Closing Recap

Tuesday, February 11, 2025

U.S. stocks finished Tuesday mixed, with the S&P 500 hitting highs before a late day dip, the Nasdaq finishing down slightly, the Smallcap Russell 2000 underperforming, and the Dow rising helped by earnings from Coca Cola (KO) ahead of key inflation data tomorrow morning. Day one of Federal Reserve Chair Jerome Powell’s testimony in Washington DC did little to move the markets, especially with fresh commentary on the economy/monetary policy just last week at the FOMC meeting. Powell told the Senate Banking committee today, “with our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance.” Powell added, “we know that reducing policy restraint too fast or too much could hinder progress on inflation. At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment”. Powell speaks again tomorrow in Capitol Hill. The other major news item tomorrow is the January consumer price index (CPI) which is expected to hold near the prior month levels for headline and core. Earnings season remains busy, with 65% complete for the quarter, heading into big week for Utilities, Healthcare and REITs. In stock news, META posts its 17^th consecutive day of gains while TSLA tumbles for the 5^th straight day (down -16% during stretch). Big movers to the upside on earnings were KO, SHOP and SLQT while big decliners on earnings/guidance included ACLS, ALAB, AMKR, COTY, FIS, FLNC, HLIT and many others.  Tariff headlines weighed on markets overnight after President Trump is now proposing 25% tariffs on all aluminium imports.

• April gold slips -$1.80 to settle at $2,932.60 an ounce, down from all-time high of $2,968.50 an ounce this week, but remains in upward momentum move over the last few months. President Trump substantially raised tariffs on steel and aluminium imports to a flat 25% "without exceptions or exemptions"
• Treasury yields climb as the first of three Treasury auctions this week was strong as the U.S. sold $58B in 3-year notes at high yield 4.300% vs. 4.313% when issued prior, as awards 41.59% of bids at high; the U.S. 3-year notes bid-to-cover ratio 2.79 (vs. 2.62 prior auction) as Primary dealers take 10.18% (lowest on record) of U.S. 3-year notes sale, direct 15.82% and indirect 74%.
• Chicago corn and soy futures drifted down on Tuesday after the U.S. Department of Agriculture projected U.S. end-of-season supplies above market expectations in a monthly supply-and-demand report, analysts said.

• In EVs: TSLA shares fell below its 100-dma support level around $335, dropping over -17% YTD; XPEV, NIO shares slipped after BYD Group (BYDDF announced a move to offer free smart driving features on almost all of its models. BYD on Monday put on sale 21 models equipped with its "God’s Eye" advanced driver-assistance system similar to that offered by rival Tesla, for no additional cost.
• In Auto Parts/Suppliers; LKQ was assumed Overweight and $48 tgt at JP Morgan but lowers ests and places on negative watch list into earnings on Thursday 2/20 as it foresees Q424 earnings and the accompanying 2025 outlook to be a ‘kitchen sink’ event for shares as sustained unfavorable industry trends are likely to prompt management to guide conservatively for the full year ahead.
• Online autos: B Riley previews the quarter for industry saying they expect a generally in-line Q4 for online autos, as industry trends indicate increasing sales volumes, which suggest positive consumer demand; used inventory trends are up M/M but down Y/Y), which provides an incremental lever for online marketplaces (CARG, CARS). Used wholesale continues to fare well, which bodes well for ACVA, in B Riley’s view, while incentive spending is also trending up, which it believes bodes well for TRUE.

• In Retailers: SHOP posted Q4 EPS and revs above consensus while Gross merchandise volume (GMV) was $94.46B, higher than analysts’ forecasts of $92.79B. BABA shares popped this morning after a report in The Information saying AAPL reportedly partnered with BABA to develop AI features for iPhone users in China. DKS shares rallied all afternoon after positive commentary from Cleveland Research.
• In Beauty/Consumer Products: been a rough few weeks for beauty space with EL, ELF shares falling post quarterly results while COTY overnight mixed as Q2 adj EBITDA $390.7Mm vs est. $268.2Mm but revs $1.669B miss est. $1.721B saying APAC region and FX headwinds weigh on Q2 sales; sees 2H25 LFL sales trends broadly consistent with Q2 LFL trend at -1% to -2%; cuts FY25 EPS view to $0.50-$0.52 from $054-$0.57.

