Early Look

Monday, April 12, 2021

After posting its third straight week of gains last Friday, U.S. stock futures are edging slightly lower, with the S&P 500 index pulling back from record all-time highs as investors await the start of earnings season this week with results from big banks all week (JPM, C, WFC, GS, MS). Over the weekend, Fed Chairman Powell said in a CBS “60 Minutes” interview that the US economy is set to make a turnaround with increased growth that should provide more jobs, however the major risk to the economy is any resurgence in the virus & reopening too quickly. Several healthcare related stocks could be active today following updated data this weekend from the American Association for Cancer Research virtual conference. Bitcoin prices are back on the rise, up around 3%, trading back near the $60,000 level. The yield on the benchmark 10-year remains steady at 1.65% with no major economic data expected today in the U.S. Last week, the S&P rose 2.71%, the Dow added 1.96%, the Nasdaq gained 3.12% following a round of solid economic data and more upside momentum buying on a dovish Fed as mega cap technology stocks (AAPL, AMZN, FB, GOOGL, MSFT, NFLX) paced the gains. In Asian markets, The Nikkei Index fell -229 points to 29.538, the Shanghai Index dropped -37 points to 3,412 and the Hang Seng Index declined -245 points to 28,453. In Europe, the German DAX is up slightly at 15,240, while the FTSE 100 is down around 20 points to slip back under the 6,900 level.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 31.63 points, or 0.77%, to 4,128.80

·     The Dow Jones Industrial Average rose 297.03 points, or 0.89%, to 33,800.60

·     The Nasdaq Composite climbed 70.88 points, or 0.51%, to 13,900.19

·     The Russell 2000 Index edged higher 0.88 points, or 0.04% to 2,243.47

Events Calendar for Today

·     2:00 PM EST       Federal Budget for March

Other Key Events:

·     American Association for Cancer Research (AACR) Annual Meeting (virtual) 4/10-4/15

·     Needham Annual Healthcare Conference (virtual), 4/12-4/15

World News

·     Federal Reserve Chairman Jerome Powell said the economy appears to be at an “inflection point” in an interview set to air on “60 Minutes” tonight. “We feel like we’re at a place where the economy’s about to start growing much more quickly and job creation coming in much more quickly.” He attributed the expected growth to widespread vaccinations and strong monetary policy support

Sector News Breakdown

Consumer

·     BorgWarner (BWA) positive mention in Barron’s saying the company is ready for an electric vehicle future as it has prepared for the shift by designing components like electric drive modules; Barron’s also notes shares are still below where they were three years ago and are less than half as expensive as the S&P 500 index

·     Cruise Line stocks Carnival (CCL), Norwegian (NCLH) and Royal Caribbean (RCL) mentioned cautiously in Barron’s saying facing a virtual shutdown and suffering heavy losses, the three-dominant cruise-line operators have raised a total of about $40B through debt and equity sales – article says the industry’s massive fund-raises during the pandemic will come with a price — higher interest expenses and a sharp increase in shares outstanding

·     Tractor Supply Company (TSCO) and Orscheln Farm and Home receive second request from FTC under HSR act in connection with tractor supply’s pending acquisition of Orscheln farm and home; the two continue to cooperate fully with the FTC in its review of the pending acquisition

Energy, Industrials and Materials

·     REV Group (REVG) files to sell 34.5M shares of common stock for holders

·     Raytheon Technologies (RTX) said its CFO O’Brien stepped down abruptly a year later; RTX said it expects sales for q1 of 2021 to be above mid-point of previously communicated range; doesn’t change year outlook

Financials

·     Goldman Sachs (GS) mentioned positively in Barron’s saying the stock still has room to rise after a strong run during the pandemic, while the IPO and merger trends that propelled its business are still in play; Barron’s also notes the bank is less exposed to the negative impact of low interest rates

·     Credit Suisse (CS) mentioned cautiously in Barron’s saying its battered stock price may look tempting, but more challenges could lie ahead, as losses from exposure to hedge fund Archegos Capital Management raise questions about its risk management

