Mid-Morning Look

Tuesday, December 28, 2021

The S&P cleared 4,800 for the first time ever and is poised for record close #70 of 2021 if it can stay positive into the closing bell. If all four of the indices above end green today, it would be the first time this year that all four enjoyed 5-day winning streaks concurrently. Additionally, Apple is trying to extend its own 4-day winning streak and become the first company to achieve a $3 trillion market cap in the process. It would need to log a 1.4% gain today to hit $182.86, though shares are currently trading in the red so it appears as though this milestone may have to wait for another day. For the morning so far, the tech-heavy Nasdaq has been weighed by semiconductor stocks slipping after the ETF hit record highs yesterday while travel names are rallying. Economic news and trading volumes remain light this week as several investors enjoy a longer holiday break.

Economic Data

·     US Redbook YoY Actual 21.4% (Forecast -, Previous 16.4%)

·     Case-Shiller Home Prices: U.S. Home prices +1.1% in October from September, +17.4% in 12 months through October; US October 20-metro area home prices +18.4% from year ago vs +19.1% in September, +0.9% seasonally adj vs +1.0% in September

·     Dallas Fed Texas service sector revenue index 20.4 in December vs 25.4 in November; Dallas Fed Texas service sector index of general business activity outlook 12.9 in December vs 22.7 in November

Sector Movers Today

·     Auto sector; TSLA had its PT raised to $1400 PT from $1100 at Wedbush with China remaining the linchpin to their bull thesis as it can make up to 40% of deliveries next year for $400/shr in addition to the company possibly doubling its production capacity with its Berlin and Austin plants, and demand outstripping supply, and Argus also upped their PT to $1313 from $1010 to reflect continued gross and operating margin expansion with top-line growth; Needham started EVGO at Hold as they believe the company will be a formidable player in charging but believe long-term Street expectations are too aggressive; LAZR is a top pick for 2022 at Northland as it is likely going to be the only lidar company in a production vehicle next year, has a supply chain in place, cost reduction path, strong partnerships, and announced a $300M buyback plan; Truist lowered their FY22 revenue and adj EBITDA estimates on TRUE to reflect Q3 results and recent auto sales trends with their PT going to $4.25 from $6

·     Hardware, Components & Services; AEY Q4 EPS 5c from (9c) YoY on revenue that increased 61% to $19.7M; Needham named FFIV as its Best Idea for 2022 in networking as they believe its software growth will improve its operating margin and drive advancing multiples and raised their PTs on CIEN to $88 from $80 after its third consecutive beat-and-raise report and $1B buyback and EXTR to $18.50 from $16 due to its healthy demand, huge backlog, and abating supply chain and cost pressures; BB was granted five patents

Stock GAINERS

·     JKS +7%; after completing its IPO registration with China Securities Regulatory Commission

·     BBIO +14%; bouncing after yesterday’s -72% decline on its Ph3 study that failed to meet its primary endpoint as several analysts reiterated their Buy ratings despite slashing their price targets

·     APPS +4%; announced a strategic multi-year partnership with GOOGL to support the Android ecosystem by enabling nearly a billion devices with intelligent app Discovery

·     KNDI +11%; announced it successfully started mass production of its lithium iron phosphate battery

·     VLO +2%; shares are rising after Cowen said they expect a Q4 beat, and with other Energy names after Crude prices hit their highest levels of December

·     NVAX +6%; after its vaccine was received EUA in India; shares are rebounding after falling for five consecutive days

Stock LAGGARDS

·     KNSA -2%; the Phase 3 portion of its Ph 2/3 trial in Covid-19 related acute respiratory syndrome did not meet the primary efficacy endpoint, but off its worst levels of the morning

·     RRD -1%; identified a systems intrusion and is not aware of any compromise of client data or determine the extent of material adverse impact on business at this time

·     VIPS -5%; lowered Q4 revenue outlook to (5%)-0% YoY from prior guidance of 0-5% growth due to market and operational conditions, and Jefferies lowered their PT on the new guidance as they also see the warmer December affecting winter clothing demand

·     PTON; Raymond James was cautious on the December quarter after seeing a meaningful year-over-year slowdown in search data that would make it difficult to achieve FY22 guidance