Mid-Morning Look: May 10, 2022

Mid-Morning Look

Tuesday, May 10, 2022






DJ Industrials




S&P 500








Russell 2000






After a 3-day stock market annihilation, that has pushed the S&P 500 index down 17% from 52-week highs and the Nasdaq down about 27% from its 52-week highs, U.S. stock markets open higher to start the day – questions is, can it maintain its gains? Stocks got an additional boost this morning after CNBC’s Jim Cramer noted in conversation with hedge fund manager David Tepper that he covered his Nasdaq short and is a buyer of the S&P. Tepper said he believes “the sell-off could be concluding.” “I was talking to my friend Dave Tepper, who’s been short,” Cramer said on “Squawk Box,” before the opening bell, following another day of broad declines on Wall Street.” “He came in, covered his short on the Nasdaq. Again, he is a trader. He feels that the sell-off could be concluding. The comments helped a market that already saw an overnight bounce. Biotech gets a bounce (XBI was down 8% yesterday and been cut in half over last 12-months) following an M&A deal in the space as PFE buys BHVN in $11.6B deal (roughly 70% pop), while tech looks to rebound with the Nasdaq on track for its worst start to a year (to this point) ever, down 25% thus far. Haven demand eased, with the dollar halting a three-day advance and 10-year Treasuries rising (sending the 10-yr yield below 3% after topping at 3.2% Monday). Gold gained and Bitcoin rebounded from its swoon below $30,000. Oil nudged down and U.S. retail gasoline and diesel prices rose to a record. A handful of stocks with sharp moves to the downside following disappointing earnings/guidance: BHC, CARG, DM, FTCI, GDRX, GRPN, LDI, NVAX, PTON, UPST







WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector; TSLA has halted most of its production at its Shanghai plant due to problems securing parts for its electric vehicles Reuters reported; China passenger vehicle sales tumbled 35.7% last month from a year ago to 1.06 million units, the biggest decline since March 2020; in auto retail, ORLY upgraded to Buy and GPC to Neutral at Bank America as reassess valuations and growth outlooks for the auto parts retail stocks in particular, which are often considered more defensive; FREY and Powin LLC have signed a conditional agreement for Powin to offtake battery cells produced by FREYR for energy storage system applications; Cathie Woods ARK investment buys 158,137 shares of GM yesterday; CARG better Q1 outweighed by disappointing CarOffer GMS and 2Q EBITDA guide-down; auto supplier ALV upgraded to Buy at UBS

·     Software: RNG beat consensus for total rev, ARR and margins but sub rev and Office ARR growth decelerated further and net ARR $’s added missed estimates – sequential ARR growth of 5% was below Q1 seasonal average of 8% Q/Q growth; PLTR downgraded to Underperform from Sector Perform and lowers PT to $6 from $12 following Q1/22 earnings at RBC Capital; PUBM reported in-line 1Q22 results on the top line, while EBITDA was slightly above expectations. Guidance for 2Q22 was also roughly in line, and FY22 was reiterated; APPN was awarded $2.036 billion in damages against PEGA

·     Consumer Staples; SYY raises FY adj EPS view to $3.16-$3.26 from prior $3.00-$3.10 and est. $3.05; USFD announces CEO Transition and Board Changes said Satriano Steps Down as CEO and will not stand for re-election as director at 2022 annual meeting of shareholders; IFF reported 1Q adj. EPS of $1.69, beating consensus of $1.29 and adj. EBITDA of $702mm was well above of ~$613mm while also raised year guidance; MO downgraded to market perform from outperform at Bernstein, which is increasingly worried about the deterioration in the company’s relationship with its former subsidiary Philip Morris International

·     Renewables, Utilities & Solar; PLUG slips after posting a larger-than-expected Q1 loss of (-$0.27) and say expect margins to remain under pressure in Q2 2022 driven by continued increase in natural gas prices; EIX downgrade to Neutral from Buy at Mizuho based on concerns about the impact of rising interest rates on the earnings of Edison’s utility subsidiary Southern California Edison; in solar, FTCI slips after quarterly results; in clean energy, CLNE upgraded to Outperform at Raymond James after being on the sidelines for a decade noting valuation has compressed towards levels of traditional fuel companies



·     APPN +32%; was awarded $2.036 billion in damages against PEGA

·     BHVN +70%; after PFE agrees to acquire for $148.50 per share in a deal total valued at $11.6B – the two companies have been partners for migraine therapy rimegepant, sold as NURTEC ODT, and zavegepant https://bit.ly/3KV5cj3

·     IGT +11%; helping give the gaming sector a little post on better earnings and guidance

·     SWAV +14%; reported a strong Q1 beat and raised 2022 guidance on broadly improved expectations and after relaxing prior COVID conservatism – raised 2022 revenue guidance by $30M at the midpoint

·     SYY +8%; raises FY adj EPS view to $3.16-$3.26 from prior $3.00-$3.10 and est. $3.05

·     TREX +11%; Q122 results beat expectations for both revenue ($339M vs. $326M consensus) and adjusted EBITDA ($105M vs. $93M). Revenue +38% y/y (Resi +40%, Commercial flattish).

·     XPO +4%; delivered 1Q results that far exceeded consensus estimates and increased 2022 adjusted EBITDA and EPS guidance – North American Less-Than-Truckload segment revenue grew 15% y/y in 1Q22



·     BHC -36%; after the company missed revenue and earnings expectations for Q3 and offered revenue guidance for the year that lagged consensus ($8.2B-$8.4B vs. est. 48.6B)

·     CARG -13%; better Q1 outweighed by disappointing CarOffer GMS and 2Q EBITDA guide-down

·     DM -35%; posts Q1 rev beat of $43.7M vs. est. $41.6M but reports wider Q1 adj Ebitda loss of (-441.6m) vs. est. loss (-431.7M) and announces proposed convertible senior notes offering

·     GDRX -25%; as Q1 results were ahead of consensus, but the company retracted FY guidance because of a key retail partner’s (temporary, per mgmt) inability to provide PBM discounts

·     GRPN -10%; reported 1Q22 results below expectations, with 2Q22 revenue and EBITDA guidance well below expectations, and FY revenue also well below expectations.

·     NVAX -11%; slides in vaccine space after top and bottom-line miss (1 EPS $2.56 vs. est. $2.69; Q1 revs $704M vs. est. $845.2M)

·     PEGA -36%; after losing court ruling against APPN

·     PTON -14%; reports wider-than-expected Q3 loss on rev miss $964.3M vs. $971.6M, offers weak Q4 guidance $675M-$700M vs. est. $820.9M and taps banks for a cash buffer, as to borrow $750M in 5-year term debt; gross margins go from 35.2% to 19.1% in a year

·     TASK -13%; outperformance in 1Q22 was overshadowed by a prudent reiteration of CY22 outlook given potential for macro-driven volatility at certain customer said Morgan Stanley

·     UPST -56%; after guides Q2 revs $295M-$305M below the $337M estimate; guides year revs about $1.25B, below prior estimate $1.4B, prompting several analyst downgrades of the name today (shares of AFRM tumbled in reaction as well)

·     XRAY -6%; reported Q1 EPS miss on sales of $965M, down 6% Y/Y and missing views while says unable to file quarterly report amid internal investigation by audit committee


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.