Mid-Morning Look: February 28, 2023

Mid-Morning Look

Tuesday, February 28, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are mixed on this final trading day of the month, as the S&P remains on track for a -2% decline for Feb, the Dow -3.8% and the Nasdaq down slightly after a tremendous January. The S&P having trouble again at its 50-day MA resistance now around the 3,980 level (for SPX), with the 200-day MA support lower at 3,940 (which held last week). With earnings season wrapping up (still a heavy dose of retail results this week), focus firmly on the Fed and their pace of future interest rate hikes, which has increased in recent weeks. Just the last week or so, the U.S. has seen the likelihood of disinflation disappear following “hotter” CPI, PPI, and PCE prints. Overseas in Europe, consumer prices in France jumped by a euro-era record 7.2% from a year ago in February as food and services costs increased, and Spain saw a stronger-than-expected 6.1% advance. Data today showed weaker Chicago PMI manufacturing and waning consumer confidence, which was received positively by stock markets. Treasury yields pulled back off highs after the data as the 10-yr dipped to 3.95% from 3.98%. Oil, gold, Treasury yields all higher early while the dollar slips after economic data.


Economic Data

·     Chicago PMI at weakest level since November last year, reported at 43.6 which was below the 45.4 estimate. This is the sixth straight reading below the 50 threshold that indicates contraction territory.

·     Consumer Confidence index for Feb 102.9 below consensus 108.5 and vs. Jan revised 106.0 while the hard-to-get index 10.5 in Feb vs Jan revised 11.1 (previous 11.3); US 1-year consumer inflation rate expectations 6.3% in February vs January revised 6.7% (previous 6.8%)

·     U.S. trade deficit in goods climbs 2% in January to three-month high of $91.5 billion and the trade gap in goods increased from $89.7 billion. An advanced estimate of wholesale inventories, meanwhile, showed a 0.4% decrease in January. Retail inventories rose 0.3% in the month.

·     U.S. home prices retreated for the sixth consecutive month in December 2022, according to the S&P CoreLogic Case-Shiller Home Price Index; seasonally adjusted HPI Composite for 20 cities: -0.5% M/M vs. -0.5% consensus and -0.5% prior.







WTI Crude















10-Year Note





Sector Movers Today

·     Consumer staples: SJM reported better Q4 sales, in line GM, lower on SD&A, EPS slight beat while reaffirmed sales and raised low end of EPS guide; CELH upgraded to Outperform at Credit Suisse and raise price target to $120 from $110. OLPX Q4 slight miss, Q1 guide bad (revs -40% w/inventory issues), Q2 sequential improvement, but FY still well below the street (revs -20%, EPS -30%, etc.). For KO EU antitrust regulators on Tuesday scrapped an investigation into potential anti-competitive practices by The Coca-Cola Co and its bottlers, Coca-Cola Europacific Partners, and Coca-Cola Hellenic, citing insufficient ground for the case.

·     Energy top stories: CVX raised its share repurchase guidance to $10B-$20B a year and said it will raise its targeted annual buyback rate to $17.5 billion, starting in the second quarter; OXY reported EPS miss on transitory gas realizations/opex (EPS of $1.61 missed consensus $1.79), as Bofa notes the delta was lower realized gas and NGL prices (12c) weighed by the collapse in Waha basis in Dec that have since recovered. Ranger Oil Corp. (ROCC) is being bought by Baytex Energy Corp. in a cash and stock transaction valued at $2.35B including debt as Ranger holders will receive a fixed ratio of 7.49 shares of Baytex and $13.31 in cash – total $44.36 per share.

·     Retailers: TGT reported better Q4 results with EPS/revs $1.89/$30.98BM vs. est. $1.40/$30.72B AS Q4 comp sales up 0.7% down from 8.9% y/y and est. -1.7% but guided Q1 EPS guide of $1.50-$1.90 vs. est. $2.19 and year EPS $7.75-$8.75 vs. est. $9.25; ahead of earnings, DKS downgraded from Buy to Neutral at Citigroup as expect an EPS beat ($2.98 vs cons $2.90) driven by stronger sales, but anticipate weaker GM vs. consensus. CLAR projections for sales and adjusted Ebitda for the current year fell short of the average analyst estimates as N. America wholesale impacts 1Q guide, but Spring/Fall BD orders up y/y. KTB shares surge after quarterly results.

·     In Leisure & Travel: ABNB upgraded to Buy with $144 Target at Argus as expect demand for Airbnb rentals to remain strong in the U.S., driven by longer stays and growth in urban markets and should benefit from the easing of COVID-19 restrictions in China, growth in Latin America. In theme parks, SEAS Q4 EPS $0.76 vs. est. $0.73; Q4 revs $390.52M vs. est. $382.08M; Q4 attendance was 4.9 million guests and total revenue per capita increased 5.7%. In cruise lines, NCLH posted a wider-than-expected loss for 4Q as it is “undertaking a broad and ongoing margin enhancement initiative” this year and that it has already begun to trim costs, looking to drive a nearly 15% drop in non-fuel costs this year.



·     AAP +4%; posted both an earnings and sales beat Q2, while same-store sales growth also came in higher than Wall Street’s expectations and guides FY23 sales $11.4B-$11.6B vs. est. $11.33B.

·     AMAT +4%; outperforms in semis after Bloomberg reported the equipment maker to challenge ASML’s grip with new machines designed to reduce need for lithography.

·     HIMS +18%; Q4 Revenue/EBITDA came in above guidance and consensus estimates and FY23 guidance was introduced ahead of expectations as beat was across the board and largely stemmed from more than anticipated subscriber adds coupled with G&A efficiencies.

·     KRYS +12%; upgraded to Buy from Neutral at Goldman Sachs and raise tgt to $124 from $79 saying the 5/19 PDUFA for collagen 7 (COL7A1) herpes simplex virus gene therapy (HSV GT) drug Vyjuvek for dystrophic epidermolysis bullosa (DEB) remains the key NT event.

·     PGNY +14%; after results as 4Q adj EBITDA $33.05Mm vs est. $32Mm on revs $214.3Mm vs est. $211.8Mm; guides 1Q revs $245-250Mm vs est. $230.9Mm and EBITDA $41.5-44M vs est. $36M.

·     SIBN +13%; shares jump as delivered strong top-line results for the Q4 and full year with impressive Y/Y growth in active surgeons with strong November and December.

·     TGT +2%; after big profit beat and surprise revenue growth, offsetting a downbeat profit outlook.

·     ZM +1%; reported Q4 results that beat expectations and gave an outlook for adjusted earnings that was much stronger than expected.



·     AHCO -22%; tumbles after cutting its year revenue outlook to $3.16B-$3.24B from $3.21B-$3.29B and Ebitda guidance.

·     DISH -4%; as Bank America double downgraded to underperform from Buy and slash tgt to $10 from $30 on assumption changes in our valuation framework.

·     GS -2%; as hosts Investor Day today.

·     NCLH -9%; posted a wider-than-expected loss for 4Q as it is “undertaking a broad and ongoing margin enhancement initiative” this year and that it has already begun to trim costs, looking to drive a nearly 15% drop in non-fuel costs this year.

·     OKE -3%; slips following quarterly results.

·     OMI -17%; after Q4 EPS $0.28 misses the $0.40 est. citing volume decline and pricing issues while revs of $2.55B beat (est. $2.46B) but guides year profit $1.15-$1.65, well below $2.29 estimate.

·     UHS -9%; shares slide as reported Q4 results that topped consensus, but still guided year profit below expectations (guides year EPS $9.50-$10.50 vs. est. $10.74).


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.