• In Lodging & Online Travel: MAR forecast slower net room growth and 2025 profit below Wall Street estimates, hurt by poor performance at its hotels in Greater China; guided FY EPS $9.82-$10.19, below analysts’ expectations of $10.65 per share; During Q4, systemwide room revenue in Greater China declined 1.7%; sees global net rooms growth in 2025 to be in a range of 4% to 5%, lower than its 2024 growth of 6.8%.

• In Solar: FSLR was upgraded to Outperform, raise PT to $259 from $218 at Mizuho saying based on channel checks, now sees better moat vs cSi competition in the US as other U.S. cell manufacturers opt for the expensive/inefficient PERC cells due to FSLR’s hold on the more efficient TOPCon tech.
• Energy Services & Equipment: FLNC shares tumbled after reported Q1 results well below expectations and reduced fiscal 2025 revenue guidance by 15%, prompting a few Wall Street downgrades (BMO, Guggenheim); Q4 revs fell -49% y/y to $186.79M vs. est. $380M saying decline primarily driven by the pronounced backend nature of expected revenue for FY25 vs. the revenue distribution seen in FY24. BKR was added to best ideas list at Benchmark after attended BKR’s AGM in Italy last week and were astounded by the step change in business momentum in its IET segment. SLB said it would lay off employees and reorganize specific functions within its business, as per Reuters.

• In FinTech: FIS shares tumbled after guiding Q1 EPS $1.17-$1.22 vs. est. $1.28 which overshadowed better Q4 results (FY EPS view $5.70-$5.80 midpoint above consensus $5.72); also said partners with AFRM to bring integrated pay-over-time capabilities directly to debit issuing banking clients and their cardholders.
• In Insurance: TRV announced preliminary estimate of catastrophe losses relating to the January 2025 California wildfires is $1.7B pre-tax ($1.3B after-tax). The preliminary estimate includes losses from the Company’s personal and commercial segments. ACGL posted Q4 adj operating EPS of $2.26 above consensus of $1.82 helped by a stronger favorable reserve development, driven by the Mortgage and Reinsurance segments, and lower-than-expected catastrophe losses ($393M vs. $420M est.). CINF reported Q4 EPS $3.14 topping ests $1.87 helped by a better than-expected core loss ratio as well as lower cat losses. SLQT shares jump after $350M investment from investors including Bain Capital, Q2 results.
• In Financial Services: SPGI board authorized share buyback of up to $4.3B; EFX was downgraded to Hold from Buy at Argus saying Equifax is now struggling to meet its growth targets in a business environment marked by higher interest rates and a slowdown in mortgage-related demand.

• DVAX downgraded to Sell from Neutral at Goldman Sachs and cut tgt to $12 from $15 due to the evolving competitive landscape in shingles vaccination, and uncertainty on FDA/ACIP’s regulatory stance towards vaccines in the US
• INCY reported FY24 Jakafi revenues of $2.79B (+8% y/y) slightly ahead of Street estimates ($2.77B), citing strong growth in PV as well as overall favorable trends in paid drug rate; provided strong FY25 guidance for Jakafi of $2.925-2.975B; reported FY24 Opzelura revenues of $508M vs. est. $484M)
• NVS said it will acquire Anthos Therapeutics, the developer of a new type of blood-thinning medicine, for $925 million, or as much as $3.1 billion if certain future conditions are met.
• REGN said the FDA has accepted its resubmitted application seeking approval of linvoseltamab for certain patients with the blood cancer multiple myeloma.
• RGNX downgraded to Neutral from Buy at Goldman Sachs and cut tgt to $14 from $38 amid increasing debate about the appeal of gene therapy in the treatment of wet AMD and Dr, increasing price competition from bipolar, and waning differentiation vs competitor program
• VYGR said it will assess alternate payloads related to its gene therapeutic program related to a form of amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease.

