Mid-Morning Look: January 09, 2023

Mid-Morning Look

Monday, January 09, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks jump following an obscene amount of news, data, earnings guidance, company updates, and M&A headlines to start the week, with major averages building on last Friday’s gains ahead of key consumer price inflation data later this week. Stocks surged on Friday behind better jobs data, as wages showed signs of slowing – boosting hopes the Fed will slow its pace of interest rate hikes. This morning an absolute massive overload of news in the retail and healthcare space, with several co’s issuing guidance ahead of 41st JPM Healthcare Conference and ICR 2023 Retail Conference in Orlando taking place this week. M&A activity plentiful, with at least 3 mergers announced in the biotech sector (ALBO, AMYT, CINC), along with a few collaborations, as well as deal in the FinTech space (PAYA), and Software sector (DCT). Retail a mixed bag with weaker sales outlook from Macy’s and softer margins from LULU hit shares, but AEO and ANF with upbeat holiday sales views. The US dollar and Treasury yields slide early while commodity prices jump. Bitcoin prices rise for a 6th straight session to start the year, rising back to $17,250 and lifting shares of several stocks. Early leaders include Materials, Technology, and Consumer Discretionary, while Healthcare lagging in the S&P.







WTI Crude















10-Year Note





Sector Movers Today

·     Transports: Trucking and Freight changes at Morgan Stanley as upgraded LSTR, SAIA to EW from UW, and raised GXO to Overweight from EW and upgrading Industry View to In-Line saying after a 12-15-month de-stocking driven downcycle, see signs of bottoming that can potentially lead to inventory normalization by mid-2023 and perhaps drive an upcycle in 2H23. Susquehanna not as positive on Trucking sector, downgraded Sector to Neutral and downgrading JBHT, WERN, KNX, SNDR, SAIA, and TFII to Neutral from Positive as they remain selectively constructive on HUBG, FWRD, and GXO – says with shares higher and EPS expectations lower they move our trucking industry view to Neutral

·     Software: DCT be taken private by Vista Equity Partners in an all-cash deal valued at about $2.6B at a purchase price of $19 per share, represents a premium of 46% https://on.mktw.net/3ZpB203 ; ORCL upgraded to overweight from neutral at Piper Sandler saying FY24 growth in operating profits and earnings per share could accelerate to more than 10%; APPN downgraded to Underperform and tgt cut to $23 from $37 at SMBC Nikko on a lower EV/ revenue multiple and a modification of our DCF to better reflect our subjective view of APPN’s jury award value; NEWR, NOW downgraded in Infrastructure & Security Software at Truist, positioning for the 2023 in terms of what they expect from coverage on both fundamental outcomes and stock performance; CTSH downgrade to Underperform at Bank America due to incremental macro headwinds and company-specific demand challenges. Softer than anticipated bookings YTD could persist in 4Q; project funding could get off to a slow start in ’23

·     Visa (V), MA, IIIV all upgraded at Keybanc while firm downgraded PYPL, FIS, and Adyen in FinTech saying Embedded Finance is re-shaping the value chain, prompting a thesis refresh that favors key ideas such as SQ on underappreciated growth durability and profitability upside, while see new payment flows extending the growth runway at V and MA. Said the accelerated pace of industry change also creates market-related fundamental uncertainty for FIS as see embedded payments gaining notable share in FIS-heavy restaurant/retail verticals and at PYPL; Goldman Sachs continues to favor a defensive posture within Payments into as upgrades FOUR to Buy from Neutral given valuation support off the back of their gateway conversion strategy; upgrades NVEI to Buy from Neutral on a similar notion of valuation support; downgraded PAY to Sell from Neutral given inflationary impacts on transaction margins and the potential for further implementation delays and upgrades RSKD to Neutral from Sell following underperformance; FISV, PAY, and TASK downgraded to UW from EW in Payments, Fintech & IT Services at Wells Fargo saying they think ’23 will be more challenging fundamentally for coverage vs. ’22. Firm said thematically, prefer best-in-class “share gainers” and/or profitable growth companies at a reasonable price (highlight FLYW, SQ, SHOP, BILL, TOST, V, MAand PYPL).



·     ALBO +92%; agreed to be acquired by France’s Ipsen for an initial $952M, as Ipsen said it agreed to pay $42 a share in cash upfront for Albireo https://on.mktw.net/3irXYuY

·     AMD and NVDA +6%; among top gainers in the S&P, as semis outperform, with SOX rising about 3%5 to 2,715 (200-day MA higher at 2,757)

·     AMYT +107%; agreed to be acquired by Italian healthcare group Chiesi Farmaceutici S.p.A. for up to nearly $1.5 billion, which agreed to pay an initial $14.50 in cash for each ADR share https://on.mktw.net/3IzqCEV 

·     ARHS +10%; guides Q4 revs to $351-356M vs est. $315.0M saying demand comps accelerated from MSD through Nov to ~10% for the qtr.

·     BABA +2%; on news that Co-founder Jack Ma is ceding control of affiliate company Ant Group Co., potentially paving the way to revive plans for an initial public offering by the fintech giant

·     CINC +137%; AZN agreed to buy CINC, acquiring global rights for baxdrostat cardiorenal drug for an upfront transaction value of around $1.3 billion https://on.mktw.net/3GsUVKK 

·     DCT +46%; be taken private by Vista Equity Partners in an all-cash deal valued at about $2.6B at a purchase price of $19 per share, represents a premium of 46% https://on.mktw.net/3ZpB203

·     EXAS +21%; reports preliminary Q4 revenue $550.7M-$552.7M vs. $506.48 est.

·     PAYA +24%; agreed to be acquired by NVEI for $9.75 a share in a deal valued at $1.3 billion https://on.mktw.net/3k4q1AQ

·     TSLA +7%; positive mention in Barron’s saying it’s time to buy Tesla shares given growth prospects that remain robust, the company’s 10-year lead in EVs, and a cheap valuation

·     VYGR +16%; after collaboration agreement with NBIX



·     CHS -9%; cuts Q4 EPS view to (2c)-0c from $0.07-$0.10 prior

·     CUTR -23%; after guiding year rev guidance to $252-$253M, below prior view $255M-$260M and vs. est. $259M

·     IRWD -9%; guides 2023 revenue $420M-$453M vs. est. $439.4M

·     LULU -11%; said it sees Q4 revs in the range of $2.66B-$2.7B, representing a 25%-27% increase y/y and above prior view of $2.605B-$2.655B; said it now expects gross margin for Q4 to decline 90-110 bps compared to its previous expectation for an increase of 10-20 bps

·     M -4%; preannounced 4Q sales at the low-end to midpoint of the previously issued guidance, implying sales declined 4.5-6.0%. Non-holiday weeks underperformed as inflationary woes crimped spending.

·     REGN -7%; after forecasts eye drug sales of EYLEA below estimates at $6.26B for the full year 2022, vs mean Refinitiv estimate of $9.27B and U.S. net product sales of Eylea at ~$1.5B for Q4 2022, vs mean estimate of $2.4B


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.