Mid-Morning Look: October 20, 2021

Mid-Morning Look

Wednesday, October 20, 2021

Index

Up/Down

%

Last

 

DJ Industrials

156.12

0.44%

35,613

S&P 500

20.25

0.45%

4,539

Nasdaq

42.97

0.28%

15,172

Russell 2000

8.14

0.36%

2,284

 

 

U.S. stock sentiment continues to push major averages higher, with the S&P 500 index knocking on the door of its September all-time intraday highs of 4,545, with the Dow and Nasdaq also not far off their respective record highs, boosted by a strong start to quarterly earnings the past week. Inflation concerns still not impacting stock markets, as billionaire hedge fund manager Paul Tudor Jones said this morning in a CNBC interview that inflation could be “much worse” than feared…it’s probably the single biggest threat to certainly financial markets and probably I think to society just in general.” Investors continue to pour money into crypto assets as an inflation hedge with bitcoin hitting a new record high topping $66K, while Ethereum rises above $4K as crypto space remains red hot (note ProShares bitcoin-futures ETF BITO rises as well). No major U.S. economic data today, but several Fed speakers on tap. Fear again not a factor in market in general as the CBOE Volatility index (VIX) slips for the 10th time in the last 12-trading days, dropping to 15.40, its lowest levels since August 13th. The dollar dipped as risk sentiment improved after hitting one-year highs last week, while oil prices bounce on bullish inventory data. Just another unreal start for major averages this morning as investors with FOMO and continue to add to stock, crypto and commodity related positions, as major averages on track for a 6th straight day of gains.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.20

83.16

Brent

-0.66

84.41

Gold

12.70

1,785.10

EUR/USD

0.0011

1.1643

JPY/USD

-0.08

114.28

10-Year Note

0.002

1.636%

 

 

Sector Movers Today

·     Auto sector; Ford (F) upgraded to Outperform from Neutral at Credit Suisse and up tgt to $20 from $15 saying has seen a “significant turnaround” as the company and its transition to electric vehicles has sharply accelerated; MGA cut its 2021 total sales view to $35.4-36.4B from $38-39.5B and below est. $37.5B and now expects its adjusted EBIT margin rate to be 5.1-5.4% vs. prior view of 7.0-7.4% as these changes reflect declines in anticipated 2021 light vehicle production due to ongoing semiconductor chip shortages and the COVID-19 pandemic; Into earnings, Cowen lowered their PTs on BEEM ($28 from $29), EVGO ($13 from $18) while remaining positive on BLNK ($35 from $37), CHPT ($37 from $41), and QS ($36 from $39) in EV space; LAD Q3 adj EPS $11.21 and revenue $6.2B both beat estimates of $9.30, $5.75B as new vehicle same-store revenue -3.2% was offset by used vehicle same-store revs +39.9%; Goldman started HYZN at Buy with $7 target; TSLA scheduled to report earnings tonight

·     Restaurants; casual dining names weaker after EAT released preliminary F1Q22 results at its Investor Day as Q1 EPS $0.34 misses est. $0.68 and revs in-line at $876.4M as company-owned comps +17.0% vs consensus +18.7% – Chili’s +13.4% vs consensus +13.8% (decelerated from +8.8% in July to +3.1% in August, before recovering to +7.0% in September) – BJRI, DENN, RRGB, BLMN shares volatile on guidance; RBC Capital said they are incrementally cautious into earnings next week for QSR, MCD, YUM, SBUX saying while believe average check drivers (e.g. pricing, digital) and improving mobility in international markets likely provided a top line tailwind, they wonder to what extent staffing challenges and dissipating stimulus benefit may begin to have a more visible impact on domestic trends

·     Bank movers; CMA Q3 GAAP EPS of $1.90 beats by $0.26 and revs of $755M (+6.3% Y/Y) beats by $21.58M; CFG Q3 EPS $1.22 vs. est. $1.16; Q3 revs $1.66B vs. est. $1.64B; provision for credit losses a benefit of $33 mln; FHN Q3 Non-GAAP EPS of $0.50 beats by $0.09; GAAP EPS of $0.41 beats by $0.08 while net interest income was up 1% as we delivered loan growth of 1% before the impact of the PPP portfolio; MTB Q3 Non-GAAP EPS of $3.76 beats by $0.27; GAAP EPS of $3.69 beats by $0.19 and revs of $1.53B (+4.8% Y/Y) beats by $60M; trust bank NTRS Q3 revenue rises 10% Y/Y as new business contributed to its trust, investment, and other servicing fees (revs $1.64B beats $1.61B est.) as net interest income of $357.1M rises 4% from $343.9M in Q2 and 6% YoY; CTBI Q3 GAAP EPS of $1.19 beats by $0.03.

