Mid-Morning Look: August 05, 2021

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Mid-Morning Look

Thursday, August 05, 2021

Index

Up/Down

%

Last

 

DJ Industrials

149.57

0.43%

34,942

S&P 500

14.09

0.32%

4,416

Nasdaq

66.01

0.43%

14,844

Russell 2000

16.70

0.76%

2,213

 

 

Another day, another rally, and another run at record highs for most major averages, with the Nasdaq, S&P 500, and Dow all within a stone’s throw of all-time bests as upward momentum and investor market enthusiasm lifting broader markets. Earnings this quarter have been nothing short of outstanding, though there were several “hiccups” overnight in momentum related names that are impacting specific shares (ROKU, ETSY, FSLR, FVRR) but not the overall market picture. After leading markets higher recently, healthcare stocks are lower behind weaker results/cost comments from Cigna and CAH, though vaccine names extend record gains behind better MRNA results. Casino sector also in focus after MGM, WYNN earnings results and PENN acquisition of SCR. Economic data mostly in-line with consensus for jobless claims ahead of nonfarm payroll data tomorrow. Path of least resistance again remains firmly to the upside for major averages.

 

Economic Data

·     Weekly jobless claims fell to 385K in latest week, mostly in line w estimates (prior week to 399K from 400K); the 4-week moving average fell to 394,000 from 394,250 prior week; continued claims fell to 2.930M in latest week from 3.296M; the U.S. insured unemployment rate fell to 2.1% from 2.4% prior week

·     June International Trade in Goods and Services showed a deficit (-$75.7B) vs. (-$74.0B) consensus and (-$71.0B) prior (revised from -$71.2B); June exports were $207.7B, $1.2B more than May exports and June imports were $283.4B, $6.0B more than May exports.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.33

68.48

Brent

0.57

70.95

Gold

-8.10

1,806.40

EUR/USD

0.0013

1.1848

JPY/USD

0.17

109.64

10-Year Note

0.021

1.205%

 

 

Sector Movers Today

·     Casinos& Gaming; group rebounds from recent weakness; MGM Revs missed at $2.3B vs est. $2.5B and property EBITDAR was $717m vs est. $800m while Vegas margins were nearly 40% (light of recent CZR); WYNN Q2 revenue of $990mm (+36% q/q) and Property EBITDA of $248mm (+142% q/q) were 7% and 45% above consensus (Consensus Metrix), respectively; PENN agreed to acquire SCR for about $2.0B in cash and stock as holders get $17 in cash and 0.2398 PENN shares https://on.mktw.net/3xqzcg6; GENI announced a new supplier agreement with DKNG for providing its full range of official sportsbook data and content and fan engagement solutions, including a complete suite of NFL-related products (GENI also named new “short” at SprucePoint)

·     Consumer Staples & Restaurants; ELF reported much stronger-than-expected quarterly sales and raised its fiscal 2022 guidance (prompts upgrade to Buy at Citigroup); Kellogg (K) Q2 EPS and sales topped consensus as now expects organic net sales for 2021 to be flat to up 1%, slightly up from previous guidance for flat sales; QSR 9.6M share Block Trade priced at $63.50; JACK delivered 3Q results well above expectations, however, guidance weighed on shares after hours (newly introduced FY22 capex guide, in particular); DENN a mover on earnings; THS Beat EPS by 1c but missed on Sales and GMs, which were offset by lower SG&A

·     Healthcare Services; CI falls as doubled its estimate of the hit to full-year earnings from the pandemic as it reported a better-than-expected quarterly profit and maintained its annual adjusted earnings forecast; CAH 4Q adj EPS $0.77 vs est. $1.20 on revs $42.6B vs est. $40.43B, says disappointed in 4Q results; guides FY22 adj EPS $5.60-5.90 vs est. $6.17, says raising enterprise cost savings target by additional $250Mm to $750Mm by FY23; AMED slides on mixed Q2 results (EPS beat/sales miss) and guides year EPS $6.37-$6.49 below consensus est. $6.96; XRAY reported 2Q21 revenue/EPS that was 6%/7% ahead of consensus but only reaffirmed its 2021 revenue and EPS guidance; ONEM reported strong 2Q21 y/y membership growth of 31% and posted positive adjusted EBITDA in the quarter