• In Medical Equipment: INSP shares slipped on news around a recent civil investigative demand, while the co delivered Q4 revenue results in-line with its pre-release on 1/13 that exceeded prior consensus by 3% and mgmt reiterated 2025 sales guidance of $940-955MM and introduced positive EPS guidance.
• In Life Sciences: Last Friday, the NIH announced that it would immediately cut funding for indirect costs paid to research institutions, capping the rate of support to 15% of grants. The move sent shockwaves through the science world as shares of AVTR, TMO, BRKR, A, TXG, QTRX were pressured yesterday. Yesterday, attorneys general (all Democrats) representing 22 states sued the Trump administration over the move. Within hours, a federal judge in Boston issued a temporary order halting the policy in those 22 states (hearing set for 2/21).

• In Aerospace: ACHR said it has raised $300M in a funding round that consisted of institutional investors including accounts managed by BLK; LDOS top and bottom line beat as Q4 EPS $2.37 vs. consensus $2.28; Q4 revs $4.4B vs. consensus $4.13B; sees FY25 EPS $10.35-$10.75 vs. consensus $10.54 and sees revenue $16.9B-$17.3B vs. consensus $16.97B; RKLB announced it will soon launch a satellite on a dedicated Electron mission, the first of a bulk order of multiple missions for real-time space-based intelligence company BKSY
• In Defense: RTX was upgraded to Buy from Hold at Argus noting the defense contractor concluded 2024 with organic sales growth of 11% and margin expansion in all three of its segments and says noted expects continued growth in 2025 from demand for the company’s military products. BA delivers 45 commercial jets in January, the most deliveries in a month since 2023; said books 36 gross orders in January, down from 145 gross orders in December; delivers 40 737 max jets, four 787s and one 777 freighter.
• In Chemicals: DD reported Q4 adjusted earnings of $1.13 a share, topping analysts’ estimates of $0.98 while net sales in the period rose 7% to $3.1B, topping the $3.07B estimate as organic sales also rose 7%; sees FY25 adjusted EPS $4.30-$4.40, vs. consensus $4.31.
• In Metals & Mining: sector remains active after President Trump on Monday imposed 25% tariffs on all steel and aluminum imports from March 4, putting further pressure on top trading partners Canada and Mexico. This morning in research, Keybanc upgraded STLD to Overweight given their view recent operational challenges at Sinton (and margins) are turning, supporting materially positive earnings revisions.

• Cyber Security: SailPoint (SAIL) said it is now seeking a valuation of up to $12.57 billion in its U.S. initial public offering (IPO) as the company and its parent Thoma Bravo are together selling 50 million shares, priced between $21-$23 each to raise as much as $1.15 billion. SailPoint’s previous proposed range was between $19-$21 to raise up to $1.05 billion for a target valuation of up to $11.5 billion.

• AMKR shares fell; Q4 was mixed with EPS beat but revs missed on better but indicated weaker than expected conditions in Auto/Industrial and a temporary socket loss on the iOS platform are driving the majority of its lower Q1 outlook (guides Q1 sales $1.225-1.325B vs est. $1.438B and EPS $0.01-0.17 vs est. $0.28).
• GFS Q4 revs $1.83B misses the $1.98B estimate while guides Q1 revs $1,55B-$1.6B below consensus of $1.66B as the co tempers expectations amid looming fears of President Donald Trump’s tariffs and a challenging smartphone market in 2025.
• INTC shares outperformed for a second day as reviewers praised its latest processor, the Intel Core Ultra 9 275HX. A number of reviewers, including PC World and Toms Hardware, both cited the performance of the Core Ultra 9 275HX, and the battery life boost provided to laptops https://tinyurl.com/mrpwfpv7 ; also shares rise after VP Vance promises to safeguard American AI and chips.    
• LSCC shares rise; reported in-line 4Q results and guided 1Q slightly higher while design wins remain at record levels with continued momentum across the Avant and Nexus product families, while the business returned to growth following five consecutive quarters in decline.