Mid-Morning Look: May 04, 2021

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Mid-Morning Look

Tuesday, May 04, 2021






DJ Industrials




S&P 500








Russell 2000






For the first time in a few weeks, market action is decisively negative, with major averages falling sharply (Nasdaq dropped as much as 2%) led by technology, though selling was generally broad-based. After yesterday’s rally in materials, consumer retail and recovery plays, profit taking ensues with markets getting anxious about inflation, as more and more companies are noting in their earnings reports the higher costs of materials and goods which are impacting results (and forcing companies to raise prices). Despite the Federal Reserve and Treasury Secretary Yellen saying inflation is transitory, it appears market participants are starting to question if that is indeed the case. First-quarter earnings have been largely upbeat as the average profits at S&P 500 companies are expected to have risen 46% in the quarter, compared with forecasts of a 24% growth at the start of April, according to Refinitiv, with 85% earnings beat so far. Energy is one of the few strong sectors with oil prices moving closer to highs hit in early March. Financials are lower after Treasury yields plummet as the 10-year hits 1.55%. The Philly semi-index (SOX) breaks the 3,000 level, down -2.4% (dropped below its 100-day MA support of 3,022).


Economic Data

·     U.S. March Trade Deficit -$74.4B in-line with consensus $74.5B and vs. Feb deficit $70.5B; March goods deficit $91.56B, services surplus $17.11B as exports +6.6% vs. Feb -2.4%, imports +6.3% vs. Feb -0.7%; March exports $200.03 bln vs. Feb $187.59B, imports $274.48B vs Feb $258.11B

·     March Factory Orders rise +1.1% vs. +1.3% consensus and -0.5% prior (revised from -0.8%)







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; UAA raised its annual profit and sales forecasts after reporting a 35% jump in quarterly revenue, as reopening markets in the United States and Asia fuel demand; retailers were among the biggest gainers the day prior – but mixed today; IRBT overnight reported a big EPS beat of 41c vs. est. 9c on better revs of $303M, but only reaffirmed operating income and EPS forecasts to manage spending as higher-than-expected costs; DG downgraded from Overweight to Sector Weight at KeyBanc given valuation and difficult comparisons as the economy returns to normal and as the stimulus impact wanes; DG, DLTR, BIG, WMT, TGT estimates raised at KeyBanc into earnings as analyze the impact from recent stimulus across the retail/consumer landscape, utilizing data from our proprietary credit/debit card and ACH data; FRPT beat on Sales and adj. EBITDA but missed on EPS due to a loss on equity method investing and the higher share count

·     Alternative energy & Solar; BLDP Q1 GAAP EPS loss of (6c) missed est. (5c) loss and revs $17.6M (-26.1% Y/Y) missed est. $25.25M, Gross margin 15%, a decline of 6-points due to lower revenue and a shift toward a lower overall margin product and service revenue mix that also impacted adj EBITDA, which came in at ($14M), a wider loss than last year’s ($8.8M); REGI Q1 adj EPS $0.88 beat est. $0.18 on revenue $539.74M vs est. $535.26M, adj EBITDA $56.06M vs est. $22.08M as higher selling prices offset the decline in renewable diesel sales due to COVID-19 disruption and planned facility turnaround, and they see Q2 adj EBITDA $65-85M; SEDG Q1 EPS 98c vs. est. 99c on revenue $405.5M vs. est. $396.21M, sees Q2 revenue $445M-$465M (est. $446.81M) and Q2 revenue from solar products to be $405M-420M, non-GAAP gross margin 32%-34%; SHLS reported Q1 adj EPS 5c vs est. 4c on revs $45.6M vs est. $43.4M, and guided full-year net income to $47-51M and revs $230-240M

·     Aerospace & Defense; BA upgraded to market perform from underperform and raise tgt to $229 from $196 as Bernstein as see less company-specific risk now that Boeing controls 787 deliveries, 777X expectations have been reset, and free cash flow estimates have been brought down; MAXR Q1 revs rose to $392M but missed the $436.5M estimate and said Q1 backlog was $1.8 bln as of March 31, compared with $1.9 bln as of Dec. 31; WWD beat on FY2Q margins, with strong cost controls and operating productivity, generating solid Industrial segment y-o-y OM expansion for the fourth straight quarter

