Mid-Morning Look: March 24, 2021

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Mid-Morning Look

Wednesday, March 24, 2021






DJ Industrials




S&P 500








Russell 2000






An active morning for major stock averages, with several new developments on the Covid front, Fed Chairman Powell and Treasury Secretary Yellen begin day 2 of testimony on Capital Hill (to Senate today), semiconductors surge on better guidance/capex from Intel, though overall tech underperforms as Treasury yields recover back near highs of day. Also seeing a bit of a rebound for yesterday’s losers, as reopen related sectors (airlines, cruise, lodging, travel) among top gainers along with a recovery in energy stocks as oil prices jump, mainly due to the traffic jam in the Suez Canal but also as Germany is reversing its decision to impose a hard five-day lockdown over the Easter period to battle higher COVID cases as Chancellor Angela Merkel took sole responsibility and asked for forgiveness after talking to regional leaders. In vaccine news, the Hang Seng dropped overnight as Hong Kong authorities halted the use of a COVID-19 vaccine developed by Pfizer/BioNTech on Wednesday, citing defective packaging. Semiconductor chip shortages and looming inflation risks weighing on sentiment (GIS in earnings miss today noted higher input costs and expenses of logistics weighed on operating earnings). Markets also still working stimulus checks into system, but higher corporate taxes remain a concern after reports Democrats are weighing a variety of possible tax increases, including boosting the corporate tax rate and the top marginal income-tax rate on individuals, to raise revenue. Economic data this morning mixed to slightly worse after Durable Goods unexpectedly slipped.


Economic Data

·     Durable Goods Orders unexpectedly fell (-1.1%) vs. est. for up +0.8% in February, while Durable goods ex: transportation fell (-0.9%) vs. est. up +0.6%, suggesting some cooling in business spending on equipment after recent strong growth. Feb durables ex-defense orders -0.7% vs. Jan +2.3%, nondefense cap orders ex-aircraft -0.8% vs. Jan +0.6%

·     February U.S. PMI Composite Index (final) reported at 59.1 vs. 58.8 consensus and 59.5 prior, while the PMI Service Index at 60, in-line with consensus, 59.8 prior; services sector input prices index at highest in series history going back to October 2009; manufacturing flash input prices index at highest since matching 74.9 in March 2011







WTI Crude















10-Year Note





Sector Movers Today

·     Semi equipment companies LRCX, AMAT, KLAC rose following Intel’s announced $20B manufacturing expansion in Arizona in its push to become a global foundry player; ASML among top gainers in semi after INTC comments on EUV lithography last night in company update; Cowen noted INTC’s commentary was very bullish for semicaps as their capex moved up 37% above our $15B estimate. Further, Gelsinger highlighted EUV being extremely important and that INTC is partnering with ASML and has ‘fully embraced’ EUV and increased adoption by 100%.

·     Leisure and Lodging sector; MTN slides after reduces all pass prices by 20% toward goal of ‘epic for everyone’ as launches new version of epic day pass with more limited resort offering at $67 for a 1-day pass; in theme parks, Stifel says the recent pullback has created compelling entry points and still see plenty of upside to amusement park names, raising ests and tgt prices for SIX, SEAS, FUN as believe visitation/spending patterns across the amusement park sector should continue to accelerate from current levels and show strength over the next six; in RV, towable, WGO Q2 profit and sales topped consensus with sales of towable vehicles grew 55% YoY, to $439.3 million and overall revs up to $839.9M from $626.8M a year ago

·     Auto sector; GM said to extend production cuts due to global semiconductor chip shortage – says cuts are included in company’s prior forecast that chip shortage could hit 2021 profits by up to $2 bln, as per Reuters; TSLA active after CEO Elon Musk tweeted that Tesla cars can be bought using bitcoin and the option will be available outside U.S. later this year; KAR positive mention at Truist saying came away from our VNDR with greater confidence in KAR’s combined dealer-to-dealer offering following the complete integration of TradeRev and BacklotCars; CVNA, VRM active after Truist said analysis of data points to an improving pace of unit sales QTD and data also suggests no surprising swings in ASP, with directional trends largely consistent vs expectations

