Mid-Morning Look: September 11, 2020

Mid-Morning Look

Friday, September 11, 2020

Index

Up/Down

%

Last

 

DJ Industrials

147.86

0.54%

27,682

S&P 500

16.50

0.49%

3,355

Nasdaq

37.72

0.36%

10,958

Russell 2000

1.52

0.10%

1,509

 

 

U.S. stocks higher but pulling back after initial strong gains in what continues to be a volatile (holiday shortened) week of trading. Coming into today, major averages are on track for their first back-to-back weekly drop since May as the S&P 500 is down more than 2% for the week, along with Dow, while the Nasdaq has fallen 3.5%. Stocks opened higher initially as investors again try and scoop up oversold stocks (Nasdaq fell over 10% in the last week off record highs), and on hopes of a stimulus deal in Washington passing – though the two sides have failed to come close over the last month, raising concern on no new stimulus, potential for a double dip recession potentially. Tensions with China increased overnight as Beijing said it has imposed restrictions on American diplomats in China to retaliate against Washington’s recent move to curb activities of Chinese diplomats in the U.S. political concerns ranging from November’s U.S. elections to Brexit are also impacting markets and sentiment. Fears over a messy no-deal Brexit dragged sterling to new 5-1/2-month lows after the European Union told Britain it should urgently scrap a plan to break their divorce treaty. Oil dips again on rising inventories and sliding stock markets.

 

Economic Data

·     Consumer Price index (CPI) MoM for August rose 0.4% vs. est. 0.3% and core prices rose 0.4% topping the 0.2% estimate; YOY, CPI overall rose 1.3% vs. est. 1.2% and core CPI YoY 1.7% vs. est. 1.6%; CPI energy +0.9%, gasoline +2.0%, new vehicles 0.0%

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.19

37.11

Brent

-0.32

39.74

Gold

3.75

1,950.000

EUR/USD

0.0025

1.184

JPY/USD

-0.02

106.11

10-Year Note

-0.015

0.669%

 

 

Sector Movers Today

·     Internet; EBAY founder Pierre Omidyar stepped down from the company’s board as part of a broader overhaul that also has Elliott Management partner Jesse Cohn leaving the board; EXPE downgraded to neutral from buy at UBS but raise tgt to $116 from $84 while reiterate Neutral rating on BKNG but raise tgt from $1,850 to $1,950 saying they don’t find the risk/reward for both as compelling at current stock price levels as it was in the March to May timeframe; CHWY reported better-than-expected Q2 profit and revenue, helped by new customer additions but said it expects potential H2 cost headwinds in the form of media costs, higher logistics expenses and short-term costs related to COVID-19; RVLV 4M share Block Trade priced at $19.50

·     Metals & Materials; in chemicals, LYB was upgraded to overweight from neutral at JPMorgan and raise tgt to $88 from $62 and up tgt on DOW to $45 from $39 saying domestic polyethylene (PE) demand has been growing in 2020 despite the recession and the quarantines, and the US producers have been successfully addressing the export markets. In the timber sector, Bank America downgraded BCC, OSB and PCH to neutral from buy saying wood stock rallied about 36% relative to S&P 500 since the end of Q1 as lumber prices rose 147% over that period, and a deceleration is likely as repair-and-replace activity slows after a very strong 2020

·     Pharma movers; GLPG announced positive top line results in the Phase 2a NOVESA trial with investigational ziritaxestat (GLPG1690) in patients with diffuse cutaneous systemic sclerosis (dcSSc), a severe autoimmune disease. The trial enrolled 33 patients; SPRO 8M share Secondary priced at $10.00; MNOV said says BioComo, with whom is it co-developing a coronavirus vaccine, reported high levels of virus-neutralizing antibodies in mice given the experimental intranasal vaccine; ATRA reports early-stage study data of ATA188 for treatment of progressive forms of multiple sclerosis; STSA downgraded by at least two analysts after top-line data from EMERGE Phase 3 trials showed that STS101 failed to meet either of its primary endpoints

