Early Look

Monday, May 10, 2021

Another day, another record – with record highs in major averages for the U.S. on Friday carrying over to this morning (more commodity strength as well with massive surges in copper, iron ore, lumber and other grains) along with Europe touching new highs. Oil prices rose and gasoline jumped as Colonial Pipeline, the operator of a major pipeline system that transports fuel across the East Coast, shut down operations because of a ransomware attack. Stocks are looking to add to big gains last week as the Dow rose 2.7%, its biggest weekly percentage gain since March and the S&P 500 gained 1.2%, its best week since mid-April (to settle at record highs), while the Nasdaq shed 1.5% despite a big jump Friday after weaker U.S. jobs data eased concerns over prospects for rising rates. The report alleviated some concerns about rising inflation and potentially higher U.S. interest rates, which some investors worry would hurt growth companies with high valuations. In Asian markets, The Nikkei Index rose 160 points to 29,518, the Shanghai Index edged higher 9 points to 3,47 and the Hang Seng Index slipped -15 points to 28,595. In Europe, the German DAX is down around -30 points to 15,370, while the FTSE 100 inched higher about 10 points to 7,140. Earnings season is now beginning to slow after three weeks of strong earnings beats, with roughly an 85% EPS beat rate.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 30.98 points, or 0.74%, to 4,232.60

·     The Dow Jones Industrial Average rose 229.23 points, or 0.66%, to 34,777.76

·     The Nasdaq Composite gained 119.39 points, or 0.88%, to 13,752.24

·     The Russell 2000 Index advanced 30.21 points, or 1.35% to 2,271.63

Events Calendar for Today

·     No Major U.S. Economic Data

Earnings Calendar:

·     Earnings Before the Open: AKBA, AMR, APD, AXSM, BALY, BHVN, BTAI, CCO, CEVA, CHH, CBST, COTY, DBD, DUK, EGRX, ENR, FOLD, GEO, GTES, IMGN, ITCI, J, KOS, LINC, MAR, NBEV, PRTY, RDNT, RUBY, SGMS, STXS, TGNA, TSN, TTD, USFD, VTRS, WHF, WKHS, XENT, XPEL

·     Earnings After the Close: ACEL, ADMS, AFRM, APEI, APPF, ASUR, BHF, BRKS, BRP, CARA, CORR, CPSI, CSTL, DDD, EGHT, ELY, EPM, EVBG, FGEN, FPAY, FSK, G, GBDC, GOOD, HALO, HIL, IEA, IFF, IIN, INO, IPAR, JCOM, MBI, MGNI, MODN, NCMI, NLOK, NLS, NSTG, NUAN, NVAX, OMER, OXY, PRTS, RAX, RBLX, REAL, RLGT, RPAY, RXT, SAIL, SCSC, SDC, SPCE, SUM, SWAV, SWCH, TREX, VLDR, VOYA, VUZI, WES

Other Key Events:

·     Bank of America Healthcare Conference (virtual), 5/10-5/13

·     JMP Securities’ Insurance Week (virtual), 5/10-5/14

·     China April CPI and PPI data

World News

·     Dogecoin, the fifth most valuable cryptocurrency, retreated from an all-time high after billionaire Elon Musk, appearing on “Saturday Night Live,” jokingly called it “a hustle.” The price had surpassed $0.73 on Saturday before dropping to $0.46 as Sunday morning a 35% decline in 24 hours. Dogecoin hadn’t been below $0.40 since May 4

Sector News Breakdown

Consumer

·     Barron’s said fashion changes as the U.S. emerges from the coronavirus pandemic suggests a rally in apparel stocks may benefit companies like Nike (NKE), TJX Cos. (TJX), trendy online-only retailer Revolve Group (RVLV), and American Eagle Outfitters (AEO).

·     Ford Motor Co (F) is recalling nearly 617,00 Explorer sport utility vehicles in the United States (sold between 2016-2019) at the request of regulators because retention pins could loosen and allow roof rail covers to detach from the vehicle

Energy, Industrials and Materials

·     U.S. government officials were working closely with top U.S. fuel pipeline operator Colonial Pipeline on Sunday to help it recover from a ransomware cyberattack that forced the company to shut a critical fuel network supplying populous eastern states. U.S. government officials were working closely with top U.S. fuel pipeline operator Colonial Pipeline on Sunday to help it recover from a ransomware cyberattack that forced the company to shut a critical fuel network supplying populous eastern states