·     Metals & Materials; Morgan Stanley said they remain constructive on mining equities but are rotating to equities more directly exposed to emissions cuts in China as upgrade AA to overweight (tgt to $43 from $20.50) on better prospects for aluminum & downgrade FCX (tgt raised to $38 from $28), GMBXF to equal-weight to take profits on copper names; MP 6M share Secondary priced at $35.00; WOR Q3 profit rose as it booked gains in steel processing, though total sales fell to $759.1M (from $764), driven by lower sales in the oil-and-gas-equipment business within the pressure-cylinders segment; CMP entered into a definitive agreement to sell its South America specialty plant nutrition business to ICL Brasil, for total potential gross cash proceeds of approximately $418M

·     Software movers; ADBE quarterly beat as net new Digital Media ARR of $435M surpassed consensus by $23M, driven by strength in both Creative Cloud (20% y/y ARR growth vs. 19% last quarter); sees Q2 revenue roughly $3.72B vs. est. $3.7B; ZS upgraded to Buy from Hold at Truist and up tgt to $225 from $175 as walked away extremely positive from conference at the company’s short, medium-term as well as its long-term durable growth profile; NET upgraded to Buy and tgt raised to $110 at Truist saying conversations with customers indicate broad-based strength in NET’s business, with newer solutions like Teams now starting to drive new customer growth in addition to increased upsell opportunity; DOCN 16.5M share IPO priced at $47.00



·     APTO +83%; following 4Q results and mgmt’s update on luxeptinib’s Phase 1 trials in AML and CLL/NHL – price tgt raised to $9 from $8 at Oppenheimer

·     ASML +5%; outperform other semi-cap names after INTC comments on EUV lithography last night in company update; overall semi equipment rise (KLAC, AMAT, LRCX) after Intel outlined plans that mix increased outsourcing with a commitment to spend $20 billion on new factories

·     BCLI +8%; announces positive topline data in phase 2 study evaluating Nurown as a treatment for progressive MS as it was shown to be safe and well tolerated and achieved the primary endpoint of safety

·     DLPN +55%; and HOFV shares surge after the companies signed a partnership to offer non-fungible tokens (NFTs) late yesterday

·     FANG +6%; rebound in energy stocks after oil prices recover off 6-week lows

·     FNKO +8%; adding to yesterday gains – Piper noted today new & old articles have surfaced quoting CEO Brian Mariotti’s interview with Yahoo!Finance regarding Funko’s intent to enter the NFT market and soon

·     INTC +1%; said it would top its Q1 guidance issued earlier this year for sales and earnings saying sales are likely to reach $76.6B this year, down from a record $77.9B in 2020, but above the $72.7B estimate

·     PLBY +10%; rises after posting a narrower Q4 loss as revenues soared and raised its revenue growth expectations for 2021.



·     BIDU -2%; Chinese internet/e-commerce names under pressure following news overnight that the Chinese govt has issued new rules that define for the first time the “necessary” personal information that mobile apps can obtain from their users, as Beijing intensifies its campaign against unauthorized data collection by Big Tech to further control the country’s digital economy.

·     GIS -3%; shares slipped as Q3 adj EPS of 82c missed the 84c est. on slightly better sales of $4.5B noting higher input costs and expenses of logistics weighed on operating earnings and margins, after adjustment

·     GME -19%; shares slide after the videogame retailer said it may raise funds through a share sale, while also downgraded at Wedbush to neutral after quarterly results

·     HOME -7%; falls despite reporting Q4 EPS of $1.08, well above consensus of $0.69 driven by stronger sales and nearly 400pps of better gross margin, while comp sales of 30.8% topped its preliminary comps of 23-24% announced in January

·     MTN -6%; slides after reduces all pass prices by 20% toward goal of ‘epic for everyone’ as launches new version of epic day pass with more limited resort offering at $67 for a 1-day pass

·     VIAC -11%; as 20M share Secondary priced at $85.00



·     ACV Auctions (ACVA) 16.55M share IPO priced at $25.00

·     Aveo Pharmaceuticals (AVEO) 6M share Secondary priced at $8.00

·     DigitalOcean (DOCN) 16.5M share IPO priced at $47.00

·     MP Materials (MP) 6M share Secondary priced at $35.00

·     Piedmont Lithium (PLL) 1.75M share Secondary priced at $70.00

·     Prothena (PRTA) 3.5M share Spot Secondary priced at $20.75

·     Second Sight (EYES) private placement of common stock priced at $6.00 per share

·     ViacomCBS (VIAC) 20M share Secondary priced at $85.00


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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