Mid-Morning Look: July 21, 2021

Mid-Morning Look

Wednesday, July 21, 2021






DJ Industrials




S&P 500








Russell 2000






Stocks open higher (and holding steady thus far) following volatile trading Monday/Tuesday sparked by worries about the spread of coronavirus, as buyers’ step in with the benchmark S&P 500 rising after posting its biggest one-day gain since late March. Tuesday’s advance almost unwound the S&P 500’s steep drop from Monday and pushed the index to within 1.5% of its record closing high. The Russell 2000 Smallcap getting a boost again, outperforms behind a rebound in energy and financial stocks as yields rise and oil recovers (RTY snapped its 5-day losing streak yesterday). A strong start to the earnings season among the biggest U.S. companies is helping buoy sentiment as through Tuesday, 85% of S&P 500 companies that had filed quarterly results topped analysts’ expectations, according to FactSet. Stocks benefitting from earnings results this morning include CMG, KO, LE while STX, HOG slip despite beating. The yield on 10-year Treasury rose to 1.28% from 1.208% Tuesday (well off Tuesday lows below 1.13%). Oil prices rebound as WTI crude rises over 3% to session-high $69.50, shrugging off bearish API inventory data. Bitcoin rose 6% compared to its level on Tuesday, trading around $31,700 after having slipped below $30,000 on Tuesday for the first time in about a month (crypto space getting a boost as Tesla CEO Elon Musk, Twitter’s Jack Dorsey and ARK Invest’s Cathie Wood are among those to take part in a live discussion at The B Word conference today). Earnings tonight from TXN, CSX, LVS, WHR.







WTI Crude















10-Year Note





Sector Movers Today

·     Semiconductors; big earnings this week; overnight, ASML reported a rise in second-quarter profit, a new share buyback program and higher full-year sales guidance; strength across the board in semi-cap equipment names (LRCX, TER, AMAT, KLAC) after ASML bookings were +74% q/q; markets prepare for INTC earnings tomorrow night; IIVI downgraded from Buy to Neutral at Citigroup as believe that the stock will see relative underperformance until the acquisition of COHR closes later this year; STM announced that they have worked together to develop a new Unilumin display using the ST60A2, ST’s 60GHz RF transceiver for advanced high-data-rate contactless-transfer solutions; TER positive catalyst watch in semi-equipment sector at Citigroup while AMAT remains top pick; NVDA advanced on first day after 4-1 stock split takes effect

·     Auto sector; DDAIF Q2 sales EU43.48B beat est. EU42.74B, but cut full-year unit sales expectations for Mercedes-Benz to be at prior year’s level from ‘significantly above’ expected earlier as the semiconductor shortage will continue to affect 2H business; HOG posted Q2 adj EPS $1.41 above est. $1.26 on revs $1.53B that also beat est. $1.41B, motorcycle shipments nearly doubled YoY to 56,700, retail sales 65,300 (+23.9%), and guided FY motorcycle segment revs +30-35%; LAD reported Q2 adj EPS $11.12 vs. est. $5.85 on revs $6.01B vs. est. $4.99B as new vehicle retail sales increased 130.0% and used vehicle retail sales increased 95.7% from last year; F (Ford) and private company Argo AI said they will launch self-driving vehicles on the LYFT network by the end of the year with initial deployments in Miami and then Austin; Barclays lowered their price target on CAR to $70 from $83, but kept their $150 bull case intact

·     Healthcare Services; managed care provider ANTM reported 2Q results, with slightly better revenues $33.28B (vs. $33.1B cons) and EPS of $7.03 (vs. $6.34 cons), with better benefit expense ratio 86.8% (vs. 87.8% cons) and Investment Income partially offset by higher SG&A 11.5% (vs. 10.8% cons) while raised its ’21 guidance; SDC announced a favorable legal ruling, specifically, an en banc panel of the U.S. Court of Appeals for the Eleventh Circuit sided with SDC, rejecting the Georgia Board of Dentistry’s attempt to shield itself from antitrust liability

·     Transports; in airlines, UAL Q2 results largely in-line with consensus views as international and business travel rebounded faster than expected – revs of $5.47B topped the $5.35B estimate on mostly in-line EPS loss of ($3.91)but Q3 guidance was relatively upbeat; in truckers, KNX posts Q2 EPS and revs ahead of consensus views and raises year guidance; in rails, CNI posts Q2 Operating Miss, as EBIT fell short of consensus (-6%), with the O.R. deteriorating by 120bps y/y and incremental margins of just 29% y/y on a 12% y/y increase in revenue

