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Gapping up
In reaction to earnings/guidance:PANW +11.8%, BBY +4.6%, MDT +1.9%, RIOT +0.9%, BMO +0.7%
Other news:
GTS +44.3% (GuideWell to acquire GTS for $36.00/share in cash)
BPTH +33% (clearance of investigational new drug application for BP1002 in refractory/relapsed acute myeloid leukemia patients)
CARA +21.8% (FDA approval of KORSUVA)
CWH +5.9% (increases dividend)
VTRU +5.4% (enters into business combination with Unicesumar)
NRZ +4.9% (increases dividend)
BXC +4.6% (authorizes new $25 mln share repurchase program; also announces termination of ATM offering)
NGL +3.4% (announces that Linda Bridges will be promoted to Executive Vice President and Chief Financial Officer effective September 30)
IMCR +3.3% (announces that FDA and European Medicines Agency accept biologics license application and marketing authorization application for tebentafusp in metastatic uveal melanoma)
MAN +2.4% (to acquire IT resourcing firm ettain group for $925 mln in cash; to be accretive to ’21, ’22 EPS)
MOS +1.5% (authorizes new $1 bln share repurchase program)
CI +1.4% (announces $2 billion accelerated stock repurchase agreements)
LIVX +1.3% (entered into $45 mln common share sales agreement)
NOV +1.1% (announces supply contract with COSCO Shipping)Analyst comments:
OVV +2.8% (upgraded to Outperform from Market Perform at Cowen)
AGCO +1.6% (upgraded to Buy from Neutral at Goldman)
DXC +1.6% (upgraded to Positive from Neutral at Susquehanna)
SHO +1.1% (upgraded to Equal Weight from Underweight at Wells Fargo)Gapping down
In reaction to earnings/guidance:
AAP -1.8%
Other news:
TBPH -24.9% (reports its study of Izencitinib did not meet its primary endpoint)
NVS -1% (reports Phase III BELINDA study did not meet primary endpoint)
BNL -0.9% (entered into an forward equity distribution agreement with aggregate gross sales price of $400 mln of its common stock)
VXX -0.7% (volatility continuing to wane)Analyst comments:
GMAB -2.2% (downgraded to Neutral from Buy at H.C. Wainwright)
CMI -1.5% (downgraded to Neutral from Buy at Goldman)[b]BMO Capital initiated coverage of Dole (DOLE) with a Market Perform rating and $19 price target
[/b]
Which implies 18% upside from current levels. The firm believes should generate above-average growth over the long-term and will continue to consolidate the highly fragmented global fruit and vegetable industry. However, the firm is on the sidelines saying visibility into Dole’s first half of 2022 performance remains somewhat limited given the pricing outlook and inflationary environment.William Blair initiated coverage of MaxCyte (MXCT) with an Outperform rating and no price target.
The firm notes the company provides diversified exposure to the large, rapidly growing cell therapy market. The firm says MaxCyte’s ExPERT platform is used to advance the discovery, development, and commercialization of next-generation cell therapies and is seen as a critical enabling technology by many leading cell therapy companies. The firm expects the percentage of cell therapies that leverage the company’s technology to grow over time. Further, the firm believes the terms of MaxCyte’s strategic platform licenses make investing in the company a one-of-a-kind opportunity in life sciences.
Jefferies initiated coverage of Omega Therapeutics (OMGA) with a Buy rating and $30 price target.
Omega is an early-stage platform company developing new class medicines termed epigenetic controllers, and the firm tells investors in a research note that its lead programs target c-Myc, which if successful could represent a $4B opportunity in Liver/Lung cancers alone.
Downgraded
Goldman downgraded Cummins (CMI) to Neutral from Buy with a price target of $230, down from $270, representing 2% downside. The firm says U.S. and China truck demand is set to slow. The firm believes trucking spot prices in the U.S. are at historical highs while utilization levels have deteriorated. Spot market capacity utilization is down 23% since a February high. Meanwhile, the firm says the Chinese government is tightening restrictions on entertainment activities which could drive a slowdown to freight volumes following a stabilization in recent months.
Truist downgraded Broadstone Net Lease (BNL) to Hold from Buy with a price target of $27, up from $25. Given Broadstone’s 38% year-to-date rally, the firm views the shares as fairly valued.
Upgrades
Cowen upgraded Ovintiv (OVV) to Outperform from Market Perform with a price target of $39, down from $40. The firm said the company stands out with best-in-class yield and ‘rate of change’ potential on RoC given its leverage to all three commodities (oil, natgas, NGLs), along with across the board pricing strength and capital efficiency gains.
Susquehanna upgraded DXC Technology (DXC) to Positive from Neutral with a price target of $42, up from $40. The firm believes cost cuts will drive higher earnings and expanded EBIT margins. The firm believes an analysis of DXC reveals a cost structure that remains bloated. The analyst sees $400M-$600M of potential cost savings and a CFO starting to get it done.
Wells Fargo upgraded Sunstone Hotel Investors (SHO) to Equal Weight from Underweight with a price target of $11.50, down from $13. The firm notes, should gains in business transient and group demand prove to be disappointing in early Fall, a stock with lower leverage, such as Sunstone Hotel would be more protected to the downside versus one with higher leverage. The firm adds, in a scenario where demand surprises to the upside, the shares should participate in the lodging real estate investment trusts’ gains given Sunstone’s demand exposure. The firm points out that several REIT management teams, including Sunstone Hotel’s, have noted the potential for privatizations in the space should share prices remain below net asset values, given the amount of capital interested in lodging.
