Y26.09B) loss a year earlier but smaller than the expected (Y79.30B) loss and cut its revenue projection for the fiscal year ending in March, citing the impact of the pandemic and a shortage of semiconductors; HMC reported Q3 profit Y284.05B (~ $2.7B), more than doubling YoY and topping est. Y158.53B, and it trimmed its revenue projection for the fiscal year ending March but raised its net-profit forecast; GT Q4 adj EPS 44c beat est. 14c on sales $3.66B (est. $3.60B); DRVN was initiated at OW with a $39 pt at JPMorgan, OW with a $37 pt at Piper, and Buy with a $36 target at Bank of America given the franchise’s status as the leader in auto services and as a beneficiary of reopening

·     Housing & Building Products; BECN reported a strong beat of $158M in adjusted EBITDA vs. consensus of $117M while one firm noted even when stripping out the soon to be sold interiors business, EBITDA of $143M beat expectations (shares upgraded at BTIG); Wedbush raises tgts on builders KBH (to $53), TPH (to $25) & LEN (to $102) noting YTD the homebuilder ETF ITB is +16% vs a 4% gain for the S&P 500 and believe the anticipation surrounds the possibility of a $15k tax credit for first time home buyers; MAS 4Q EPS of $0.75 vs Consensus $0.74, with $1.86B vs Consensus $1.80B, EBITDA actually a small miss at $343M vs Consensus $346M, as gross margins missed by 40 bps and operating margins missed by 70 bps

·     Consumer Staples; COTY 2Q net revs $1.42B vs. est. $1.43B but America sales of $540M missed the $600M view), and saw organic sales fall 18% during the quarter, driven lower by a 22% decline in the mass segment/says digital and e-comm sales +40%; STZ upgrade from Buy to Conviction Buy w/ $275 pt at Goldman Sachs as believe the market is underappreciating: the significance of Modelo’s distribution runway, Corona Hard Seltzer’s imminent scalability and greater margin upside potential following the completion of the Gallo sale; EPC beat on sales (flat v –LSD), GMs (+70bps), and EPS (43c vs. est. 25c) vs. muted expects/FY outlook unchanged.

·     Restaurants; Wedbush raising price tgts for BJRI (to $61 from $49), CAKE (to $55 from $49), CHUY (to $46 from $37.50), PZZA (to $110 from $98), TXRH (to $100 from $89) & SHAK (to $122 from $77) – Casual dining momentum bears watching, with CAKE, TXRH our top picks; CMG upgrade from Neutral to Buy w/ $1,827 pt at Northcoast

·     Leisure and Gaming; MAR reached a deal to more than double its portfolio of all-inclusive resorts, as the long-term deal with Sunwing Travel Group’s hotel division, Blue Diamond Resorts, will add 19 franchised properties with a total of nearly 7,000 rooms to Marriott’s portfolio; WYNN 6.5M share Secondary priced at $115.00; NCLH said its 2023 voyage sold out within one day. More than one-third of all bookings came from first time, new-to-brand guests; in leisure (boating), MBUU posted Q2 results above consensus; Truist said view BALY’s expanded offering favorably and believe the imminent launch of its interactive B2C business combined with the Bally Sports Network should help investors give more credit to BALY as being a credible player in the emerging sports betting/iGaming space; DKNG and PENN shares slipped late after Texas Lt. Gov. Dan Patrick said he doesn’t see support for sports betting in the Texas Senate now

·     Services; ARMK 1Q adj EPS loss ($0.31) vs. est. ($0.41) on revs $2.7B vs. est. $2.73B; sees organic revs improving over course of FY, sees adj op income drop-thru rate of 18-22% in 2Q, sees FY FCF neutral to $200Mm; in online learning, CHGG Q4 EPS and revenue topped consensus and issues Q1 and year revenue above consensus



·     Energy stock movers; after outperformance over the last week, energy stocks took a breather today alongside a dip in oil prices from 1-year highs; MTDR downgraded to neutral at MKM saying fair value estimate increased by $2 to$19 due to minor refinements in capital intensity and a slightly lower cost-of-capital given the material increase in market capitalization; ET shares fell as Credit Suisse said the stock trading down on potential Dakota Access Pipeline (DAPL) decision delay. According to media reports, the U.S. Army Corps of Engineers on Monday asked a federal judge to delay a hearing on a temporary shutdown of the pipeline, as per Reuters. CS says the prospect of 2 more months of overhang could be driving an unwind in positions

·     Coal, Utilities & Solar; CNX posts Q4 net income attributable to shareholders of 49c vs. 54c a year ago, sending shares lower as 4 freight, SG&A costs rose ~276% and ~132% respectively; AQUA 16.383M share Spot Secondary priced at $24.85; utilities fell to lows this morning as rising Treasury yields and the search for risk by investors send defensive sectors lower



