Mid-Morning Look: November 17, 2023

Mid-Morning Look

Friday, November 17, 2023






DJ Industrials




S&P 500








Russell 2000






U.S. stocks are trading sideways, struggling for direction after a lackluster session on Thursday, with major averages holding the strong rally off the October lows (SPX 10% bounce off those lows) as slowing inflation data (CPI, PPI) remains the key driver for major averages. Several Fed speakers this morning – all talking about the economy and inflation: 1) Fed’s Goolsbee said the Fed will do whatever it takes to beat inflation, and while inflation is improving, it is still too high and notes there’s a ‘big Gap’ between the data and how consumers, businesses feel about the economy; 2) Fed’s Collins also notes in CNBC interview that there’s been promising inflation news, but remains too soon to declare victory over high inflation. European markets jumped overnight after softer inflation data there as well. U.S. 10-year Treasury yield fells 4.379% this morning, its lowest since Sept 20, but has since bounced to highs around 4.47%. Lone piece of economic data was stronger as Housing Starts for October rose +1.9% to 1.372M, above the 1.350M expected and upwardly revised 1.346M in Sept; Oct Building Permits rose +1.1% to 1.487M vs. 1.463M expected and above the downwardly revised 1.471M (from 1.473M) in Sept. In stock news, retailers seeing a nice rebound led by apparel after GPS posts beat on better margins. Major averages on track for strong weekly returns with the S&P 500 +2% WTD (+7.5% in Nov), the Dow +1.9% WTD, the Nasdaq +2.2% (+9.7% MTD) and the Russell 2000 +5% on week (+7.6% MTD).







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers been the big story all week: Jumping early in week behind better TGT and Macy’s results, fell midweek as WMT didn’t deliver same beat with stock at 52-week highs leading to slide in some names/discount retail, and today apparel retail getting a bounce after GPS reported better results (big apparel earnings next week too). ROST better results in off-price retail help today while warehouses mixed after BJ sales miss/guidance.

·     Software Movers: RBLX upgraded from Underperform to Peer Perform at Wolfe Research noting the co has showcased its more durable bookings growth and provided more granular detail on its advertising opportunity, two core points in their prior thesis for its downgrade. Unity (U) kicked off its Unite 2023 conference, announcing several new features and upgrades to Unity’s platform of services and keynote highlighted the launch of its new LTS release in 2024 called Unity 6. ZM was upgraded to Neutral from Sell at Citigroup with $66 tgt saying they see more balanced risk/reward with the stock sitting below its target price and near trough multiples, with most of its downgrade concerns playing out.



·     ADI +2%; upgraded to Overweight from EW at Morgan Stanley and raise tgt to $225 from $176 saying the current analog/MCU downcycle is expected to bottom in May 2024. That said, quality matters and shifts their preference to a late downcycle playbook, more optimistic on analog

·     BKD +13%; upgraded to Outperform from Sector Perform at RBC Capital and raising PT to $9 from $7 as sees improving fundamentals and favorable supply.

·     CRSP +10%; comes a day after U.K. regulators approved Casgevy, the first-ever medicine to use CRISPR genome editing.

·     GPS +30%; reported better-than-expected Q3 results as Q3 revs $3.7B topped the $3.6B est. and adj EPS of $0.58 beat the $0.19 est. – Wells Fargo noted GPS beat GMs by ~250bps, 2) doubled Street EBIT and 3) returned their largest/most profitable brand (Old Navy) back to pos comps.

·     MANU +7%; after Sky News reported the Glazer family is set to finalize a $33 per share deal with Jim Ratcliffe that will see the British billionaire acquire a 25% stake in the English soccer club. https://tinyurl.com/e4z4h58x

·     ROST +8%; posted a strong Q3 beat, driven by 5% comps and a big freight recapture tailwind; operating margin improved to 11.2% from 9.8% last year; overall sales rose 7.9% y/y to $4.92B topping consensus.

·     THC +10%; to sell three hospitals and related operations in South Carolina to Novant Health for $2.4B to cut down debt; estimates recording a pre-tax book gain of ~$1.6B on transaction.

·     TWST +23%; after quarterly revenue topped consensus, $67M vs. est. $63.5M on narrower EPS loss, though guided FY24 revs $285M-$290M vs. est. $298.7M.



·     AMAT -4%; posted Q4 beat led by IoT, Communications, Automotive, Power, and Sensors while mgmt noted the impressive growth will cool-off towards the back-end of FY24 coming off tough comps while noted DRAM and NAND WFE improving, but NAND still <10% of total WFE – shares fell on concerns over potential US sanctions and as AMAT did not provide a 2024E WFE outlook.

·     AMSWA -12%; as Q2 EPS $0.08 vs. est. $0.09; Q2 revs $25.7M vs. est. $28.27M; Q2 Subscription fees rose 8% y/y to $13.4M; cuts FY24 adjusted EBITDA view to $14.5M-$16M from $19M-$21M.

·     BABA -2%; adding to yesterday -9% decline after the company called off a spinoff of its cloud unit, citing tightening US curbs on advanced chips for China.

·     BJ -3%; Q3 net sales of $4.82B missed the $4.9B consensus estimate as they face tight discretionary spending; lowered its annual forecast for adj. comp sales to a range of 1%- 1.8% from prior target of 2% rise (est. 2.1%).

·     CHPT -28%; after missing Q3 revenue guidance by 43% at midpoint and with the CEO and CFO’s departures; slashes Q3 revenue view to $108M-$113M from $150M-$160M (est. $157.3M); cuts margin guidance; expects to take a non-cash impairment charge of $42M during Q3.

·     CMP -5%; reported Q4 EBITDA of $33M vs. Street $42.5M, largely driven by higher Corporate and Other costs because of recognition timing for Fortress EBITDA to Q1 vs the initially expected Q4.

·     NAPA -6%; after saying it would acquire Sonoma-Cutrer Vineyards and related brand trademarks from BF in stock/cash deal valued at about $400M.

·     SPB -7%; Q4 adj EPS and sales topped consensus and said expects low single-digit reported net sales decline in Fiscal 2024, with foreign exchange expected to have a slightly negative impact based upon current rates.


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.