Mid-Morning Look

Monday, December 07, 2020

U.S. stocks open mixed as the Nasdaq Composite touches another all-time high, outperforming behind large cap giants again as Apple (AAPL), Tesla (TSLA), Facebook (FB) among strongest movers, while the Dow slips and the S&P is little changed as investors keep buying ahead of expected Covid-19 vaccine approvals and growing optimism of a relief package out of Washington (though nothing has yet materialized after talks resumed). News plentiful this morning in the healthcare sector after several data points released at industry conferences, but outside of that, news flow relatively quiet. After closing at all-time closing highs on Friday, markets not really doing much despite sour trade news with China over the weekend and surging coronavirus cases. Global equities dipped overnight after reports that U.S. is preparing to impose sanctions on at least a dozen Chinese officials over their alleged role in Beijing’s disqualification of elected opposition legislators in Hong Kong. No major economic data to report today in the U.S., though more positive data in China overnight. Trading issues this morning for online brokers as both Robinhood and Interactive Brokers reported technical disruption. Gold prices rise over 1% after last week gains, getting another boost from a weaker dollar while oil prices pare recent gains.

Sector Movers Today

·     Leisure and Gaming; big week now IPO’s as Airbnb (ABNB), and DoorDash (DASH) both recently boost their price ranges ahead of mega week for IPOs. DoorDash upped the price for its stock in a filing on Friday to a range of $90-95 a share — already raised from between $75-85, while Airbnb boosted its price to $56-60 from $44-50, which would give them a valuation as high as $42B; for towables and RV’s (CWH, THO, WGO), Baird said retail trends remain strong in the offseason, limiting dealer ability to replenish inventory. Sentiment remains positive in a seasonally less relevant time of year, but the need to restock is top-of-mind for dealers; MTN was downgraded to hold from buy at Truist; IGT agreed to sell its Italian gaming machine, sports betting and digital gaming businesses to APO’s Gamenet Group for 950 mln euros ($1.2 billion) in cash

·     Energy research; at Wells Fargo, CHX remains our top pick, downgrade RIG to underweight to account for challenging balance sheet issues, downgraded LBRT to equal weight on value, prefer SLB (tgt to $28 from $23) over BKR (tgt to $25 from $22) due to higher expected FCF Conversion; HP downgraded to Underperform from Neutral at Bank America; OXY was downgraded to neutral from buy at MKM Partners as shares have appreciated 100%+ since late October and now reflects our fair value estimate

·     Biotech movers; a CRSP-based gene-editing therapy for sickle cell disease and beta-thalassemia is thus far quite effective in patients, according to interim data presented this weekend at the annual meeting of the American Society of Hematology; RARE downgraded to neutral from outperform at Wedbush saying the Friday presentation ofGTX-102 data in Angelman Syndrome reinforced the up/down nature of the preliminary Phase 1/2 study with lead investigator Dr. Elizabeth Berry-Kravis calling the study a “rollercoaster ride; SCPH slides after the FDA declined to approve its heart failure drug, Furoscix citing their need to conduct pre-approval inspections at two of SCPH’s third-party manufacturing facilities that could not be conducted due to travel restrictions – FDA also raised questions related to testing, labeling

·     Semiconductors; INTC shares slipped after Bloomberg reported AAPL is planning a series of new Mac processors for introduction as early as 2021 that are aimed at outperforming Intel fastest; QCOM tgt raised to $185 from $160 at JPMorgan and remain OW but remove from Analyst Focus List noting shares have reacted positively to the company successfully leveraging the 5G smartphone opportunity and investors have been rewarded by a 77% rise in the shares YTD; CREE downgrade from Overweight to Equal-weight w/ $93 pt at Morgan Stanley saying it is the best way to play EVs in our coverage, but after a big move in the stock has difficultly underwriting upside

·     In cancer NK cell antibody treatments data this weekend from FATE and GMDA helping boost the sector; Mizuho noted data released this weekend from both continue to help support both the safety and efficacy potential of NK cells in general as they upped their tgt on NKTX to $47 from $34, while AFMD shares also jump in reaction; FATE rises after the company provided a positive clinical update to FT516, an iPSC-derived NK cell therapy expressing a non-cleavable CD16 receptor, in combination with rituximab in patients with r/r B cell lymphomas; GMDA presented results for 19 patients with non-Hodgkin’s lymphoma with a median follow-up of 10 months, vs. 15 patients and 10.8 months in the abstract

Stock GAINERS

·     BA +3%; leading in the Dow early after UBS raised to Buy with $300 tgt saying out-year free cash flow estimates have moved materially higher (also upgraded SPR to Buy)

·     FATE +39%; rises after the company provided a positive clinical update to FT516, an iPSC-derived NK cell therapy expressing a non-cleavable CD16 receptor, in combination with rituximab in patients with r/r B cell lymphomas – said two of four lymphoma patients taking co’s drug FT516 in combination with Roche’s Rituxan in an early-stage trial had achieved complete remission

·     GMDA +15%; presented results for 19 patients with non-Hodgkin’s lymphoma with a median follow-up of 10 months, vs. 15 patients and 10.8 months in the abstract

·     IGT +9%; agreed to sell its Italian gaming machine, sports betting and digital gaming businesses to APO’s Gamenet Group for 950 mln euros ($1.2 billion) in cash

·     KODK +88%; after the stalled U.S. government loan to KODK was cleared by the inspector general of the U.S. International Development Finance Corp of any wrongdoing on Sunday

·     NEM +4%; as gold miners exhibit early strength after recent recovery in gold prices

·     PERI +13%; raises financial outlook amid recent acquisitions and higher demand across CTV and video offerings as sees Q4 revenue to $100M-$105M from $81M-$91M vs. $86.14M consensus

·     TSLA +3%; upside momentum again in shares amid ongoing strength in the electric vehicle industry over the last month

Stock LAGGARDS

·     BLCM -8%; as the FDA placed an early-to-mid stage trial of its experimental cancer therapy on hold after death of a pancreatic cancer patient – says co and clinical investigator have classified death as unrelated to drug

·     FTI -3%; seeing early weakness in energy sector after recent recovery in shares

·     INTC -3%; shares slipped after Bloomberg reported AAPL is planning a series of new Mac processors for introduction as early as 2021 that are aimed at outperforming Intel fastest

·     LYRA -27%; after saying it saw positive topline results from a Phase 2 study of LYR-210 for chronic rhinosinusitis, but it missed a primary endpoint for two doses

·     OXY -2%; downgraded to neutral from buy at MKM Partners as shares have appreciated 100%+ since late October and now reflects our fair value estimate

·     SCPH -32%; after the FDA declined to approve its heart failure drug, Furoscix citing their need to conduct pre-approval inspections at two of its third-party manufacturing facilities that could not be conducted due to travel restrictions

·     XPEV -3%; filed to sell 40M in common stock