Mid-Morning Look

Wednesday, March 13, 2024

Index	Up/Down	%	Last
DJ Industrials	104.04	0.27%	39,113
S&P 500	-7.97	0.15%	5,168
Nasdaq	-100.73	0.61%	16,166
Russell 2000	11.73	0.57%	2,077

 

 

U.S. stocks seeing mixed results early following another record closing high for the S&P 500 on Tuesday (17^th of the year), with oil prices jumping helping boost energy stocks, but technology shares paring recent gains amid rising Treasury yields, profit taking, and a few specific headlines. In Tech, TSLA falls following an analyst downgrade, AAPL falls as supplier issues weaker results and semiconductors taking a breather after incredible run. Copper prices jump on China headlines overnight, lifting copper producers. Sentiment remains strong for major averages as global equities attracted another $6.9B in week-ended 6-Mar, marking a seventh straight week of inflows and according to BofA’s Flow Show report, bringing the total over that period to just over $90B, the strongest trend in two years. However, US equities saw a small outflow of $0.1B and BofA flagged a record $4.4B exodus from tech, the first outflow in nine weeks. In Washington DC today, the U.S. House of Representatives plans to vote on a bill that would give TikTok’s Chinese owner ByteDance about six months to divest the U.S. assets of the short-video app used by about 170M Americans or face a ban. No Fed speakers this week ahead of FOMC meeting next week, no economic data today but a $25B 30-yr bond auction at 1:00 PM – tomorrow busy with PPI, Retail Sales, and Jobless Claims. Bitcoin prices resume upward momentum above 472,500 and Ethereum (ETH) around $4,000. The dollar flat, yields up, and gold higher.

 

Macro	Up/Down	Last
WTI Crude	2.05	79.61
Brent	1.87	83.79
Gold	3.80	2,169.90
EUR/USD	0.0006	1.0930
JPY/USD	0.29	147.94
10-Year Note	0.023	4.178%

 

• In Tech Hardware: AAPL supplier Foxconn FY Net income misses estimates as 2023-year results showed net income 21.04b yuan, below estimate 23.31b yuan and revenue 476.34b yuan, below estimate 511.24b yuan. In Servers: Bank America said AI is set to drive server market growth above historical rates. BAML models server market revs growing at 23% CAGR 2023-27. Within the server market, BAML models AI servers growing much faster with revenue and unit CAGRs of 50% and 58%, respectively. Within BAML’s coverage, it sees SMCI, DELL, HPE, NTAP, PSTG, WDC and STX as beneficiaries.
• In Managed Care: HUM downgraded to Hold from Buy at Argus saying Humana faces headwinds to revenue and earnings growth as its profit margin is squeezed by an unanticipated spike in medical utilization among its Medicare Advantage members. CLOV shares rose after Q4 adjusted EBITDA loss ($19.1M) vs ($80M) y/y and revs $510.30M vs. est. $480.25M; sees 2024 insurance revenue $1.25B-$1.3B; Issues 2024 guidance with Insurance MCR range of 79% – 83% and up to $20M of Adjusted EBITDA profitability at the high end of the range.

 

• FCX +5%; as copper hits 7-month highs on reports overnight Chinese smelters, which process half of the world’s mined copper, agreed on a joint production cut.
• MSTR +5%; Bitcoin prices jumped over 2% to $72,500 adding more gains to top Bitcoin holder MSTR as shares topped $1,600 this morning along with activity in MARA, RIOT, CLSK, HUT, others.
• SKIN +37%; Q4 revenue of $96.8MM was ahead of the Street’s $88.0MM and adj EBITDA of $3.4MM was ahead Street’s ($2.6MME) as the new management team stabilized the business while management’s 2024 EBITDA guidance of >$40MM was much better than $36Mm est.
• WOOF +7%; reports 4Q EPS in-line and revenue beat, $1.7B vs cons $1.63B; sees Q1 rev $1.5B, in-line with ests and said CEO to step down.
• WSM +14%; shares jumped after boosting its quarterly dividend by 26% to $1.13 per share and expanded its stock repurchase capacity to $1 billion; also, Q4 comp sales -6.8%, better than est. -9.05%.

 

• DLTR -14%; shares fall on miss/guidance as Q4 adj EPS $2.55 vs. est. $2.65; Q4 revs $8.63B vs. est. $8.67B; sees Q1 EPS $1.33-$1.48 vs. est. $1.69 and revenue $7.6B-$7.9B vs. est. $7.68B; sees FY24 EPS $6.70-$7.30 vs. est. $7.04 and sees FY24 revenue $31B-$32B vs. est. $31.65B.
• GEHC -4%; as 14M share Spot Secondary priced at $87.75.
• MCD -2%; shares slipped following comments at conference as forecasts Q1 sales in its international business slightly lower than Q4; said they continue to deal with impacts of war in Middle East but are also forecasting "a sluggish start" in China this year.
• SWIM -3%; after the company initiated 2024E guidance with the midpoint of revenue ($490M to $52OM) and adjusted EBITDA ($60M to 570M), roughly 8% and 35% below consensus expectations.
• TSLA -2%; was downgraded from Equal Weight to Underweight at Wells Fargo and cut tgt to $125 from $200 saying they see downside risk to volume as price cuts are having a diminishing impact and sees headwinds from disappointing deliveries & more price cuts, which likely drive negative EPS revisions.
• WBA -1%; after the WSJ reported Amazon Pharmacy, which has sold prescription medicines online since 2020, will now handle some of the home delivery of anti-obesity therapy Zepbound and other LLY drugs that are ordered through the drugmaker’s new direct-to-consumer service.

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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.