·     Hardware & Component news; KODK active after Bloomberg noted holder Southeastern reports 15.8% stake in amended 13G; CTSH was upgraded to buy from neutral at Bank America as seeing signs of building momentum and raises the price target from $67 to $76; JNPR estimates lowered at Raymond James following CIEN’s recent report and our industry checks but stay OP rated; ERIC hit a milestone by demonstrating a live C-band network in the United States with 16-layer downlink multi-user MIMO tech (company hit 5.4 Gbps peak cell capacity)

 

Stock GAINERS

·     ATRA +9%; reports early-stage study data of ATA188 for treatment of progressive forms of multiple sclerosis

·     HOLX +3%; following upward revision of Q4 guidance driven by strong sales of COVID-19 tests and Panther instruments as sees revenue of $1,225B-$1,275B, up 54 – 60% from a year ago and up from its outlook of $925M-$1.025B provided in July

·     KODK +4%; after Bloomberg noted holder Southeastern reports 15.8% stake in amended 13G

·     LAUR +17%; after striking a deal to sell Walden University to ATGE in a transaction valued at $1.48B in cash – Walden University will remain part of the Laureate International Universities network until the closing of the transaction

·     ORCL +6%; as posts Q1 adj. profit 93c topping the 86c estimate and better revs of $9.37B topping the $9.19B view as revenue from its largest unit, which includes cloud services, rose 2.1% to $6.95B and also signaled a recovery in client spending as remote work lifted demand for cloud

·     PTON +11%; beats analysts’ estimates for Q4 revs amid a surge in subscribers and higher demand for its fitness products during the pandemic; sees FY21 revenue $3.5B-$3.65B above $2.72B and sees 2.05M-2.1M ending Connected Fitness Subscriptions, growth of 90% at the midpoint

·     SAGE +6%; adds to yesterday gains after Wedbush upgrade and analyst up tgt after the co presented an overview of their R&D pipeline yesterday, highlighting their work in depression, executive function, and essential tremor

·     ZUMZ +12%; Q2 results beat and same-store sales growth of 37% and said upbeat Q2 sales due to more full-price sales and higher online demand across categories, particularly skateboards

 

Stock LAGGARDS

·     AMRS -16%; after late yesterday, LAVVAN, Inc. files $881 million federal lawsuit against the company for patent infringement and trade secret misappropriation

·     CHWY -5%; reported better-than-expected Q2 profit and revenue, helped by new customer additions but said it expects potential H2 cost headwinds in the form of media costs, higher logistics expenses

·     EXPE -2%; downgraded to neutral from buy at UBS but raise tgt to $116 from $84 while reiterate Neutral rating on BKNG but raise tgt from $1,850 to $1,950 saying they don’t find the risk/reward for both as compelling at current stock price levels

·     NKLA -10%; refuted allegations of fraud made by short-seller Hindenburg Research in report published Thursday saying they retained a law firm to evaluate possibility of legal recourse

·     PLAY -7%; reported an 85% fall in Q2 comp sales while revs were $50.8M, missing the $80.9M estimate

·     STSA -13%; downgraded by at least two analysts after top-line data from EMERGE Phase 3 trials showed that STS101 failed to meet either of its primary endpoints

 

Syndicate:

·     10x Genomics (TXG) 4M share Secondary priced at $110.00

·     Azek (AZEK) 25M share Secondary priced at $33.25

·     Brigham Minerals (MNRL) 4.366M share Spot Secondary priced at $8.20

·     i3 Verticals (IIIV) 3.25M share Secondary priced at $23.50

·     Intra-Cellular (ITCI) 11.667M share Secondary priced at $30.00

·     Lightspeed (LSPD) 11.65M share IPO priced at $30.50

·     Natera (NTRA) 4.16M share Secondary priced at $60.00

·     Quotient (QTNT) 17.65M share Secondary priced at $4.25

·     Revolve Group (RVLV) 4M share Block Trade priced at $19.50

·     Shift4 Payments (FOUR) 10M share Secondary priced at $48.50

·     Spero Therapeutics (SPRO) 8M share Secondary priced at $10.00

·     Trillium Therapeutics (TRIL) 10M share Secondary priced at $13.00

·     Vroom (VRM) 10.8M share Secondary priced at $54.50

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Market commentary provided by Catena Media Financials US, LLC, 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.