Mid-Morning Look: October 27, 2021

Mid-Morning Look
Wednesday, October 27, 2021
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
-90.35 |
0.25% |
35,667 |
|||
S&P 500 |
-1.11 |
0.02% |
4,573 |
|||
Nasdaq |
50.61 |
0.33% |
15,286 |
|||
Russell 2000 |
-8.24 |
0.36% |
2,287 |
|||
Wall Street opens higher after upbeat earnings reports, as several large caps out with results while investor sentiment remains upbeat amid hopes in Washington D.C., as lawmakers’ inch closer to a bipartisan infrastructure bill. House Speaker Nancy Pelosi said overnight votes on the bill and the Democrat’s tax and spending plan are possible this week. Stocks have since pulled back off, but major averages still not far off all-time records. In earnings, five Dow components out: 1) MSFT Q3 revs rose 22% Yoy to $45.3B, topping the $44B est. as Q1 Azure and other cloud-computing services grew 50% as posts upside across every key business unit/continued to show double-digit top/bottom-line growth; 2) MCD posts top and bottom-line beat, helped by stronger than expected comp sales as global Q3 same-store-sales at +12.7% vs est. +9.9% and U.S. comp sales +9.6% vs. est. 8.1%; 3) BA posts wider-loss than expected, but moved close to cash break even in 3Q as jetliner receipts improved, burning through just $300M/said monthly 737 MAX production is up to 19 and on track to hit 31 early next year; 4) KO 3Q adj EPS $0.65 vs est. $0.58 on revs $10B vs est. $9.75B (organic revs +14%) and raises FY guide, says expects FY organic revs +13-14% and adj EPS +15-17%; 5) Visa (V) weighs on Dow as reported EPS of $1.62 topped consensus of $1.54 as payments volume rose 17% yoy in constant dollars – but guidance weighs as expects high end of the mid-teens revenue growth against Street est. of +20% growth. Bespoke Investment noted this morning: “The S&P 500 entered the day up 6.2% MTD. Historically, when the S&P 500 has rallied at least 5% MTD headed into the final three trading days of the month, those final days of the month have tended toward weaker than normal performance.”
Economic Data
· September Durable Goods fell (-0.4%) vs. (-0.9%) estimate and +1.3% prior (revised from +1.8%), while Durables-Excluding transportation, new orders rose +0.4% vs. +0.5% expected and +0.2% prior; Core Durable Goods rise +0.4%, in-line with expectations
· U.S. Advance goods trade deficit unexpectedly jumped out to new record of (-$96.3B) in Sept, wider than (-$88.2B) in August, and easily beating the prior record shortfall of (-$92.0B in June); exports plunged -4.7% to $142.2B following the 0.8% prior increase to $149.1B and imports increased 0.5% to $238.4 after rising 1.0% to $237.3B
Macro |
Up/Down |
Last |
|
||
WTI Crude |
-0.76 |
83.89 |
|||
Brent |
-0.77 |
85.63 |
|||
Gold |
-5.60 |
1,789.80 |
|||
EUR/USD |
0.0015 |
1.1610 |
|||
JPY/USD |
-0.41 |
113.75 |
|||
10-Year Note |
-0.036 |
1.583% |
|||
Sector Movers Today
· Transports; NSC Q3 EPS $3.06 vs est. $2.91 on revs $2.85B vs est. $2.75B; CHRW Q3 EPS $1.85 vs est. $1.42 on revs $6.3B vs est. $5.43B with strong results largely driven by strong Global Forwarding results; ODFL Q3 EPS $2.47 vs est. $2.37 on sales $1.4B vs est. .$1.37B; Ryder (R) Q3 adj EPS $2.55 vs est. $2.09 on revs $2.5B vs est. $2.38B, raised FY adj EPS range to $8.40-8.50 from $7.20-7.50 and above est. $7.52, announced two new buyback authorizations for up to a combined 4.5M shares; HA posted a loss of ($0.95) in Q3, narrower than est. ($1.33) on revs $508.8M vs est. $4888.8M that was -33% vs 2019, its first positive adj EBITDA quarter since the pandemic, and guided Q4 revs to be down 32-37% from 2019
· Auto sector; Elon Musk confirms TSLA didn’t give Hertz (HTZZ) discount on 100k EV order, and UBER launched a new partnership with Hertz to offer 50k Tesla’s as a rental option to its drivers by 2023, starting next week in select California cities and Washington, DC before expanding; Hertz also announced a separate partnership with CVNA to boost online sales; GM Q3 adj EPS $1.52 beat est. $0.97 on revs $26.78B vs est. $26.51B, raised FY adj EPS view to $5.70-6.70 from $5.40-6.40 (est. $6.27), sees EV sales about $10B in FY23 and about $90B by 2030 which would be about 40-50% of total sales; QS shares fell initially on EPS while saying it believes that the addition of another global automotive OEM alongside the existing partnership with Volkswagen has major commercial implications; PAG Q3 adj EPS $4.46 vs est. $3.54 on revs $6.5B vs est. $6.42B, EBITDA $522.5M vs est. $424.8M; Cowen downgraded RMO to Market Perform with a $4 target from $7 as they await an update after the BWA JV closed and despite the commercial BEV space gaining steam has they have struggled on cell shortages and a lack of consistent business wins which only amplifies the insourcing risk of being a pack provider; RBC said yesterday’s 12% selloff in DAN was overdone as they still view the medium-term as favorable even though the company needs to regain trust after missing indications from last month’s analyst day
