Mid-Morning Look

Friday, November 06, 2020

U.S. stock markets open lower despite a very strong monthly jobs report (unemployment rate dropped under 7% after 7.9% the prior month) and more clarity in the Presidential election as Joe Biden has taken leads in remaining battleground states following another late run of mail-in ballots that were predominantly in his favor. However, markets have since bounced off the lows as treasury yields rise, the dollar recovers off multi-week lows while oil prices tumble. The U.S. labor market continued to rebound last month, rising a 6^th straight month as employers added 638,000 jobs (topping views of 600,000) and sent unemployment down sharply (to 6.9%) amid signs the economy is healing from the pandemic-induced downturn. Private-sector employers added 906,000 jobs last month, a pickup from September, offsetting a drop of 268,000 jobs in the public sector. The S&P 500 index comes into the day riding a 4-day win streak of 1% gains or more, which is the longest such streak since 1982, while stock markets have shown no fear ahead of a catalyst rich filled week with the election, jobs data, an FOMC meeting and a barrage of earnings results.

Economic Data

·     Jobs data very strong for October -Nonfarm payrolls rise 638K vs. est. 600K (Sept revised to 672K from 661K); private payrolls rise 906K vs. est. 690K (prior revised to 892K from 877K) and unemployment plunges to 6.9% from 7.9% and below the 7.7% estimate

Sector Movers Today

·     Media & Telecom movers; DISH 3Q EPS beats by 16c on mush better revs ($4.53B vs. est. $3.56B) as net pay-tv subs up about 116k in qtr; IAC shares rally after Q3 revs beat consensus and said it is considering a spin-off of its ownership stake in Vimeo to its shareholders; TMUS outperforms in Telco after beat on top and bottom lines for Q3 as subscriber metrics well above expectations (Net additions rose to a record 2.035M, and postpaid net adds rose to a record 1.979M, both industry bests) and raised guidance; VIAC with Q3 rev beat $6.12B vs. est. $5.94B) as nearly reached its annual streaming subscription target a full quarter ahead of time as COVID-19 lockdowns boosted demand; UONEK signs a definite asset exchange agreement with Entercom Communications to receive Charlotte radio stations

·     Video game software; EA Q2 bookings missed expectations though topping company guidance, and issued weaker bookings forecast short of consensus, while announced a new $2.6B buyback program and initiated a dividend (downgraded at Piper); GLUU reported an unexpected Q3 profit topping views; TTWO Q2 bookings beat ($957.5M, beating expectations for $884.7M) and raised expectations for the full-year with bookings guidance, and digitally delivered GAAP net revenue rose 16%, to $711.3M, and made up 85% of the total

·     Software movers; HUBS rises on Q3 beat of rev growth to $228.4M(up 32% YoY) and EPS of $0.28 and upside Q4 rev view ($235M-$237M vs. $217.8M) – said Q3 sub revenue was up 32% Y/Y to $221.1M while Professional services and other fell 12% to $7.3M; AVLR reported strong Q3 results with 30% revenue growth, above both our and consensus estimates, driven in part by a continued resilient business model in the current COVID-19 environment; DBX delivered a strong quarter that saw net paid user adds of 290K outperform est. by ~100K (but down QoQ); TTD posts Q3 top and bottom line beat and guides Q4 revs $287-$291M vs. est. $252.6M; NEWR downgraded to underweight at JPMorgan saying the new consumption-based pricing model, with a robust free tier, has created a bigger than anticipated impacts on financials, while noting ARR in the quarter missed expectations

·     MedTech and Equipment; FLDM reported a top and bottom line Q3 beat by 12c and $7M; MTD EPS beats by $1.05, beats on revenue while provides Q4, FY20 and FY21 guidance; ZBH reported 3Q results, with sales of $1.93B (vs. $1.71B) citing stronger than expected recovery of elective procedures in the third quarter and better EPS ($1.81 vs. $1.07 est.); TNDM delivered another beat and raise result in Q3

Stock GAINERS

·     AIG +5%; Q3 EPS of 81c beat the 55c view while Q3 total net investment income on adjusted pretax income basis was $3.20BB vs. $3.20B in Q2 and $3.48B in Q3 2019

·     FTCH +12%; after BABA and Swiss group Richemont will invest $1.1 bln in FTCH and its new marketplace in China, as online demand for luxury goods booms in the Asian country

·     GPRO +25%; surges as delivered its most profitable third quarter results since 2017 as Q3:20 results beat as mix shifts toward higher-margin DTC sales

·     IAC +3%; shares rally after Q3 revs beat consensus and said it is considering a spin-off of its ownership stake in Vimeo to its shareholders

·     MTD +8%; EPS beats by $1.05, beats on revenue while provides Q4, FY20 and FY21 guidance

·     NET +14%; rises in CDN space after Q3 beats, upside current quarter guidance, and a raised full-year view as Q3 revenue was up 54% Y/Y to $114.2M (a lift in space after recent lower FSLY guidance) – several analysts raise tgts

·     NWSA +9%; after Q1 EPS 8c on revs $2.12B topped 0c and $1.98B est. as segment Ebitda at Dow Jones grew 47%, due to average consumer product subscriptions of 3.88 mln, 29% growth in digital-only subscriptions

·     ROKU +5%; reported a Q3 beat with revenue & Ebitda coming in well above street and implied q4 revenue also ahead of the street as record high revenue growth, Ebitda margin, and +90% y/y impressions growth

·     SQ +10%; Q3 adjusted EPS beat (34c vs. est. 16c) as Q3 total revs of $3.03B beat the $2.08B estimate with Q3 adjusted EBITDA of $181M increased from $98M in Q2 and Q3 Cash App ecosystem gross profit jumped 212% YoY for $385M

·     TTD +18%; reported Beat & Raise Q3 results, coming in 20% better than the Street on Revenue and well above on EBITDA with Q4 guidance 15% above the Street on Revenue at the high end, which calls for 35% Y/Y growth

Stock LAGGARDS

·     AAOI -23%; after Q4 rev guidance of $50M-$55M well below consensus of $84M after Q3 miss

·     ASMB -67%; after saying mid-stage study testing its lead drug, vebicorvir, for hepatitis B virus did not achieve meaningful sustained virologic response (SVR) as 39 out of 41 patients had relapsed

·     EA -10%; Q2 bookings missed expectations though topping company guidance, and issued weaker bookings forecast short of consensus, while announced a new $2.6B buyback program and initiated a dividend (downgraded at Piper)

·     GBT -32%; falls as Q3 total costs and operating expenses climb 38.5% to $95.2M while Q3 Oxbryta sales of $36.9M missed the $44M estimate

·     LYV -4%; posted Q3 EPS loss ($2.45) on revs $184M vs. est. loss ($2.20) and $193.51M

·     MTEM -19%; as reports a FDA partial clinical hold on MT-3724 (1st-gen aCD20 ETB) Ph2 trial, following 1 pts death due to capillary leak syndrome (CLS) on the MT-3724 mono TRx study

·     NEWR -14%; downgraded to underweight at JPMorgan saying the new consumption-based pricing model, with a robust free tier, has created a bigger than anticipated impacts on financials, while noting ARR in the quarter missed expectations