·     Bank movers; SBNY added to Focus List at JPMorgan saying the bank is in prime position to add new customers to its digital asset platform and boost volumes, as CEO on Q4 call commented that the Digital Banking team increased deposits by $8B in 2020 to over $10B in deposits (~16% of total deposits); Piper upgraded TCFC to OW after its strong Q4 earnings report, highlighted by core NIM expansion and good expense control; Janney upgraded ZION to Buy with $55 target

·     Asset managers & Advisors; AMG was upgraded to Buy at Citi who raised their price target to $172 from $63.50 given expectations for significantly higher capital return, its core long-term story showing more signs of inflection, and its deal pipeline continuing to firm, and Credit Suisse also raised its price target to $130 from $118; CNS reported prelim AUM $81.3B as of Jan 31, 2021, which was a monthly increase of $1.3B from December due to net inflows of $2.1B, partially offset by market depreciation of $586M and distributions of $207M

·     Insurance; RE reported Q4 EPS loss ($1.12) vs. est. ($1.16) on rev $2.76B vs. est. $2.32B, gross written premium +13%, attritional combined ratio of 86.3% (a 4 point improvement YoY), pre-tax net catastrophe losses of $70M; RGA posed Q4 adj EPS $1.19 vs. est. $1.06 on rev $4.14B vs. est. $3.77B, global estimated Covid-19 claim costs of approximately $300M for the quarter which was negatively impacted by a significant level of Covid-19 mortality claim costs; SLQT reports Q2 EPS 55c (est. 44c) on revs $358.3M (est. $316.5M), guided FY21 revs $920-940M (est. $866.7M) and net income $138-146M (est. $139M); WLTW Q4 EPS $5.23 beat est. $5.03 on mostly in-line revs $2.76B (est. $2.72B); UBS increased its price targets on AON, CB, HIG, KMPR and lowered its target on ALL

·     Consumer Finance; GPN reported Q4 adj EPS $1.80 vs est. $1.76 on revs $1.75B vs est. $1.77B, boosted its share buyback authorization to $1.5B, and selected Google Cloud as the cloud provider for its merchant solutions; OMF Q4 adj EPS $2.77 (est. $2.00) reporting Q4 FFO $2.17 (est. $2.22), portfolio NOI -23.9% in Q4 and -17.1% for the year, US malls and premium outlets occupancy 91.3% at year-end, and guides FY21 FFO/shr $9.50-9.75 (est. $9.55), EPS $4.60-4.85, and expect growth in earnings and cash flow for the upcoming year; Baird downgraded MAC to Neutral from Outperform and upgraded CPT to Outperform with a $119 pt; Bank of America upgraded EQR to Buy with a $78 price target and downgraded CPT to Neutral

·     Financial Services; INTU reported prelim Q2 adj EPS 67-68c vs est. $1.26 and prelim Q2 net rev $1.57-1.58B vs est. $1.92B as its revenue and operating income were below consensus due to tax season opening later this year; JPMorgan notes that its valuation multiples in the commercial mortgage sector remain below pre-Covid valuations and they downgraded LADR to UW despite seeing limited downside as they believe the potential returns are at the low end of the sector, and they upgraded KREF to OW as its potential returns are near the high end of the sector; JLL posted Q4 adj EPS $5.29 vs est. $3.93 on revs $4.85B (-10% YoY), and adj EBITDA $417.1M (est. $322.8M); SPGI Q4 adj EPS $2.71 topped est. $2.54 and revs $1.87B also topped est. $1.76B, and it now sees FY adj EPS $12.25-12.45 vs est. $11.90; NRZ reported in-line Q4 EPS 16c on revs $570.67M, which missed est. $768.75M; DA Davidson initiated FTHM at Buy with a $54 target given its recent agent growth and multiple long-term attractive adjacent opportunities



·     Pharma movers; in cannabis space, TLRY shares jump after announcing an agreement with Grow Pharma, where in the medical cannabis distributor will import and distribute Tilray’s GMP-certified medical cannabis products across the UK; KALV shares more than double after saying its treatment with its experimental drug KVD900 significantly reduced the use of rescue medicines in patient with hereditary angioedema; AZRX rises as enters agreement with contract research organization PPD for its planned mid-stage clinical trial of its experimental drug niclosamide for COVID-19-associated gastrointestinal (GI) infections

·     Biotech movers; ESPR downgraded to Sell at Goldman Sachs with street low $24 tgt down from $44 saying checks with both private practice and academic cardiologists suggest continuing low adoption among physicians for its drugs; HTBX positive interim survival data from ongoing HS-110 Phase 2 NSCLC Trial; SIEN 5.4M share Spot Secondary priced at $6.75

