Mid-Morning Look: October 30, 2020

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Mid-Morning Look

Friday, October 30, 2020






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U.S. stock futures are falling sharply to end the week, with the Nasdaq down over 2% as the roller-coaster ride continues for global markets in the face of rising coronavirus cases worldwide, the upcoming Presidential election outcome next Tuesday (hopes for an outcome as many expect either side could contest) and after underwhelming quarterly updates from a number of the tech titans overnight (AAPL, AMZN, FB, GOOGL). Third-quarter earnings season is past its halfway mark and about 84.8% of S&P 500 companies have beaten estimates for earnings, according to Refinitiv data. Still between the uncertainty of the election, surging Covid cases in Europe and the U.S. and fact that lots of positive earnings baked in, markets seeing massive selling pressure to end a tumultuous week of trading as the S&P 500 and Dow were on course for their worst week since March.


Big tech earnings have AAPL, AMZN, FB, TWTR lower but GOOGL higher: 1) AAPL reported headline beat on EPS and revs, however Iphone Revs light and no hard guidance given weigh on the stocks – overshadows slight beat on total revenues driven by Mac and iPad strength and strong service revenues for quarter; 2) AMZN with big headline beat and guides Q4 revenues above Street however operating income guidance came in below consensus; 3) FB reported Q3 results as revs beat by 8% and GAAP EPS of $2.71 easily exceeding the Street at $1.90 with better ad revs of $21.2B vs. est. $19.5B while expects the number of Facebook DAUs and MAUs to be flat to down sequentially in Q4; 4) GOOGL the highlight as reported strong results, beating consensus estimates across the board including a 45% beat on EPS ($16.40 vs. cons. $11.28) and revs up 14% YoY to $46.2B and GAAP operating margins +460bps above the Street; 5) TWTR results weigh on social media names as better earnings and revenue was overshadowed as user growth disappoints


Economic Data

·     University of Michigan surveys of consumers sentiment final oct 81.8 (consensus 81.2) vs preliminary oct 81.2 and final sept 80.4; current conditions index final oct 85.9 vs prelim oct 84.9 and final sept 87.8 and consumers expectations index final oct 79.2 vs prelim oct 78.8

·     September Personal Income and Outlays: Income +0.9% M/M vs. +0.3% consensus and -2.5% prior; consumer spending: +1.4% M/M vs. +1.0% consensus and +1.0% prior; the PCE Price Index: +0.2% in-line with consensus and +0.3% prior and core PCE Price Index: +0.2% in-line with consensus and +0.3% prior.

·     October Chicago PMI above ests at 61.1 vs. 58.0 consensus, 62.4 prior, marking the fourth consecutive month above 50 (i.e. expansion territory); new Orders was the only category to show a monthly uptick, rising a hair to its highest level since November 2018 while production saw the largest decline, sliding 5.9 points







WTI Crude















10-Year Note





Sector Movers Today

·     Retailers; AMZN earnings handily beat on both the top and bottom lines for Q3 as operating income jumped 94% YoY to $6.2B, while AWS sales of $11.6B was just in-line with consensus – the negative was sees Q4 operating income of $1.0B to $4.5B below the $5.81B consensus; in apparel, COLM shares tumble as Q3 EPS 94c on revs $701.1M below est. $1.16 and $767.13M on weaker sales outlook for Q4 of $850M-$880M vs. $914M; SKX another retailer weak after Q3 operating profit missed views and issued no guidance; DECK reported blowout FQ2 EPS results of $3.58 vs. consensus estimate of $2.68 driven by robust sales growth (+15%), solid gross margin expansion (+80bps); UAA blasts past Q3 estimates, posting better guidance as Q3 wholesale revenue was flat in Q3 at $1.4B and apparel revenue fell 6% to $927M vs. $801M consensus

·     Housing & Building Products; OC was upgraded to Neutral from Underweight at JPM following the company’s 3Q20 results and conference call; MDC upgraded to Equal Weight from Underweight at Wells Fargo in builders and raise tgt to $46 noting shares fell despite a strong 3Q conference call and outlook; FND reported adj 3Q20 EPS of $0.56, well above consensus of $0.40 on stronger comps and margins and noted that same-store sales growth accelerated throughout the quarter, with a strong exit rate that continued in Oct; MHK Q3 EPS $3.26 vs. est. $2.14 on better revs as N.A. flooring drove the beat with Q3 EBITDA $441M vs. est$353M on better margins; USCR rises following strong Q3 margins and aggregate products segment

·     Restaurants; SBUX reported F4Q20 earnings, with EPS of $0.51, US SSS -9%, International SSS -10% and China SSS -3% (including 4% VAT benefit). US SSS improved sequentially each month, including July -14%, August -11% & September -4%; PZZA was upgraded to outperform and $96 tgt at Oppenheimer as believe the market overly discounts the potential loss of COVID-19-era financial gains, discredits new mgmt’s operational playbook and underappreciates catalysts; SHAK reported 3Q comp sales (-31.7%), including traffic of (-42%) and price/mix of 10.3%, and a restaurant margin of 14.8% while digital represented 60% of sales in 3Q and ~58% in October; CAKE 3Q EPS of ($0.33) vs. est. ($0.40), with sales of $518M vs Consensus $490M and comps better at -23% vs -28%

