Mid-Morning Look: November 08, 2022

Mid-Morning Look

Tuesday, November 08, 2022

Index

Up/Down

%

Last

 

DJ Industrials

285.53

0.87%

33,112

S&P 500

20.28

0.53%

3,827

Nasdaq

48.00

0.45%

10,612

Russell 2000

-1.50

0.08%

1,808

 

 

U.S. stocks bouncing early, with market focus this week solely on mid-term election results tonight and inflation data later this week (Oct CPI). Looking to the last 2-months of the years, several analysts and strategist have noted positive seasonal factors including “Santa Claus” rally, end of mid-term elections – while several other macro issues remain including higher inflation, recession risk, and geopolitics. Deutsche Bank said in a strategy note today “we will see every seat in the US House of Representatives (the lower chamber) up for grabs, along with a third of the seats in the Senate (the upper chamber), on top of the governorships in 36 of the 50 US states. And when it comes to markets, it’s no exaggeration to say that midterm elections are one of the best historic buy signals for equities we have. In fact, in the 19 midterm elections since WWII, the S&P 500 has always been higher one year after the vote”. They did provide caveat that “whether any of those cycles had to contend with the macro tsunami that’s coming in the next 12 months is a moot point, but it shows the underlying technicals.” Outside of the larger macro picture, several stocks moving on news/guidance today (details below) with DIS active ahead of earnings tonight. Treasury yields and the dollar slip, gold prices bounce and crypto assets (Bitcoin) tumble. Stocks continue to get punished on disappointing earnings results, with hefty declines this morning in TTWO, LYFT, TRIP, QTWO, SWAV, SKIN, while a handful of names edge higher on upbeat results including SEDG, PLNT, SANM, DD, GFS.

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.38

91.41

Brent

-0.34

97.58

Gold

29.30

1,709.80

EUR/USD

0.004

1.0059

JPY/USD

-1.03

145.58

10-Year Note

-0.061

4.153%

 

 

Sector Movers Today

·     Bitcoin news: Crypto assets tumbling as Bitcoin (BTC) drops -5% at $19,600, and Ethereum (ETH) -7% at $1,465 – lower on the FTX (Sam Bankman Fried) vs Binance fight ongoing. U.S. federal authorities say they seized over $3.36 billion in Bitcoin during an investigation into fraud on the Silk Road dark web marketplace. Germany’s financial regulator ordered the local Coinbase (COIN) branch to comply to risk and capital requirements outlined by national banking legislation; RIOT reported Q3 results last night; Crypto exchange FTX seems to have stopped processing withdrawal requests, according to on-chain data, the Block reported this morning

·     Chemicals: DD Q3 adj EPS $0.82 vs. est. $0.79 as demand for electronics and other industrial products helped offset cost pressures/announces $5B share buyback; ASH reported F4Q adj. EBITDA of $147mm, directly in-line with consensus of and issued FY23 EBITDA guidance of $600-$650mm; MOS reported 3Q adj. EBITDA of ~$1.7bln, a touch below consensus of $1.87bln while 4Q price guide is better vs. expectations; IFF reported 3Q adj. EPS of $1.36, beating consensus of $1.33 and adj. EBITDA of $612mm was above consensus of $609mm while lowered its FY revenue and EBITDA guidance towards the low; SMG upgraded to OW at Barclay’s with $75 tgt as expect SMG to delever rapidly from here even under a wide range of macro scenarios.

