Mid-Morning Look

Wednesday, November 20, 2024

U.S. stocks opened mixed but quickly turned lower amid a pullback in technology, consumer staples and consumer discretionary sectors ahead of key NVDA earnings tonight after the bell. The weakness in retail early comes after Target (TGT) shares fell -20% following a weak earnings report and sharply lower downside guidance, prompting declines in other discount stores. Treasury yields are not doing too much as the 10-yr holds above 4.4% but the dollar jumps. Bitcoin has been a big story since the election, adding to gains and touching new all-time highs today above $94,500. After geopolitical concerns escalated markedly yesterday, investors breathed a sigh of relief overnight after Reuters reported that President Putin is willing to discuss a ceasefire in Ukraine with President-elect Trump, although Russia rejects major territorial concessions and insists that Ukraine abandon plans to join NATO. But this morning, new reports arose that Ukraine’s armed forces fired British cruise missiles at military targets inside Russia for the first time, a Western official familiar with the matter said. The strikes using Storm Shadow missiles were approved in response to Russia deploying North Korean troops in its war against Ukraine, Bloomberg reported. Stocks are currently at lows, with the Nasdaq down over 1% and the SOX index down around -2% into NVDA tonight.

• In Crypto: Bitcoin touched new all-time highs boosting shares of COIN as well as Bitcoin miners and others; MSTR sold a larger-than-expected $2.6 billion of bonds that converts into stock, giving the cryptocurrency-buying software company more cash to purchase bitcoins. The convertible bond offering increased in size by almost 50%, from a previous $1.75 billion, the company said Wednesday, signaling strong investor demand.
• In Media: CMCSA announced its plans to create a new publicly traded company comprised of a portfolio of NBCUniversal’s cable TV networks, including USA Network, CNBC, and MSNBC. SpinCo’s CEO will be Mark Lazarus, current Chairperson of NBCUniversal Media Group while Anand Kini, now NBCUniversal’s CFO, will be SpinCo’s finance chief and chief operating officer. ROKU shares fell after TTD announced Ventura, an innovative new streaming TV operating system (OS). The Trade Desk will partner with smart TV original equipment manufacturers (OEMs) and other streaming TV aggregators to deploy Ventura. NFLX hit new record highs again.

• AZTA +8%; will replace ENV in the S&P SmallCap 600 effective prior to the opening of trading on Monday, November 25.
• CHWY +3%; was double upgraded from Underperform to Buy at Bank America and raised tgt to $40 from $24 saying adoption trends have steadily improved since the start of ’24 & pet spend appears to have bottomed out.
• FLEX +7%; will replace AZTA in the S&P MidCap 400, effective prior to the opening of trading on Monday, November 25.
• GLBE +10%; shares jumped on earnings and guidance (Q3 revs +32% y/y to $176M vs. est. $169.5M).
• LMND +10%; was upgraded to EW from UW at Morgan Stanley after Investor Day takeaway, where mgmt laid out an ambitious plan to accelerate growth, with ten times the business from $1B in premiums to $10B over the next several years.
• KEYS +9%; after Q4 results beat on the top and bottom lines and is set to return to top-line growth in FQ125, after five consecutive quarters of declines and -9% YoY growth in F2024
• WIX +14%; rises as Q3 EPS $1.62 tops est. $1.51; Q3 revs $444.67M vs. est. $457.9M; raises FY24 revenue view to $1.757B-$1.764B from $1.747B-$1.761B, also boosts full year bookings outlook to $1.822B-$1.832B, or 14-15% y/y growth, compared to previous guidance of $1.802B-$1.822B or 13-14% y/y growth.
• WSM +22%; after earnings beat, now expects annual net revenue to fall between 1.5% and 3%, compared with prior estimates of a 1.5% to 4% decline and said board approved a new $1 bln stock repurchase authorization.

• POWL -14%; shares stumbled as Q4 revs rose 32.1% y/t to $2751M but was below consensus $284.3M; said orders rose 56% y/y to $267M, Backlog as of September 30, 2024, remained at $1.3B; said for FY25 expect continued strength across most of end markets.
• QDEL -6%; after Carlyle Group (CG) sells remaining 12% stake as announced pricing ~8.26M share secondary offering by the private equity firm (8.26M share Spot Secondary was priced at $35.60).
• ROKU -6%; after TTD announced Ventura, an innovative new streaming TV operating system. The Trade Desk will partner with smart TV original equipment manufacturers and other streaming TV aggregators to deploy Ventura.
• TGT -21%; shares tumbled on results/guidance as Q3 adj EPS $1.85 missed the est. $2.30 and Q3 sales of $25.23B below est. $25.74B; Q3 operating margin 4.6% vs. est. 5.6%; Q3 operating income -11% y/y to $1.17B vs. est. $1.46B; Q3 comp sales +0.3% vs. +1.5% est.; lowers FY adj EPS $8.30-$8.90, from $9-$9.70 (est. $9.57).