·     Energy stock movers; CVX reported a Q3 EPS loss of (12c) and adj EPS of an 11c profit, besting estimated (26c) loss, though $24.45B revenue missed the $25.84B consensus as oil demand and crude prices remained weak throughout the quarter; XOM reported Q3 EPS loss (15c), the first time the company has ever posted three straight quarterly losses, and $46.2B revenue missed the est. $48.36B and was down from $65.05B YoY. The company also announced it plans to cut up to 15% of its workforce, including 1.9K jobs in the US; PSX Q3 adj EPS (1c) loss, beating est. (74c) loss as revs $16.3B also miss est. $17.15B; DVN reported stronger than expected 3Q20 results driven by higher production and lower operating expenses as generated FCF of $and raised 4Q20 oil guidance to 148-153 mbbls/d (from 141-146) and guided 4Q20 capex of $160-$200mm; SM Q3 EPS (5c) loss is narrower than the expected (28c) loss, though $281M sales miss $309.9M estimate, and the company announces its CEO will retire Nov 2 and be replaced by their current President and COO; BE Q3 rev of $200.3M misses consensus view of $221.3M, while adj loss of (4c) narrower than expected loss of (12c), and the company reports adj EBITDA of $277M; COG reported Q3 adjusted EPS 9c on revs $291.04M vs. est. 6c and $351.72M, and Q3 2020 daily production was 2,406 mln cubic feet equivalent (mmcfe) per day and reaffirmed its Q4 production guidance range of 2,300-2,350 Mmcfe/day; DVN Q3 EPS loss (4c) beats est. loss (10c), but revenue of $1.07B (-38.9% Y/Y) misses by $40M as net production averaged 326,000 Boe/day, compared to consensus of 335.3 Mboe/day, while oil production 146k barrels per day exceeded midpoint guidance by 6k barrels per day



·     ACHC +21%; after Q3 EPS and revenue top consensus and said U.S. same facility revenue increased 7.5% with a 4.2% increase in patient days and a 3.1% increase in revenue per patient day

·     BLRX +65%; announces positive results from interim analysis of genesis phase 3 trial of motixafortide (bl-8040) in stem cell mobilization- enrollment to cease immediately; topline data anticipated in h1 2021-

·     EQ +35%; after receives “Study May Proceed” letter from FDA for co’s COVID-19 experimental drug’s final stage trials as the co plans to start final-stage clinical trial in hospitalized COVID-19 patients in Q4; initial clinical data expected mid 2021

·     GOOGL +5%; after beating analysts’ expectations and providing a better look on digital advertising (EPS $16.40 on revs $38.01B vs. $11.42 and $35.35B) as Cloud Platform brought in $3.44B in the quarter

·     MHK +13%; Q3 EPS $3.26 vs. est. $2.14 on better revs as N.A. flooring drove the beat with Q3 EBITDA $441M vs. est$353M on better margins and better Q4 profit guidance

·     PLT +9%; after Q2 beat which included 93c earnings and $415M in revenue (both handily topping consensus views) and better revs for Q3 of $417-447M (est. $379.92M)

·     RMD +6%; was upgraded to neutral at JPMorgan saying it again benefitted from a boost in ventilator sales offsetting weakness in the sleep business as revs rose to $751.9M, beating the 711M est. on better profit

·     ZEN +7%; as reaccelerating metrics across international growth improved to 26% y/y (vs. 24% last quarter) and contributed to the $8.2M revenue beat while guided next qtr higher $274M-$279M vs. est. $273.6M) with positive analyst comments



·     AXGT -33%; as it delays in manufacturing process that will potentially postpone the start of enrollment in AXO-Lenti-PD trial, and it seems unlikely to enroll patients by the end of year

·     BLCM -34%; downgraded by two analysts on reduced probability-adjusted NPV for BPX-603 in HER2+ cancers following clinical update and restructuring around its controllable cell therapies

·     COLM -12%; reported 3Q20 sales & EPS below expectations in part due to shipment timing and guided 4Q well below the Street

·     NUVA -6%; downgraded by BTIG and Canaccord as valuation reflects a slower 3q recovery and a long road to a robot, but competition is gaining and likely to increase robotic adoption, ultimately outpacing NUVA leaving limited upside

·     SGEN -5%; announced mixed Q3 results with surprisingly strong Tukysa sales offset by weak Adcetris performance owing to COVID-induced declines and Padcev revs miss estimates

·     SWBI -4%; RGR also lower after WMT removed firearms and ammunition from U.S. store floors this week amid rising tensions across the country

·     TEAM -6%; forecasts $460-475M in Q2 revenue below consensus of $481.81M as the lower guidance offset a beat on the top and bottom lines for Q1

·     TWTR -18%; reversed the narrative for last quarter with slower than expected mDAU growth but materially better than expected monetization driving ad revenue upside



·     Atea Pharmaceuticals (AVIR) 12.5M share IPO priced at $24.00

·     Gaming and Leisure Properties (GLPI) 8M share Secondary priced at $36.25

·     Lufax (LU) 175M share IPO priced at $13.50

·     SQZ Biotechnologies (SQZ) 4.412M share IPO priced at $16.00


Market commentary provided by Catena Media Financials US, LLC, 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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