Mid-Morning Look

Thursday, April 29, 2021

U.S. stocks open at record highs for the S&P 500 and Nasdaq Composite, paced by big gains in technology early following big earnings beats for mega-caps Apple (AAPL) and Facebook (FB) as both beat top and bottom-line estimates handily, with Apple also guiding Q3 revenue to be up strong double digits and authorizing an increase of $90 billion to its existing share repurchase program. Stocks have since rolled off those highs but remain in positive territory. In industrials, Dow component CAT with a top/bottom-line beat. Today marks the busiest day for S&P companies, with roughly 11% of the S&P 500 set to report Q1 results. Dow component MRK reported a top and bottom line miss in healthcare, while energy stocks outperform for a second day behind a pop in oil prices. Sentiment wise, the “reopen” sectors (cruise, travel, restaurants, leisure, etc.) got an early boost after New York Mayor Bill De Blasio setting July 1 as the goal to fully reopen New York City and the WSJ reported the CDC said cruise operations could begin again in the U.S. by mid-July and can proceed to passenger sailings without test cruises if they can assure 98% of crew and 95% of passengers are fully vaccinated. Last night, President Biden officially outlined his American Families Plan to Congress and the American people– no new news with details leaked all week – which included a proposed $1.8 trillion spending plan on education, childcare, and infrastructure over the next 10 years. Gold prices slide along with tech has markets again watching the slow rise in Treasury yields (10-year at 3-week highs above 1.68%). Markets also getting another good round of economic data today (GDP and jobless claims) – Fed said yesterday will remain accommodative despite strength. Another busy night of earnings highlighted by Amazon (AMZN)

Economic Data

·     Strong data for U.S. economy in Q1 as Q1 GDP (initial estimate) rose +6.4% annualized vs. +6.5% estimate (estimates varied from 6.1%-6.6%) and +4.3% in Q4; the PCE price index rose +3.5% vs. +2.5% consensus and +1.5% in previous quarter and core PCE prices +2.3% vs. +2.4% consensus and +1.3%

·     Weekly jobless claims fell to 553,000 in latest week vs. est. 549,000 and vs. 566,000 prior week; continued claims rose to 3.660M from 3.651M (est. 3.614M); the U.S. insured unemployment rate unchanged at 2.6% and the 4-week moving average fell to 611,750 from 655,750 prior

·     March Pending Home Sales rose +1.9% M/M to 111.3 vs. +3.8% consensus and -11.5% in February (revised from -10.6%)

Sector Movers Today

·     Consumer Staples; HSY 1Q adj EPS $1.92 tops est. $1.80 on sales $2.296B above est. $2.11B while sees FY adj EPS $6.79-6.92 vs. est. $6.75; CHD Q1 adj EPS 83c vs. est. 81c; Q1 revs $1.24B vs. est. $1.2B; sees year sales up 5%-6% and EPS $3.00-$3.06 vs. est. $3.03 with organic sales growth to be 4%-5%; MO 1Q adj EPS $1.07 on revs $6.0B, cigarette shipment volume -12%; says expects adj EPS growth in last 3 qtrs of yr and reaffirms FY earnings guide; in food, KHC reports organic sales growth of 2.5% in Q1 to top the consensus mark of +0.6% and sees a mid-single-digit percentage increase in both organic sales and adjusted EBITDA in Q2

·     Consumer Finance; MA follows good earnings from peers Visa and COF the day prior, as Q1 EPS and revs top consensus estimates ($1.74/$4.16B vs. est. $1.56/$4.05B) as gross dollar volume rises 8% on a currency neutral basis to $1.71T; LC boosted its 2021 targets for loan originations and total revenue as sees Q2 loan originations of $1.7B-$1.9B and total revenue of $130M-$140M (vs. consensus of $107.1M); expects Q2 consolidated net loss of $30M-$40M; ADS big Q1 beat $5.74/$1.08B vs. est. $3.16/$1.06B) while sees FY21 revenue ‘down low-single-digits compared to 2020

·     MedTech Equipment; ABMD Q1 EPS of $1.24 beat by 14c on better revs $241.2M vs. est. $231M and issues higher guide for year revs of $990M-$1.03B vs. est. $998.1M – said worldwide Impella heart pump revs up 17% YoY; BAX raises FY21 adjusted EPS view to $3.47-$3.55 from $3.35-$3.43 and ups FY21 revenue view to up 8%-9% from 7%-8% after Q1 top/bottom line beat (Q2 guide below); IART announced Q1 revenue coming in above the high-end of management’s guidance range and adjusted EPS also came in above expectations with consolidated organic revenue growth of 2.9%; TMO reported 1Q results, with revenue slightly ahead ($9.91B vs. $9.72B) as total organic growth slightly ahead of street, with focus on Specialty Diagnostics miss

·     Restaurants; MCD Q1 EPS $1.92 vs. est. $1.81 and revs $5.12B vs. est. $5.03B; global comparable sales increased 7.5% in q1 as systemwide sales increased 12% (8% in constant currencies) and U.S. comp sales up 13.6%; CAKE Q1 revenue beat and current-quarter growth saying Q2 comp sales rose over 2019 levels, as COVID-19 dining restrictions eased and consumer spending increased; DPZ reported Q1 EPS $3 vs est. $2.94 on revs $983.7M that was shy of estimated $985.2M, with US comp sales +13.4% and international same-store sales +11.8% both topping respective estimates of +9.7% and +6%; BLMN Q1 adj EPS 72c more than doubled expected 30c on revs $987.5M that were above est. $953.2M with US comp sales +3.3% for the quarter (est. +2.1%) that have drastically accelerated over the past 4 weeks (ending April 25) to +155.8% YoY, and guided Q2 adj EPS to above 60c and revs to above $1.03B

