Mid-Morning Look: August 09, 2021

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Mid-Morning Look

Monday, August 09, 2021

Index

Up/Down

%

Last

 

DJ Industrials

-148.32

0.42%

35,060

S&P 500

-7.64

0.17%

4,428

Nasdaq

26.37

0.18%

14,862

Russell 2000

-15.05

0.67%

2,232

 

 

U.S. markets open the week mixed, with modest declines off all-time highs for the S&P 500 index and weakness in Smallcaps (Russell 2000 index), while the tech heavy Nasdaq Composite rises after underperformance on Friday as investors prepare for inflation data (CPI, PPI) later this week. Big movers today include the crypto space with Bitcoin nearing $46,000 (200-MDA was around $45K), its highest levels since mid-May as Ethereum jumps over 7% topping $3,100 while commodity prices get crushed. Oil prices lower as WTI Crude slips 3.75% or over $2.50 to $65.70 (lowest levels since June) as worries about the COVID Delta variant’s impact on global growth increase. Goldman Sachs cut its forecast for China Q3 and full year GDP but does expect the government to bring the outbreak under control in about a month. Also, China’s crude imports slipped to the lowest since May last month after operations were halted at key ports on the east coast due to a typhoon. Gold prices slide $22 or over 1% at $1,742.00 an ounce – but well-off overnight lows after plunging just below $1,700 an ounce. Lone piece of economic data today, JOLTS Job Openings coming in at 10.073M, topping the forecast 9.27M, and prior month reading of 9.209M. Treasury yields pulling back with 10-yr under 1.28% after topping 1.3% late Friday. In corporate news, several M&A deals lifting stocks/sectors: 1) DKNG entered an agreement to acquire GNOG in an all-stock deal valued at about $1.56 billion; 2) Cargill and Continental Grain Company to acquire SAFM for $203 per share in cash in an all-cash transaction valued at $4.5B.

 

 

Macro

Up/Down

Last

 

WTI Crude

-2.52

65.76

Brent

-2.47

68.23

Gold

-20.70

1,742.40

EUR/USD

-0.0009

1.1751

JPY/USD

-0.14

110.11

10-Year Note

-0.001

1.287%

 

 

Sector Movers Today

·     Casinos & Gaming; busy sector as DKNG entered an agreement to acquire Golden Nugget Online Gaming Inc. (GNOG) in an all-stock deal valued at about $1.56 billion. As part of deal, DKNG to form a new holding co called New DraftKings, which will be the going-forward public firm. GNOG shareholders will receive 0.365 shares of New DraftKings’ stock for each share held https://on.mktw.net/3xsKtMU ; SGMS reported Q2 revenue $880M, topping the $765M estimate with strong sequential growth across all businesses; BALY Q2 adj EPS $0.48 vs. est. $0.46; Q2 revs $267.7M vs. est. $225.3M; in research, Bank America upgraded CZR to Buy and downgraded WYNN to neutral saying the heart of these moves are 1) recent data, 2) catalyst paths ahead and 3) the backdrop for longer-term growth, which we think favors domestic and Digital gaming over Macau and international exposures

·     Pharma movers; SGEN and REGMY entered into an exclusive worldwide licensing agreement to develop and commercialize disitamab vedotin, a novel HER2-targeted antibody-drug conjugate, in a deal which could be worth as much as $2.6B; ALNY completes enrollment in HELIOS-B phase 3 study of investigational vutrisiran in patients with transthyretin-mediated (ATTR) amyloidosis with cardiomyopathy; BNTX posts Q2 results and FY forecast – said expects 15.9 bln euros in revenue from the vaccine in 2021, up from a May forecast of 12.4 bln euros; ELAN posted Q2 results above consensus while lowered its FY adj EPS guidance to $0.97-$1.03 (from $1.00-$1.06), with dilution from its KindredBio acquisition, higher logistics costs and inflationary pressures; ETON slips as its antiepileptic topiramate oral solution FDA action date has been delayed three months to November 6, 2021, according to an SEC filing after a decision was expected on Friday

·     Retailers; KSS rolled out the Sephora shop within Kohl’s stores on Friday with several analysts attending and 5 have positive comments on the Sephora – Bank America said think this rollout can add 200bp to 2H comps and over time can be 15% accretive to EPS, without taking any cross-shopping into consideration; DLTR downgraded from Buy to Hold at Deutsche Bank and lowering our PT to $102 from $129, as now see more balanced risk/reward, especially with renewed concerns around building inflationary pressures; ENR Q2 EPS of $0.74 topped the $0.67 estimate on better revs $721.8M vs. est. $661M and posts organic growth +5.8% vs consensus (1.6%)

