Mid-Morning Look: May 28, 2021
Mid-Morning Look
Friday, May 28, 2021
Index |
Up/Down |
% |
Last |
|
||
DJ Industrials |
102.68 |
0.30% |
34,567 |
|||
S&P 500 |
10.28 |
0.24% |
4,211 |
|||
Nasdaq |
56.16 |
0.41% |
13,792 |
|||
Russell 2000 |
6.01 |
0.27% |
2,266 |
|||
U.S. stock markets higher on Friday, looking to close out a strong week of gains with the S&P up over 1.3% on the week (led by 4.2% bounce in semiconductors), and a 1% rise for the Dow, but gains this week paced by the Nasdaq up over 2.3% and the Russell 2000 up 2.4% as Smallcaps lead. The stock market rises with equities and bonds looking past a bigger-than-expected rise in the Fed’s preferred inflation gauge (PCE data higher, but Treasury yields slip to lows 1.59%). The April core PCE price index came in up 0.7% month over month and 3.1%, both ahead of forecasts (and highest levels since 1992). Fed officials have repeated their view time and time again that inflation expectations aren’t going to move, and that any price spikes are seen as temporary, which has eased investor fears. Several movers in retail (GPS, GES, BIG, COST, ULTA) and software and hardware space (CRM, VEEV, DELL, HPQ) after earnings last night. Oil prices are flat while the dollar bounces and gold edges higher.
Economic Data
· Personal income for April fell -13.1% compared to est. decline of -14.1% and down from March up 20.9%; Personal saving rate 14.9% vs. March 27.7%; Personal spending rises +0.5%, in-line with estimates while March revised up to 4.7%; real consumer spending fell -0.1%
· Inflation data hotter as: April core PCE price index rises +0.7% vs. est. 0.6% and above March 0.4%; April overall PCE price index +0.6% in-line with March reading; April year-over year PCE price index +3.6% vs. March +2.4% and core +3.1 % vs. est. 2.9%
· April Advance International Trade in Goods with wider deficit of -7.3% to -$85.2B vs. -$91.0B consensus and -$92.0B prior (revised from -$90.6B); Advance April retail inventories excluding autos +0.5% and U.S. advance April wholesale inventories +0.8%
· Chicago PMI surges as reported at 75.2, well above the 68 estimate and prior reading of 72.1 (all time high was 81 in 1973); It’s up from 35.3 a year ago
· University of Michigan consumers sentiment final May 82.9, in-line with consensus and vs. preliminary May 82.8 (and April final 88); the expectations index for May-F 78.8 vs. prelim May 77.6 and the current conditions index final May 89.4 vs prelim May 90.8 and final April 97.2
Macro |
Up/Down |
Last |
|
||
WTI Crude |
0.05 |
66.89 |
|||
Brent |
0.19 |
69.65 |
|||
Gold |
0.10 |
1,898.60 |
|||
EUR/USD |
-0.001 |
1.2181 |
|||
JPY/USD |
0.13 |
109.93 |
|||
10-Year Note |
-0.021 |
1.589% |
|||
Sector Movers Today
· Auto sector; Wedbush said changes to U.S. tax legislation on electric vehicles (EV) could boost demand by 12% to 15% and sees a potential removal of the 200,000 vehicle limit on EVs eligible for a $7,500 tax credit, which would greatly benefit TSLA and GM (also sees an increase in the EV tax credit to $10,000 per vehicle); NKLA was initiated Buy at BTIG with $18 tgt on its view the company is ripe for disruption with the Tre battery-electric truck set to debut this year/expects a handful of Tre deliveries from Nikola of the Tre before Q4
· Energy stock movers; Barclays downgraded GLOP to UW with a $3 target as it is taking a cautious approach given the stock’s current valuation and also downgraded SLCA to UW with a $10 target on balance sheet concerns and a lack of faith in the sub-segment of OFS that the company operates in; Stifel raised their 2021-23 NYMEX oil and gas price forecasts and their price targets on most E&P stocks in their universe, now forecasting an average implied upside of 87% for their bellwether stocks, (DVN, PXD, XEC, SM, LPI, BCEI); RBC initiated coverage on CRC at Outperform with a $40 target as they see shares being deeply undervalued and on WLL at Sector Perform with a $47 target despite its discount to peers; following yesterday’s announced acquisition of a refinery in Mobile, AL for VTNRHC Wainwright upped its price target on the stock to $25 from $4 after raising its 2023 revenue and adj EBITDA and Craig Hallum also reiterated the stock as Buy with a new $13 target
