Mid-Morning Look: February 09, 2023

Mid-Morning Look

Thursday, February 09, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks erase yesterday’s market decline, boosted by more market chasing upside momentum in technology (XLY +15% YTD) and Consumer Discretionary (XLY +18% YTD) and as the number of Americans filing new claims for unemployment benefits increased more than expected last week, but the underlying trend continued to point to a tight labor market. The dollar fell against a basket of currencies. U.S. Treasury prices rose, while Bitcoin not rallying with broader risk assets early. Markets remain in broad trading range after breaking out to the upside a few weeks back, with the next major catalyst on the horizon the Tuesday CPI inflation report. Given a jump in some rents in NYC, and a reversal to the upside in used car prices this past month, some note CPI could see a bounce after months of meaningful declines – but stock markets not showing concern now. Dow component Walt Disney (DIS) shares jumped in early trading after the company unveiled plans to cut 7,000 jobs in a bid to save $5.5 billion. Market momentum to start the year continues with biggest losers in 2022 among top gainers in 2023 – TSLA rises an 8th straight day and now up 14 of last 15 days. Strong start to the trading day with energy and defensive utilities lagging, but other sectors higher.


Economic Data

·     Weekly Jobless Claims rose to 196,000 in latest week vs. est. 190K (vs. prior week 183K) as the 4-week moving average fell to 189,250 from 191,750 prior week, the US insured unemployment rate rose to 1.2% and continued claims rose to 1.688M from 1.65M prior week.







WTI Crude















10-Year Note





Sector Movers Today

·     In food & beverage: PEP Q4 profit that beat expectations, a sign that inflation-weary grocery shoppers are absorbing higher prices on beverages and snacks (core EPS $1.67 vs. est. $1.65; Q4 revs $27.996B vs. est. $26.84B); SJM entered into a definitive agreement to sell several pet food brands to POST in deal valued at approximately $1.2B, consisting of $700M in cash and approximately 5.39M shares of common stock; Kellogg (K) announces earnings beat ahead of planned separation into three publicly traded companies (global snacks, North American cereal, and plant-based food businesses) – sales rose 12% to $3.83B topping the $3.66B estimate while said is now expecting its 2023 EPS to fall 2% to 4% on a currency-neutral basis.

·     In software, CRM rose after reports Dan Loeb’s Third Point is the fifth known activist shareholder with a position in the software company’s shares. TOST shares mentioned positively in Barron’s given strong growth and a reasonable valuation. SUMO confirmed it was being acquired by investment firm Francisco Partners, valued at $1.7 billion, Sumo Logic shareholders will receive $12.05 in cash https://on.mktw.net/3RNUf8b ; FROG reported mixed 4Q results, with strong SaaS/cloud growth (+52.7% YoY) and acceleration in revenue from Enterprise+ customers (+58.8% YoY) but revenue miss and weak FY23 guidance. APP surges as 4Q revenue exceeded expectations driven by Software Platform revs, +3% better and roughly in-line 1Q revenue guide.

·     Healthcare Services: HIMS upgraded to Buy at Jefferies saying analysis of app downloads, web traffic and market share suggests momentum in the underlying business remains strong; while the firm downgraded ACCD to Hold saying while there is plenty of whitespace to penetrate in benefit spend, their survey suggests employers may have a limited appetite to add, leading us to believe navigation is more of a nice to have instead of a must have. Hospital operator THC 4Q EBITDA of $897M consistent with messaging over slightly above midpoint of guide while 1Q Guidance was slightly below street, though FY guidance bracketed consensus though closer to top end, with better Ambulatory vs. lighter Hospital segment guide.

·     Casinos active after WYNN Q4 revs beat, EBITDA beat, with Macau small miss but impacted – but strength in Las Vegas with beat (similar to MGM) as margins of 37.5% way above Bofa 36.2%. MGM Q4 EBITDAR beat at $957M, topping expectations of $860M by 11% driven by Las Vegas 12% above consensus and the regional market +7%. Same-store EBITDA increased 6% YoY vs. CZR preannounced growth of 10% to 12% (LVS, CZR, MLCO also active). In online gambling, DKNG downgraded to Sell at Roth MKM as expect 1H23E EBITDA losses greater than consensus and reduce investor conviction in DKNG’s profitability narrative.



·     APP +28%; 4Q revenue exceeded expectations driven by Software Platform (SP) revenue, which was +3% better and roughly in-line 1Q revenue guide.

·     CSII +48%; as ABT to acquire the medical-device company in a deal valued at $890M, with CSII holders to receive $20 per common share https://on.wsj.com/3RKKIPa

·     DIS +2%; announced massive cost cuts and shares were rewarded, saying they will lay off 7,000 people, restructure business into three units to achieve cost savings of $5.5B (followed earnings).

·     HLT +3%; Q4 adj EPS $1.59 topped the $1.22 estimate and revs +33% y/y to $2.44B vs. est. $2.37B on better margins; Q4 System-wide occupancy 67% vs. 61.3% y/y, and RevPAR $101.72, +21% y/y, below Bloomberg estimate $103.85.

·     MGM +8%; Q4 EBITDAR beat at $957M, topping expectations of $860M by 11% driven by Las Vegas 12% above consensus and the regional market +7%. Same-store EBITDA increased 6% YoY.

·     NUVA +5%; to combine with GMED as NUVA holders to receive 0.75 shares of GMED for each share held representing a 26% premium based on last night’s close. https://on.mktw.net/3xcxHEK

·     TPR +6%; profit beat as company raises guidance for FY23 as now expects revenue of about $6.6B and EPS of $3.70-$3.75, ahead of $3.65 consensus.

·     TSLA +5%; coming into the day on 7-day win streak and up 13 of the last 14 days, now more than doubling off the $101.81 low on January 6th.



·     AFRM -17%; as Q1 EPS loss wider than expected and revs $399M misses the $416M estimate while guides Q3 revs $360M-$380M below est. $418M (announced 19% workforce reduction).

·     BAX -13%; mixed Q4 as EPS miss but sales beat but guide for Q1 and year well below consensus; 1Q EPS expected to be $0.46-$0.50 vs. $0.76 est. and FY23 EPS $2.75-$2.95 vs. $3.53 est.

·     GLPG -9%; after a Phase 3 trial of filgotinib for Crohn’s disease didn’t meet two co-primary endpoints. Galapagos said it decided not to submit a Marketing Authorization Application in Europe based on the data.

·     IFF -15%; volumes were weak in December-quarter, and Credit Suisse said margins appear to be the issue in 2023 given solid +6% organic sales guide.

·     LNC -4%; shares slide following earnings as Q4 operating EPS $0.97 vs. est. $1.80, though Q4 revs $4.68B topped consensus est. $4.56B.

·     MAT -10%; disappoints as Q4 adj EPS $0.18 misses $0.29 consensus and revs fell -22% y/y to $1.4B, below Street consensus $1.68B; guides FY23 adjusted EPS $1.10-$1.20 vs. est. $1.66.

·     STE -9%; reported quarterly sales of $1.22B (+1% y/y, +7% organic cc), below consensus of $1.27B and red FY23 guidance constant currency organic growth to 7% from 10% previously.



·     Hesai (HSAI) 10M share IPO priced at $19.00.

·     Napco Security (NSSC) 2.1M share Spot Secondary priced at $31.50.

·     Purple Innovation (PRPL) 13.4M share Spot Secondary priced at $4.50.


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.