·     Media & Telecom movers; DISCA receives three analyst upgrades this morning – Wells, UBS and Bank America a day after earnings results; CMCSA EPS of 76c beat by 17c as Q1 revenue rises 2.2% to $27.21B, topping ests of $26.7B and gained 461,000 broadband customers in Q1, topping estimates of 396,000 net additions; DISH Q1 EPS 99c vs. est. 81c; Q1 revenue $4.5B vs. est. $4.37B; Q1 net Pay-TV subscribers decreased approximately 230K compared to a net decrease of approximately 413K YoY; NOK rises after posted better-than-expected sales, profit led by networks, 5G equipment sales, while expecting 2021 margin at the upper end of the 7-10% range; AMT Q1 adj FFO $2.46 vs est. $2.30 on in-line revs $2.16B and lowered its FY revs guidance to $8.48-8.63B from $8.5-8.65B but upped FY adj FFO to $4.09-4.19B from $4.06-4.16B

Stock GAINERS

·     AAPL +1%; reported March F2Q results that, across the board, beat on every metric including iPhone, services, MACs, wearables, gross margins and EPS

·     CCL +1%; as the WSJ reports the CDC said cruise operations could begin again in the U.S. by mid-July and can proceed to passenger sailings without test cruises if they can assure 98% of crew and 95% of passengers are fully vaccinated – WSJ https://on.wsj.com/3eDcE4t

·     CMCSA +3%; EPS of 76c beat by 17c as Q1 revenue rises 2.2% to $27.21B, topping ests of $26.7B and gained 461,000 broadband customers in Q1, topping estimates of 396,000 net additions

·     FB +5%; posts better than expected Q1 earnings as ad revenue soars, led by a 50% surge in advertising revenues overall revs $26.17B topped the $23.72B estimate, on better EPS of $3.30 (est. $2.61) on slightly better DAU’s of 1.88B

·     GRTX +47%; after releasing data from a trial of its GC4419 in certain pancreatic cancer patients – said median overall survival in the treatment arm was nearly twice as long as observed in the placebo arm, 20.1 months compared to 10.9 months, respectively

·     OSTK +7%; as reports a 94% surge in Q1 revenue to $660M (vs. est. $582m), while adj EBITDA of $33.9M compared vs. $6.5M loss a year ago and said order deliveries increased 66% to 3.6M from a year ago, while avg order value was $183, up 17%

·     QCOM +5%; reported a solid MarQ rev/EPS of $7.9B/$1.90 and guided JunQ well above consensus at $7.75B/$1.65, reflecting QCT and high-margin QTL strength

·     VER +18%; as Realty Income Corp. (O) agreed to buy the fellow real-estate investment trust in a stock swap worth about $11 billion https://bit.ly/2QFTjYm

Stock LAGGARDS

·     ADVM -60%; downgraded to Sector Perform at RBC Capital and lowers tgt to $6 after ADVM announced a serious adverse event of hypotony (decreased intraocular pressure), panuveitis and loss of vision in a DME patient

·     AZPN -11%; following soft results and weak guidance; 3Q adj EPS $1.05 vs. est. $1.11 on revs $162.7Mm vs. est. $169.4Mm and guides FY revs $705-729Mm vs. est. $745.3Mm

·     CARA -40%; after saying topline results from its Phase 2 dose-ranging clinical trial of Oral Korsuva difelikefalin tablets for the treatment of moderate-to-severe pruritus in mild-to-severe atopic dermatitis patients missed its primary and secondary endpoints

·     CTXS -8%; as posts a 10% fall in Q1 rev to $776M, missing the $797M estimate citing the $129M YoY decline in Product and License rev as a result of discontinuing perpetual licenses for Citrix Workspace

·     EBAY -11%; 1Q results/2Q guide were largely in-line but with reopening uncertainties lingering, EBAY remains a show-me story according to analysts (was downgraded at Wedbush)

·     F– 9%; slipped after guiding FY adj EBIT $5.5-$6.5B, below the $6.82B estimate saying it now plans to lose about 50% of planned 2Q production to account for semiconductor shortage

·     MRK -3%; reported an earnings and revenue miss and estimated negative impact its Q1 pharmaceutical revenue about $600 million due to Covid

·     PLBY -6%; after announces stock offering following rally in shares

·     TDOC -9%; Q1 revenue and adjusted EBITDA ahead of consensus and management notched up 2021 revenue guidance slightly, but several analysts lowered their price tgts noting TDOC left FY 2021 membership guidance unchanged at 52-54 mln and that may weigh on the stock

Syndicate:

·     Aldeyra (ALDX) 10M share Secondary priced at $12.50

·     Aveanna (AVAH) 38.2M share IPO priced at $12.00

·     Endeavor Group Holdings (EDR) 21.3M share IPO priced at $24.00

·     Hydrofarm (HYFM) 4.806M share Secondary priced at $59.00

·     PQ Group (PQG) 12.5M share Secondary priced at $14.00

·     Privia Health (PRVA) 19.5M share IPO priced at $23.00