Mid-Morning Look: August 03, 2022

Mid-Morning Look

Wednesday, August 03, 2022






DJ Industrials




S&P 500








Russell 2000






U.S. stocks opened with strong gains Wednesday, attempting to bounce after back-to-back losses as investors weigh mixed corporate earnings/outlooks and the Federal Reserve’s plans for hiking interest rates in its bid to rein in inflation. After one of the worst starts to stock markets all-time in the first half of the year, markets have been “bulled” up since the start of July, with major averages posting strong gains again today in a broad-based market rally (defensive staples and utilities lag). Markets got an extra bump this morning following a well-received ISM services report which showed an overall rise in biz conditions while prices paid inflation data slipped to lowest since Feb 2021. Several Fed speakers on calendar again after many yesterday talked about inflation being the focus. The U.S. Federal Reserve will be steadfast in raising interest rates to bring inflation running at four-decade highs back to the central bank’s 2% target, St. Louis Fed President James Bullard said this morning on CNBC. “We are going to be tough and get that to happen,” Bullard said in an interview; “I think we can take robust action and get back to 2%.” “We’re going to need to see convincing evidence across the board, headline and other measures of core inflation, all coming down convincingly before we’ll be able to feel like we’re doing enough.” Following data and comments, bonds selling off and yields spiking, oil prices slipping on OPEC headlines and gold sliding given pullback in haven assets with stocks rebounding. Recap of top stock movers on earnings and news below.


Economic Data

·     ISM report on U.S. Non-manufacturing sector shows PMI 56.7 in July vs 55.3 in June; business activity index 59.9 in July vs 56.1 in June; prices paid index 72.3 in July vs 80.1 in June; new orders index 59.9 in July vs 55.6 in June; employment index 49.1 in July vs 47.4 in June. ISM non-manufacturing prices paid index at lowest since February 2021

·     U.S. June factory orders +2.0% above est. +1.1% and May +1.8%; factory orders ex-defense +1.3% pct vs May +1.7%; factory orders ex-transportation +1.4% vs May +1.8%; June Durables orders revised to +2.0% from +1.9%; inventories/shipments ratio 1.45 months’ worth vs May 1.46

·     S&P Services PMI Final Actual 47.3 (Forecast 47, Previous 47.0); S&P Composite PMI Final Actual 47.7 (Forecast -, Previous 47.5)







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10-Year Note





Sector Movers Today

·     E&P and Majors; CHK CEO said they plan to exit the Eagle Ford shale as it continues to pivot away from oil to natural gas; OXY posts $3.6B Q2 profit, topping estimates but slipping from Q1 heights of $4.7B, Q2 net earnings swung to a profit of $3.6B, or $3.47/share, from a loss of $97M; PXD reported a modest CFPS beat and as expected, increased ’22 CAPEX; EGY lowers FY22 production guidance by 750 NRI BOPD at the midpoint; CTRA 2Q22 in-line and boost in 2022 capex guide with 80% of FCF total payout; MGY beat and slight 2022 guide increase on higher activity with new quarterly dividend

·     Biotech movers; GILD Q2 beat with strength from its HIV and cell therapy franchises driving a ~$400M (+6.5%) top-line beat and raised guidance, both for Veklury and ex-COVID product sale; MRNA rises after 2q earnings beat, $3B share buyback plan; REGN 2Q adj EPS $9.77 vs est. $8.84 on revs $2.86B vs est. $2.8B; 2Q Dupixent global net sales recorded by Sanofi +40% to $2.09B; sees FY adj R&D $3.1-3.24B vs prior $2.9-3.1B, SG&A $1.74-1.84B vs prior $1.65-1.77B; CHRS said the FDA approved its treatment for age-related muscular degeneration Cimerli, a biosimilar product that can be used interchangeably with Novartis’s Lucentis; INCY downgraded at Guggenheim saying another Jakafi beat in 2Q underscores the strong commercial foundation the product provides for INCY; however, the looming 2027 COM patent expiration, increasing investor uncertainty around the Opzelura launch; SRPT reported above-consensus 2Q product sales of $211M and provided details on the path forward for ‘9001

