Mid-Morning Look

Tuesday, November 12, 2024

A day after record highs for the S&P 500, Nasdaq, Dow Jones Industrials and Dow Transports, U.S. stocks are trading sideways/slightly lower ahead of several Fed speakers and key economic data later this week. All eyes on the consumer price index (CPI) inflation data on Wednesday and producer price index (PPI) data on Thursday for signs of inflation and insight as to the next Fed cut. Several notable movers on earnings this morning with SHOP, SE spiking on results while Dow component HD reported a top and bottom line beat with better guidance. After being closed for Veteran’s Day on Monday, bond prices are moving lower as yields bounce, with the 10-yr hitting highs of 4.39% this morning before paring back while the dollar extends its gains (weighing on gold prices). After nearly topping $90K, Bitcoin prices pullback slightly to around $86K this morning. US listed China stocks under pressure after a few possible names asked to be in Trump administration that are seen as “tough” on China. Oil prices bounced, recovering from a 5% drop over the previous two sessions, as investors digested OPEC‘s latest downward revision for oil demand and market’s disappointment over China’s latest stimulus plan. OPEC cut its forecast for global oil demand growth this year and next on Tuesday, highlighting weakness in China. Treasuries are falling with 2- and 10-year yields up around +6-7bps.

• In Security Software: Deutsche Bank upgraded SentinelOne (S) to Buy from Hold and raise PT to $32 from $25 as believes the company is not only benefitting from positive organic momentum (product + partnership + GTM), but also some disruption within the endpoint market post July 19. OKTA was downgraded to Hold at Deutsche Bank saying feedback on Okta has been more mixed of late and thinks the path to realizing value here may still be several quarters away. Piper said GTLB and SentinelOne (S) remain top picks in security software earnings preview, expecting results from its October-quarter cohort to prove stronger than the mixed results it has seen out of September-quarter reporters so far – but continue to evidence signs of the challenging environment.
• In Retail/Footwear: ONON reported Q3 adjusted EPS of CHF 0.16, missing estimate of CHF 0.20; Q3 sales were CHF$635.8M vs. est. CHF$617.3M; raises FY sales forecast to at least CHF 2.29B ($2.60B) vs CHF 2.26B projected earlier; Quarterly selling, general and administrative expenses rise 36% to CHF 312.7M. Bernstein noted NKE and ADDYY biggest China wholesale partner, Pou Sheng, reported a +4.7% increase in monthly retail sales in October, the first increase since February 2024. 80% of Pou Sheng’s China sales are from Nike and Adidas products. CRI was upgraded to Neutral at Citigroup on more balanced risk/reward as believes the market better accounts for the sales/margin pressures CRI will likely face in F25. ROST downgraded to Neutral from Buy at Citigroup (lower tgt to $152 from $179) saying the combination of a management change that brings increased uncertainty to the story and the stock’s relatively high multiple create a less favorable risk/reward.

• HON +5%; as activist investor Elliott Investment Management has built a $5B-plus position and is pushing the company to consider breaking up, Bloomberg reported. https://tinyurl.com/dxm6nca9
• LYV +5%; Q3 AOI grew +9% (5% above Street estimates) on Concert Margins expanding 232bps from Venue Nation generating a larger mix of high-margin ancillary revenues said Oppenheimer.
• NVRO +21%; delivered a Q3’24 beat on sales and EPS by a wide margin while reiterated 2024 sales guide ($400-405MM, down 5-6% y/y), but raised Adj. EBITDA by $2MM to a loss of $16-18MM.
• SDGR +13%; after saying it enters collaboration pact with NVS under which it will receive a $150M upfront payment and be eligible for up to about $2.3B in milestone payments and royalties.
• SE +18%; shares jumped on better Q3 results as Q3 EPS $0.24 vs $0.24 Est. and revenue rose 31% y/y to $4.33B vs $4.08B Estimate; Q3 Ebitda $531.3M vs. est. $491M.
• SHOP +20%; reported +26% y/y to $2.16B above ests $2.12B, as Gross merchandise volume (GMV) rose 24% y/y to $69.72B and guided Q4 revs to increase in the mid-to-high-twenties percentage range, vs analysts’ estimate for growth of 22.7%.
• TSN +8%; Q4 net sales rose 1.6% to $13.57B above the $13.39B estimate, adj EPS of $0.92 topped ests $0.69, Tyson’s pork segment reported a 3.2% rise in Q4 volumes, while prices fell 6.9%; Volumes in the beef segment rose 3.7%; posted an adj operating margin of 3.8% in Q4, compared with 1.8% y/y.

• BAYRY -11%; following 3Q’24 miss and cautious commentary; said weak agricultural markets mean its earnings are likely to fall further next year; the company said it expected “a muted outlook on top and bottom-line next year with likely declining earnings”.
• FOUR -3%; on guidance and weaker Q3 results; now expects gross revenue less network fees in the range of $1.35B-$1.36B vs. prior range $1.35B-$1.38B and lowers end-to-end payment volume for full year between the range $164N-$166B vs. prior view between $167B-$172B.
• FWRG -9%; after 8M share secondary priced at $19.95.
• NGNE -42%; shares tumbled after NGN-401 initial efficacy data suggest real clinical effect at low-dose; safety the question/debate as shares of rival Rett Syndrome drug company TSHA advanced in reaction
• NVAX -4%; as reported smaller Q3 loss of $121M vs. est. loss $133M, but cuts 2024 revenue forecast for its COVID-19 vaccines to $175M-$225M from prior $275M-$375M; guides overall FY revs to $650M-$700M vs. est. $761.5M
• THS -17%; shares fall as Q3 sales of $839M miss the $880M estimate on weak margins 15.6% vs. est. 18.4% and guides FY net sales $3.37B-$3.4B below consensus $3.46B; said results impacted by a recent recall of frozen griddle products and disruptions from Hurricane Helene
• UPST -9%; after announced proposed 6-year convert private offering of $425M as plans to use net proceeds for general purposes, including to pay down debt.