Early Look

Friday, January 8, 2021

Stocks in the U.S. are looking higher yet again, pointing to new record highs for major averages ahead of the monthly jobs report, with the S&P and Dow looking to make it a 4^th straight day of gains. The losses for U.S. stocks on the first day of the year are but a distant memory, as major averages have soared the last few days, on track for solid weekly returns as investors extend bets that a Biden presidency and Democratic House and Senate (after Georgia seat victories this week) will result in more fiscal stimulus legislation. Technology names rallied after slipping in Wednesday’s trading, led by the mega caps and new all-time highs for semiconductors (SOX), while the recovery trade picks up steam as well as those sectors seen the most benefitting from addition fiscal spending measures (infrastructure, metals, materials and industrial). Semiconductors extending those gains this morning after better earnings results overnight from Micron (MU) and ST Micro (STM), as shares of both are looking higher. Consumer discretionary jumped on Thursday, led by another record high for Tesla (TSLA) which spiked another 8% topping the $800 level (and indicated higher by another 3% to start the day), while the market remains enamored with Bitcoin, which topped the $41,000 mark this morning, up from $30,000 just a few days ago. The 10-year Treasury yield climbs further after breaking out of its multi-month trading range, rising 1 bps to 1.08%, bolstering the financial sector as banks are among the best winners this week. Oil prices higher as well, giving energy stocks another bump. In Asian markets, The Nikkei Index jumped 648 points (2.36%) to settle at 28,139, the Shanghai Index slipped -6 points to 3,570 and the Hang Seng Index jumped 329 points (1.2%) to end the week at 27,878. In Europe, the German DAX is up around 100 points to 14,070, while the FTSE 100 is flat above the 6,850 level. Its hard to find anyone negative these days despite soaring valuations and market multiples, as investors turn to positive vaccine news (more news from PFE/BNTX overnight) and fiscal and monetary help.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 55.65 12.58 points, or 1.48%, to 3,803.79

·     The Dow Jones Industrial Average rose 211.73 points, or 0.69%, to 31,041.13

·     The Nasdaq Composite surged 326.69 points, or 2.56%, to 13,067.48

·     The Russell 2000 Index advanced 38.96 points, or 1.89% to 2,096.89

Events Calendar for Today

·     8:30 AM EST      Non-farm Payrolls for December…est. 71K

·     8:30 AM EST      Private Payrolls for December…est. 98K

·     8:30 AM EST      Manufacturing Payrolls for December…est. 20K

·     8:30 AM EST      Unemployment Rate for December…est. 6.8%

·     8:30 AM EST      Average Hourly Earnings MoM for Dec…est. 0.2%

·     10:00 AM EST    Wholesale Inventories for November…est. (-0.1%)

·     3:00 PM EST       Consumer Credit for November…est. $9.0B

Sector News Breakdown

Consumer

·     PriceSmart (PSMT) 1Q EPS $0.90 vs. est. $0.68 on revs $877.4Mm vs. est. $837.4Mm; comp merchandise sales +3.6%, e-comm 3.1% sales penetration; recorded operating income during the fiscal first quarter of $44.5 million compared to operating income of $30.7 million in the prior year period

·     Velodyne (VLDR) said it shipped more than 4,100 sensors to its global customer base, bringing the annual total units shipped in 2020 to more than 11,500, including over 600 solid state Velarray units in the fourth quarter alone; sees Q4 revenue $15.5M-$16M (est. $29.5M) and 2020 revs $94M; said long-term outlook remains strong, but at this time 2021 guidance withdrawn due to reduced near-term visibility

·     Honda Motor Co. (HMC) plans to trim auto production by about 4,000 units in Japan this month due to a shortage of semiconductors, Japanese business daily Nikkei reported

·     Hyundai Motor said it in was in early discussions with Apple (AAPL) after Korea Economic Daily TV reported that the two were in talks to cooperate on electric cars and batteries, sending Hyundai’s shares surging over 20%

Energy, Industrials and Materials

·      Boeing (BA) will pay more than $2.5B in criminal fines as part of an agreement with the U.S. Department of Justice (DoJ) to resolve a criminal charge related to a conspiracy to defraud the Federal Aviation Administration in connection with the 737 MAX jet.

