Mid-Morning Look: March 15, 2021

Mid-Morning Look
Monday, March 15, 2021
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
30.66 |
0.09% |
32,808 |
|||
S&P 500 |
-3.23 |
0.08% |
3,940 |
|||
Nasdaq |
22.07 |
0.17% |
13,341 |
|||
Russell 2000 |
-9.00 |
0.39% |
2,343 |
|||
Stocks open higher to start the week but are now trading mixed as the Dow Jones Industrial Average and Dow Transports briefly touched intraday record highs before paring gains, while the Nasdaq Composite leads markets early as investors rotate out of recent winners into laggards. Transports and reopen related stocks among top advancers to start the week with massive gains for airlines (AAL, DAL), cruise lines (CCL, RCL) and casinos (WYNN, MGM), while energy slips after 2021 outperformance (couple of analyst downgrades in space following rally in shares). Treasury yields not impacting markets early as the 10-year holds above 1.6%, but down from last week highs. Cannabis stocks also showing early strength (TLRY, CGC, CRON), along with bitcoin leveraged names (GBTC, MARA, RIOT) as the crypto currency surged to new all-time highs above $60K this weekend but has since slipped back around $57K. The Fed in focus this week along with economic data (note better manufacturing data this morning). Eli Lilly (LLY) the biggest drag in the S&P after drug data for its Alzheimer’s drug falls short of high expectations; also several M&A deal moving stocks today (SJR, GNMK, STAY, RMBL among them).
Economic Data
· Empire manufacturing for March shows current business conditions index at 17.4, above consensus of +14.5 and above the +12.1 in February; New orders index 9.1 in March vs +10.8 in February, prices paid index 64.4 in March vs +57.8 in February, employment index at 9.4 in March vs +12.1 in February and six-month business conditions index 36.4 in March vs +34.9 in February
Macro |
Up/Down |
Last |
|
||
WTI Crude |
-0.87 |
64.74 |
|||
Brent |
-0.92 |
68.31 |
|||
Gold |
8.60 |
1,728.40 |
|||
EUR/USD |
-0.0034 |
1.192 |
|||
JPY/USD |
0.18 |
109.22 |
|||
10-Year Note |
-0.024 |
1.611% |
|||
Sector Movers Today
· Casinos and Gaming; DKNG announces proposed offering of $1 billion of convertible senior notes; PENN rises as it will be added into the S&P 500 index (along with CZR); MGM upgraded to Buy from Hold and raise tgt to $50 from $36 at Jefferies as expect change in valuation context on improved macro outlook for 2H21-2022, with a steeper recovery trajectory in Las Vegas vs. prior and continued regional strength; LVS tgt to $77 from $68 and WYNN to $157 from $135 at Stifel saying they believe the Macau-centric names could represent some of the most compelling ideas for the remainder of 2021 given the massive underperformance over the last twelve months
· Airlines; sector strong with reopen stocks extending gains, and better monthly metrics; yesterday was the first day in 2021 where TSA travelers were > 2020’s date 1,357.111 for 2021 vs. 2020 YoY figure 1,257.823 – https://www.tsa.gov/coronavirus/passenger-throughput ; monthly metrics showed: 1) DAL sees 1q daily cash burn $12M-$14M, operating expenses high end prior view and sees 1q total rev low end of prior guidance; 2) LUV said it saw better leisure demand though business travel continued to lag/said it expects operating revenue to fall 15% to 20% from 2020 and 55% to 60% from 2019, both narrower declines than previously estimated; 3) JBLU said it now expects revenue to decline between 61% and 64% during Q1 YoY; 4) ALK said Q1 expectation for capacity (ASMs) % change versus 2019, down about 33% and Q1 expectation for cash flow from operations $50 mln to $100 mln
· Biotech movers; GILD and MRK rejoining forces to develop a long-acting HIV therapy, and are planning to explore whether a combination of two experimental drugs, which the companies had been researching separately, could treat HIV even if taken every several months, WSJ reported; CHEK shares double in premarket trading after FDA permits co to begin study of its experimental cancer screening test in the U.S.; REGN and SNY said they are stopping a Phase 3 study of their anti-PD-1 cancer drug Libtayo early due to positive results in advanced cervical cancer; NTEC surges as announces merger with Decoy Biosystems as former Decoy stockholders expected to own about 75% of combined co, and NTEC 25%; HSTO rises after announcing that the FDA has removed the clinical hold on its early-stage HST-003 trial
