Mid-Morning Look

Monday, August 31, 2020

The final day of trading for August starting off mixed with renewed strength in technology shares as the Nasdaq Composite touches new intraday record highs after AAPL, TSLA stock splits take effect, while the S&P 500 7-day win streak is in jeopardy early. Stocks are on track for big gains in August as the Dow is up around 7.5%, its best August since 1984 as stocks rally on stimulus hopes, an accommodating Fed and a strong quarterly of corporate earnings, while the S&P 500 is up about 7% (up 8% YTD) and the Nasdaq up 9% (up 30% YTD). News flow generally quiet on this last day of the month heading into September and the final week of the summer, but early on retail, energy remain weak though biotech advances after the FDA said it is willing to bypass the full federal approval process in order to make a COVID-19 vaccine available as soon as possible. Gold prices edge higher along with oil after positive China data overnight, while Treasury yields are steady holding at multi-month highs.

Sector Movers Today

·     Consumer Staples; UTZ and special purpose acquisition company Collier Creek Holdings completed their business combination, forming Utz Brands Inc., which began trading today on the NYSE; BYND was upgraded to neutral from sell at Citigroup citing underperformance vs the S&P 500 since initiation on July 10, and her positive view of the new direct-to-consumer site announced Aug. 27; SAM tgt raised to $1,000 from $735 at UBS as its Hard Seltzer Pulse Check survey showed significant increase in consumers (increase to 43% from 35% in May-20) who drink Hard Seltzer on a regular basis

·     Restaurants; New Jersey said restaurants statewide will be able to open for indoor dining beginning this Friday at 25% capacity and with social distancing between tables; tgt prices were raised at Guggenheim upping BJRI to $49 from $31, BLMN to $19 from $15, CAKE to $36 from $30, DNKN to $89 from $77, DPZ to $461 from $450, DRI to $119 from $96, and MCD to $241 from $215 as now see a justifiable case for premium multiples relative to historical ranges on 2021’s Ebitda outlooks; SBUX a positive mention in Barron’s calling it a stock to add to your portfolio as shares rose this week after a Stifel analyst’s upgrade, citing the coffee chain’s ability to adapt during Covid

·     Biotech movers; NVAX reached an agreement with the government of Canada to supply up to 76 million doses of NVX-CoV2373, Novavax’ COVID-19 vaccine; LPCN shares fell after saying FDA needs additional time to complete its review of Tlando’s new drug application; BCRX said the FDA has granted Orphan Drug designation for its oral Factor D inhibitor, BCX9930, for the treatment of paroxysmal nocturnal hemoglobinuria; AXSM reports development plans of AXS-05 for Alzheimer’s disease agitation

·     Media & Telecom movers; AT&T Inc. (T) shares active after reports late Friday it is taking a fresh look its DirecTV business, exploring a deal for a service wounded by cord-cutting as the co and its advisers at Goldman Sachs Group Inc. have been in talks with private-equity suitors about the satellite TV unit https://on.mktw.net/3jph0Nl ; shares of DISH were active on news; AMC has signed a definitive agreement to sell nine theater locations in Latvia, Lithuania and Estonia to UP Invest for EU65m, or about $77M

Stock GAINERS

·     AIMT +172%; Nestle announced it would be acquiring the remaining ~74% equity ownership it does not currently own, for $34.50 cash/share, representing a 174% premium to its prior closing price, in a roughly $2.6B deal https://on.mktw.net/31GRAob

·     AKCA +58%; IONS to acquire remaining 24% of common stock it does not already own for $18.15 per share (59% premium to Friday’s close) for a total transaction value of $500M

·     GME +23%; after RC Ventures reports 9% stake in 13D filing (co-founder Ryan Cohen reports 9% stake in GME as of Aug. 18 on belief they were undervalued)

·     NVAX +3%; reached an agreement with the government of Canada to supply up to 76 million doses of NVX-CoV2373, Novavax’ COVID-19 vaccine

·     UTZ +9%; and special purpose acquisition company Collier Creek Holdings completed their business combination, forming Utz Brands Inc., which began trading today on the NYSE

·     VNTR +3%; after HUN agreed to sell its stake in Venator Materials PLC to funds advised by SK Capital Partners, LP – HUN will sell about 42.5 million shares for about $100 million as the deal also includes a 30-month option for the sale of about 9.5 million

Stock LAGGARDS

·     BIGC -15%; after Morgan Stanley initiated coverage with $52 tgt and underweight saying at current levels, BIGC is trading at 60x CY21 EV/S and 2.8x growth-adjusted on our base case estimates, making it the most expensive growth asset in SaaS

·     LPCN -18%; shares fell after saying FDA needs additional time to complete its review of Tlando’s new drug application

·     MPC -2%; refiners underperform broader markets with weakness in HFC, PSX, MPC early on

·     NIO -1%; as secondary offering priced at $17.00

·     PENN -4%; big run in the month of August – hit ATHs ($57.93) on 8/21 and has been cooling off since

·     RGS -13%; shares fall after earnings miss

·     UAA -2%; weakness in retailers early (RL, WMT, HAS)