Mid-Morning Look: August 06, 2021

Mid-Morning Look

Friday, August 06, 2021






DJ Industrials




S&P 500








Russell 2000






Major averages are mixed early as the S&P 500 and Dow Jones Industrial Average each touch new record highs, lifted by financials while the tech heavy Nasdaq Composite underperforms following a spike in Treasury yields after a stellar July payroll report. The strong increase in jobs in July sparked concerns of higher inflation at a time when the Delta variant of the coronavirus has cast a shadow over a broader economic rebound. Financials outperform, with top leaders in the S&P 500 insurance/banks following the jobs data which lifted treasury yields which tend to help lending margins. Gold tumbling on better jobs report, falling as much as 2% below $1,780 as the dollar rises (up 0.55) and Treasury yields spike (10-year at 1.28%). WTI Crude oil erases early gains, slips – 0.6% to $68.69 and set for 7.1% weekly decline, biggest in 10 months. This was the last big week for earnings with over 430 S&P companies now having reported, with more small and midcap names expected next week.


Economic Data

·     Strong economic data as payroll report beats – Nonfarm payrolls +943K in July, compared with +870K expected and +938K in June (revised from 850K), private payrolls mostly in line at 703K and manufacturing payrolls 27K vs. est. 25K; unemployment rate tumbles to 5.4% vs. 5.7% expected and 5.9% in June while wages rise 0.4% vs. est. 0.3%.







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector; auto supplier LEA posted a top and bottom line miss as EPS $2.45 below the $2.68 est. and revs $4.76B misses $4.91 consensus while also cut FY21 revenue view to $19.7B-$20.5B from $20.35B-$21.15B (est. $20.72B); sees FY21 adjusted EBITDA $1.48B-$1.67B; Bloomberg reported DIDI is weighing giving up control of its most valuable data as part of efforts to resolve a regulatory probe into the aftermath of its controversial U.S. IPO; in online auto space, CARG reported better than expected 2Q results largely driven by upside in the recently acquired CarOffer business – and while dealer count declined sequentially in 2Q, dealer retention remains strong; CVNA posted +198% sales growth (vs. Wells +161%), record GPU performance (of $5,120) and its first ever positive EPS quarter (+26c) as a public company; TRUE posted Q2 EPS loss larger than expected on in-line revs $65.8M, sends shares lower

·     Consumer Staples; BYND shares slip early after posting a larger loss and weaker guidance – Q2 EPS loss (-$0.31) vs. est. loss (-$0.23) and sees Q3 revs $120M-$140M vs. est. $153.7M; IFF 2Q results that were generally in line, despite the raw material and logistics headwinds, as better-than-expected results from its Nourish segment more than offset lower-than-expected results from Health and Biosciences; BGS Q2 adj EPS 41c vs est. 48c on sales $464.4M vs est. $444.5M as higher than expected cost inflation on inputs like raw materials and transportation impacted gross profit in the quarter and they expect input cost inflation to be materially higher in 2H21 than 2H20 and continued cost inflation in FY22; MNST Q2 EPS 75c vs est. 68c in revs $1.46B vs est. $1.4B; SFM reported Q2 adj EPS 52c vs est. 45c on sales $1.52B that missed est. $1.6B, comp sales -10% and 2-yr comp sales -0.6%, and raised FY adj EPS view to $1.90-2.02 from $1.87-2 but lowered FY sales outlook; SPB Q3 adj EPS $1.57 vs est. $1.58 on revs $1.16B vs est. $1.17B and still sees FY21 adj EBITDA and sales growth both increasing in the mid-teens; POST Q3 adj EPS 93c vs est. 97c on sales $1.59B vs est. $1.51B and said it plans to distribute a significant portion of its interest in BRBR to POST shareholders

·     Software movers; DBX Q2 revenue rose 13.5% to $530.6M, above the $523.9M estimate and said it had 16.14M paying users at quarter-end vs 14.96M a year ago; ZNGA agrees to buy China’s StarLark, the creator of “Golf Rival”, for $525M in a cash-and-stock deal, while lowered its FY net bookings view to $2.8B-$2.9B below the est. $2.93B; FEYE shares fall in Internet security sector on in-line EPS/revs for Q2 and said its spinoff of its legacy products business to focus on cloud-based services will result in higher costs; BL reported 2Q results that beat expectations with subscription revenue +22% y/y to $95.2mn (vs. Street at $94.4mn) and bookings growth of 29% y/y to $115.5mn (vs. Street at $107.9mn); QTWO reported solid 2Q21 results given the current demand environment, with non-GAAP revenue of $124.2mn, up 25.5% (Street at $123.3mn), including 16% growth in registered users to >8.8mn; BIGC 2Q represented another quarter of accelerating subscription revenue growth (up 42%) and enterprise ARR was impressive with 54% y/y growth; AVLR Q2 beat highlighted by an impressive 52% billings growth and confirmation of a number of key growth vectors

