Mid-Morning Look

Tuesday, November 09, 2021

It was bound to happen eventually as U.S. stocks fell in early trading, a day after closing at record highs and on track to snap the 8-day win streak for the S&P 500 (longest streak since 1997) and 11-day win streak for the Nasdaq Composite in a bout of profit taking. The Dow Jones Industrial Average slips after it closed at a record for the 44th time in 2021. Financials among early decliners as Treasury yields tumble further amid in-line monthly PPI inflation data (though still very elevated), as the 10-yr trades as low as 1.43%. Crypto assets still surging with Bitcoin trading as high as $68,525.84, according to CoinDesk, along with gains in Ethereum, Ripple, Litecoin and others. Back to inflation data, the PPI came in-line with views, ahead of tomorrow’s CPI report. The pullback this morning not deep, with major averages down about -0.3%, but still off to an incredible start to the month across the board. The U.S. dollar holds firm ahead of more data while gold dips.

Economic Data

·     October Producer Price Index: +0.6% vs. +0.6% consensus and +0.5% prior while on a YoY basis, rose +8.6%, in-line with economist estimates and +8.6% prior. Core PPI (ex food & energy) rises +0.4%, in-line with estimates and +0.2% prior and on a YoY basis, rises 6.8% (also in-line)

Sector Movers Today

·     Casinos, Gaming, Lodging & Leisure sector; SEAS Q3 EPS $1.28 vs est. $1.67 on revenue $521.2M vs est. $536.5M, attendance 7.2M guests from 1.5M YoY and -11% vs 3Q19, and said its results were hurt by limited international and group-related attendance and a record number of weather-impacted days; IGT 3Q EPS 31c vs est. 30c on revs $984M vs est. $981M, guided FY revs $4.1B vs est. $4.0B, sees FY CAPEX below $300M, and reinstated its 20c quarterly dividend; MLCO Q3 EPS (49c) was worse than est. (41c) on revenue $446.4M below est. $515.4M; HGV Q3 EPS 90c vs est. 38c on revs $928M vs est. $357.7M, contract sales $433M vs $117M YoY; TRIP shares fell after reporting Q3 adj EPS 16c vs est. 24c on revenue $303M vs est. $304.4M, adj EBITDA $72M vs est. $79.1M, saying it expects Q4 revenue and profit to be impacted by typical seasonal step-down vs Q3, and that its co-founder and CEO will step down in 2022; RCL CEO Richard Fain to step down after 33 years and remain Chair of the Board with the current CFO replacing him Jan 3; PLYA 8.4M share Secondary priced at $8.35

·     Pharma movers; MRK said the U.S. government will buy 1.4M additional courses of their COVID-19 pill, for about $1B to bring the total purchase commitment to about 3.1M courses for ~$2.2B; BNTX Q3 EPS EUR12.35 topped est. EUR9.35 on revs EUR6.09B vs est. EUR 4.99B, sees FY21 Covid vaccine revenue EUR16-17B on up to 2.5M doses; ALKS shares fell after receiving notices of partial termination of two license agreements with JNJ; NVTA posts Q3 results that missed on the top and bottom line, and they slashed full-year revenue outlook to $450-475M from $475-500M; PFE, BHVN enter strategic collaboration for the commercialization of Rimegepant outside the united states, and BHVN separately reported a narrower Q3 loss than expected on revenue above consensus

·     Software movers; RBLX surges as posted bookings that topped analyst estimates and slashed losses, while User growth and engagement were in line with expectations; NEWR Q3 beat and raise with revenue accelerating to 18% y/y from 11% in F1Q and 8% in F4Q, back toward the Company’s 25% industry benchmark (at least six brokerages raise NEWR’s PT a day after the results); FIVN reported strong results with upside to revenue, billings, and EPS of $8M, $6M, and $0.05, respectively. Enterprise Sub growth of 51% LTM (we estimate 46% y/y) was helped by strong International growth; ZNGA announced better-than-expected 3Q21 results, with a slight beat in bookings of $668M and higher-than-expected adj. EBITDA of $198M; PING 10M share Spot Secondary priced at $28.25