·     Material movers: CLW reported 2Q adj. EBITDA of $63M, at the high end of guidance of $54M-$64M and above consensus/us at $61M; price/cost was more favorable than consensus expected and guidance was also above views (upgraded at RBC Capital to Outperform after results); SEE upgraded to Outperform at RBC as well as believe that at current levels, the stock is attractive and offers ~25% potential upside given modest FY23 assumptions; OI Q2 beat in line with pre-announcement and FY eps guidance raised as expected, though implied 4q guidance below consensus; delays to capital/MAGMA plans; in lithium space, LTHM raises sales and profit forecast for the year due to rising prices of the metal that is used in making electric-vehicle battery after a Q2 beat (other lithium movers ALB, SQM, LAC)

·     Utilities & Solar; in solar, SEDG stumbles following Q2 miss and margin weakness – Q2 EPS $0.95 vs. est. $1.39; Q2 revs $727.8M vs. est. $725.23M and cash flow generated from operating activities was $77.4M, compared with $163.0M prior quarter and margins impacted; DQ Q2 revs of $1.24B beat the $1.15B estimate as net income $627.8M vs. $232.1M y/y on better margins; in utilities, shares of NI, PPL, EXC among movers on earnings; Wells Fargo weighs in on inflation Reduction Act: saying positive on NEE, CEG and PEG, Clean Energy Tech: see it positive for FSLR, PLUG, RUN and NOVA, Utilities: continue to be relative safe way to play the transition, highlight ETR leverage to hydrogen economy, Autos: tax credits + TSLA, Refiners: see it 1/3 positive 2/3 negative, good for tax credits for renewable fuels (VLO, DINO, CLMT) and carbo capture and underground storage (BKR, FTLS, OXY)



·     ALNY +52%; after the company said that its Phase 3 study of Patisiran met the primary endpoint of change from baseline in the six-minute walk test at 12 months (IONS rises in reaction)

·     AYX +20%; after Q2 revenue was $180.6M, an increase of 50%, compared to revenue of $120.1M in the year-ago quarter with ARR growth of 33% y/y

·     CHRS +9%; said the FDA approved its treatment for age-related muscular degeneration Cimerli, a biosimilar product that can be used interchangeably with Novartis’s Lucentis

·     CWH +14%; reported stronger-than-anticipated 2Q22 results including adj. EBITDA of $278mm and revenue of $2.17B, both above estimates

·     MRNA +14%; after 2q earnings beat, $3B share buyback plan

·     PING +59%; to be acquired by Thoma Bravo for $28.50 per share in cash, in deal valued at $2.8B

·     PYPL +11%; after EPS and revs topped views, said it expects to record $900 million in savings this year from cost-cutting, and that activist investor Elliott is now one of its largest shareholders (about a $2 bln investment)

·     SOFI +22%; came in ahead of its Q2 guidance with adjusted revenue of ~$356mm, ~$21mm ahead of the guide (at the midpoint) as its Lending segment drove most of beat

·     SWIR +7%; SMTC to acquire SWIR for $31 per share in all-cash transaction in a transaction representing a total enterprise value of approximately $1.2B

·     TUP +44%; after earnings beat and better sales



·     ABNB -4%; reported mixed Q2 results, with Nights & Experiences Booked and GBV both coming in slightly below consensus while revenue and profitability were in line with and well ahead of expectations, respectively

·     AMD -2%; after guiding Q3 sales to approx $6.5-6.9B vs est. $6.8B still sees year revs $26.0-26.6B vs est. $26.18B after Q2 top and bottom-line beat – AMD revised its outlook on the PC market for this year drop by the mid-teen’s percent from previous projections of a high single digit

·     BGFV -10%; after big miss in EPS and comps as Q1 EPS $0.41 vs. est. $0.89; Q2 sales $253.8M vs. est. $294.2M and comp sales -22% y/y; guides Q3 EPS $0.22-$0.32

·     HZNP -21%; sinks after lowering full-year sales view to high-teens growth from prior view of mid-30’s hurt by slower sales growth of Tepezza drug

·     KN -17%; reported 2Q22 revenue below consensus and guided for a sequential decline versus typical strong seasonality

·     MTCH -20%; Q2 revenue and operating income was relatively in-line with expectations but the guidance fell well short of Street estimates and, importantly, new CEO announced several sweeping changes at Tinder

·     SEDG -17%; Q2 EPS $0.95 vs. est. $1.39; Q2 revs $727.8M vs. est. $725.23M and cash flow generated from operating activities was $77.4M, compared with $163.0M prior quarter and margins impacted

·     SPR -4%; after posting a wider-than-expected Q2 loss of (-$1.21) vs. est. loss (-$0.25) and revs of $1.26B missed the $1.28B estimate with a Q2 op loss of $104.7M vs. a loss of $97.7M y/y


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.