Mid-Morning Look

Friday, February 21, 2025

U.S. stock futures were stuck in a narrow trading range overnight for a second straight day (14 point range all night), before opening and trading lower on the open. Dow Transports under the most pressure, down over -3% following sharp declines in truckers/LTL freight stocks. US listed China stocks have picked up steam this month, led by BABA surge (helped further after better earnings yesterday). Gold prices eased on Friday on profit taking from the previous session’s record high, but were set for an eighth straight weekly gain, driven by strong safe-haven demand. Retailers and financials were pressured on Thursday following the weaker WMT revenue outlook which remains a concern for broader markets. Economic data this morning is broadly weaker along with a small uptick in inflation expectations which remains a concern for the Fed as rate cuts have continued to get pushed out further in 2025. Treasury yields are little changed (10-yr around 4.5%), the dollar bounces +0.3% and Bitcoin is down slightly around 98K). Consumer Discretionary, Industrials, Energy the biggest decliners this morning with Consumer Staples higher. Stocks on track for weekly losses.

• Jan Existing Home Sales reported at 4.08M unit rate, down -4.9% and below consensus 4.12M, down from Dec 4.29M figure; Jan inventory of homes for sale 1.18M units, 3.5 months’ worth; Jan national median home price for existing homes $396,900, +4.8% from Jan 2024.
• University of Michigan surveys of consumers sentiment final Feb 64.7 below consensus 67.8 and vs preliminary Feb 67.8 and final Jan 71.1; current conditions index final Feb 65.7 vs prelim Feb 68.7 and final Jan 74.0 and the expectations index final Feb 64.0 vs prelim Feb 67.3 and final Jan 69.3.
• University of Michigan surveys of consumers 1-year inflation outlook final Feb 4.3% vs prelim 4.3% and final Jan 3.3% and the 5-year inflation outlook final Feb 3.5% vs prelim 3.3% and final Jan 3.2%.

• In Trucker/LTL sector: TFII was downgraded by a few Wall Street firms (Bofa, UBS) given accelerating costs, likely flat earnings in 2025, and increasing loss of profitable small- to medium sized business customers, while seen as no longer having visibility to a path of significant margin improvement in their US LTL business (shares of rivals/comps ODFL, JBHT, SAIA, LSTR, RXO, WERN, MRTN among names down prior day).
• In Cruise stocks: Truist lays-out what might be a reasonable “worst-case” scenario for earnings and implied hit to stocks should such a tax be implemented (recall yesterday the sector declined following comments from Commerce Secretary Lutnick who said in Fox interview, “”You ever see a cruise ship with an American flag on the back? … None of them pay taxes … every supertanker. None pay taxes.”) In such a case Truist assumes a 25% tax rate on the income earned from ships that depart from U.S. ports as part of their cruise itineraries, which it assumes are approx. 40% for CCL, 45% for NCLH, 65% for RCL and 20% for VIK (assume 40% of Ocean cruises and Ocean contributes approx. 50% of earnings).

• CELH +23%; after announcing its agreement to acquire rival Alani Nutrition for $1.8 billion in cash and stock, including $150 million in tax assets and reported Q4 sales slightly ahead of lowered expectations.
• COIN +2%; announced that the SEC has agreed to drop its enforcement case against the company, pending the approval of its commissioner. In 2023, the SEC charged Coinbase with operating an unregistered securities exchange and for failing to properly register its crypto staking program.
• FIVN +4%; reported strong 4Q24 results with top-line growth accelerating, driven by momentum in large deals and bookings growing sequentially in 4Q. AI is driving accelerating fundamentals with the Five9’s platform being leveraged to improve customer experience.
• MELI +6%; after reported strong 4Q results with revenue and EBIT above Street estimates by 3% and 33%, respectively and total GMV grew +56% ex-FX in 4Q, while units sold was up +27% (1-pt deceleration on 3-pt tougher comp) on better margins.

• CARG -18%; shares slumped as Q4 was mixed along with somewhat disappointing Q1 and 2025 guidance commentary as RBC noted CarOffer’s operational struggles have seemingly gotten worse with another re-org resetting revenue significantly lower.
• DBX 12%; after reporting another mixed quarter, as revenue was decent, and ARR growth deceleration of 10 bps was better than feared; but issued a worse-than-expected annual revenue forecast for 2025, missing ests for annual revenue growth by around 3.5% points.
• GLOB -24%; reported mixed Q4 results as revenue was a touch lighter than expected due to FX headwinds, but favorable below-the-line items helped drive the EPS beat; also provided weaker than expected Q1/FY25 guide which factors in FX headwinds, softer spending at Disney, and political/economic uncertainty in LATAM.
• HIMS -20%; shares slipped after according to a Recent SEC Filing; Andrew Dudum, 10% Owner, Director, CEO, on February 18, 2025, sold 175,661 shares for $10,230,063. Following the Form 4 filing, Dudum has 97,687 shares held directly. Also hurting shares further, FDA confirms Ozempic & Wegovy shortages are fully resolved.
• UNH -8%; as the WSJ reported the U.S. Justice Department has launched an investigation into UnitedHealth’s Medicare billing practices in recent months, citing people familiar with the matter.
• XYZ -15%; delivered mixed results and a slightly underwhelming guide which pressured shares as net revenue came in at $6.032B, up 4% y/y, including Cash App transactions for Bitcoin which were below the $6.295B Street estimate while gross profit rose 14% to $2.31B vs. estimates of $2.33B.