·     Chemicals & Materials; APD shares slide on EPS miss as Q3 adj EPS $2.31 vs. est. $2.36; Q3 revs $2.6B vs. est. $2.49B; sees Q4 adj EPS $2.44-$2.54 vs. est. $2.51; SON implemented a $70 per ton price increase for all grades of uncoated recycled paperboard (URB) in the United States and Canada, effective with shipments beginning September 7, 2021; IPI announced an $80/ton increase to Ag potash price at all locations and for all product grades. Intrepid is now posted at $200/ton above the 2021 summer-fill price levels announced in May 2021; FTSI upgraded to Buy with $32 tgt at Stifel saying the co emerged from bankruptcy in late November 2020 with solid assets, a track record of execution, and a strong balance sheet and is too cheap to ignore

 

Stock GAINERS

·     BNTX +5%; posts Q2 results and FY forecast – said expects 15.9 bln euros in revenue from the vaccine in 2021, up from a May forecast of 12.4 bln euros

·     GNOG +29%; DKNG to acquire Golden Nugget Online Gaming Inc. (GNOG) in an all-stock deal valued at about $1.56 billion; As part of deal, DKNG to form a new holding co called New DraftKings, which will be the going-forward public firm https://on.mktw.net/3xsKtMU

·     HOOD +5%; volatility continues since IPO, as shares start the week higher

·     MRNA +5%; seeing another spike in vaccine related names – BNTX up on earnings, NVAX up

·     NVTA +3%; rises on a late Friday Bloomberg report that EXAS approached the company about a possible merger, while saying the companies are not in active talks, and if a deal materializes, it could be an all-stock deal with a low premium https://bit.ly/37wMxch

·     SAFM +7%; Cargill and Continental Grain Company to acquire Sanderson Farms (SAFM) for $203 per share in cash in an all-cash transaction valued at $4.5B https://on.mktw.net/3Cougfk

·     TSLA +2%; upgraded to Buy from Hold at Jefferies and up tgt to $850 from $700 as sees higher global battery electric demand, more battery and assembly capacity coming on stream, a broader and mix-accretive model line-up with more Model Ys and the new S

·     TSN +6%; TSN Q3 sales of $12.48B tops the $11.5B estimate and raises 2021 sales forecast to $46B-$47B from $44B-$46B prior saying it benefited from strong demand for its beef products after restaurants and hotels resumed businesses across the country

 

Stock LAGGARDS

·     APD -6%; shares slide on EPS miss as Q3 adj EPS $2.31 vs. est. $2.36; Q3 revs $2.6B vs. est. $2.49B; sees Q4 adj EPS $2.44-$2.54 vs. est. $2.51

·     AXSM -40%; as FDA identifies deficiencies that preclude labeling discussions for major depressive disorder treatment – Recall the company has an 8/22/21 PDUFA date for AXS-05

·     BLUE -24%; along with its earnings update, the company disclosed a safety event with a patient being treated with eli-cel in its Phase 3 ALD-104 study. A case of myelodysplastic syndrome (MDS) was observed in a patient; the FDA has placed the eli-cel program on a clinical hold as a result

·     ELAN -16%; posted Q2 results above consensus while lowered its FY adj EPS guidance to $0.97-$1.03 (from $1.00-$1.06), with dilution from its KindredBio acquisition, higher logistics costs and inflationary pressures

·     EPZM -8%; announces a deal with Hutchmed China to develop Tazverik, but shares slide after earnings and CEO succession plan

·     ETON -13%; antiepileptic topiramate oral solution FDA action date has been delayed three months to November 6, 2021, according to an SEC filing after a decision was expected on Friday

·     TTD -4%; Q2 revs $280M vs. est. $261.1M; sees Q3 revs at least $282M vs. est. $274.5M; Q2 EPS non-GAAP EPS $0.18 vs. est. $0.13

·     ZI -4%; 20M share Spot Secondary priced at $63.00 – holders offered 20m shares – the holders include funds affiliated with TA, Carlyle, 22C and an entity affiliated with ZoomInfo’s co-founders

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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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