· Hardline/Broadline Retailers; COST posted another strong quarter with core comp growth of 15.1% and strong earnings leverage (EBIT margin of 3.7% was 50 bps above RBC 3.2%E) and EPS beat EPS of $2.75 topped a Street consensus of $2.32; BIG shares slip after saying it expects a low double-digit decline in comp sales in Q2 after a year of strong growth on pandemic-driven demand for furniture and foods, but guided Q2 EPS above views $1.00-$1.15 vs. est. $1.04 after Q1 beat; OLLI posted better-than-expected Q1 results and Q2 QTD trends – while not guided, Q2 QTD comp is running ahead of expectations and historical 2-yr trends (ie. 2-yr growth of 40%+); HIBB lifted its full-year guidance and expanded its stock-buyback program after better quarter
· Consumer Staples; BYND shares extend recent gains, adding to yesterday 12% gains as shares have caught attention with retail traders yesterday after being singled out by Jim Cramer and landing on Bank of America’s list of top Reddit stocks by mentions; ULTA comps came in above high estimate (65.9% vs. 53%e), EPS was 116% ahead of consensus and gross margin was above 1Q19 levels and raised its FY21 EPS and operating margin view; Wells Fargo comments on food services saying they remain optimistic on the post-COVID earnings power of this space overall and continue to see upside in all three stocks, but the risk/rewards have shifted as PFGC is now top idea, and continue to like USFD a lot, and believe it’s probably the cleanest way to play
Stock GAINERS
· CRM +6%; reported bullish F1Q results and guidance well ahead of expectations on both top and bottom lines led by Current RPO growth of 23% Y/Y (+20% CC) that was significantly above the Street’s 19% reported forecast – also boosted year outlook
· PLTR +5%; rises a 6th straight day after being awarded a $111M contract by the U.S. Special Operations Command (USSOCOM) to work on their enterprise data management and AI-enabled mission command platform
· ULTA +4%; comps came in above high estimate (65.9% vs. 53%e), EPS was 116% ahead of consensus and gross margin was above 1Q19 levels and raised its FY21 EPS and op margin view
· VEEV +10%; delivered strong print as Q1 billings, revenue, and margins all well ahead of elevated investor expectations – billings were ~$27M above Street ($421M vs. $394M) driven by strong demand for Dev Cloud and services
· VTNR +55%; HC Wainwright upped its price target on the stock to $25 from $4 after raising its 2023 revenue and adj EBITDA and Craig Hallum also reiterated the stock as Buy with a new $13 target (more than triple the current price) as they say calling the acquisition “transformational”
· WBT +9%; WSJ reported the co has received a topping bid valuing the co at around $3.3 billion, as Italy’s Ali Group made an all-cash offer to buy the company for $23 a share earlier this week https://on.wsj.com/3uvRdIc
· YEXT +20%; after forecasting Q2 and year guidance above estimates following Q1 beat
Stock LAGGARDS
· BIG -7%; after saying it expects a low double-digit decline in comp sales in Q2 after a year of strong growth on pandemic-driven demand for furniture and foods, but guided Q2 EPS above views $1.00-$1.15 vs. est. $1.04 after Q1 beat
· DELL -3%; posted better-than-expected results for the fiscal first quarter ended April 30, driven by impressive personal computer growth, but said ongoing computer chip shortage could impact ability to meet laptop demand in 2021
· ETON -12%; said the U.S. FDA has declined to approve the company’s dehydrated alcohol injection for the treatment of methanol poisoning
· HPQ -7%; deliver strong financial results for the latest quarter despite a semiconductor shortage that is denting some industries – but shares slip
· PRVB -16%; FDA AdCom for PRVB’s teplizumab to delay clinical type 1 diabetes in high-risk individuals voted in favor of approval with a 10-7 vote. Focus remains on PK comparability, CMC/manufacturing and scope of label following the AdCom
· YY -3%; posts Q1 loss per share of 30c wider than the est. loss of 11c; says Indian government’s ban of Chinese apps saw its monthly average users drop 15%
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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.