Early Look

Friday, September 25, 2020

Stocks futures are looking lower, capping a tumultuous week that has raised concerns about rising COVID-19 cases in parts of the world, healthcare policy concerns ahead of a new Supreme Court Justice nomination, increasing China-U.S. tensions, and additional stimulus hopes fading – all leading to the mass uncertainty of the Presidential election in less than 40-days. Major averages concluded Thursday with modest gains in choppy trading with big-cap tech, banks, materials, and consumer goods leading and healthcare, and energy & defense lagging. Jobless claims have been mixed this week as initial jobless claims remain stubbornly high at 870K, but new home sales in August came in at a seasonally adjusted annualized rate of more than 1M – the rate hasn’t topped 1M in a month since 2006. In a bid to restart negotiations, House Democratic lawmakers have begun to prepare a new $2.4 trillion coronavirus aid package, $1 trillion smaller than their previous proposed bill, according to multiple published reports on Thursday. In Asian markets, The Nikkei Index rose 116 points to 23,204, the Shanghai Index dipped -3 points to 3,219 and the Hang Seng Index fell -75 points to 23,235. In Europe, the German DAX is down around -200 points to 12,400, while the FTSE 100 falls around -25 points to just under 5,800. The economic calendar is light today with only durable goods due at 8:30 AM.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 9.67 points, or 0.30%, to 3,246.59

·     The Dow Jones Industrial Average rose 52.31 points, or 0.20%, to 26,815.44

·     The Nasdaq Composite climbed 39.28 points, or 0.37%, to 10,672.27

·     The Russell 2000 Index inched higher 0.36 points, or 0.02% to 1,451.82

Economic Calendar for Today

·     8:30 AM EST      Durable Goods for Aug

·     8:30 AM EST      Durable Goods Ex: Transportation, for Aug

·     1:00 PM EST       Baker Hughes Weekly Rig Count

World News

·     Consumer sentiment in the U.K. ticked up slightly in September despite the increase in Covid-19 infections, as the GfK consumer confidence barometer climbed to minus 25 in September, an increase of two points compared with minus 27 registered in August.

·     COVID-19 cases are growing across the U.S., with infections rising in 22 states over the past week. The U.S. is now averaging roughly 43,000 new cases per day, a 16% increase from a week ago

Sector News Breakdown

Consumer

·     Costco (COST) Q4 EPS $3.13 vs. est. $2.84 on sales $53.38B (up 12.5% YoY) vs. est. $52.46B; Q4 membership fees up 5.3% to $1.11B; U.S. comp sales rose 11.0% and overall comp sales up 11.4% while ecommerce comp sales rose 90.6%; Q4 was negatively impacted by incremental expense related to covid-19 premium wages and sanitation costs of $281 mln pretax

·     Penn National (PENN) 14M share Secondary priced at $61.00

·     Norwegian Cruise (NCLH): Regent Seven Seas Cruises announced that the 2023 World Cruise set a new world cruise.

·     Vail (MTN) Q4 EPS loss ($3.82) on revs $77.2M (down -68% YoY) vs. est. loss ($3.44) and $136.6M; Q4 Ebitda loss $103.8 million; says 4q total skier visits 150,000; in North America, U.S. resort communities experienced increasing demand from leisure travelers throughout month of July; expects to see material declines in visitation to resorts, associated rev fall in fiscal 2021 relative to original expectations for 2020

·     Scholastic (SCHL) Q1 adjusted EPS loss (90c) on revs $215.2M vs. est. $219M; not providing a financial outlook for fiscal year 2021; believes that a significant portion of cost savings, new measures, should continue to favorably impact future period results

Energy, Industrials & Materials

·     Targa Resources (TRGP), Plains All American (PAA) and Plains GP Holdings (PAGP) all upgraded to Overweight from Underweight at Morgan Stanley

·     Boeing’s (BA) grounded 737 MAX could receive regulatory approval to resume flying in November and enter service by end of year, Europe’s aviation safety regulator EASA says. The EASA expects to lift its technical ban not long after U.S. FAA, probably in November, but national operational clearances needed for individual airlines to resume flying could take longer – Reuters

·     Impresa Aerospace LLC, a parts maker involved in the manufacture of Boeing Co.’s 737 MAX airliners, has filed for bankruptcy protection after losing revenue due to the aircraft’s grounding in the wake of two fatal crashes – WSJ

·     Oceaneering International (OII) announced that it will report Q3 financial results consistent with its newly realigned operating segments.

·     AAR Corp. (AIR) Q1 adj EPS 17c on sales $401M vs. est. loss (5c) and $381.7M; Q1 adj Ebitda down -48% YoY to $21.6M

Financials

·     Colony Capital (CLNY) agreed to sell SIX of its hospitality portfolios to Highgate in a transaction valued at $2.8 billion; deal includes $67.5 million of gross proceeds on a consolidated basis and the assumption of $2.7 billion in consolidated investment-level debt

·     Epam Systems (EPAM) files automatic mixed securities shelf

Healthcare

·     Bristol Myers Squibb’s (BMY) said preliminary data from a Phase III clinical trial of CheckMate-274 evaluating the PD-1 inhibitor Opdivo (nivolumab) after surgery (adjuvant therapy) in patients with high-risk, muscle-invasive urothelial carcinoma demonstrated that the study met the primary endpoint of disease-free survival (DFS) compared to placebo in the overall study group and in patients with PD-L1-expressing (at least 1%) cancer.

·     GENFIT (GNFT) rises after enrolling its first patient visit for ELATIVE Phase 3 study evaluating elafibranor in Primary Biliary Cholangitis (PBC), a severe cholestatic liver disease that impacts and gradually destroys the bile ducts, leading to inflammation and scarring in the liver.

·     Novavax (NVAX) initiates phase 3 efficacy trial of covid-19 vaccine in the United Kingdom; clinical trial to enroll up to 10,000 volunteers across UK to assess whether nvx-cov2373 is effective in prevention of covid-19; trial is expected to enroll and immunize up to 10,000 individuals between 18-84 years of age over next four to six weeks

·     Luminex (LMNX) receives $5.4M BARDA award to support 510(k) filing for NxTAG respiratory pathogen panel that includes sars-cov-2

·     Graybug Vision (GRAY) 5.625M share IPO priced at $16.00

·     Greenwich LifeSciences (GLSI) 1.26M share IPO priced at $5.75

·     PMV Pharmaceuticals (PMVP) 11.765M share IPO priced at $18.00

·     Prelude Therapeutics (PRLD) 8.325M share IPO priced at $19.00

Technology, Media & Telecom

·     Apple Inc.’s (AAPL) legal battle in Europe over a $15.2 billion tax bill will continue, potentially for years, after the European Union appealed a court ruling that sided with the tech giant

·     CalAmp (CAMP) Q2 adj EPS loss (3c) on revs $83.5M vs. est. 0c and $78.8M; not providing guidance; software/subscriptions revenues grew 20.2% from last quarter and 8% from last year and now makes up 40.3% of consolidated revenue; Software & Subscription services, $33.7M (up 8%); Telematics products, $40.7M (down 16.8%); LoJack U.S. SVR products, $9.1M (down 30.4%).

·     Splunk (SPLK) upgraded to outperform from neutral at Baird with $240 tgt given the company’s alignment with our security coverage and our newly launched observability coverage

·     VIA Optronics (VIAO) 6.25M share IPO priced at $15.00