Mid-Morning Look

Monday, February 10, 2025

U.S. stocks markets are off to a very strong start to the week, trading at highs with broad based strength, looking to erase last Friday and weekly declines. Big gains early for Technology (XLK) and Energy (XLE), both up over 1.5% while year-to-date winner Financials (XLF) takes a breather. U.S. markets appear unphased by the increased tariff/trading rhetoric between China and the US after President Donald Trump’s pledged to impose 25% tariffs on all imports of steel and aluminum (which is boosting US listed metals names in steel, aluminum sectors) and also his reported plans to make an announcement on reciprocal tariffs early this week. German Chancellor Olaf Scholz warned the EU is prepared to respond if US tariffs target European goods. The US dollar rallied alongside gold, which rose to a record high above $2,930 an ounce after Trump’s comments on Sunday added to increasing uncertainty in global financial markets. News and market catalysts tend to heat up the rest of the week with Fed Chairman Powell testifying on Capitol Hill tomorrow and Wednesday discussing the economy and monetary policy, along with consumer price index (CPI) inflation data on Wednesday 2/12 and Retail Sales Friday 2/14 and another busy week of corporate earnings.

• In Life Sciences: several stocks fall (BRKR, TXG, AVTR, TMO) following NIH announcement on the funding of indirect costs. Barclays upgraded shares of Agilent (A) and raise tgt to $145 from $135 and upgraded WAT (PT to $415 from $360) both to Equal Weight from Underweight (cut tgts on TXG, BRKR) saying they expected the group to be down today and sentiment to shift more negative on A&G names following Friday’s news around the Trump Administration’s implementation of a 15% cap for NIH reimbursement of “indirect costs” on the grants it awards Universities. Indirect costs are mostly overhead items for facilities and back-office administration. These typically range around 27%-28%+. The estimated savings would be ~$4B off of the $36B in funding.
• In the Food Sector: HAIN shares tumbled after Q2 sales of $411.5M missed the $430.8M estimate and widened loss while lowering its FY25 organic sales view to decline between 2% and 4%, down from prior view of flat or better. KHC was downgraded to Neutral at Mizuho, reducing ests saying food industry volume is eroding for many categories despite moderating inflation & stabilizing leftovers consumption. Mizuho views BRBR, SMPL, LTH, & NOMD as best positioned with material risks for HSY CELH price tgt and estimates reduced to below consensus at Stifel for 2025-2026 sales and adjusted EBITDA reflecting weakening sales trends in scanner data tracked channels which it thinks could result in additional modest destocking of inventories by PepsiCo.
• In Metals & Mining: Huge lift for US aluminum (CENX, AA), steel (NUE, X, STLD, CLF) producers after President trump said Sunday, he will introduce new 25% tariffs on all steel and aluminum imports into the U.S., on top of existing metals duties, in another major escalation of his trade policy overhaul. Gold miners also surging early (GOLD, AEM, NEM, etc.) as gold prices top $2,930 an ounce for record highs as upside buying momentum continues as safe haven demand heats up on tariff impact fears on inflation.

• BABA +5%; as US listed China stocks jump early despite aggressive trade tension/tariff headlines with US.
• BP +6%; shares rise after investor Elliott Management built a stake in the energy major it is expected to use to press for a change in strategy and to the board.
• MBLY +17%; was upgraded to Neutral at Bank America on limited downside risk, bottoming sentiment; separately, rises as Tech Crunch reported LYFT is planning to launch fully autonomous robotaxis, powered by MBLY to its app as soon as 2026 in Dallas.
• META +1%; looking to extend winning streak to 16 straight days.
• MNDY +29%; after results and guidance came in above consensus views.
• NEM +3%; along with gains in AEM, GOLD and other gold miners as gold prices topped $2,930 an ounce for new record highs as upside buying momentum continues.
• NUE +5%; shares of US aluminum (CENX, AA), steel (NUE, X, STLD, CLF) producers rise after President trump said Sunday, he will introduce new 25% tariffs on all steel and aluminum imports into the U.S., on top of existing metals duties, in another major escalation of his trade policy overhaul.
• SWTX +30%; after Reuters reported Merck KGaA in talks to buy SpringWorks Therapeutics. If the talks are successful, a deal could be signed in the coming weeks, the three sources said https://tinyurl.com/mr2pu9vk
• TMUS +2%; said Sunday it will launch its satellite-to-cell service, powered by SpaceX’s Starlink, in July for $15 a month; T-Mobile began wide-scale testing of the service on Sunday, which will be free till its launch; after its launch, the service will be included in T-Mobile’s premium Go5G Next plan at no extra cost.

• HAIN -23%; after Q2 sales $411.5M missed the $430.8M estimate and widened loss while lowered its FY25 organic sales view to decline between 2% and 4%, down from prior view of flat or better.
• ILMN -6%; downgraded to Underweight from Equal Weight at Barclays given the recent China news and the risk to management’s ’25 and LRP guidance.
• ON -6%; shares fell on results and weaker guidance, impacting on the auto related semi chip makers (NXPI, ADI, STM early) as reported Q4 revs fell -15% y/y to $1.72B vs. est. $1.76B as EPS missed on adj operating margin 26.7% vs. 31.6% y/y, as R&D expenses $155.2M, +3.3% y/y; guided Q1 revs $1.35B-41.45B vs. est. $1.69B.
• PLRX -62%; after announced it has voluntarily paused enrollment and dosing for the BEACON-IPF Ph2B/3 study which examines bexotegrast for idiopathic pulmonary fibrosis (IPF).
• SCHW -3%; as Canada’s TD Bank is looking to exit its full investment in SCHW through a secondary offering, the companies say; top shareholder TD currently holds 184.7 million shares in SCHW, or a 10.1% stake worth $15.36 billion; TD plans to use C$8 billion ($5.58B) of the proceeds to repurchase its stock.
• SMTC -31%; announced 2026 net sales of CopperEdge products are expected to be lower than the company’s floor case estimates of $50M due to rack architecture changes.
• TXG -12%; along with weakness BRKR, TMO others after the NIH, the U.S. government’s largest source of federal funds for medical research, said late Friday it plans to reduce indirect costs across both existing and future grants related to biomedical research.