Chinese tech stocks are bouncing after getting crushed for nearly two months.
Ecommerce giant Pinduoduo (PDD) is leading the way after reporting a surprise Q2 adj. profit of RMB 493M vs. estimates for a RMB 2.4B loss. Revenue grew 89% but actually missed estimates.
China’s largest agricultural platform also announced the launch of a dedicated “10 Billion Agriculture Initiative” to face and address critical needs in the agricultural sector and rural areas. Profits from the second quarter and any potential profits in future quarters would be allocated to the Initiative. The Initiative would not be driven by profit or commercial goals, but strive to facilitate the advancement of agritech, promote digital inclusion, and provide agritech talents and workers with greater motivation and a sense of achievement.
Peer JD (JD) is extending yesterday’s gains following strong Q2 results. ARK Invest added 165K shares to the ARKQ fund yesterday after blowing out of most Chinese tech stocks this summer.
Software security stocks are gapping up after strong results and guidance from Palo Alto Networks
(PANW) +12%, one of the largest/cheapest stocks in the group. PANW reported Q4 billings +34% vs. +22-23% guidance with earnings well above guidance. The company also forecasted FY22 EPS and revenue above estimates. Firewall sales grew 10% while next-gen software offerings continue to post strong growth. The company increased its buyback to $1B.
The ~30x EBITDA multiple remains quite attractive and a September 13 Analyst Day could serve as the next catalyst. I don’t want to chase this gap up but a pullback to support near $400/share could provide an attractive entry point.
ADRs like JD.com (JD 73.56, +7.83, +11.9%), Pinduoduo (PDD 93.74, +12.66, +15.6%), and Alibaba (BABA 173.20, +12.14, +7.5%).
[color=green][size=5][b]Dow 35,366.26 30.55 0.09%
S&P 500 4,486.23 6.70 0.15%
Nasdaq 15,019.80 77.15 0.52%
GlobalDow 4,032.15 26.73 0.67%
Gold 1,805.30 -1.00 -0.06%
Oil 67.66 2.02 3.08%[/b][/size][/color]RIP Charlie Watts, original drummer Rolling Stones for 60 years 8)
Market Updates
S&P Futures vs Fair Value: +3.0
10 yr Note: 1.294%USD/JPY: 109.77 +0.16
EUR/USD: 1.1753 +0.0001Europe: FTSE: +0.2% DAX: -0.1% CAC: +0.2%
Asia: Hang Seng: -0.1% Shanghai: +0.7% Nikkei: 0.0%Gold (1795.20 -13.30) Silver (23.79 -0.11) Crude (67.00 -0.54)
Overnight Summary — World markets lacking luster
The global equity markets are quiet. S&P Futures are up about three points to around the 4485 area. The activity level over the course of the night was mundane. The range narrowed to just over 11 points with a high of 4487.50 and a low of 4476.25.
In Asia, China rose 0.7%, while Japan closed flat. The Shanghai saw the benefit of a RMB50 billion liquidity injection from the PBOC. In Japan, the Nikkei started the day off in positive territory, but faded into the close. Steel stocks were a pocket of strength with JFE Holdings rising 5%.
In Europe, the major bourses are little changed. Contrary to yesterday, the DAX is underperforming its peers. This is likely due to German IFO data that saw missed expectations for two out of the three major components. Mining stocks are under modest pressure with gold falling back under the $1800 threshold.
Gapping up
In reaction to earnings/guidance:
SCSC +5.8% (also announces new $100 mln share repurchase auth), INTU +2% (also increases dividend by 15%), TOL +1.9%, PLAB +1.3%, VNET +1.2%, SCVL +1.2%, RY +0.8%, ATHM +0.5%
Other news:
BLFS +9.5% (to join S&P SmallCap 600)
ICLK +8% (board of directors has approved to upsize the share repurchase program announced on December 10, 2020 by $10 mln from $15 mln to $25 mln)
OPCH +7.7% (to join S&P MidCap 400)
TRMK +6.9% (to move to S&P SmallCap 600 from S&P MidCap 400)
MIME +5.2% (to join S&P MidCap 400)
SJ +3.8% (partners with global friendship exchanges foundation to build a dedicated tech team for artists)
FGEN +3.2% (topline results from WHITNEY, the Company’s Phase 2 clinical study of roxadustat for the treatment of chemotherapy-induced anemia)
IBIO +3.2% (signed a definitive worldwide exclusive license agreement with RubrYc Therapeutics for RTX-003)
LMPX +3% (to acquire dealership; expected to add $0.12/sh in 2022)
GHM +2.9% (awarded over $20 mln in orders to date for 2Q22)
FLXN +2.6% (expands Phase 1b Trial Investigating FX301)
CNK +1.8% (to move to S&P SmallCap 600 from S&P MidCap 400)
AVT +1.5% (increases dividend)Analyst comments:
CATB +4.6% (upgraded to Buy from Neutral at H.C. Wainwright)
OKTA +2.7% (upgraded to Strong Buy from Outperform at Raymond James)
KRG +2.5% (upgraded to Strong Buy from Outperform at Raymond James)
UNVR +2.2% (upgraded to Buy from Hold at Berenberg)
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