Mid-Morning Look

Monday, December 27, 2021

The Santa Claus rally is in full swing today with the S&P 500 hitting a record intraday high for the first time since November 22 to recover all the Omicron-related selloff that started right after Thanksgiving. It is currently on pace for its second consecutive record close as well. However, the variant is still wreaking havoc on travel and causing mass cancellations for air travel and cruise lines. These stocks and others tied to reopening are the top decliners so far today, while large-cap tech is pushing the drive to new records. Oil prices were lower overnight on demand fears stemming from rising Covid cases and the cancellations but have rebounded on hopes that the Omicron variant will have a limited impact on 2022 demand.

Economic Data

·     Holiday Retail Sales (Nov. 1 – Dec. 24) increased +8.5% YoY (vs est. +7.4%) and +10.7% vs 2019 according to MasterCard SpendingPulse, the largest annual increase in 17 years

·     Dallas Fed Texas manufacturing index of general business activity 8.1 in December vs 11.8 in November; Dallas Fed Texas manufacturing output index 26.7 in December vs 27.4 in November

Sector Movers Today

·     Biotech movers; STRO received $40M upfront as part of its deal to license its STRO-002 in China; Pardes Biosciences (PRDS) begins trading after going public via SPAC with FSII; UTHR resubmitted its new drug application for Tyvaso DPI, which targets the treatment of pulmonary arterial hypertension and pulmonary hypertension, to the FDA after the agency said in October that only a single deficiency prevented approval; SRNE announced its rapid Covid test COVISTIX detects all Covid variants including Omicron, and Mexico executed its second contract for 10M tests; Mizuho sees favorable risk-reward in ARQT and multiple upcoming catalysts; CELU received Fast Track designation from the FDA for its cell therapy in development for the treatment of AML

·     Media & Telecom movers; CSSE filed for a common stock offering of up to $100M; NWSA announced it has bought back stock as part of its $1B repurchase program and acquired Base Chemicals, known for its pricing data and insights for the world’s most important base chemicals, from SPGI, INFO for $295M in cash; BMO initiated CTV at Outperform with a $13 PT due to its video-native ad server seeing accelerated adoption

Stock GAINERS

·     MBOT +67%; announced collaboration with SYK to develop the LIBERTY Robotic System for neurovascular applications

·     GDDY +8%; activist investor Starboard took a stake of roughly 6.5%, worth around $800M

·     FCEL; reached a favorable settlement agreement with South Korean POSCO Energy that confirmed its exclusivity to sell its differentiated platform technology throughout Asia

·     SPGI +1%; sold CUSIP to FDS for $1.925B in cash and Base Materials with INFO to NWSA for $295M in cash

·     CEI +14%; received a $25M loan to redeem its Series C preferred stock

·     LUCD +10%; initiated at Buy with a $12 PT by Ascendiant on likely catalysts and a large market potential

·     VUZI +8%; announced an agreement with VZ to use its 5G and edge computing technologies to deliver a first-of-its-kind augmented reality experience for sports and gaming

Stock LAGGARDS

·     BBIO -72%; after its Phase 3 trial to treat transthyretin amyloid cardiomyopathy didn’t meet its primary endpoint at month 12

·     AAL -2%; lower with other airline stocks (JBLU, UAL, DAL, ALK, LUV) as ~800 flights were cancelled this morning and over 3,000 over the weekend

·     NCLH -3%; lower with other cruises (CCL, RCL) after Covid outbreaks altered at least six sailings in the past week

·     DIDI -2%; its 180-day lockup expiry is today and the company indefinitely blocked employees from selling

·     PSTI -15%; its Phase 2 trial to treat acute respiratory distress syndrome linked to COVID-19 failed to meet their primary endpoint

·     INNV -11%; downgraded at Barclays with a new $6.50 PT from $22 due to uncertainty surrounding the timing of the resolution of the CMS sanctions announced on Thursday