Mid-Morning Look

Monday, November 11, 2024

Momentum to the upside in U.S. stocks continues after massive gains last week, as the S&P 500 hits its 50^th record high of 2024 today, along with new records for the Nasdaq and Dow Jones Industrials (adding another 400 points). Stocks surged last week (S&P 500 climbed 4.7%, the Dow climbed 4.6% and the Nasdaq climbed 5.7%) on election results, earnings and another Fed rate cut (with more cuts expected going forward), adding to the euphoric Wall Street mood as stocks continue to push higher. Financials (XLF) are up 33% YTD along with a 32% gain YTD in Communications (XLC) and more than 20% gains YTD for Industrials (XLI), Technology (XLK), Utilities (XLU) and Consumer Discretionary (XLY) while the overall S&P 500 is +25% YTD. Smallcap Russell 2000 playing some catch up in recent days, now up 10% on the month and +18% YTD as they are expected to be a key beneficiary of President-elect Donald Trump’s proposed tax cuts and expectations of an easier regulatory environment. The other big story today outside of stock strength is the new all-time high in Bitcoin, topping $82,000, extending a rally fueled by crypto optimism following Donald Trump’s election. There is no economic data today and bond markets are closed in observance of Veteran’s Day holiday. The Nasdaq modest weakness early behind a pullback in semiconductors as the SOX is down over -2%.

• In Chemicals: CE was downgraded to Neutral from Buy at UBS and slashed tgt to $97 from $161 saying the company’s recent results and weaker market outlooks create more concerns about the ability for it to manage its debt load. CBT was downgraded to Underweight from Neutral at JP Morgan with an unchanged price target of $105 as expects prices for carbon black in the U.S. to flatten out after a multi-year period of increase. OEC upgraded to Overweight from Neutral at JP Morgan as believes Orion is undervalued at the current share price and Cabot is “somewhat overvalued.” There is an upside opportunity in Orion to $25 or about 60% appreciation potential should the company reach a 6.5-times multiple for 2026.

• CI +6%; shares jumped after confirming it isn’t pursuing a combination with HUM; CI reaffirming previously provided outlook for full-year 2024, and adjusted eps growth of at least 10% in 2025.
• CSCO +1%; was upgraded to Overweight from Neutral at JP Morgan and raised tgt to $66 from $55 saying they see further headroom for upside in the medium term despite the recent rally in the shares
• EVO +17%; shares jumped after Bloomberg News reported Triton Partners is considering a takeover bid for Germany’s Evotec SE after the private equity firm emerged as one of the drug developer’s largest shareholders. Triton now holds a 9.99% stake in Evotec, making it its biggest shareholder, the companies told Reuters.
• MQ +9%; shares advanced following a report in DealReporter that private equity names are looking at it  https://tinyurl.com/r2vnk7kw
• NVAX +3%; shares advanced after the FDA removes clinical hold on co’s covid-19-influenza combination and stand-alone influenza late-stage trial.
• PINS +4%; upgraded to Outperform from Neutral at Wedbush with a $38 price target as believes the company is executing well against its user engagement and monetization strategies and remains on pace to deliver growth and profits in line with its multi-year guidance framework.
• RDNT +19%; shares jumped following quarterly results and entered a collaboration with GEHC
• TSLA +7%; adding to last week gains where the stock rose 29%, benefiting from Donald Trump’s reelection as U.S. President and reached $1 trillion market capitalization for the first time since 2022 in prior session. This morning, Wedbush analyst Dan Ives raised its tgt on TSLA to $400 from $300.

• APP -6%; to replace DLTR in the Nasdaq 100 Index (announced Friday night) – note shares of APP soared over 77% last week following earnings and is up a whopping 585% YTD.
• HUM -4%; after CI confirmed it isn’t pursuing a combination with HUM
• MNDY -17%; reported Q3 EPS/revs beat and raised guidance for the full year for both profit and sales, but investors cautioned on in-line Q4 guidance.
• MPWR -19%; after Seeking Alpha report saying Blackwell allocation ‘at risk,’ citing a report by Edgewater   https://tinyurl.com/3dcdbbjm
• SMR -11%; after filed for offering of up to $200M shares of Class A common stock late Friday.
• SPNS -25%; after cutting FY24 revenue view to $541M-$546M from $550M-$555M saying revs fell short of their targets in Q3, and the challenges we encountered are expected to impact revenue in the fourth quarter. However, they expect their non-GAAP operating margin to be within our guidance range at 18.2%.
• TEM -3%; downgraded to Hold from Buy at Stifel after the run-up in shares noting since the IPO in June, the stock is up ~100% since its debut.