Mid-Morning Look

Friday, May 23, 2025

U.S. stock futures were flattish overnight, digesting the recent dip in markets this week with the S&P coming into the day with a modest 3-day losing streak, but things got volatile this morning after comments from President Trump his Truth Social media platform. The President around 7:20 am this morning threatened a 25% tariff on Apple (AAPL) saying, “I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump said on Truth Social. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.” The headlines bumped futures lower and pushed Apple down -3% along with chip suppliers. The President was not done, later saying, U.S.-EU trade talks “are going nowhere” and so he’s “recommending a straight 50% Tariff on the European Union, starting on June 1, 2025.” The U.S. currently imposes a 10% tariff on all European goods, but the 25% sector tariffs on steel, aluminum and especially autos raised the effective tariff on European goods. That headline pushed major averages even lower, with the S&P 500 Index (SPX), opening at its 200-day moving average (dma) technical support of 5,770, which so far marks near the low of the day. Treasury Secretary Bessent doubled down on Trump comments saying Trump sees the EU proposals as low quality & tariff move follows stalled talks after 90-day pause. Outside of those comments, retailers are weaker after DECK, ROST shares tumble on earnings results. One of the few outlier sectors to the upside in nuclear/uranium power after Reuters reported overnight U.S. President Donald Trump will sign executive orders as soon as Friday that aim to jumpstart the nuclear energy industry. In currencies, the Japanese yen gains broadly on haven buying after Trump tariff threats vs. Apple, EU but off day’s low, while the dollar index (DXY) hits new May lows before paring losses.  Gold rises 2% on safe haven flows after Trump’s renewed tariff threats, and Bitcoin prices tumbled initially but have since pared losses to -1% near $110,000.

• In the Mortgage Insurance sector: Compass Point updated models, estimates, price targets, and ratings for the Mortgage Insurance (MI) sector post 1Q25 earnings. They downgraded RDN to Neutral from Buy; (but raise PT to $37 from $34; raised PTs for ESNT to $69 from $62, MTG to $28 from $27 and NMIH to $47 from $36 saying as a general theme, with higher mortgage rates—recently rising to ~7.00%—Compass expects industry NIW will remain muted through FY25 and potentially into FY26.
• In Waste sector: WM was upgraded to Overweight at JP Morgan, downgraded GFL to Neutral and stayed Overweight WCN and Neutral RSG saying this defensive growth sector is positioned attractively near term should the US macro growth slow or inflation pick up due to tariffs. Longer term, WM’s valuation gap vs peers should narrow as JPM expects ~HSD% topline and HSD-LDD% EBITDA growth targets in the next five years (at the high end in the earlier years) at the June Analyst Day driven by revenue and cost synergies in Healthcare Solutions/Stericycle and sustainability projects gaining traction; it also recommends owning WCN.

• INTU +8%; as top-line strength translated to operating income and EPS and results and revised FY25 guidance were above expectations as TurboTax strength was led by Live growth.
• MRUS +27%; after updated data at ASCO 2025 demonstrated strong consistent data, saying a combination of its experimental drug petosemtamab with the checkpoint inhibitor Keytruda has kept 79% of patients with newly diagnosed metastatic head and cancer alive for at least one year.
• OKLO +25%; along with gains in other nuclear/uranium companies (UEC, CCJ, SMR, LEU, UUUU) after Reuters reported that President Donald Trump will sign executive orders that aim to jumpstart the industry by easing the regulatory process on approvals for new reactors and strengthening fuel supply chains.

• BAH -13%; shares tumbled after the gov’t service co reported in-line Q4 EPS results (weak revs), but guided FY revs $12B-$12.5B (vs. ests $12.86B), EPS $6.20-$6.55 vs. est. $6.41, and guided FY26 free cash flow $700M-$800M below estimates above $900M.
• CPRT -9%; reported Q3 revenue and net income below Wall Street estimates as weak vehicle sales and higher expenses offset growth in service segment; Q3 revs of $1.21B missed the estimates of $1.23B while Q3 net income of $406.6M was slightly below the estimates of $407.34M.
• DECK -21%; was downgraded at Keybanc following a Q4 beat, as HOKA’s FQ4 sales missed Street expectations (sales decelerated, particularly in its US DTC business), and management did not provide a FY guide.
• HNRG -9%; after the company said its conversion transaction commitment agreement was being terminated by the counterparty. Hallador said it learned at the close of business on May 19 that the agreement with a leading global datacenter developer was being terminated.
• ROST -13%; as the company reported healthy 1Q25 results but disclosed that over half of its directly imported goods are originally sourced from China (more than Street expected it appears) and guided Q2 EPS $1.40-$1.55 below consensus $1.64.
• WDAY -11%; reported Q1 revenue slightly above on better operating margins and while headline cRPO growth of 15.6% is solidly ahead of consensus of 15.1%, it notably includes 0.5 points of contribution from ST tenant contracts, which were not previously included in the cRPO definition or guidance.
• XRX -9%; after the company lowered its quarterly dividend to 2.5 cents per share ahead of the Lexmark deal closing late yesterday.