Mid-Morning Look: November 16, 2020

Mid-Morning Look

Monday, November 16, 2020

Index

Up/Down

%

Last

 

DJ Industrials

378.86

1.29%

29,858

S&P 500

32.02

0.89%

3,617

Nasdaq

72.51

0.61%

11,901

Russell 2000

27.47

1.58%

1,772

 

 

Stocks jump globally, with trading action much like last Monday when PFE/BNTX reported positive vaccine news as the reopen related plays (mall REITs, retail, restaurants, travel, cruise lines, energy, casinos, lodging) are seeing the biggest gains and the stay at home beneficiaries during the coronavirus pandemic (software, video games, online delivery, retail) are seeing the biggest declines as Moderna (MRNA) the latest company to provide positive vaccine news after reporting a 94.5% efficacy rate with its COVID-19 vaccine in a Phase 3 trial. Moderna (MRNA) trades to all-time highs (and leading stock markets overall) after saying its COVID-19 vaccine candidate met its primary endpoint in a Phase 3 trial, demonstrating 94.5% efficacy – said it plans to submit an Emergency Use Authorization with the U.S. FDA in the coming weeks and expects it to be based on the final analysis of 151 cases and a median follow-up for more than two months. Last week, Pfizer Inc. (PFE) and partner BioNTech SE (BNTX) said their vaccine candidate had achieved 90% efficacy in a Phase 3 trial, a far higher benchmark than originally expected. The news has overshadowed any other news or market comments thus far.

 

 

Macro

Up/Down

Last

 

WTI Crude

1.57

41.70

Brent

1.41

44.19

Gold

2.30

1,888.50

EUR/USD

0.0005

1.1836

JPY/USD

-0.07

104.55

10-Year Note

0.012

0.905%

 

 

Sector Movers Today

·     Consumer Finance; Monthly Master Trust credit card data out: COF reports October net charge-offs 3.11% vs. 3.95% last year and reports October 30-plus day delinquencies 2.19% vs. 3.79% last year; SYF reported charge-offs for Oct. of +3% and Oct. delinquencies 1.76%; DFS credit card delinquency rate 1.31% at October end vs 1.28% at September end and credit card charge-off rate 1.88% at October end vs 1.98% at September end; GHLD was initiated with Overweight ratings at Compass Point, JMP, JPM, and Wells Fargo; KeyBanc maintained their OW rating on SQ, and raised its target to $250 from $215 on rising monetization potential in the wake of Covid-19 as app users use Cash Card

·     REITs; SPG said on Sunday it will cut purchase price for an 80% stake of rival TCO by 18%, from $52.50/share to $43, for a total of $2.65B down from the $3.6B SPG walked away from in June due to pandemic-induced uncertainties; WELL downgraded to Equal Weight from OW at Wells Fargo who says that investors may move to the sidelines on healthcare REITs with senior exposure as cases rise across the country; Citi upgraded UNIT to Neutral from Sell and raised its target to $10 from $6; Argus raised its price target on BXP to $100 from $90 and reiterated its Buy rating as the REIT should benefit from the gradual reopening of the economy and the company’s development portfolio in coastal markets outside of New York City gives it a competitive advantage over its peers

·     Materials; KeyBanc said they walk away from the recent IHS Markit Global Plastics Summit with an increasingly bearish view on ethylene demand and a more cautious stance on ethylene/PE names LYB, WLK, and DOWwas upgrade to Buy at Citigroup on containerboard price hike expectation of a second $50/ton containerboard price hike, which we expect could be announced in 1Q ‘21. While the stocks have outperformed over the past 3 months this likely reflects the November hike and stepped-up vols, rather than a second hike

·     Healthcare services and providers; medical distributors and pharmacy retail rising early on the positive Covid-19 vaccine news from MRNA today (CAH, ABC, MCK as well as WBA, CVS); CNC negative catalyst watch at Citigroup saying 2021 represents a more competitive environment with CNC standing out after being displaced as the lowest cost plan in a number of markets, which could offset gains from new market entry

·     Retailers; ; TPR was upgraded to OW with a pt raise to $35 from $25 at JPMorgan after underperforming the S&P 500 by 80% the past 3 years following management’s confidence in multi-year bottom-line acceleration; LEVI was reiterated at OW with a new pt of $18 (from $17), and RL was reiterated at Neutral ($83 pt) after management met with JPM at the same conference; TGT was highlighted by Barron’s as being undervalued, saying the stores have gained market share from department stores and malls, and its valuation is cheaper and dividend yield greater than WMT, COST, DG, KSS, JWN; WMT sold 65% of its stake in Seiyu, a Japanese supermarket chain, to KKR and 20% to a Rakuten subsidiary, retaining a 15% stake in a $1.65B deal; FL price target was raised to $36 from $30 at UBS and $50 from $35 at Raymond James

 

Stock GAINERS

·     BA +4%; shares seen a beneficiary to vaccine news along with boost in airline stocks as well as improved hopes of Max flights (AAL, DAL, UAL, LUV)

·     CCL +8%; cruise lines another sector rising on MRNA vaccine news (NCLH, RCL)

·     FANG +6%; energy another top sector gainer on the reopen trade

·     HDS +24%; to be acquired by HD for $56 per share for a total enterprise value (including net cash) of approximately $8 billion https://on.mktw.net/3lBSava

·     MRNA +12%; after saying its COVID-19 vaccine candidate, mRNA-1273, was 94.5% effective in preventing COVID-19, based on interim data from a late-stage clinical trial – PFE and BNTX said last week their vaccine candidate was more than 90% effective based on initial trial results

·     PANW +5%; Q1 beats with 23% Y/Y revenue growth to $946M and $1.62 EPS as billings increased 21% Y/Y to $1.1B and deferred revenue was up 31% to $3.9B with better guidance (Q4 revs $975-990M vs. est. $971.20M)

·     SPG +6%; after announced an agreement to revise their merger deal price (lower) with TCO, after SPG “terminated” the original agreement back in June – the new deal price of $43 per share, 18% below the prior agreement of $52.50 per share

 

Stock LAGGARDS

·     CSPR -19%; shares tumbled as Q3 revenue fell 3.3% for the latest quarter as the Covid-19 pandemic disrupted its supply chain, though its loss narrowed

·     FE -5%; weakness in defensive sectors such as utilities as Treasury yields rise

·     PFE shares slip after Covid-19 vaccine maker rival MRNA said its covid-19 vaccine is 94.5% effective in interim analysis (vs. PFE, BNTX 90% effectiveness last week)

·     RAPT -27%; shares tumble after missed eps by $0.02 & beats on revs and reports initial clinical data from its ongoing Phase 1/2 trial for FLX475 in multiple cancer indications

·     SPCE -8%; shares tumbles after saying its latest space test flight, planned between Nov. 19-23 from its New Mexico spaceport, will now be rescheduled for another time due to Covid limits

@media only screen and (max-width: 500px) {
td p.MsoNormal {
text-indent: 0!important;
margin: 0!important;
}
}
div[class*=WordSection]>p {line-height: inherit !important;}div[class*=WordSection] a:not([href]) {color: inherit !important;}

_________________________________________________________________

Market commentary provided by Catena Media Financials US, LLC, 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.