·     Barron’s bullish on six ag stocks saying prices of corn and other agricultural commodities have been soaring, but some closely-linked stocks have not kept pace, which says has created a buying opportunity in shares of ag companies such as Corteva (CTVA) and FMC Corp. (FMC). Said if surging Chinese demand can continue to elevate commodity prices for the next couple of years, ag stocks don’t look particularly expensive. Deere (DE) trades for ~21x times estimated 2021 earnings, in line with the S&P 500, while AGCO (AGCO) trades at a respective 16x and 15x 2022 earnings, and fertilizer Mosaic (MOS) and Nutrien (NTR) trade at a respective 19x and 15x

·     Air Products (APD) Q2 adj EPS $2.08 vs. est. $2.12; Q2 revs $2.5B vs. est. $2.34B; sees Q3 adjusted EPS $2.30-$2.40 vs. est. $2.29; sees 2021 EPS $8.95-$9.10 vs. est. $9.04

·     Kosmos (KOS) Q1 adj EPS loss (8c) vs. est. loss (9c); Q1 revs $176.57M; Q1 net production 53,100 barrels of oil equivalent per day, or boepd, with sales of 36,500 boepd

·     Eversource (ES) Q1 EPS $1.06 vs. est. $1.09; Q1 revs $2.83B vs. est. $2.58B

·     Hannon Armstrong Sustainable Infrastructure Capital (HASI), a real estate investment fund based in Maryland that targets renewables projects, is likely to profit in niche areas of the industry where its expertise is most valued according to Barron’s

Financials

·     MoneyGram (MGI) upgraded to Neutral on fading headwinds at JPMorgan

·     Cardtronics (CATM) Q1 adj EPS 42c vs. est. 30c; Q1 revs $267.83M vs. est. $279.24M; said growth in its core U.S. business was offset by declines in other regions, especially in the U.K. and Canada, which were heavily impacted by pandemic-related social restrictions

·     Top U.S. mall owner Simon Property Group Inc (SPG) and Authentic Brands Group LLC have agreed to buy Eddie Bauer, adding the outdoor gear and apparel retailer to a brand marquee housing Aéropostale, Forever 21 and Brooks Brothers – Reuters

Healthcare

·     AstraZeneca (AZN) could skip seeking the emergency use authorization and instead apply for full FDA approval of the COVID-19 vaccine it co-developed with the University of Oxford, The Wall Street Journal reported this weekend, citing people familiar with the matter.

·     Aurinia Pharmaceuticals (AUPH) announced that The Lancet published the results of the company’s Phase 3 AURORA 1 study evaluating LUPKYNIS (voclosporin) in adults with lupus nephritis

·     BioNTech (BNTX) plans to set up a regional center and a new factory in Singapore for its vaccines, it said on Monday, boosting its presence in Asia as a debate over patents rages and pressure grows on drugmakers to raise output of COVID-19 shots.

·     RadNet (RDNT) Q1 adj EPS 4c vs. est. loss (3c); Q1 revs $315.3M vs. est. $294.92M; raises 2021 revenue view to $1.28B-$1.33B from $1.25B-$1.3B and ups adjusted EBITDA view to $187M-$197M from $180M-$190M prior

·     Takeda Pharmaceutical (TAK), which is importing Moderna Inc (MRNA) COVID-19 vaccine into Japan, said interim results of clinical trials ahead of domestic regulatory approvals have been positive

Technology Media & Telecom

·     Seagate Technology (STX), which has been making hard drives for four decades, looks cheap, according to Barron’s. Notes even as the stock has rallied 47% to trade at $91 this year, it fetches just 14 times earnings estimates for the next 12 months. It’s also the last “hard-drive pure play” after Western Digital (WDC) diversified by buying flash hard memory company SanDisk

·     Defense officials are considering pulling the plug on the $10B JEDI cloud-computing project, which was awarded to Microsoft (MSFT) in 2019 over Amazon (AMZN), which has contested the award in court ever since https://on.wsj.com/3f9y3Cj  

·     Weibo (WB) Q1 non-GAAP EPS 57c vs. est. 47c; Q1 revs $458.9M vs. est. $429.84M; monthly active users were 530M in March, a decrease of 4% YoY and an increase of 2% quarter-over-quarter; mobile MAUs represented 94% of MAUs; sees Q2 revenue down 25%-30%

·     ChipMOS (IMOS) reports March revenue growth of 23.1% Y/Y and -2.6% M/M to of $81.8M.

·     Taiwan Semi (TSM) reports April revenue rose 16% Y/Y and -13.8% M/M to NT$111.315B; YTD revenue advanced 16.5% to NT$473.725B

·     Clear Channel Outdoor (CCO) Q1 revs $370.91M in-line with estimates of $370.44M; reports Q1 adjusted EBITDA ($32.67M) vs. $51.29M the prior year