· Payments and FinTech; Stripe said that it raised $600 million from a group of investors that included Ireland’s National Treasury Management Agency, insurers Allianz SE and AXA SA and investment managers Baillie Gifford & Co. and Fidelity Investments/valued Stripe at $95B, more than 2 1/2 times the valuation in a 2019 fundraising round. https://on.wsj.com/3tkig9g ; Mizuho said their survey estimates that 10% of the direct stimulus checks may be used to buy Bitcoin and stocks, with Bitcoin accounting for 60% of total incremental spend which may add 2-3% to its $1.1T market cap, and rank V (Visa) and PYPL as the preferred payment names among check recipients by a wide margin, followed by MA, SQ; Wedbush says the recovery in travel and overall economic activity, as well as the recent stimulus bill, is positive for V (Visa), MA, FIS, PYPL, WNS, and said the street is currently yet to model such a recovery; Wells sees the payments from the stimulus bill as a positive for V, MA as they should have an immediate impact on consumer loan credit, payment rates and spend volumes, boost debit volumes
Stock GAINERS
· AAL +8%; airlines broadly higher with reopen stocks extending gains (casinos/theme parks), and better monthly airline metrics (ALK, JBLU, DAL, LUV out); yesterday was the first day in 2021 where TSA travelers were > 2020’s date 1,357.111 for 2021 vs. 2020 YoY figure 1,257.823
· BA +2%; shares adding to recent gains as economic recovery play, rising a 6th straight day and leading the Dow to another record highs, as it approaches the 33K level
· GNMK +29%; to be acquired by Roche in a deal valued at approximately $1.8 billion, paying $24.05 a share in cash https://on.mktw.net/30LhFBi
· MGM +6%; upgraded to Buy from Hold and raise tgt to $50 from $36 at Jefferies as expect change in valuation context on improved macro outlook for 2H21-2022, with a steeper recovery trajectory in Las Vegas vs. prior and continued regional strength
· OCUP +30%; said a Phase 3 registration study of its lead product candidate Nyxol in the reversal of pharmacologically induced mydriasis, or dilation of the pupil for eye exams, met its key endpoints
· PENN +7%; all-time highs after being announce as upcoming add to the S&P 500 index
· SJR +41%; shares jumped as RCI agreed to acquire the Telecom company in a $26B deal, paying $40.50 per share in cash, a premium of about 70%, as deal also includes about $6 billion in Shaw debt https://on.mktw.net/3tmxRFk
· STAY +14%; confirmed an agreement to be acquired by Blackstone Group Inc. and Starwood Capital Group in an all-cash deal valued at about $6 billion, with holders to receive $19.50 for each Extended Stay share they own https://on.mktw.net/3cMVm43
Stock LAGGARDS
· BABA -1%; slips after the WSJ reported that the Chinese government has asked the company to develop a plan to divest its media assets on concerns about the tech giant’s scope https://on.wsj.com/3qLJsfp
· CHPT -7%; adds to Friday losses post earnings (fell -8.5% Friday)
· DFS -2%; credit card delinquency rate falls to 2.01% in February from 2.08% in January and 2.64% in February 2020, while its net principal charge-off rate was 3.15% in Feb versus 2.57% in January
· LLY -8%; slips after the highly anticipated release of data on the company’s experimental Alzheimer’s disease drug (Donanemab) fell short of Wall Street expectations as analysts said the data was promising, but not as strong as investors had believed they would be
· OXY -4%; profit taking in energy sector (XOM, EOG) among top drops in S&P 500
· X -3%; downgraded at Argus after run-up in shares; co with positive guidance though as sees Q1 adj EPS about $1.02 vs. est. 70c and said Q1 adj EBITDA is expected to be approximately $540M and excludes impacts related to acquiring the remaining stake in Big River Steel
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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.