Mid-Morning Look

Wednesday, February 22, 2023

US stocks are seeing modest losses early after a wash-out day yesterday. Less hawkish commentary from the Fed’s Bullard this morning and some easing of the recent upward pressure on yields are lifted stocks initially before fading. Early breadth was almost 2.5:1 in favor of advancers, with notable gains in NDSN +3.6% in industrials, FANG +4.8% in energy, AMZN, NOW, PAYC +2% in technology and TGT +1.75% in consumer – but that has changed quickly. Early decliners include KEYS -15.7% in technology, CRL -9.4% in healthcare, NWSA -5% in media and CEG -2.4% in utilities. Treasury yields slipping off the overnight high’s, 10y yield last 3.902% from an overnight 3.968% high. Stocks however are quickly sliding to session lows, paring gains. INTC cuts its dividend to shore up its capital. No major economic data this morning with attention on the FOMC minutes from the February meeting later this afternoon when they raised rates by 25-bps.

Stock GAINERS

·     BIDU +6%; Q4 EPS $2.21 vs. est. $2.00; Q4 revs $4.8B vs. est. $4.65B; announces $5B share repurchase program; non-online marketing revenue rose 11% to 7.6 billion yuan, driven by AI and cloud businesses.

·     FANG +4%; Q4 adj EPS $5.29 vs. est. $5.22; Q4 revs $2.03B vs. est. $2.09B; Q4 average production of 226.1 MBO/d.

·     LLAP +60% after saying its subsidiary, Tyvak Nano-Satellite Systems, awarded $2.4 bln contract to build 300 satellites for Rivada Space Networks.

·     ONEM +8%; as AMZN said it had completed its $3.5 billion takeover of the primary care provider a day after a U.S. FTC official announced that the agency would not challenge the deal.

·     PANW +10%; after F2Q product, billings, next gen security (NGS) ARR, RPO, FCF, and EPS all beat, while total revenue was in line. FY23 billings, NGS ARR, FCF, EBIT, and EPS were all guided higher.

Stock LAGGARDS

·     CRL -9%; after disclosing it received a subpoena relating to an ongoing DoJ investigation into the supply chain for research primates and have voluntarily suspended shipments from Cambodia.

·     CSGP -6%; as FY23 EBITDA guidance came in ~33% below consensus due to increased organic investment. We estimate incremental residential investment of ~$250mm, resulting in ~$475mm total FY23 investment, given the decision not to acquire Move (owner of Realtor.com).

·     INTC -1%; said it will cut the quarterly dividend to $0.125 per share, or 50 cents annually as part of its strategy to improve capital amid uncertain times.

·     OSTK -5%; after quarterly results miss as Q4 adjusted EPS loss (-$0.04) vs. est. $0.02; Q4 revs $405M vs. est. $448.67M.

·     ZIP -18%; 4Q revenues were modestly ahead guidance but guided to softer than expected 2023 revenues as January did not see the typical seasonal improvement in job listings.