·     Consumer Staples; APRN slides as Q3 revenue fell 2% YoY to $109.7m from last year and its loss in Q3 widened to $1.17 per share from 96c a year ago; HAIN Q1 adj EPS 25 matched consensus on sales $454.9M vs est. $443.7M, adj EBITDA $47.3M slightly above consensus, sees 1H22 adj sales to decline in the low-single digits; FRPT Q3 EPS (5c) vs est. 7c profit on revenue $107.6M vs est. $115.5M, lowered full-year outlook for sales to approx. $445M from prior guidance exceeding $445M and adj EBITDA to approx. $50M from prior view above $61M; IPAR Q3 EPS $1.20 vs. est. $0.68 on revs $263M vs. est. $262.69M as Montblanc, Jimmy Choo, Coach, GUESS and Lanvin each performed exceptionally well compared to 3Q19; IFF Q3 EPS $1.47 vs. est. $1.16 on revs $3.07B vs. est. $2.61B, sees FY21 revs $11.55B vs. est. $10B and adjusted operating EBITDA margin 21%; VFF Q3 EPS 1c vs est. (1c), adj EBITDA $6.79M crushed estimate $3.64M, adj EPS 1c million (range $1.35 million to $6.40 million) and was upgraded by Cantor to Overweight as they see them as being a good grower in the cannabis space who will gain market-share with their low price points and trades at a discount vs peers; COTY upgraded to Outperform with a $14 PT at Raymond James who believes they are on more solid footing to offer upside; Gugg upgraded SJM to Buy as management changes have brought improved operational focus, they see favorable growth drivers with more margin protection from cost inflation than other food peers, and attractive valuation; VGR Q3 EPS missed estimates on generally in-line revenues, and was upgraded to Outperform at OpCo after announcing plans to spin-off Douglas Elliman (DOUG) as an independent entity, which they believe unlocks significant value; SYY reported Q1 adj EPS 83c vs est. 87c on sales $16.5B vs est. $15.8B, including a 46.5% increase in food-service sales

Stock GAINERS

·     DHI +2%; Q4 EPS $3.70 vs. est. $3.40; Q4 revs $8.1B vs. est. $7.94B; consolidated pre-tax profit margin improved 480 basis points to 21.3%

·     EVGO +21%; expanded its partnership with GM to now deploy 3,250 charging stalls across the country to be the nation’s largest public fast-charging network through 2025, and also expanded its partnership with UBER

·     GE +5%; on news to split into three public companies – GE Aviation, GE Healthcare, and the combined GE Renewable Energy, GE Power, and GE Digital businesses to become three industry-leading, global, investment-grade public companies

·     LAZR +20%; as announced today at the NVIDIA GTC conference that its lidar solution has been selected to be part of the sensor suite in the NVIDIA DRIVE Hyperion autonomous vehicle reference platform

·     NEWR +30%; Q3 beat and raise with revenue accelerating to 18% y/y from 11% in F1Q and 8% in F4Q, back toward the Company’s 25% industry benchmark

·     RBLX +29%; surges as posted bookings that topped analyst estimates and slashed losses, while User growth and engagement were in line with expectations

·     TDUP +20%; posted another quarter of accelerating growth, resulting in upside to Q3 sales/EBITDA guidance. Specifically, revenues grew 35% (vs. guidance 30-32%), which was an acceleration from Q1’s +15% and Q2’s +27%

·     TREX +11%; record highs as 3Q21 results were ahead of expectations for revenue ($336M vs. Street consensus $326M) and adjusted EBITDA ($108M vs. $102M) driven by strong end market demand, inventory build

Stock LAGGARDS

·     AMRS -21%; tumbles after its qtrly report missed estimates and it said supply chain challenges impacting near-term performance/posts Q3 revs of ~$48M, missing the $64M estimate and lowers its outlook

·     BHVN -16%; PFE will acquire overseas marketing rights to two of its migraine drugs for up to $1.24 billion, in a deal that includes an upfront payment of $500 million for the rights to Biohaven’s rimegepant and zavegepant (slipped on apparent disappointment no buyout)

·     FRPT -12%; reported weaker-than-expected Q3 results as adjusted EBITDA of $14.6M fell short of a Street figure of $18.8M driven by supply chain challenges and increased cost pressures

·     NVRO -8%; reported Q3 results with revenue of $93.2M (-14% Y/Y; -9% Q/Q); 4Q revenue was guided to $94M to $98M, representing a decline of 11%-14% Y/Y and growth of 1%-5% Q/Q

·     NVTA -11%; posts Q3 results that missed on the top and bottom line, and they slashed full-year revenue outlook to $450-475M from $475-500M

·     PYPL -11%; on mixed Q3 but guidance weighed on shares after the payment co warned it might not meet the expectations for the current quarter’s revenue and earnings

·     PRTY -19%; as the company misses on revenue but guides Q4 revenue above consensus; said Q3 sales fell 4.4% Y/Y while 3q comp sales +7.5% vs. +8.30% y/y

·     SDC -23%; as quarterly results and outlook fall short of expectations with Q3 revs down 18% yoy to $138M, missing the consensus of $181.9M on a wider loss and sees FY 2021 rev forecast $630-$650 mln is below avg analysts’ estimate of $757.2M

·     TCMD -27%; slides on Q3 top and bottom line miss and lowers year rev view to $203.5M-$206M from $216.3M-$224.5M prior

·     TSLA -5%; seeing massive volatility early amid weakness in the EV space (profit taking)

Syndicate:

·     Hertz (HTZ) 44.5M share Secondary priced at $29.00

·     Ping Identity (PING) 10M share Spot Secondary priced at $28.25

·     Playa Hotels & Resorts (PLYA) 8.4M share Secondary priced at $8.35

·     Surgery Partners (SGRY) 6M share Secondary priced at $46.50

·     Talos Energy (TALO) 6M share Spot Secondary priced at $12.30

·     Third Coast Bancshares (TCBX) 3.5M share IPO priced at $25.00