·     MedTech Equipment: MDT slips after saying clinical trial for surgical procedure “renal denervation” (RDN) misses primary efficacy levels; RDN is conducted to lower blood pressure with less medications for hypertensive patients; SWAV company reported a Q3 beat and raised 2022 guidance though implied for Q4 is a modest 6% sequential increase due to macro, fewer selling days as compared to Q3, and greater FX headwinds; MTD upgrade from Sell to Neutral at Goldman Sachs and raise tgt to $1,355 PT from $1,120 as believe the significant multiple compression from peak levels in 4Q21 better reflect the overall macro concerns and potential deceleration in growth for ’23; ESTA reported 3Q revenue that exceeded consensus estimates (operational growth of 38% ) despite facing a significant FX headwind of 600bps in the quarter

·     Auto sector: in ride hailing, LYFT slides as 3Q results were mixed, with Active Riders ~4% below and revs close to in line, while EBITDA came in ahead after backing out adverse insurance liabilities (GAAP gross margin was otherwise below est’s); NKLA and CHPT partner to accelerate charging infrastructure solutions – collaboration will enable Nikola sales and service dealer network to resell ChargePoint’s charging infrastructure; RIDE reported worse-than-expected 3Q results and provided an operational update as it recently agreed to an expanded equity agreement w/Foxconn; TSLA recalls 40K U.S. Vehicles over potential loss of power steering assist

 

Stock GAINERS

·     AMGN +4%; hosted an investor event post-AHA and provided updated data from Ph3 FOURIER and OLE Repatha studies and Ph2 OCEAN(a)-DOSE study of olpasiran

·     DD +6%; Q3 adj EPS $0.82 vs. est. $0.79 as demand for electronics and other industrial products helped offset cost pressures/announces $5B share buyback

·     KSS +7%; announces CEO transition process Michelle Gass plans to step down December 2 as Tom Kingsbury to serve as Interim CEO

·     NVDA +3%; said it is offering a new advanced chip in China that meets recent export control rules aimed at keeping cutting-edge technology out of China’s hands. – Reuters

·     PLNT +10%; Q3 adj EPS $0.42/$244.3M tops consensus of $0.38/$234.5M revs and raises FY22 revenue view to up high 50% range from up mid 50% range and adj. EPS view to up mid 90% range from up mid 80% range

·     SEDG +18%; reported a mixed 3Q22 with a beat on revenues, but a large EPS miss primarily due to higher taxes while guidance implies a sequential step-up in GM in 4Q22, but flat operating margins as 3Q22 benefited from an FX impact to OpEx

·     TWOU +2%; delivered an in-line revenue print and exceeded consensus estimates by 18.2% on adjusted EBITDA and reiterated its FY23 EBITDA Target of at least $150M

 

Stock LAGGARDS

·     COIN -11%; Crypto assets tumbling as Bitcoin (BTC) drops -6%, Ethereum -7% – lower on the FTX (Sam Bankman Fried) vs Binance fight ongoing and reports Crypto exchange FTX seems to have stopped processing withdrawal requests

·     LYFT -16%; 3Q results were mixed, with Active Riders ~4% below and revs close to in line, while EBITDA came in ahead after backing out adverse insurance liabilities (GAAP gross margin was otherwise below est’s)

·     MDT -5%; after saying clinical trial for surgical procedure “renal denervation” (RDN) misses primary efficacy levels; RDN is conducted to lower blood pressure with less medications for hypertensive patients

·     QTWO -12%; missed 3Q expectations and lowered full year targets, as some of its larger financial clients slowed discretionary spend given persistent macro headwinds (at least two analyst downgrades)

·     SKIN -10%; after the company lowered its guidance for adjusted Ebitda for the year, citing macro factors

·     TRIP -22%; Q3 adj EPS $0.28 vs. est. $0.38; Q3 revs $459M vs. est. $441.86M; sees Q4 revenue of low-single digit increases from 2019 levels

·     TTWO -11%; delivered disappointing F2Q23 results, missing consensus view on both net bookings and profitability and initiated a conservative view on F3Q22 financial growth and reduced FY23 guidance

 

Syndicate:

·     AmerisourceBergen (ABC) 10M share Spot Secondary priced at $155.20

·     Ares Capital (ARCC) 8M share Spot Secondary priced at $18.95

·     LSB Industries (LXU) 14.35M share Spot Secondary priced at $13.50

·     Marinus Pharmaceuticals (MRNS) 10.53M share Spot Secondary priced at $4.75

·     Roivant Sciences (ROIV) 30M share Spot Secondary priced at $5.00

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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.