Mid-Morning Look

Thursday, February 22, 2024

Index	Up/Down	%	Last
DJ Industrials	268.04	0.70%	38,881
S&P 500	80.57	1.62%	5,062
Nasdaq	375.19	2.40%	15,955
Russell 2000	8.00	0.40%	2,002

 

 

The S&P 500 hits all-time highs along with the Dow Jones Industrials! U.S. stocks surge after Nvidia (NVDA) tops all-time highs, rising over 15% to $775 per share after quarterly results and guidance surpass very high expectations. NVDA reported Q4 EPS $5.16 on revs $22.10B, topping ests of $4.60 and $20.41B while Data center revenue $18.4B tops est. $17.21B and above $3.62B y/y while Gaming revenue $2.9B, +58% y/y. Gross margins also a bright spot at 76.7% vs. est. 75.4% and forecasts Q1 rev $24B, plus or minus 2%, vs. est. $21.9B. It was a great quarter, and the result leading to follow through strength in semis with the SOX rising as much as 4% to 4,625 boosting shares of ARM, AMD, AVGO, SMCI, TSM and many others. The Nasdaq is leading up over 2.3%, but still off its all-time high of 16,080.07 on February 12th while the Smallcap Russell 200 and Dow underperform the S&P and Nasdaq. Fed’s Jefferson the first of many Fed heads speaking today saying it is “likely to be appropriate to begin cutting policy rate later this year; January CPI data disappointing, shows path down likely to be bumpy, and remains cautiously optimistic about progress on inflation”. Fed speakers have backed off on the more aggressive rate cut outlook, but still see roughly 75-bps in cuts this year vs. market estimates for -150bps in cuts to start the year. The 10-year Treasury yield popped this morning to highs around 4.35% following the stronger Jobless Claims data but gave back those gains after S&P Global PMI data in expansion territory but below prior month. There are recaps of other sector earnings movers below, but market reaction all thanks to Nvidia.

• S&P Global February flash composite PMI at 51.4 (vs 52.0 in January); U.S. S&P Global February flash services PMI at 51.3 (vs 52.5 in January) and S&P Global February flash manufacturing PMI at 51.5, 17-month high (vs 50.7 in January).
• Jan Existing Home Sales rose 3.1% to 4.00M unit rate above consensus 3.97M and vs Dec 3.88M (prev 3.78M); Jan inventory of homes for sale 1.01M units, 3.0 months’ worth and the national median home price for existing homes $379,100, +5.1% from Jan 2023.

 

 

Macro	Up/Down	Last
WTI Crude	0.14	78.05
Brent	0.10	83.13
Gold	-2.00	2,032.30
EUR/USD	-0.0004	1.0812
JPY/USD	0.22	150.48
10-Year Note	-0.012	4.311%

 

• Restaurants: BROS Q4 EPS beats comp store sales growth well above expectations (Q4 EPS $0.04 above consensus of $0.02 on system SSS growth of 5.0% and company owned SSS growth of 4.6% vs. est. 2.5% and 1.4%, respectively); CAKE Q4 EPS of $0.80 was above $0.73 consensus and comp sales growth of 2.5% at The Cheesecake Factory versus 2.1% consensus and its 2.5% estimate, unit-level margin of 15.1% was above consensus of 14.8% and Q4’s menu pricing was 7.3%; JACK maintained all aspects of its full-year ’24 financial guidance (i.e. EPS of $6.25–6.50), despite softer SSS trends in 1Q23 and 2Q-to-date; Bernstein downgraded WEN from Outperform to Market-Perform based on its lowered expectations on same-store sales and unit growth, as well as a lack of clear catalysts for multiple expansion in the near term (note JP Morgan downgraded earlier this week as well).
• In Energy sector: earnings from APA which showed moderating capex/oil growth in current macro, SM sticks with mid-single digit oil growth for 2024, VTLE posts with good inventory update and MRO which reported a miss on 4Q23 EBITDAX/FCF (~4%/17% below Street) despite in-line volumes driven by higher opex and little capex surprises. In Solar: RUN Q4 installs came in below estimates and guidance mid-point, but net subscriber value $13,445/customer grew better than expectations; Storage demand remains robust, with RUN guiding to ~+60% y/y growth in 2024 in MwH installed, led by >80% attach rates in California. NOVA tumbles after reporting Q4 EPS reported ($1.53) vs est. ($0.18) on revs $194.182Mm vs est. $223.4Mm

 

• DOCN +8%; Q423 revenue grew 11% year/year, a $3M beat, with Cloudways up 43% Y/Y and Paperspace contributing $3M and mid-point of guidance for Q1 and FY come in above views.
• NVAX +26%; said it has agreed to pay back international vaccine group Gavi at least $475M in cash or vaccines by the end of 2028 in settlement.
• NVDA +12%; trades back to new all-time highs after results and guidance overnight lift the entire semiconductor sector and technology in general on Q4 big beat and upbeat guidance (boosts shares of ARM, AMD, SMCI, others).
• PWR +9%; Q4 profit and revs topped consensus and forecast annual revs above estimates as well.
• RCL +5%; boosted its FY24 adjusted EPS view to $9.90-$10.10 from $9.50-$9.70 (est. $9.77) – less than three weeks since they issued their previous guidance along with its Q4 earnings (CCL NCLH rise in sympathy).
• RILY +16%; after the company said an internal review had found that it had not been involved with, or knowledge of any of the alleged misconduct concerning Prophecy Asset Management.
• SNPS +11%; after quarterly results and guidance topped consensus.

 

• GSHD -20%; as operating EPS of $0.28 missed consensus of $0.33, driven lower by lower-than-expected renewal royalty fees, lower renewal commission for the corporate channel and worse agency fees.
• KDP -4%; mixed Q4 as EPS beat by a penny, but sales of $3.87B missed the $3.91B estimate saying higher prices hurt demand for soda, impacting volume sales.
• LCID -16%; introduced FY24 Annual Production Guidance of ~9K vehicles, which was significantly below consensus of ~23K vehicles and delivered 6,001 vehicles in FY23, while Q4 revs fell -39% y/y to $157M missing the $180M estimate.
• NEM -3%; in gold miners after Q4 results missed, co said intends to divest six non-core assets, and reduced its quarterly dividend to 25 cents a share from 40 cents a share.
• RIVN -25%; after reported an in-line DecQ top line at $1.32B and delivered ~14k vehicles versus 17.5k produced but announced that it predicts vehicle deliveries in Q1 2024 to be about 10%-15% lower than in Q4 2023 and that it is laying off 10% of its salaried workers.
• RUN -7%; Q4 installations came in below estimates and guidance mid-point, but net subscriber value $13,445/customer grew better than expectations.

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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.