Mid-Morning Look

Wednesday, March 06, 2024

Index	Up/Down	%	Last
DJ Industrials	156.04	0.41%	38,741
S&P 500	26.95	0.53%	5,105
Nasdaq	94.19	0.53%	16,024
Russell 2000	12.91	0.63%	2,066

 

 

U.S. stocks bouncing after yesterday’s declines, as markets listen to testimony from Fed Chairman Powell this morning which began at 10:00 AM. Powell said in prepared testimony to the House Financial Services Committee that the Fed does not expect it will be appropriate to reduce policy rate until we have greater confidence in inflation moving sustainably toward 2%, but likely be appropriate to begin dialing back policy restraint at some point this year. Market expectations are for the Fed Chair to stick to the core message post January’s FOMC. So far, markets taking early Q& in stride with no major surprises. Economic data this morning mixed with slightly weaker ADP private payrolls while JOLTs data in-line and wholesale inventories down. In stocks news the “AI” semi-chip Bull theme and Bitcoin bounce continue to lead the FOMO buying while large cap mega tech AAPL, TSLA, MSFT, GOOGL remain laggards. Broad based strength so far with 9 of 11 S&P sectors in the “green” while Discretionary weak. Software stocks rally behind better results/guidance from CRWD in cyber security last night while FL, JWN, ODD, ANF, BF/B shares slip on results in consumer. Oil prices jump with WTI above $80.

• January JOLTs Job openings reported at 8.863M vs. est. 8.850M and vs. December revised 8.889M from 9.026M.
• Wholesale inventories for January revised to -0.3% (vs. consensus -0.1%) from -0.1% while wholesale sales -1.7% (vs. consensus +0.5%) vs Dec +0.3% (prev +0.7%) and stock/sales ratio 1.36 months’ worth vs Dec 1.34 months.

 

 

Macro	Up/Down	Last
WTI Crude	1.99	80.14
Brent	1.30	83.34
Gold	5.50	2,147.40
EUR/USD	0.0031	1.0887
JPY/USD	-0.49	149.55
10-Year Note	-0.017	4.12%

 

• In EV Autos/Charging: CHPT disappoints again, reports Q4 revenue down -24% y/y to $115.8M (missing est. $118.8M) as Q4 net loss widened to $94.7M from $78.7M y/y and guided Q1 revs $100M-$120M, missing $120.6M est. NIO was downgraded from Buy to Outperform at CLSA and tgt cut to $6 from $9.80 after results noting Q4 ASP declined 1.8% QoQ, and net loss rose 20.8% QoQ to Rmb5.59B and missed consensus by 10%. MSCO comments on TSLA noting EV demand continues to decelerate despite continued price cuts and says fleets are dumping EVs and strong hybrid momentum is competing for the marginal EV buyer.
• In Managed Care: Barclay’s initiated coverage on the U. S. Health Care Facilities & Managed Care sector with a Neutral industry view that tilts positively toward facilities with durable volume growth and MCOs that have a differentiated mix of earnings toward the ACA exchanges and commercial segments. But Barclays was cautious on Medicare saying reimbursement challenges, increasing cost trend, and slowing senior growth make the MA investment case less compelling now than at any point in the last ten years. Top Overweight ratings include CNC, CI, EHC, THC; notable EWs include CVS, HUM, SGRY, PRVA; and UWs include AGL, ALHC.

 

• CELZ +34%; said the FDA granted orphan drug status to its experimental immunotherapy to prevent graft rejection in patients with brittle type 1 diabetes, undergoing pancreatic islet cell transplantation.
• CRWD +22%; reported strong Q4 earnings of $0.95 (est. $0.82) on revenues of $845.3M (est. $839.1M), FQ4 ARR of $3,435M (34% y/y) beat consensus by $37M, and FQ1 ARR was guided roughly $35M above consensus and announced intent to acquire Flow Security (a data security posture management, DSPM, provider).
• DXCM +3%; said the FDA cleared the use of its 15-day wear sensor, known as Stelo, intended for people with type 2 diabetes who do not use insulin as the first continuous glucose monitor (CGM) to be available over the counter.
• JD +16%; shares jumped as posted a quarterly revenue increase and launched a new $3 billion share repurchase program.
• PLTR +3%; on news it received a contract from the U.S. Army worth $178.4M to develop ten artificial intelligence-powered ground stations as part of a project called Titian, or Tactical Intelligence Targeting Access Node.
• SMCI +2%; initiated with a Buy and Street high $1,350 tgt at Argus calling it a leading computer and server provider for the age of generative AI as in addition to a full line of rack and blade servers for cloud, enterprise, data center and other applications, SMCI provides GPU-based systems for deep learning, high performance computing.

 

• EVC -51%; after saying they received communication from META that it intends to wind down its ASP program globally and end relationship with all its ASPs … company estimates Meta’s ASP program represented approx $23.8Mm of the $57.7Mm consolidated EBITDA.
• FL -24%; after guiding FY EPS of $1.50-$1.70 per share below consensus estimate of $1.93 as CFO said 2024 will serve as a cash rebuilding year and company will not resume a dividend at this time.
• JWN -13%; as reported a top-and-bottom line beat, though GM missed expectations, with management citing ongoing momentum at Rack while also noting a still cautious consumer environment and forecasts annual EPS $1.65-$2.05 vs. consensus $1.98.
• ODD -4%; reported a top-and bottom-line beat, with net revenues coming in ~14% above consensus and growing ~44% y/y on better margins but shares slipped on lower FY24 EPS outlook.
• THO -16%; Q2 EPS of $0.13, below the Street’s $0.67 as sales fell -6% y/y to $2.2B and operating profit of $18.3mn was 53% below last year; the co also cuts FY24 revenue view to $10B-$10.5B from $10.5B-$11B (est. $10.65B) and lowers its FY24 consolidated gross profit margin.
• UNFI -8%; as Q2 results slightly better/in-line, but cuts FY24 revenue view to $30.5B-$31B from $30.9B-$31.5B (est. $31.01B) and announced CFO will leave company.
• VNOM -7%; announced 11.5M shares sold by its parent FANG for gross proceeds of $402M as deal priced at $35.00 per share (the sale cut FANG’s stake in VNOM from 55.8% to 49%, or ~87.2M shares, per SEC filing).

_________________________________________________________________

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.