·     WD-40 (WDFC) 1Q EPS $1.72 vs. est. $10.3, sales $124.6Mm vs. est. $106.9Mm; guides FY sales $435-470Mm vs. est. $434.5Mm

·     Hollysys Automation Technologies Ltd. (HOLI) said it rejected an unsolicited takeover offer made last month from Baiqing Shao, Ace Lead Profits Ltd. and CPE Funds Management Ltd for $15.47 a share in cash, saying it undervalues the company.

·     SunPower Corporation (SPWR) to close manufacturing facility in Hillsboro, Oregon

Financials

·     Cardtronics (CATM) rises 13%: said that it received an offer from an undisclosed party for $39 per share in cash, above the prior $35 deal it reached with Apollo (APO) and Hudson Executive last month https://bit.ly/39fBJiW

·     Duck Creek Technology (DCT) 1Q adj EPS $0.02 vs. est. ($0.01) on revs $58.9Mm vs. est. $55.6Mm; sees 2Q revs $58.5-59.5Mm vs. est. $58.7Mm, sees 2Q subscription revs $28-29Mm, sees FY revs $246-251Mm vs. est. $246.9Mm

·     Horizon Bancorp (HBNC) files $250M mixed securities shelf

Healthcare

·     Sarepta Therapeutics (SRPT) plunges -50%; announces top-line results for part 1 of study 102 evaluating srp-9001, its investigational gene therapy for the treatment of Duchenne muscular dystrophy; study met primary biological endpoint of micro-dystrophin protein expression at 12 weeks post-treatment but SRP-9001 study did not achieve statistical significance

·     Pfizer Inc (PFE) and BioNTech’s (BNTX) Covid-19 vaccine appeared to work against a key mutation in the highly transmissible new variants of the coronavirus discovered in Britain and South Africa, according to a laboratory study conducted by the U.S. drugmaker

·     Accolade (ACCD) Q3 EPS loss (32c) on revs $38.4M vs. est. loss (35c) and $36.2M; sees Q4 revs $51M-$54M and FY revs $162M-$165M

·     LabCorp (LH) awarded CDC contract to study variants of covid-19 virus and improve public health response; genomic sequencing aims to help define changes in transmission and identify new mutations

·     Merus (MRUS) granted FDA fast track designation of zenocutuzumab for the treatment of patients with neuregulin 1 fusion cancers

·     Syros Pharmaceuticals (SYRS) files for stock shelf of up to 14.14 mln common shares by the selling stockholders

Technology, Media & Telecom

·     Micron (MU) Q1 adj eps 78c vs. est. 67c and revs $5.77b vs. est. $5.63b; Q1 adj gross margin 30.9%, vs. est. 29.6%; operating cash flow of $1.97 billion versus $2.27 billion for the prior quarter and $2.01 billion for the same period last year

·     F5 Networks (FFIV) reaffirms commitment to $1B in stock purchases; sees Q1 EPS top end of $2.26-$2.38 vs. est. $2.34 and revs between $623M-$626M vs. est. $605.2M; will acquire shares of privately held Volterra for approximately $440 mln in cash to create the first edge 2.0 platform for enterprises and service providers

·     Sirius XM (SIRI) said it expects to meet or exceed its 2020 guidance for revenue, EBITDA and free cash flow; added a net 909,000 self-pay subscribers to end 2020 with about 30.9M self-pay subs, beating its most recent guidance; now expects self-pay net adds of about 800,000 for the year, along with total revenue of $8.35B, EBITDA of $2.575B, and free cash flow of about $1.6B.

·     STMicroelectronics NV (STM) preliminary Q4 revenue was $3.24B, topping its prior view of $2.99B plus or minus 350 bps, helped by smartphone demand as well as automotive products and microcontrollers

·     ChipMOS Technologies (IMOS) Q4 revenue $224.7M (+13.3% Y/Y) as December revenue was $78.0M (+20.1% Y/Y; +6.8% M/M), helped by strong memory and DDIC demand throughout 2020

·     AU Optronics (AUO) December revenue was up 39.3% Y/Y to NT$28.86B