Healthcare

·     iRhythm (IRTC) shares fall -25% after Novitas published Medicare reimbursements rates for its ECG monitoring devices this weekend as the reimbursement rates for codes 93243 and 93247 at $103 and $115 respectively are well below the around $300 that Novitas was historically paying https://bit.ly/3dSKB0t

·     Luminex Corp (LMNX) rises after Italian diagnostics group DiaSorin said it will buy the company for $1.8 bln in cash, agreeing to pay $37 per share, which represents a 12.3% premium to Friday’s closing price https://on.mktw.net/3s4Kxji

·     Regeneron (REGN) said it will seek U.S. approval for its COVID-19 antibody cocktail as a preventative treatment after a trial showed it helped reduce the risk of symptomatic infections in households where someone else is ill

·     Blueprint Medicines Corporation (BPMC) said that multiple presentations across the company’s leading systemic mastocytosis (SM) program are being reported at the virtual American Association for Cancer Research (AACR) Annual Meeting 2021

·     Alnylam Pharmaceuticals, Inc. (ALNY) announced positive interim results from the ongoing Phase 1 study of ALN-AGT, a subcutaneous investigational RNAi therapeutic targeting liver-expressed angiotensinogen for the treatment of hypertension

·     Clovis Oncology (CLVS) highlights Rubraca clinical data at AACR Virtual Annual Meeting 2021; findings from the Phase 1b RAMP study evaluating the combination of Rubraca and Xtandi (enzalutamide) in men with unselected mCRPC lay the groundwork for the Phase 3 CASPAR study which is expected to begin enrolling patients shortly

·     Oncocyte (OCX) said its study achieved primary endpoint demonstrating significant correlation between DetermaIO and two-year overall survival rate to atezolizumab in metastatic bladder cancer

·     Qualigen Therapeutics (QLGN) shares fell late Friday after withdrawing the Emergency Use Authorization application submitted to the FDA in June for its COVID-19 antibody test.

·     Seagen (SGEN) and Genmab (GMAB) said late Friday the FDA has accepted for Priority Review the Biologics License Application seeking accelerated approval for tisotumab vedotin

Technology, Media & Telecom

·     Microsoft (MSFT) is in advanced talks to buy Nuance Communications (NUAN), Bloomberg reported saying those talks could value the company about $56 per share (would eb a 23% premium from Friday’s close); said a deal could come as soon as this week https://bloom.bg/2OCVOtk

·     Alibaba Group Holding (BABA) said it has been fined $2.75B by China for abusing its dominant position over rivals and merchants on its e-commerce platforms. The company received the Administrative Penalty Decision issued by the State Administration for Market Regulation of the People’s Republic of China. BABA said it doesn’t expect any material impact from the penalty.

·     WISeKey (WKEY) announced it is investing in its supply chain transformation in an effort to better and faster serve its customers

·     AU Optronics (AUOTY) reports March revenue of NT$30.72B (+49.8% Y/Y, +20.0% M/M); consolidated revenues in Q1’21 were NT$82.94N (+54.5% Y/Y, +3.0% Q/Q)

·     TSMC (TSM) reports March revenue of NT$129.13B (+21.2% M/M, +13.7% Y/Y)

·     Affirm Holdings (AFRM) with a positive mention in Barron’s saying the shares could benefit from the fast-growing “buy now, pay later” trend in e-commerce, and notes shares are down more than 50% from their February peak – says the next few months should be boom times for retailers as stimulus checks pump up the economy, and are increasingly likely to shop online with a digital wallet

·     SK Innovation and LG, two South Korean suppliers of electric vehicle batteries for Ford Motor (F) and Volkswagen, reached a last-minute settlement in a trade dispute, averting a 10-year import ban of the batteries into the U.S.

·     II-VI (IIVI) mentioned positively in Barron’s saying for decades, the laser industry has been a fragmented collection of small players, but a wave of mergers is changing the dynamic, creating long-term opportunities for investors. Industry leader II-VI (IIVI) recently earned the winning bid for optical component maker Coherent (COHR) as rival offers from competitors (LITE, MKSI) forced II-VI to raise its offer several times and ultimately pay about $7B in cash and stock. II-VI’s stock dropped from a high of nearly $100 to the mid-$60s when the bidding war came to a close, which was an overreaction, with the stock rebounding to about $76 in recent days.