· Internet; GOOGL reported better-than-expected 3Q results with revenue and operating income coming in 3% and 16%, respectively, ahead of consensus on strength across all advertising revenue lines and regions and nearly all verticals; TWTR posted $1.28B in revenue, largely in line with expectations, with ad sales rising 41% yoy; DAUs rose 13% y/o/y to 211 million in Q3, topping the 11% increase seen in Q2, while international DAUs rose to 174M from 152M; SPOT Q3 revenue rose 27% to 2.50 billion euros, beating the 2.45 billion expected; reported a 19% jump in paid subscribers for its premium service to 172 million, just beating analysts’ expectations of 171.7 million; BTIG downgraded TRUE to Neutral as they see the co being a victim of forces beyond its control as it is a tough environment within the auto marketplace
· MedTech Equipment; ABT upgraded to Overweight at Atlantic after the company’s recent Q3 report saying was impressed with the strong execution in the underlying business; MASI reported Q3 revenue of $307.4M (~$11.5M above consensus), a three-cent beat on non-GAAP EPS, and shipped 74,600 boards and instruments, roughly 10,000 more than consensus; BSX Q3 adj EPS $0.41 vs. est. $0.40; Q3 revs $2.93B vs. est. $2.97B; cuts FY21 revenue view to up 19%-20% from up 21%-22%; narrows FY21 adjusted EPS view to $1.60-$1.62 from $1.58-$1.62; TMO Q3 adj EPS $5.76 vs. est. $4.67; Q3 revs $9.33B vs. est. $8.39B; raising its revenue guidance by $1.2B to $37.1B and raising its adj EPS guidance by $1.30 to $23.37
· Consumer Staples; KO 3Q adj EPS $0.65 vs est. $0.58 on revs $10B vs est. $9.75B (organic revs +14%); raises FY guide, says expects FY organic revs +13-14% and adj EPS +15-17% including about 2% currency tailwind in 4Q; sees FY22 currency headwind of about 2-3%; KHC 3Q adj EPS $0.65 vs est. $0.58 on sales $6.32B vs est. $6.05B; guides FY21 adj EBITDA to more than $6.2B (was at least $6.1B) vs est. $6.13B, reflecting better organic sales and efforts to manage inflationary pressures; CHEF reported results that beat consensus on the top and bottom line. Revenue and EBITDA both exceeded pre-pandemic Q3 levels
Stock GAINERS
· AFRM +4%; following the company’s pact with American Airlines to bring travelers a new flexible way to pay for flights and pay over-time
· AMD ; reported stronger than expected results for the September quarter and provided December quarter guidance which is well above consensus expectations
· HOG +9%; reported Q3 adj EPS $1.18 and revs $1.37B above highest analyst estimates (consensus $0.80, $1.13B
· ENPH +22%; Citigroup notes the co has now strung together 18 straight quarters of meeting or exceeding its revenue and gross margin guidance; along with upside guidance
· FFIV +9%; Q3 adj EPS of $3.01 topped estimate of $2.75 and Q1 profit guidance also above expectations as benefited from higher software revs in quarter, especially through subscriptions
· MCD +2%; after top and bottom-line beat, helped by stronger than expected comp sales as global Q3 same-store-sales at +12.7% vs est. +9.9% and U.S. comp sales +9.6% vs. est. 8.1%
· MSFT +2%; delivered another strong Q, with upside across every key business unit, and importantly continued to show double-digit top/bottom-line growth. Azure revenue re-accelerated by 3 pts to 48% y/y cc
· NVAX +6%; announced the completion of its rolling regulatory submission to the U.K. Medicines and Healthcare products Regulatory Agency for authorization of its COVID-19 vaccine candidate
· PSXP +2%; after refiner PSX said it would buy the remaining stake in the company it didn’t own for $3.2B
· SPOT +5%; Q3 revenue rose 27% to 2.50 billion euros, beating the 2.45 billion expected; reported a 19% jump in paid subscribers for its premium service to 172 million, just beating analysts’ expectations of 171.7 million
· TENB +6%; reported strong Q3 results with an acceleration in headline current billings growth and better-than-expected operating income and EPS
Stock LAGGARDS
· ANGN -53%; tumbles following a negative outcome of the first ANG-3777 trial for delayed graft function (DGF), which failed to meet its primary endpoint in a kidney transplant population
· CRTX -70%; after it narrowed the pool for its Alzheimer’s drug after only certain patients responded to the twice-daily pill, as the study missed its primary goal: Improvement on two measures of cognition across all patients
· DBVT -24%; after saying the FDA requested a stepwise approach to DBV’s modified Viaskin Peanut (mVP) development program
· HOOD -11%; after reported 3Q21 EPS of -$2.06, well below consensus loss of (-$1.37) as quarterly results came in below expectations across revenue and account projections, with revenue of $365mn vs. estimate of $431mn
· NYCB -11%; as Q3 EPS missed ests and the company said it doesn’t expect to close its pending acquisition of Flagstar Bancorp in Q4 as it waits for regulatory approvals.
· TXN -5%; reported 3Q results and 4Q EPS outlook that were 1% above cons, but also a deceleration from the 40%, 20% and 15% beats vs. guidance the previous 3 Qs, which led to a negative stock reaction
· TWTR -8%; as analysts lower price tgts following earnings results
· V -4%; weighs on Dow as reported EPS of $1.62 topped consensus of $1.54 as payments volume rose 17% yoy in constant dollars – but guidance weighs as expects high end of the mid-teens revenue growth against Street est. of +20% growth
Syndicate:
· Arteris (AIP) 5M share IPO priced at $14.00
· Clarus (CLAR) 2.75M share Secondary priced at $27.00
· Informatica (INFA) 29M share IPO priced at $29.00
· Rent The Runway (RENT) 17M share IPO priced at $21.00
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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.