·     Industrial & Machinery; CMI Q1 EPS $4.07 vs est $3.47 on revs $6.1B vs est $5.36B as demand accelerated in the quarter though the supply chain was strained, and raised its FY revs guidance to +20-24% (est. +12%) from +8-12%); ETN Q1 results beat consensus as adj EPS $1.44 beat est. $1.23 and net sales $4.69B topped est. $4.57B and is now projecting Q2 adj EPS $1.45-1.55 (est. $1.29) and upped its full-year adj EPS forecast; FLS Q1 EPS 28c vs. est. 19c on revs $857.3M vs. est. $812.8M, raised FY21 EPS view to $1.40-$1.60 from $1.30-$1.50; KMT Q3 adj EPS 32c vs. est. 20c on sales $485M vs. est. $472.4M and guided 4Q sales +MSD sequentially; RBC posted Q1 adj EPS $1.98 vs. est. $1.71 on sales $814.1M vs. est. $784.9M, daily orders +17% in 1Q and almost +90% in April, guides Q2 sales to increase in the high-20% (est. +23%) and adj EPS $1.85-2.05 (est. $1.82); ITRI beat the consensus 1Q21 adj. EPS estimate on margin outperformance while lifting FY guidance for impacts of the recent capital raise; MTOR reported Q2 EPS 68c vs est. 61c on revs $983M vs est. $948M and sees full-year EPS $2.15-2.30 on revs $3.56-3.8B; PLOW surprised analysts by reporting a profit in Q1 as adj EPS 4c vs est. (18c) loss and sales also surprised to the upside, totaling $103.3M vs est. $77.1M; HSC Q1 adj EPS 15c vs. consensus 5c on sales $529M vs est. $514.8M; CR posted Q1 adj EPS $1.66 vs est. $1.29 on revs $833.5M vs est. $786.2M and raised its full-year forecasts for adj EPS and revs



·     BEN +4%; reported higher profit from a year ago, while its assets under management stayed around flat from the end of the first quarter

·     BLRX +63%; following positive top-line results from its Genesis Phase 3 trial evaluating its lead clinical candidate, Motixafortide in stem-cell mobilization for autologous bone marrow transplantation in multiple myeloma patients

·     CVS +3%; Q1 adj EPS $2.04 vs. est. $1.71; Q1 revenue $69.1B vs. est. $68.39B; raised 2021 adjusted eps guidance range to $7.56 to $7.68 from $7.39 to $7.55; confirmed 2021 cash flow from operations guidance range of $12.0 billion to $12.5 billion

·     CWH +8%; with big beat for Q1 $1.40 vs. est. 69c and revs $1.56B vs. $1.31B est. – raises 2021 Ebitda guidance

·     IT +16%; among the top gainers in the S&P after Q1 results top consensus

·     SEE +7%; 1Q adj EPS $0.78 vs est $0.70 on sales $1.3B vs est $1.22B; guides FY adj EPS $3.40-3.55 vs est $3.35, sees FY sales $5.25-5.35B vs est $5.2B

·     UFS +18%; rises overnight (shares halted now) on a report that Canada’s Paper Excellence is exploring a potential bid for the company according to Bloomberg, saying a deal may value Domtar in the mid-$50s/share, but says there’s no certainty a transaction will occur https://bit.ly/3tkMpF4

·     X +4%; strength in steel stocks – X and CLF upgraded to Outperform at Credit Suisse and downgrade CMC to neutral on valuation saying the U.S steel sector is set to achieve the highest global margins in their view



·     AMAT -4%; chip stocks down across the board as the Philly semiconductor index (SOX) breaks below the 3,000 level

·     CCL -4%; seeing pullback in economic reopen sectors (leisure, cruise, travel)

·     IRBT -10%; reported a big EPS beat of 41c vs. est. 9c on better revs of $303M, but only reaffirmed operating income and EPS forecasts to manage spending as higher-than-expected costs

·     MAXR -10%; Q1 revs rose to $392M but missed the $436.5M estimate and said Q1 backlog was $1.8 bln as of March 31, compared with $1.9 bln as of Dec. 31

·     RACE -4%; postponed its 2022 financial targets by a year due to the pandemic despite reporting a record order book – Q1 EBITDA rose 19% to 376 million euros vs. the 369 million expected

·     SDC -10%; after discloses systems outage due to cybersecurity incident; provides Q1 highlights and Q2 guidance below views

·     SEDG -11%; in solar space despite better earnings as analysts note potential supply chain headwinds


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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