Mid-Morning Look

Wednesday, February 14, 2024

U.S. stocks in sharp rebound mode as another one-day pullback on Wednesday, following a “hotter” CPI inflation report, has quickly been erased with investors taking any and every (what few there have been) opportunity to buy weakness. Nearly all eleven S&P sectors are higher (after all 11 fell yesterday), with Consumer Staples (XLP) the only laggard. Major US averages looking to extend their weekly winning streak to 6 and remain higher 15 of last 16 weeks led by massive strength in technology (that trend continues). The strength in semiconductor stocks (SOX) continue to amaze, with NVDA topping GOOGL market cap today becoming the 3^rd most valuable company (passed AMZN recently and only behind AAPL and MSFT), while any chip related name tied to “AI” growth prospects such as ARM, SMCI, AVGO, others have seen share prices surge. After hitting highs of 17.94 the day prior following the CPI spike, the CBOE Volatility index (VIX) tumbles -8% to 14.50 level this morning (fear has remained very short lived during this 15 week stretch of 20% SPX stock gains). Treasury yields jumped early, but lower on day (still holding yesterday sharp spike on CPI report). Fed’s Goolsbee downplayed yesterday’s CPI report and said he doesn’t support waiting until inflation is already at 2% on a 12-month basis before cutting rates. The comments helping U.S. stocks early along with the general upside momentum seen over the last few weeks. Bitcoin jumps 4.7% approaching $52,000, crossing the $1 trillion in mkt cap for the first time since November 2021. Higher stock PE’s, a surprise jump in CPI inflation, and ongoing macro concerns (Israel, Ukraine, China economy) still having zero effects in US markets.

• BLNK +17%; after provided an upbeat sales outlook and affirmed its target for reaching adjusted profitability; said sees Q4 revs to surpass $42M (vs. est. $34.1M) citing strong demand for equipment and services and affirmed its target of achieving a positive adj Ebitda by year-end.
• DVA +10%; shares jump after Q4 rev and profit beat and sees FY24 adjusted EPS $8.70-$9.80, vs. consensus $8.68 and FCF $900M-$1.15B.
• HOOD +11%; posted a surprise profit in Q4, driven by higher interest income from customers paying back loans and a rebound in trading – posted top-line and EPS; transaction revenues & volumes increased sharper than expected in Dec. ’23 across equities, options, and Crypto volumes came in the strongest since the Sep. ’22 quarter.
• IREN +19%; after headlines energy triples AI cloud services business to 816 Nvidia h100 GPUs.
• LYFT +36%; said it sees adj EPS as much as 11% higher than analysts’ estimates, reported bookings ahead of expectations and said sees margins to expand this year by 500-bps.
• SAGE +13%; quarterly revenue of $77.97M tops ests $61M on smaller-than-expected loss of (-$0.55) vs. est. (-$1.28) helped by its postpartum depression pill Zurzuvae.
• UBER +11%; announces inaugural $7B share repurchase authorization and said expects free cash flow over the next three-years as a percentage of adjusted EBITDA to be 90% or higher annually (also helped by LYFT earnings).
• ZG +9%; delivered Q4 top and bottom-line beat as outperformance spanned all segments while Q1 outlook was mixed, with revenue guidance in line with consensus and adjusted EBITDA guidance below the Street.

• AKAM -5%; mixed results as shares slide, as reported in-line q4 revs helped by a surprise Compute beat, offset by Delivery and Security (deceleration on easier compare) misses, and another large-customer renewal cycle kicks-in with lower pricing/traffic reramp.
• CART -7%; and raise 4Q23 results, whereby GTV and EBITDA came in 1% and 16% above consensus, respectively, while 1Q24 GTV and EBITDA guidance is 2% and 1% above consensus, respectively – Revenue of $803M (+6.1% Y/Y) came in marginally below consensus.
• GNRC -2%; on mixed results/guidance; Q4 adj EPS $2.07 vs. est. $2.08; Q4 revs rose 1% y/y to $1.06B vs. est. $1.09B; Q4 Gross margin expanded to 36.5% from 32.7% in the year-ago quarter thanks to a stronger product mix.
• KHC -5%; falling in food space after forecasts slower FY core organic sales to falt-2% growth vs. 3.4% growth in 2023, after fall in Q4 sales as demand for its products to remain subdued amid price hikes.
• QDEL -33%; downgraded by several analysts after reporting a significant 4Q miss (EBITDA $195M vs. $272M consensus) and guiding 2024 well below street, with EBITDA of $526M-$720M (vs. $801M consensus, -22% at mid-point) and EPS of $2.40 to $3.07 (vs. $5.07 consensus).
• UPST -20%; after guiding Q1 revs $125M missing the $152M estimate 9after Q4 revs beat but fell -4% y/y to $140M), cautious in n-t given challenges stemming from high interest rates/elevated consumer risk due to multiple bank failures.