Mid-Morning Look: November 20, 2020

Mid-Morning Look

Friday, November 20, 2020

Index

Up/Down

%

Last

 

DJ Industrials

-130.11

0.44%

29,353

S&P 500

-11.87

0.33%

3,570

Nasdaq

2.65

0.02%

11,907

Russell 2000

-8.16

0.46%

1,774

 

 

Stock futures bounced off overnight lows following news that Pfizer (PFE) and BioNTech (BNTX) said they will submit a request to U.S. regulators for an emergency use authorization to sell their Covid-19 vaccine just days after saying it was 95% effective. Pending review by the U.S. FDA, the vaccine could reach high-risk populations by mid-December while rival Moderna (MRNA) is close to finishing its own clinical trial, after showing comparable effectiveness in an interim data analysis. Yesterday, Treasury Secretary Steven Mnuchin declined to extend four emergency lending programs it had created with the Fed which tapped funds from the CARES act to support financial markets after the pandemic roiled markets. This morning in an interview on CNBC, Mnuchin said that he will meet with White House Chief of Staff Mark Meadows and Senate Majority Leader Mitch McConnell today to discuss a potential stimulus plan in hopes of presenting a proposal to Democrats.

 

No major economic data released today in the U.S.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.16

42.06

Brent

0.33

44.53

Gold

13.90

1,875.40

EUR/USD

-0.00

0.84

JPY/USD

-0.08

103.73

10-Year Note

-0.01

0.84%

 

 

Sector Movers Today

·     Energy stock movers; a solid week of gains for energy stocks on economic recovery hopes amid positive vaccine news, as oil prices touched 2-month highs during that stretch; refiners equipment and service names have seen the biggest bounces; in stock news, OXY was upgraded from Neutral to Positive at Susquehanna as are increasingly confident in base case of a recovery in oil prices to near ~$50 per barrel by YE21 into 2022 on the back of improving macro data points and recent positive vaccine news; HP delivered roughly in-line operational results, with consolidated top-down EBITDA of $7M, while generous NWC tailwinds and disposals keyed stronger than modeled net cash flow; Truist said believe U.S. production could fall at least 1-2% sequentially this quarter and next versus the 1.2% sequential growth expected by the EIA as COVID is impacting Frac crews across Permian, Bakken, Eagle Ford. The most active operators currently in the Permian are XOM (Hold), EOG (Buy), CXO (Buy), and PXD (Hold)

·     Retailers; HIBB posts Q3 adj EPS $1.45 (est. 46c, highest analyst est. 57c), 20.3% rise in Q3 sales (est. +4%) to $331.4M, comp sales +21.2% also beats highest estimate, and sees Q4 EPS $1.00-$1.10 (above expectations of $0.60); in footwear, FL reports Q3 adj EPS $1.21 vs est. $0.63 on sales $2.11B, a 9% rise in Q3 sales (est. +1%) as demand surged during the COVID-19 pandemic as people took up outdoor exercises, such as running or cycling; CAL Q3 adj EPS 48c on revs $647.5M, both topping ests (4c, $619.5M); ROST Q3 EPS $1.02 on revs $3.8B, comp sales -3% all beat estimates (61c on $3.43B, -12.3% comps); CPRI was downgraded to Hold with a $35 pt from Buy at HSBC, but was upgraded to Buy with a $72 pt at BTIG who sees underappreciated value despite the stock rising almost 30% since its blowout FQ2 report on Nov. 5th, citing a sharp acceleration in digital traffic, multiple structural gross margin tailwinds; HSBC also downgraded GOOS to Hold with a target C$45.75; NKE increased its quarterly dividend by 12% to 27.5c/share

·     Housing, Furnishing & Building Products; WSM reported strong 3Q results that topped sell side and buy side expectations on the top- and bottom-lines (comp sales +24.4% vs est. +11.3%) as the business remained consistently strong into 4Q, and also expressed confidence that it could “comp the comp” and further expand operating margins in 2021; in building materials, Goldman Sachs upgraded EXP and FRTA to buy as they benefit from building pricing gains vs. consensus expectations in their residential businesses while downgraded VMC and MLM to neutral

·     Industrial & Machinery; HEES and URI both upgraded at Bank America given that we might finally have a COVID-19 vaccine at the same time that the used equipment market is firming, industrial production is rebounding, and time utilization is recovering; ALSN downgraded to neutral and PCAR downgraded to underperform in machinery at Bank America; in multi-industry, Goldman Sachs downgraded LII to Sell from Neutral as see 8%/9% downside to 2021-22 FactSet consensus amid slowing residential HVAC replacement demand and increased cost pressure, while relative valuations are at the high end of the historical range and cut TT to Neutral from Buy as we see risk/reward as more balanced following recent

 

Stock GAINERS

·     AMRN +4%; after saying a late-stage trial of its heart drug, Vascepa, conducted by its Chinese partner met main goal. AMRN said Vascepa significantly reduced high levels of triglycerides when compared to placebo in Chinese patients

·     BNTX +5%, PFE +1%; applied to U.S. health regulators for emergency use authorization (EUA) of its COVID-19 vaccine, which will potentially enable use of the vaccine in high-risk populations in the U.S. by the middle to end of December 2020

·     DTIL +14%; after announcing a genome editing research collaboration and license agreement with LLY which will initially focus on Duchenne muscular dystrophy and two undisclosed gene targets

·     FEYE +6%; announced an acquisition of Respond Software for $186M in cash and stock along with a strategic investment of $400M led by Blackstone Tactical Opportunities and ClearSky

·     MESO +20%; rises as NVS signs a $50M deal with MESO, securing rights to develop, commercialize and manufacture co’s experimental cell therapy Remestemcel-L, which is currently in late-stage trials

·     NGVC +21%; Q4 profit jumps YoY as net sales rose 16% to $264M and comp sales rose over 13% and declares special cash dividend of $2.00 per share

 

Stock LAGGARDS

·     CCL -2%; scraps sailings well into late 2021, leaving some ships dry of revenue for more than a year, as it needs more time to fulfill requirements for sailing approval by the U.S. Centers for Disease Control and Prevention

·     FE -3%; concluded that there was a material weakness in internal control over financial reporting

·     GILD -1%; drug remdesivir is not recommended for patients hospitalized with COVID-19, regardless of how sick they are, as there is no evidence it improves survival or reduces the need for ventilation, a World Health Organization panel said

·     GSX -22%; tumbles after reporting net loss of 932.5 mln yuan ($142.00 mln) in Q3 compared with profit of 1.9 mln yuan a year earlier

·     NNDM -26%; after entered into definitive agreements with investors for sale of 25 mln of co’s ads at $4 per ads pursuant to registered direct offering

·     WDAY -5%; delivered another quarter of solid execution against a difficult backdrop with sub. revenue/ backlog and margins all ahead of expectations – stock lagged as analysts cited potential headwind in subscription backlog forecast

 

Syndicate:

·     Avrobio (AVRO) 5M share Spot Secondary priced at $15.00

·     Maravai Lifesciences (MRVI) 60M share IPO priced at $27.00

·     Sotera Health (SOHC) 46.6M share IPO priced at $23.00

·     Stoke Therapeutics (STOK) 2.5M share Secondary priced at $39.00

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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.