·     Transports; UAL posted a narrower loss than expected despite the impact of the coronavirus delta variant; in rails, CNI posted an adj. EPS of C$1.52 in Q3, beating C$1.41 consensus, with the upside relative to our estimate coming from both sales (+C$0.03) and operating performance (+C$0.06) – Management reaffirmed its guidance for 2021 EPS and CEO to retire; in trucking, KNX sees year adj. eps $4.50-$4.55, had seen $3.90-$4.05 after EPS/revs beat; The Baltic Exchange’s dry bulk sea freight index (DSX, EGLE, GNK, SBLK) snapped its eight day losing streak, supported by higher rates across all vessel segments. The overall index, which factors in rates for Capesize, panamax, Supramax and handysize vessels, rose by 37 points, or 0.8%, to 4,751

·     Semiconductors; Mizuho downgraded MU, WDC and QRVO to Neutral given increasing headwinds for memory and handset component suppliers, and lowered their estimates and PT on QCOM but keep it at a Buy as high margin QTL should remain strong with iPhone ramps; ASML reported Q3 net profit EUR1.74B, above est. EUR1.63B on sales EUR5.24B that was within guidance range of EUR5.2-5.4B and said they continue to see high demand; MU announced that it intends to invest more than $150B globally over the next decade in leading-edge memory manufacturing and research and development, including potential U.S. fab expansion

 

Stock GAINERS

·     ABT +3%; Q3 adj EPS $1.40 vs. est. $0.93 as Q3 sales rise 23.4% to $10.9B and raises guidance as Q3 2021 sales were buoyed by strong sales of COVID-19 testing products

·     ANTM +6%; Q3 adj EPS $6.79 vs. est. $6.37; Q3 revs $35.5B vs. est. $35.3B; raises FY21 adj EPS view to greater than $25.85 vs. est. $25.65

·     BIIB +1%; sold only $300,000 worth of its new $56,000-per-year Alzheimer’s disease therapy in Q3, falling far short of analysts’ $12.1 million estimate, but shares bounced as quarterly earnings of $4.77 topped ests of $4.09 and better overall sales

·     F upgraded to Outperform from Neutral at Credit Suisse and up tgt to $20 from $15 saying has seen a “significant turnaround” as the company and its transition to electric vehicles has sharply accelerated

·     KNX +4%; sees year adj. eps $4.50-$4.55, had seen $3.90-$4.05 after EPS/revs beat

·     LRN +5%; as Q1 revs $400.2M vs. est. $359.48M; Q1 adj EBITDA $25.5M vs. $39.2M last year; Q1 total enrollment 189.6K, down 5.8% yoy; sees Q2 revs $390M-$400M vs. est. $365M

·     UAL +1%; after the airline posted a narrower loss than expected despite the impact of the coronavirus delta variant.

 

Stock LAGGARDS

·     ATIP -15%; as cuts FY21 revenue view to $620M-$630M from $640M-$670M (est. $652.72M) due to lower-than-expected patient volume

·     BBIG -12%; after the company reported the resignations of Chief Executive Officer Christopher Ferguson and Chief Financial Officer Brett Vroman

·     BKR -4%; reported a quarterly profit that fell short of expectations, sending shares lower as EPS missed by $0.06, Q3 net income totaled $8M, compared with a $170M loss in the year-earlier quarter, while revenues of $5.09B rose less than 1% Y/Y. missing ests

·     EAT -10%; Q1 EPS $0.34 misses est. $0.68 and revs in-line at $876.4M as company-owned comps +17.0% vs consensus +18.7% – Chili’s +13.4% vs consensus +13.8% (decelerated from +8.8% in July to +3.1% in August, before recovering to +7.0% in September)

·     NVAX -15%; on reports the company is facing production delays as the methods it used to test the purity of its COVID-19 vaccine have fallen short of U.S. regulators’ standards, Politico reported (NVAX responded to reports saying they are confident in manufacturing quality)

·     OMC -5%; after mixed results with EPS beating, but revs in-line and says global economic conditions may continue to be volatile if covid-19 remains, which could negatively impact clients’ spending plans (shares of IPG, WPP volatile in reaction)

·     VALE -3%; said it would slow down production of low-margin iron ore in Q4 by ~4 mln tonnes due to low prices

·     WDFC -6%; as Q4 EPS $0.61 missed the $1.24 est. and revs $115.2M below the $117.5M est.; guides FY22 EPS $5.24-$5.38 below consensus $5.94, while rev view was better

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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.