Mid-Morning Look

Thursday, May 13, 2021

Stocks rebound broadly as major averages on track to snap their 3-day losing streak after data showed fewer Americans filed for weekly jobless claims, while investors shrugged off a surge in producer prices (second inflation reading in a row that came in well above consensus views). Several Fed speakers out again today, with the Fed’s Barkin saying this morning that “expectations, business outlook, not pointing to persistent, multi-year jump in inflation” a common mantra of Fed speakers over the last few weeks that the price increases markets have witnessed will be “transitory” not persistent long-term inflation. Markets are buying the news today, rebounding sharply after three days of selling pressure despite April PPI rising 0.6% vs. est. 0.3%; and PPI YoY at 6.2% vs. est. 5.9% while core PPI MoM rises 0.7% vs. rest. 0.4% and YOY rises 4.1% vs. est. 3.7%. In other news, the Colonial Pipeline (which has been down due to a cyber-attack last Friday) began to resume fuel shipments around 5 p.m. Eastern time Wednesday though said it could take several days for the supply chain to return to normal service (oil prices sliding today on news). The CBOE Volatility index (VIX tumbles about 15% around the $23.50 level (after trading above $27 yesterday). Several individual movers on earnings overnight but the macro picture comminating news early, with Treasury yields sliding to lows around 1.67%.

Economic Data

·     U.S. jobless claims fell to 473,000 in the latest week, below the 490,000 estimate, while last week was revised to 507,000 from 498,000; the 4-week moving average fell to 534,000 from 562,250 prior week (previous 560,000); continued claims fell to 3.655 mln in latest week (in0line with ests) while the U.S. insured unemployment rate fell to 2.6% from 2.7%

·     Producer Prices rise as April PPI rises 0.6% vs. est. 0.3% and PPI YoY at 6.2% vs. est. 5.9%; core prices (ex food & energy) PPI MoM rises 0.7% vs. rest. 0.4% and YOY rises 4.1% vs. est. 3.7%

Sector Movers Today

·     Bitcoin news; Bitcoin prices plunged overnight (fell as low as $45K) before rebounding (and hurting mining stocks MARA, RIOT) after TSLA CEO Musk it has suspended the use of bitcoin to purchase its vehicles because of climate concerns/Musk said Tesla would not sell any bitcoin, and intends to use bitcoin for transactions as soon as mining transitions to more sustainable energy; SI shares surged after the firm announced a partnership with the Diem Association, a Facebook-backed group previously known as Libra

·     Retailers; FOSL said it expects Q2 worldwide sales to jump between 50%-55% as pandemic restrictions ease up in key markets and estimates FY21 worldwide sales to grow between 12%-16%; YETI Q1 adj EPS of 38c beat the 22c est.; Q1 sales jumped 42% to $247.6 million, topping analyst estimates of $220.4 million; and raised year EPS view to $2.28 to $2.32 a share, up from a prior forecast of $2.11 to $2.14 a share and sales growth of 20%-22% from prior 15%-17%; BJ upgraded to Overweight at JPMorgan as beats expected across the board; the degree is the only question and raising our estimates above the Street for BJ and TGT we raised HD earlier this week), while our WMT forecasts remain the same; FNKO double upgraded to Buy from Underperform at Bank America as see significant long-term opportunity from FNKO’s newly diversified revenue mix beyond Pop! into NFTs, Games, & Toys; BOOT comps rise +27% vs. est. low 20’s, GM beat, and EPS crushed though not providing FY guide

·     Utilities & Solar; Credit Suisse upgraded ARRY to Outperform with a reduced pt of $31 from $40 after the stock’s 46% pullback yesterday and their bullish forecast on solar demand; ENPH was initiated at OW with a $175 target at Capital One; Morgan Stanley reiterated RUN at OW after their meetings with management highlighted the underappreciated value opportunity that EV charging brings since it requires more energy, and also initiated NFE at OW with a $55 pt; TAC reported Q1 EPS loss of (C$0.11) on revs C$642M and said it expects 2021 performance to track at the upper end of its guidance range

Stock GAINERS

·     FNKO +13%; upgraded to Buy from Underperform at Bank America as see significant long-term opportunity from FNKO’s newly diversified revenue mix beyond Pop! into NFTs, Games, & Toys

·     HRTX +2%; says U.S. FDA has approved its non-opioid painkiller, ZYNRELEF, for managing post-operative pain for up to 72 hours and expects full commercial availability by July 2021

·     PLBY +5%; reported strong Q1 results driven by its direct-to-consumer segment, which more than doubled y/y and executed on its stated goals, building out its DTC properties, O&O products

·     SI +18%; after the firm announced a partnership with the Diem Association, a Facebook-backed group previously known as Libra

·     SONO +11%; boosted its annual sales forecast (sees sales $1.65B vs. prior view of $1.55B) after posts Q2 sales and profit that also beat estimates citing strong demand for its products

·     VRM +3%; reported a smaller than expected quarterly loss of (57c) vs. est. (63c) on better revs of $591.1M vs. est. $518.2M

·     YETI +4%; Q1 beat and raised year EPS view to $2.28 to $2.32 a share, up from a prior forecast of $2.11 to $2.14 a share and sales growth of 20%-22% from prior 15%-17%;

Stock LAGGARDS

·     AMWL 7%; missed 1Q revenue consensus (no quarterly guide), reported a better EBITDA loss and reiterated revenue/EBITDA guidance for the year, but guided 2Q revenue below consensus.

·     BMBL -6%; reported 1Q results that topped Street expectations across the board amid accelerating paying user / ARPPU growth and the company issued 2Q guidance slightly above Consensus but only modestly raised its FY:21 revenue/adj. EBITDA outlook

·     FLR -10%; after announced convertible preferred stock offering overnight

·     GNW -2%; as postponed its planned IPO for its subsidiary Enact Holdings

·     HAE -15%; F4Q was slightly ahead of consensus (revs $225M vs. $223M cons) on revs though EPS was light ($0.46 vs. $0.67), with disruption from COVID-19 in the qtr and provided initial FY22 guidance light of street on the bottom line

·     ONEM -4%; Q1 revenue and adj. EBITDA beat as soft Q2 guidance bracketed consensus on the top line, but was below the Street on membership

·     POSH -16%; after posts wider quarterly loss of $74.5M vs. bout a $11M a year ago due to higher costs, while guided Q2 revs better at $79M-$81M vs. est. $79.3M

·     WISH -15%; Q1 net loss ($128M) on revs $772M vs est. $743.1M and guided Q2 revs $715-730M that was below consensus $759.1M