Mid-Morning Look

Friday, May 12, 2023

U.S. stocks open to the downside, on track for mixed results on the week with the Nasdaq hanging on to weekly gains, while the Dow looks to snap its 4-day losing streak. The S&P 500 is down -0.3% week-to-date currently, but only about 4% from its 52-week highs. Economic data showed a sharp drop in investor confidence while U.S. import prices fell 4.8% over the last year, the largest YoY decline since May 2020. The data remains mixed for the Fed with signs of slowing inflation, a key to their future rate moves. Fed fund futures are currently anticipating a rate hike “pause” for the June meeting. With key data behind us and earnings season mostly over (retailers last group to report the next 2-weeks), attention in near-term turns to the debt ceiling debacle in Washington DC. The two sides delayed talking yesterday, seen as a sign of positive exchanges between Republican leaders, Democratic counterparts. Treasury Secretary Janet Yellen said the only good outcome in the current US debt standoff is for Congress to raise the ceiling. U.S sectors mixed early with strength in Energy, Materials, and Utilities while Financials, REITS, and Tech are early decliners. Oil prices falling for a 4^th straight week while the U.S. dollar index (DXY) on track for best week since February.

Economic Data

·     April import prices rose +0.4% above ests. for +0.3% rise and vs March -0.8%; April non-petroleum import prices -0.1%, year-over-year -2.1%; April petroleum import prices +5.7% vs March -2.5%; U.S. April export prices +0.2% in-line with ests and vs March -0.6%.

·     University of Michigan surveys of consumers sentiment prelim for May 57.7 below consensus 63.0 and vs final April 63.5; current conditions index prelim May 64.5 vs final April 68.2 and expectations index prelim May 53.4 vs final April 60.5.

·     University of Michigan surveys of consumers 1-year inflation outlook prelim May 4.5% vs final April 4.6% and consumers 5-year inflation outlook prelim May 3.2% vs final April 3.0%.

Sector Movers Today

·     In media: Elon Musk selected NBC Universal’s Chairman of Global Advertising and Partnerships Linda Yaccarino to be the new CEO of Twitter; NWSA shares jump after Q1 results as Q1 adj EPS $0.09 vs. est. $0.05; Q1 revs fell -1.7% y/y to $2.45B vs. est. $2.38B; expects to achieve at least $160 mln in annualized savings from previously announced headcount reductions, up from prior estimate; FOXA downgraded to EW from OW at Wells Fargo saying there’s a lot less to get excited about; DIS downgraded from Outperform to Peer Perform at Wolfe Research with $81-110 fair value range after quarterly results.

Stock GAINERS

·     ARLO +19%; posted Q1 with annual recurring revenue (ARR) of $182.6M vs $101.3M y/y and said cumulative paid accounts of over 2 mln at end of first quarter vs 1.3 mln a year earlier.

·     BLBD +31%; after the company boosted its revenue and adjusted Ebitda forecast for the full year.

·     FSLR +22%; RothMKM said checks with “multiple confirmations” suggest the domestic content ITC adder will require both cell and module and indicate that there is no grace period for foreign-produced cells, which the firm calls “a substantial positive”.

·     NWSA +7%; shares jump after Q1 results as Q1 adj EPS $0.09 vs. est. $0.05; Q1 revs fell -1.7% y/y to $2.45B vs. est. $2.38B; expects to achieve at least $160 mln in annualized savings from previously announced headcount reductions.

·     SCHW +3%; provided monthly update saying total net new assets totaled $13.6 billion in April, while core net new assets equaled negative $2.3 billion. These flows reflect client cash disbursements during tax season.

·     SRPT stock is halted for pending news, while the company’s drug candidate for Duchenne muscular dystrophy is set to face an FDA advisory committee meeting on Friday.

·     SPRY +77%; after an FDA panel of advisers voted in favor by 16-6 vote of the company’s nasal spray, neffy, for use in adults and for children above 30 kg in weight, for the treatment of allergic reactions including anaphylaxis.

Stock LAGGARDS

·     ANIP -7%; 1.9M share Spot Secondary priced at $39.50.

·     CTLT -4%; after delaying filing timely 10Q with SEC last night.

·     DTC -10%; after 11.3M share Secondary priced at $5.25.

·     GEN -7%; as Q4 results topped views but Q1 rev guide $940M-$950M missed est. $954.1M.

·     NCLH -2%; weakness early in cruise stocks (CCL).

·     SPB -2%; Q2 EPS loss (-$0.14) vs. est. (-$0.04) and revs $729M misses $759 estimate; cuts FY23 outlook citing lower first half demand and additional short-term headwinds and cuts FY23 revs to a decline mid-single digits y/y’ vs. prior view of flat y/y.