·     Healthcare services and providers; CNC posted a miss for quarterly EPS and revenue while managed care membership of 25.5M, rose 10.3M members, or 67% YoY (raises year sales view and backs EPS view); HQY F4Q:21 results and earnings were not reported, but provided total sales activity for the year and preliminary revenue expectations for F2022E; OPCH 15M share Spot Secondary priced at $18.50


Industrials & Materials

·     Industrial & Machinery; Jacobs (J) 1Q adj EPS $1.41 vs. est. $1.37 on revs $3.4B vs. est. $3.39B; sees FY21 adj EPS $5.30-6.00 vs. est. $5.79; WCC 4Q adj EPS $1.22 vs. est. $1.33 on sales $4.1B vs. est. $4.12B; guides FY21 adj EPS $5.50-6.00 vs. est. $6.83, sees reported sales +3-6%, sees FY CAPEX $100-120Mm; CARR 4Q adj EPS $0.31 vs. est. $0.36 on sales $4.6B vs. est. $4.49B; sees FY21 sales +6-8% (organic +4-6%) vs. revs est. +5.85%, sees FY21 FCF about $1.6B

·     Aerospace & Defense; Dow component BA’s board failed to challenge then-Chief Executive Dennis Muilenburg on the safety of the 737 MAX or his campaign to counter negative news reports between two fatal crashes that claimed 346 lives, WSJ reported. Separately, Singapore Airlines Ltd. has struck deals with BA and EADSY to defer the delivery of billions of dollars of aircraft on order – said it will defer about 4.4 billion Singapore dollars (US$3.30 billion) in aircraft deliveries to beyond 2025; IRDM will replace Monolithic Power Systems in the S&P MidCap 400

·     Metals & Materials; CLF 60M share Spot Secondary priced at $16.29; NUE said it announced that it expects to generate record earnings Q1 as believes its first quarter net earnings could exceed $900 million; in chemicals, DD Q4 results topped views while said it sees sales rising roughly 8% in 2021 to between $15.4B-$15.6B after it reported higher profit and sales for the fourth quarter.


Technology, Media & Telecom

·     Semiconductors; TSM January 2021 revenue of NT$126.75B (+8.0% M/M, +22.2% Y/Y); IMOS reports January revenue of $77.2M (-1.2% M/M; +24.9% Y/Y); MPWR will replace TechnipFMC plc (FTI) in the S&P 500; QCOM released a new chip for connecting devices to 5G networks that it hopes will be adopted for home internet use and inside businesses as a competitor to Wi-Fi.

·     Software movers; GLUU surges after EA to acquire the company for $2.1B, creating a new global leader in the largest and fastest growing gaming segment; Glu stockholders will receive $12.50 in cash for each share of Glu stock, representing a 36% premium ; TTWO delivered significant FQ3 top- and bottom-line upside due to continued recurrent consumer spend outperformance and raised FY21 guidance, passing through the FQ3 beat and issuing FQ4 guidance above prior consensus estimates; JPMorgan upgrades TWLO to overweight from neutral, while raising PT to $465 from $300 based as expects company-specific tailwinds, including its strengthening Enterprise presence, to drive the business in 2021; VRNS reported strong 4Q20 with revenues of $95.2M handily surpassing the high end of guidance at $85M while EPS at $0.34 swiftly came ahead of Street’s $0.12E on volume and cost optimization (ARR grew 36.5% to $287.3M, showcasing the subscription flywheel power at +99% of revenue mix); NUAN exceeding consensus’ revenue, operating margins, and EPS estimates and acquired Saykara, a small tech tuck-in aimed at boosting the AI/ML capabilities of DAX; ZM surged, announced new features aimed in part at helping information-technology leaders manage the health and safety of employees who are gradually returning to the physical office.

·     Media & Telecom movers; FOXA Q2 revs $4.09B topped the $3.99B estimate saying political advertising on its local television stations reached record levels at the end of last year, fueling revenue growth for the latest quarter; AVYA Q1 EPS 90c vs. est. 95c; revs $743M vs. est. $723.7M; sees year revs $2.9B-$2.94B vs. est. $2.91B; GSAT announced that Qualcomm (QCOM) has included Globalstar’s Band n53 in its new 5G X65 modem; ROKU shares surged over 9% late afternoon on no specific news

·     IT Services, Hardware & Component news; RAMP reported good 3QFY21 results as revenue and EPS were ahead of consensus, but directional guidance introduced for FY22 was below consensus; IT Q4 profit and sales topped expectations; TDC surges a 3rd day following earnings last week (rise over 30% on Monday and Friday) with shares more than doubling in 3 days; RAAS opens at $27, after 20Mm share IPO priced at $16 per share

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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.