Mid-Morning Look

Tuesday, March 09, 2021

U.S. stock markets are significantly higher, led by strength in the recently beaten-up technology sector. The NASDAQ recovers after falling more than 10% lows off record highs, rising over 3.5% today back above the 13K level (erasing all of Monday’s losses) as investors rotate money out of recent winners including energy, financials, media and “reopen” related sectors (travel, leisure, theme parks) and move it back into tech after its recent sell-off. A pullback in Treasury yields from one-year highs helping boost market sentiment for high growth sectors, while investors prepare for a busy week of bond auctions which could provide direction for broader markets. Investors remain focused on this week’s $120 billion auction of 3-, 10-, and 30-year Treasuries this week. Semiconductors and FANGs have been hit hard but are the biggest gainers today with the Philly Semi index (SOX up over 5% back above the 2,900 level (after sliding to 100-day MA yesterday 2,772). Precious metals seeing a rebound with gold at highs up 2% and Silver futures up 3% to $25.85 an ounce – as the dollar falls from 3 ½-month highs, as the dollar index. Early leaders include stocks leveraged to Bitcoin (NCTY, MARA, SI, GBTC, RIOT, MSTR) as prices rise above $54,000; EV stocks snap recent skid led by TSLA and other related names (BLNK, NIO, LI); and stay at home 2020 winners (ZM, TDOC, ROKU). 

Sector Movers Today

·     Retailers; DKS posted q2 beat on top/bottom ($2.43/$3.13B vs. est. $2.28/$3.07B) as comp sales rose 19.3% topping expectation of +17.1% and saw e-commerce sales soar 57% – shares slipped following EPS outlook for year of $4.40-$5.20 vs. $5.15 est., though sales view was higher; PLCE said Q4 profit fell, though adj EPS of $1.02 was above the est. loss of (23c), while net sales fell 7.8% to $472.9< but topped the $420M est. (comp sales rose 1%); SFIX shares tumble as reported lower than expected quarterly revenue, and weaker Ebitda (loss of -$9M) due to external and internal factors and FY21 guide was lowered (coming in at $504M vs. the range of $506M-$515M); PTON shares active after announcing entry into Australia in 2H21

·     Auto sector; TSLA looking to snap its 5-day losing streak, helped after upbeat car sales data out of China as the China Passenger Car Association said electric vehicle sales in February rose more than sevenfold from a year ago while falling 38% from January, to 97,000 EVs. Tesla sold 18,318 EVs in February; FSR says it crossed 14,000 reservations for its Fisker Ocean SUV on interest and orders in the fleet market and is projected to start production by Q4 2022; IDEX acquired 20% of Italian Energica Motor Company S.p.A. (Energica) for $13.2M; PRTS jumps on earnings

·     Transports; Total traffic of the US Class I rails recovered to positive YoY growth this week at +6.4% (vs. last week -0.8%), close to the YoY growth level in week 3 of the year before the adverse weather impact set in. All 4 rails had DD intermodal volume growth driven by sustained consumer economy expansion (CSX at +11.7%; NSC at +16.8%; UNP at +21.9%; KSU at +11.2%). Ex-intermodal wise, NSC and KSU’s traffic had close to 3% YoY growth while CSX and UNP are still in negative territory (as per Goldman Sachs); in airlines, ALGT February traffic results showed sharp declines from a year ago, but said travel demand has recently increased

·     Bank movers; ZION, CMA, KEY, HBAN, PBCT all down early in the S&P as markets saw a rotation out of recent winning sectors (financials, energy and media) and into tech; SoFi (IPOE) agreed to buy community bank, Golden Pacific Bancorp (GPBI) for about $22.3M in its effort to get a national bank charter; Wedbush downgraded TSC to Neutral solely on valuation after shares are now trading near their $27 target after their slight outperformance versus peers since its capital raise in October (+87% since 10/12 vs +82% vs KRX – midcap bank index); RBC reiterated STL at Outperform and raised its target to $28 after management reaffirmed its FY21 loan guidance of 4.5-7% growth and said it expects core NIM growth to be at the higher end of guidance

·     Energy stock movers; Wells said we are entering the recovery’s second phase sooner than expected and are now focused on larger operators versus the smaller, more-levered names and downgraded MTDR, SM, RRC to EW and OAS to UW, upgraded WLL to OW and AR to EW, and named PXD, DVN, PDCE as their top picks and removed CNX as a top pick to reflect this belief; RBC reiterated CLR at Outperform and raised their target to $32, saying shares provide high relative beta and correlation to oil prices; QEP shareholder Glazer Capital, who owns about 5.7% of shares, issued an open letter to other shareholders strongly urging them to vote against FANG’s proposed acquisition of the company at their special meeting on March 16; CVX expects FCF to grow by more than 10% per year by 2025, is targeting more than doubling their return on capital employed by 2025, and is also targeting a 25% carbon intensity reduction by 2028; Johnson Rice upgraded BRY, CDEV, DVN, SBOW, SWN to Buy and downgraded COG, FANG, PXD to Hold and EOG to Accumulate; Credit Suisse raised their price target on CNQ to $52 as they anticipate the company’s debt reduction pace to accelerate this year

Stock GAINERS

·     ANPC +74%; shares surge after co develops new sensor for multi-cancer detection

·     DKNG +4%; said 2020 results suggest a +$67B combined online sports betting and iGaming North American total addressable market. DKNG estimates the U.S. OSB market is at least $22B at 100% legalization

·     NVTA +12%; extends gains from late yesterday after Cathie Wood mention on CNBC saying it was among most important companies in molecular testing

·     PTON +8%; will launch in Australia in second half of 2021, will begin by selling its regular Bike, pricier Bike+ and digital app

·     SFT +11%; posted smaller-than-expected Q4 loss on in-line revenue ($73M) as BTIG noted guidance for 130% revenue growth and 120% unit growth should help validate the growth story (upgraded to Buy at Benchmark)

·     SURF +11%; to partner with MRK in a clinical trial to evaluate the safety and efficacy of a combination of co’s SRF388 and MRK’s Keytruda

·     TRIT +16%; after announces strategic partnership with Western union Business Solutions

·     TSLA +6%; looking to snap its 5-day losing streak, helped after upbeat car sales data out of China as the China Passenger Car Association said electric vehicle sales in February rose more than sevenfold from a year ago

Stock LAGGARDS

·     ACAD -44%; shares plunged after the FDA identified deficiencies during its ongoing review of co’s marketing application for its drug candidate Pimavanserin to treat hallucinations and delusions associated with dementia-related psychosis

·     DKS -6%; posted q2 beat on top/bottom ($2.43/$3.13B vs. est. $2.28/$3.07B) as comp sales rose 19.3% topping expectation of +17.1% and saw e-commerce sales soar 57% – shares slipped following EPS outlook for year of $4.40-$5.20 vs. $5.15 est

·     PLCE -6%; said Q4 profit fell, though adj EPS of $1.02 was above the est. loss of (23c), while net sales fell 7.8% to $472.9< but topped the $420M est. (comp sales rose 1%)

·     SFIX -24%; reported lower than expected quarterly revenue, due to external and internal factors and FY21 guide was lowered (coming in at $504M vs. the range of $506M-$515M)

·     VIAC -5%; seeing a pullback in media stocks after massive surge this month (DISCA)

Syndicate:

·     NexTier Oilfield (NEX) 7.9M share Block Trade priced at $5.00

·     Rimini Street (RMNI) 7.75M share Secondary priced at $7.75

·     SJW Group (SJW) 1.03M share Spot Secondary priced at $59.00