·     MedTech Equipment; QDEL shares fell on EPS miss as sales of Covid-related products fell to $83.4M vs $109M YoY and influenza products $1.6M vs $18.7M YoY; MDRX 2Q EBITDA came in 11% ahead of consensus helped by mounting benefits from the cost initiatives that began in ’20, prompting mgmt to raise its ’21 EBITDA guidance by 8% at the MP; VRAY reported Q2 revenue of $15.0M (+5% y/y), beating the $14.4M consensus estimate; ICAD announced Q2 revenue of $7.8M, missing the consensus forecast of $9.2M citing weakness from the Detection Product segment; ILMN Revenue and EPS was well ahead of expectations and management increased full year guidance; IRTC reported 2Q revs at $81.3M (+60% y/y), above consensus estimates of $76.3M as Zio AT was the bright spot in the quarter, accounting for ~10% of total revenues



·     AIG +3%; getting a boost on earnings, while financials in general rise on higher Treasury yields

·     CSOD +13%; entered into a definitive agreement to be acquired by Clearlake Capital Group for $57.50 per share or $5.2B

·     CTVA +6%; after Q2 EPS/revs beat and raises FY21 operating EPS view to $2.00-$2.10 from $1.85-$1.95 and revs view to $15.2B-$15.4B from $14.6B-$14.8B

·     DKNG +2%; rises as Q2 revs $298M vs. est. $249.4M, qtrly monthly unique payers (“MUPS”) for our b2c segment increased 281%; average revenue per MUP was $80 in q2 of 2021 representing a 26% increase; sees year revs $1.21-$1.29B vs. est. $1.17B

·     SPCE +9%; said it is reopening sales effective Thurs with prices beginning at $450,000 a seat while also posted a wider-than-expected Q2 loss but also better-than-expected revenues

·     SYNA +17%; reported better-than-expected F4Q21 sales/non-GAAP EPS with positive gross margin surprise again as sales were up 18% Y/Y driven by IoT and margins jumped another 241bps+ sequentially, to 57.5%

·     SWCH +19%; reported strong 2Q21 results and raised guidance for both organic and inorganic growth while signings came in at $24M and its backlog increased to $63.5M (upgraded at Raja as well citing strategic investment by Elliott Mgmt and the significant pursuit of a REIT conversion)

·     YELP +11%; Q2 EPS a surprise profit $0.05 vs est. loss ($0.09) on netter revs $257.2M and adj EBITDA $63.8M (est. $41.5M), with a $250M increase to its stock repurchase program and raised guidance



·     APRE -4%; after the U.S. FDA places partial clinical hold on trials of eprenetapopt in combination with azacitidine in the company’s myeloid malignancy programs

·     COLD -5%; downgraded at Raymond James as the company reported worse than expected 2Q results and lowered the outlook for FY21 in response to ongoing COVID-related challenges impacting its tenants’ ability to rebuild inventory levels.

·     DRNA -36%; as its lead drug candidate, Nedosiran, met the main goal in a pivotal trial of patients with primary hyperoxaluria – but while reductions in urinary oxalate were significant in those with subtype 1 of the disorder, participants with subtype 2 showed inconsistent results

·     EXPE -7%; Q2 revenue rises to $2.11B from$566M and above the $2.01B estimate as gross bookings surged 667% vs last year but warned the recent COVID-19 variant continues to create uncertainty in the travel industry

·     FEYE -14%; on in-line EPS/revs for Q2 and said its spinoff of its legacy products business to focus on cloud-based services will result in higher costs

·     NVAX -19%; after saying it would delay seeking U.S. emergency authorization for its Covid-19 vaccine until Q4 as it works to complete the manufacturing portion of its application (followed a larger than expected loss for the quarter)

·     OLED -10%; slides after Q2 results (EPS miss) as reported 2Q21 sales/EPS of $129.7M/$0.85, comparing to Street’s $128.1M/$0.88, as lower gross margin contributed to lower-than-expected EPS and the co kept annual revenue guidance unchanged

·     QDEL -14%; on EPS miss as sales of Covid-related products fell to $83.4M vs $109M YoY and influenza products $1.6M vs $18.7M YoY

·     SPPI -27%; slides after receiving a complete response letter (CRL) from the FDA citing deficiencies related to manufacturing and indicated that a re-inspection will be necessary

·     ZNGA -17%; reported mixed 2Q21 results, with lower-than-expected bookings and higher than expected profitability and adj. EBITDA

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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.