·     E&P and Majors; MRO Q2 adj earnings topped analyst estimates and revenues more than quadrupled to $1.14B from the year-ago quarter; PBR swung to a Q2 profit from a loss in the prior-year quarter, as net profit totaled 42.86B reais ($8.3B), well above the consensus estimate of 30.7B reais; APA EPS was 7.6% above consensus due mainly to lower than expected current taxes and 2Q21 upstream capex was 13% below guidance. 2Q21 adjusted production was in line with its pre-reported estimate, but 2Q21 oil production was 0.6% below consensus; BE reported a loss in 2Q but maintained guidance despite inflationary pressures; EOG EPS was 3.3% above consensus on better production and higher realized prices, which was partially offset by higher cash taxes. 2Q21 capex was 5% below consensus, and 2Q21 oil production was 0.7% above consensus and raised its 2021 oil production guidance; PDCE EPS was 4.6% above consensus and 2Q21 capex was 6.3% below consensus but lowered its 2021 total production guidance by 1.3%, lowered its 2021 oil production guidance by 1.5%, and raised its 2021 capex guidance by 4.5%

 

Stock GAINERS

·     BKNG +4%; better-than-expected 2Q21 results where bookings and revenue came in 37% and 15% above consensus, respectively, and travel demand improved each month through 2Q

·     DDOG +14%; following a Q2 top/bottom line beat along with strong Q3 guidance and raised full-year outlook (revs rose 67% YoY to $233.5M, topping analyst estimates by $21M)

·     ELF +9%; reported much stronger-than-expected quarterly sales and raised its fiscal 2022 guidance (prompts upgrade to Buy at Citigroup)

·     HUBS +8%; posted an all-around 2Q21 beat, with net customer adds and ASRPC accelerating from their robust 1Q21 levels, driving strong growth on the top-line

·     MRNA +3%; another record higher after Q3 earnings and revs beat – helping boost other vaccine related names today (NVAX jumped to new highs)

·     SCR +70%; as PENN agreed to acquire the company for about $2.0B in cash and stock as holders get $17 in cash and 0.2398 PENN shares https://on.mktw.net/3xqzcg6

·     PING +11%; with Q2 EPS and rev beat as ARR growth accelerated to +18.9% (+18.2% organically)

·     VNE +25%; QCOM offers to acquire VNE for $37 per share in cash, topping the prior bid from MGA of $31.25 per share, representing a total value of $3.8B

·     W +10%; earnings beat ($1.89 vs. est. $1.15) as the number of active customers reached 31.1M as of June 30, up 19.6% from a year earlier; orders per customer of 1.96 vs. 1.89 a year ago

 

Stock LAGGARDS

·     CAH -11%; 4Q adj EPS $0.77 vs est. $1.20 on revs $42.6B vs est. $40.43B, says disappointed in 4Q results; guides FY22 adj EPS $5.60-5.90 vs est. $6.17, says raising enterprise cost savings target

·     CI -13%; doubled its estimate of the hit to full-year earnings from the pandemic as it reported a better-than-expected quarterly profit and maintained its annual adjusted earnings forecast

·     ETSY -11%; after forecasting Q3 sales $500M-$525M, as the mid-point falls below the $524.9M estimate which overshadowed a Q2 rev beat

·     FSLY -22%; after mixed Q2 results (EPS beat/revs miss) as warned the significant outage that impacted Q2 results and will have an impact on Q3 and full year outlook

·     FVRR -18%; after Q3 guidance miss and lowered FY guidance noting people are traveling more and taking more vacations and spending less time online (Q revs $68M-$72M vs. est. $80M)

·     HOOD -12%; filed with the SEC a prospectus related to the offer and sale from time to time of up to 97,876,033 shares of Class A common stock by certain selling stockholders

·     ITRI -26%; quarterly results and full-year guidance disappointed as Q2 adj EPS 28c was short of est. 48c and revs $489.4M missed est. $536M, and its FY adj EPS $1-1.50 was below est. $2.42

·     LMND -11%; as Q2 adjusted EBITDA loss of $40.4M widened from a loss of $18.2M in Q2 2020 and said it still has no date for launching its auto insurance product

·     MAXR -19%; Q2 revs topped views but noted that it’s delaying the launch of its WorldView Legion satellites to at least next March

·     NVRO -25%; slides after withdrawing FY forecast on COVID-19 concerns and guided Q3 sales between $90M-$93M which is below analyst estimates of $114.7M

·     ROKU -5%; as reported a Q2 rev beat but addition of active accounts halved in Q2, compared with the same quarter last year and said streaming hours also stood at 17.4 bln hours, a decrease of 1 bln hours from Q1

 

Syndicate:

·     Driven Brands (DRVN) 12M share Secondary priced at $29.50

·     European Wax Center (EWCZ) 10.6M share IPO priced at $17.00

·     Green Plains (GPRE) 4.75M share Spot Secondary priced at $32.00

·     Restaurant Brands (QSR) 9.6M share Block Trade priced at $63.50

·     Weber (WEBR) 18M (which was cut down from 46.8M) share IPO priced at $14.00

_________________________________________________________________

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.

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