·     Media & Telecom movers; Dow component VZ posted a Q3 EPS/rev beat ($1.37/$33.8B vs. est. $1.30/$32.67B) saying the strong post-COVID economy boosted its quarterly results, along with a faster-than-expected adoption of 5G – lost 62,000 pay TV customers during the quarter but added 92,000 broadband subscribers compared to a loss of 82,000 broadband users in Q1; IAC upgraded to Outperform with $170 tgt at BMO Capital saying it’s been a particularly active 12+ months (MGM investment revealed, MTCH spin, investor day, VMEO spin) and we think investors are catching their breath with the IAC story; in advertising, IPG said it turned a profit for the second quarter due to revenue growth across agencies (better than OMC yesterday)



·     CCL +8%; cruise lines among leaders in the S&P 500

·     CMG +9%; earnings well above consensus ($7.46 vs. Street $6.53) and guided to stronger-than-expected 3Q comps (low to mid-double-digits vs. Street 10%); restaurant margin also impressed (24.5% vs. Street 23.7%),

·     IPG +13%; said it turned a profit for the second quarter due to revenue growth across agencies (better than OMC yesterday) – and sees organic revenue +9% to +10%, saw +5% to +6%

·     JNJ +2%; with a beat and raise as Q2 adj EPS $2.48 vs. est. $2.27; Q2 revs $23.31B vs. est. $22.19B and raises FY21 adjusted EPS view to $9.50-$9.60 from $9.30-$9.45 (est. $9.52) and raises FY21 revenue view to $93.8B-$94.6B from $90.6B-$91.6B

·     KLAC +3%; strength across the board in semi-cap equipment names (LRCX, TER, AMAT) after ASML bookings were +74% q/q

·      KO +2%; as Q2 sales beat expectations for the Dow component and now forecasts EPS growth of 12% to 15% from $1.95 in 2020, up from previous guidance of high-single digit to low-double digit growth (est. is for EPS of $2.18, suggesting an 11.9% rise)

·     LE +11%; raises Q2 revs to $380M-$385M, up from prior view $345M-$355M; raises Q2 adj Ebitda to $36M-$38M from prior view $20M-$23M and ups EPS view to $0.39-$0.43 from prior $0.05-$0.12 (est. $0.07); also raises year revs, income and Ebitda views

·     XM ; 2Q’s beat-and-raise was driven by broad based strength, and results display accelerating growth trends across the business metrics



·     HOG -4%; posted Q2 adj EPS $1.41 above est. $1.26 on revs $1.53B that also beat est. $1.41B, motorcycle shipments nearly doubled YoY to 56,700, but warned 2% pricing surcharge will not fully offset raw material cost pressure

·     ISRG -2%; shares pullback after hitting record highs – Q2 EPS and revenue well above estimates driven by a solid sequential improvement in both system placements and procedure growth – Revenue of $1.46B (up 71.8% YoY) surpassed the consensus’s $1.27B

·     MGTA -5%; received a clinical hold letter from the U.S. FDA related to its Investigational New Drug Application (IND) to initiate a Phase 1/2 clinical trial of MGTA-117 in patients with acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS).

·     NFLX -3%; said it added 1.5 million memberships in the second quarter, reflecting slower growth in new subscribers following a surge last year at the height of the pandemic and guided Q3 streaming net adds 3.5Mm, which was below the est. at 5.5Mm

·     SNBR -13%; shares fall on Q2 miss as EPS $0.88 below est. $1.16 on net sales $484.3Mm missing the est. $511Mm, though guidance was above views

·     STX -5%; falls despite beat and raise quarter in HDD space



·     CS Disco (LAW) 7M share IPO priced at $32.00

·     Cytokinetics (CYTK) 10M share Secondary priced at $27.50

·     Kaltura (KLTR) 15M share IPO priced at $10.00

·     Kura Sushi (KRUS) 1.1M share Spot Secondary priced at $45.00

·     National Storage (NSA) 8.8M share Spot Secondary priced at $51.25

·     Paycor (PYCR) 18.5M share IPO priced at $23.00

·     Signature Bank (SBNY) 2.5M share Spot Secondary priced at $232.00

·     Staffing 360 Solutions (STAF) 2.2M share registered direct offering priced at $3.45

·     VTEX (VTEX) 19M share IPO priced at $19.00

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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.