Mid-Morning Look: September 07, 2023

Mid-Morning Look

Thursday, September 07, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks pulling back sharply again, remain on track for a third-straight day of losses amid pullbacks in the technology space, led by tech bellwether Apple (AAPL). The iPhone maker slides another 3% ahead of its new iPhone product launch next Tuesday on reports China plans to expand a ban on the use of iPhones in sensitive departments to government backed agencies and state companies. Several agencies have begun instructing staff not to bring their iPhones to work the WSJ reported yesterday. The headlines raise more geopolitical concerns with China, sending Asian markets lower overnight. Tech in general weaker led by semiconductors and a handful of software names after weak guidance last night (details below). Smallcaps extended their declines, falling another 1%. Markets came under renewed pressure on recent news that the economy could still be too hot, with the services sector expanding for an eighth-consecutive month in August, and better jobless claims, lifting bond yields and the dollar. The recent surge in the buck/yields has weighed on sentiment. Several Fed speakers on the calendar today.


Economic Data

·     Weekly Jobless Claims fell to 216K from 229K in the prior week and below 234K estimate; the 4-wek moving average fell to 229,250 from 237,750 prior week and continued claims fell to 1.679M from 1.719M prior and vs. est. 1.715M; Insured Unemployment Rate fell to 1.1%.

·     U.S. Q2 non-farm productivity revised to +3.5% vs. est. +3.4% and prior +3.7% as Q2 non-farm unit labor costs revised to +2.2% from 1.6% and above consensus +1.9%.







WTI Crude















10-Year Note





Sector Movers Today

·     In Restaurants: MCD was upgraded to Overweight at Wells Fargo saying while Q3 trends are tracking in-line/ahead, sees a wall of worry building into tougher multi-year compares, rising rates/gas prices and looming student loan payments – sees MCD & YUM best positioned. BROS files mixed securities shelf; PLAY mixed Q2 as EBITDA of $140M outpaced consensus by ~$3M as stronger margins more than offset softer comps (-6.3% decline vs -3.3% decline consensus), while Q2 revs fell short of consensus.

·     In Homebuilders: TPH was upgraded from Perform to Outperform at Oppenheimer, noting shares are down 13% since mid-July, presenting an attractive entry point to own one of the most compelling growth stories in the sector. In Building Products/Construction materials: OC upgraded from Sell to Neutral at Goldman Sachs and raise tgt to $150 from $113, impressed by Owens Corning’s ability to drive incremental productivity and balance production across segments as demand moderates. SUM to combine with Argos USA, creating a materials-led enterprise with national scale proposed deal for $3.2B.

·     In diabetes sector: PODD, DXCM, TNDM shares tumble after a report showed GLP-1 drug (semaglutide) led to lack of need for insulin in 7 of 10 people with recent onset Type 1 (autoimmune) diabetes, and the other 3 of 10 had eliminated need for insulin w/ meals https://www.nejm.org/doi/full/10.1056/NEJMc2302677



·     CBAY +7%; after released positive results from a late-stage study of seladelpar, its investigational treatment for the rare chronic liver disease primary biliary cholangitis as about 62% of patients treated met the study’s primary endpoint vs. 20% of those on placebo.

·     CVGW +9%; results were roughly in line with estimates, but Lakestreet highlighting the result was the first full period reported under the return of CEO Lee Cole which delivered a four-year high for avocado margins.

·     GIII +9%; raises annual profit forecast after Q2 beat as sees FY24 EPS $3.20-$3.30, topping prior view of $2.80-$2.90 and sales about $3.30B vs. prior $3.29B view; also entered into a strategic multi-year license agreement with HBI

·     PATH +7%; Q2 adj EPS $0.09 vs. est. $0.03; Q2 revs $287.3M vs. est. $282.14M; sees Q3 revenue $313M-$318M vs. est. $315.33M and sees Q3 ARR $1.359B-$1.364B; raises FY24 revenue view to $1.273B-$1.278B from $1.267B-$1.272B; announces $500M stock buyback.

·     WRK +4%; after the WSJ reported WestRock and Smurfit Kappa (SMFKY) are nearing a deal to combine into a $20B entity, citing people familiar with discussions. The deal could be announced as soon as this week. https://tinyurl.com/ypm2upsr



·     AAPL -3%; adds to drop yesterday after new reports that China moves to widen state employee iPhone curbs. Shares fell Wednesday after the WSJ reported China ordered officials at Central government agencies not to use Apple’s iPhones and other foreign-branded devices for work.

·     AI -13%; shares tumble as delivered Q1 results featuring top and bottom-line beats which was largely overshadowed by weak gross margin (68.6% vs. 73% estimate) and mixed guidance (solid top-line, softer margins) while noting will no longer be non-GAAP profitable in Q4.

·     AMKR -15%; shares fell as priced 10M share Secondary at $24.00.

·     BB -14%; forecast Q2 revenue to fall -21.4% to $132M, below ests $156.8M due to cybersecurity segment lags; BB said expects Q2 cybersecurity revenue of $80 mln; says revenue lower than expected primarily due to certain large government deals not closing in the quarter.

·     CHPT -20%; as Q2 EPS loss (-$0.35) worse than est. loss (-$0.15) and Q2 revs rose 39% y/y to $150.5M vs. est. $153.1M while guides Q3 revenue $150M-$165M below est. $181.6M and sees FY24 revenue $605M-$630M, below consensus $674.9M.

·     LZ -12%; after 14M share Spot Secondary priced at $10.00.

·     PHR -16%; guides FY adj Ebitda (-$54M-$49M) which is better than prior view of (-$60M-$55M); Reported a ~26% bottom-line beat with ongoing growth on its multi-pronged platform but provider client growth (+24%) slowing in the quarter from 30-40% LTM.

·     ROL -8% after 38.724M share Spot Secondary priced at $35.00.

·     SPWH -29%; latest sporting goods store to disappoint as posts Q2 adj EPS loss (-$0.04) vs. est. $0.08 on revs miss and Q2 comp store sales fell (-16.2%) due to lower demand across all product categories and a decline in traffic; sees 3q net sales $310M-$330M below consensus of $382.3M.

·     STX -8% after Barclays downgraded and 5.57M share block priced at $69.50.

·     TTC -13%; as Q3 sales $1.08B miss the $1.22B estimate and cuts FY23 EPS view to $4.05-$4.10 from $4.70-$4.80 (est. $4.79) saying experienced a sharp and accelerated reduction in homeowner demand for residential and professional segment lawn care products.

·     VRNT -14%; as delivered weaker than expected Q2 results featuring misses on the top and bottom lines and gross margins coming in at 69.5% below the Street’s 69.8% estimate and lowered its FY24 guidance.


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.