Mid-Morning Look

Wednesday, November 11, 2020

Stocks are mixed as major averages with a reversal of the prior two trading days, as large caps outperform after small caps surged this week, while the reopen trades such as travel, leisure, restaurants, retail and energy pullback after surging on positive Covid vaccine news Monday from Pfizer and its German partner. The Dow Jones Industrial Average flirted with record territory Wednesday as bullish sentiment inspired by vaccine developments and easing political risk pushed U.S. stocks higher. Most of the stocks that powered markets higher through 2020 such as stay at home tech names have been clobbered this week amid progress toward a Covid-19 vaccine. Still, some investors are focusing on the hurdles facing making a vaccine widely available, and questions about the size of the next fiscal stimulus package along with political uncertainty as President Trump continues to fight the election results last week that saw Joe Biden get the 270 electoral votes needed to become President elect. Rising coronavirus cases and hospitalizations surge further in the U.S. as the pandemic is far from over. U.S. bond markets are closed Wednesday for Veterans Day, a day after the yield on 10-year struck its best levels since March above 0.970%. The Dow Jones Industrials (though still early in the month) on pace for best monthly return since 1987 (up around 11% currently), as per CNBC.

Sector Movers Today

·     Industrial & Machinery; Bank America upgraded shares of ETN, ALLE to buy and downgraded TT (to underperform from buy) and PNR also to underperform after the PFRE/BNTX COVID-19 vaccine is reported to have prevented 90%+ of infections out of ~44,000 participants. Says believe multi-industrials investors will shift capital from COVID beneficiaries to stocks with the potential to benefit from a return to normal; FLR files for non-timely 10Q

·     Pharma movers; PFE and BNTX reach an agreement to supply the EU with 200 million doses of their bnt162b2 MRNA-based vaccine candidate against covid-19; expect to produce up to 1.3 billion doses globally in 2021; PFE announces positive results from fifth phase 3 trial of Abrocitinib, evaluating safety and efficacy across different dosing regimens; PACB 7.4M share Spot Secondary priced at $14.25; in the cannabis sectors; Stifel downgraded shares of TLRY ($4.75 tgt) and ACB to sell from hold saying with excitement around potential U.S. federal reform driving broad undifferentiated enthusiasm, the group has outperformed

·     Insurance; AIG downgraded to neutral from buy at Goldman Sachs saying with shares, up 36% quarter-to-date, is pricing in considerable portion of the upside expected; LMND Q3 EPS loss (57c) on revs $17.8M vs. est. loss (64c) and $14.6M; raises FY20 revenue view to $91M-$93M from $86M-$88M and ups FY20 adjusted EBITDA view to ($103M)-($100M); RGA downgraded to Neutral at JPMorgan as concerned about reductions in EPS estimates due to ongoing high COVID-related deaths, especially in the U.S.

·     Media & Telecom movers; FUBO guides Q4 revs $80M-$85M above est. $77.2M after a Q3 beat on EPS/revs and subscribers of 455,000, were up 58% y/y and Ad revenue grew 152% to $7.5mm; DISH signed up QCOM as its latest partner in efforts to build its 5G network using open and cloud-based platforms by 2023; TME posted better music net adds + ad revenue helps offset continued drag from social

Stock GAINERS

·     ETSY +5%; rebound for the pandemic related stay at home winners – ZM, PYPL, PINS

·     FPRX +262%; on positive FIGHT data for bemarituzumab (bema) in 1L FGFR2b+ gastric cancer patients as Bema was statistically significant benefit on PFS, OS, and ORR in the study

·     FUBO +26%; guides Q4 revs $80M-$85M above est. $77.2M after a Q3 beat on EPS/revs and subscribers of 455,000, were up 58% y/y and Ad revenue grew 152% to $7.5mm

·     LYFT +6%; reported better than expected 3Q revenue, driven by active riders with a more favorable loss margin while guidance for 4Q was a bit below consensus (Q3 active riders 12.44M (down 44%) vs. est. 12.8M and 3q revenue per active rider $39.94 (down 7%)

·     NOW +5%; rebound in software sector, CRWD rises on Baird upgrade

·     ONEM +9%; 3Q results well ahead of expectations as revs of $101.7M grew 16.2% y/y and 30% q/q, and came in 14% above the top-end of guidance for $84-$89M as strength included the combination of pent-up demand from 2Q, increased flu vaccine activity, and COVID testing

·     SRNE +16%; after saying it is filing an Investigational New Drug application with the U.S. FDA to start an early-stage clinical trial of its intranasal antibody candidate COVI-DROPS in healthy volunteers and patients with mild COVID-19

Stock LAGGARDS

·     APD -5%; shares slumped after Q4 profit fell below expectations ($2.19 vs. $2.21) while revenue topped estimates ($2.32B vs. $2.26B)

·     DDOG -12%; reported a good 3Q, with healthy upside to revenue, margins, and FCF but JPMorgan downgraded to neutral saying second straight quarter of deceleration for a company that has been trading north of 40x revenue is likely to cause pressure to the stock

·     EGAN -25%; drops after saying it sees Q2 revs between $18.1M-$18.7M below est. $19.3M after in-line Q1 revenue results

·     KIM -5%; as well as SPG, FRT among top decliners in the S&P after recent outperformance on vaccine hopes – all down 5% or more early

·     MODN -14%; as weaker year end guidance (sees year EPS 27c-35c on revs $40.2M-$40.6M vs. est. 43c and $174.6M) overshadowed beats on top/bottom line for Q4

·     ZION -5%; falls along with CMA, DFS, LNC in the S&P as financials also under pressure