CAPIS Morning Note – 01/25/23: Stocks Lower On Microsoft Weakness After The Close, Post Earnings and Conference Call.

Overnight Summary: The S&P 500 closed Tuesday lower by -0.07% at 4016.95 from Monday higher by 1.19% at 4019.81.  The overnight high of 4047.50 was hit at 4:05 p.m. EST. The low was hit at 3996.50 at 5:20 a.m. EST, a range of ~51 points high to low.  At 7:15 a.m. EST, the S&P 500…

Overnight Summary: The S&P 500 closed Tuesday lower by -0.07% at 4016.95 from Monday higher by 1.19% at 4019.81.  The overnight high of 4047.50 was hit at 4:05 p.m. EST. The low was hit at 3996.50 at 5:20 a.m. EST, a range of ~51 points high to low.  At 7:15 a.m. EST, the S&P 500 (mini) was lower by -33.25.

Earnings Out After The Close: 

  • Beats: LRN +0.15, FFIV +0.14, NBHC +0.08, UMBF +0.07, AGYS +0.05, CNI +0.02, NAVI +0.02, RNST +0.02, SLGN +0.02, WSBC +0.01, MSFT +0.01, WAL +0.01.
  • Flat: MRTN of note.
  • Misses: COF (1.04), VBTX (0.14), TRMK (0.12), FCF (0.04), ISRG (0.02), NXGN (0.01), TXN (0.01).

Unusual Options Activity:

Daily Screen in Erlanger Chartroom that highlights unusual Call and Put Options activity.  It looks for volume outliers relative to the Open interest in Calls or puts.  Usually, the stock price activity reflects the outlier situation (earnings/buyout/announcement), but once in a while, you can uncover stocks prior to a pop or drop.

 

 

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News: None of note.
  • Secondaries Priced:
    • PACB: $175 Million offering. 17.5 Million shares at $10 per share.
    • PLRX: prices $250 Million offering. 8.33 Million shares at $30 per share.
    • PGEN: $75 Million offering. 42.9 Million shares at $1.75 per share.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • AKTS: Announces Closing of Public Offering of Common Stock and Full Exercise of Underwriters’ Option to Purchase Additional Shares.
    • DCPH: Closing of Public Offering of Common Stock and Full Exercise of Underwriters’ Option to Purchase Additional Shares.
    • DGLY: Filed Form S-1.. Common Stocks and Warrants.
    • EU: Proposed Public Offering.
    • JSPR: Proposed Public Offering of Common Stock. (CS and Blair bookmanagers)
    • KOPN: Proposed Public Offering of Common Stock and Pre-Funded Warrants. (Stifel bookmanager)
    • PACB: Announces Proposed Public Offering of Common Stock.. $150 Million. (GS, MS, Cowen and Allen bookmanager)
    • PGEN: Proposed $75.0 Million Public Offering of Common Stock. (JPM Bookmanager)
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • AREN: Files for 505,655 share common stock offering by selling shareholders.
  • Private Placement of Public Entity (PIPE):
    • GROM: Announces Pricing of $3.0 Million Private Placement Priced At-the-Market Per Nasdaq Rules.
  • Mixed Shelf Offerings:
    • EFC: Filed Form S-3ASR.. Mixed Shelf.
  • Debt Filing/Notes: None of note.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed:
    • VSTM: Up to $60 Million Private Placement Offering of Series B Convertible Preferred Stock.

Capital Raise Summary From The TradeXchange, bringing traders and investors real time news and Squawk Box, and other sources.

News After The Close:

  • After Hours: 
    • Trading Up: EHTH +22%, LRN +14%, TUSK +7%, NAVI +6%, FOXA +6%, VRA +5% of note.
    • Trading Down: PGEN -14%, ISRG -9%, KOPN -5%, PACB -5%, NXGN -4% of note.
  • News After The Close:   
    • Stocks making the biggest moves after hours: MSFT, TXN, COF, CNI (CNBC)
    • Microsoft (MSFT) stock dives into the red after forecast misses, CFO warns about deceleration. (MarketWatch)
    • Rupert Murdoch Withdrawing Proposal For Fox, News Corp Merger. (CNBC)
    • Walmart (WMT) to increase the minimum wage for U.S. hourly staff. (Reuters)
    • Tesla (TSLA): Will Be Investing Over $3.6 Billion More To Continue Growing Gigafactory Nevada – Adding 3,000 New Team Members And Two New Factories. (Release)
    • Intuitive Surgical (ISRG) stock drops 10%, COVID resurgence hobbles sales. (MarketWatch)
    • Lockheed Martin (LMT) awarded a not-to exceed $320 mln modification to a previously awarded US Navy contract.
    • JP Morgan Strategist Marko Kolanovic on CNBC after the close says he is “outright negative” on stocks. (CNBC)
  • Exchange/Listing/Company Reorg and Personnel News:
    • EXTR CFO Remi Thomas to resign and Cristina Tate named interim CFO.
    • Guardion Health Sciences, Inc. (GHSI) Regains Compliance With Nasdaq Continued Listing Requirements.
    • RKLY: NYSE to Suspend Trading Immediately.
    • Vera Bradley (VRA) announces new streamlined corporate structure that includes the elimination of Brand President, Chief Creative Officer, and Chief Revenue Officer roles
  • Buyback Announcements or News: 
    • Canadian Nat’l Rail (CNI) approves Normal course issuer bid to purchase up to 32 million shares of common stock.
    • ELV raises share repurchase program by $5 billion.
    • Liberty Energy (LBRT) Increases Share Repurchase Authorization to $500 Million and Announces Quarterly Cash Dividend.
  • Stock Splits or News:
    • SWVL 1-for-25 reverse stock split.
  • Dividends Announcements or News:
    • ASML intends to declare a total dividend for the year 2022 of €5.80 per ordinary share; a 5.5% increase compared to last year.
    • Canadian Nat’l Rail (CNI) approves 8% dividend increase.
    • Liberty Energy (LBRT) (see Buybacks)
    • Norfolk Southern (NSC) increases dividend 9% to $1.35.
    • NextEra Energy Partners (NEP) declares quarterly distribution.
    • Penske Auto (PAG) increases quarterly dividend to $0.61 per share from $0.57 per share.
      PFE Goes ex div tomorrow for $0.41.
    • ONE Gas (OGS) increases dividend by 5%.
    • RPC (RES) Board of Directors doubled quarterly dividend to $0.04 per share from $0.02 per share in the prior quarter
    • Stifel Financial (SF) raises dividend by 20% to $0.36 per share.

What’s Happening This Morning: Futures value reflects the change with fair value.

S&P 500 -30, Dow Jones -198,  NASDAQ -138,  and Russell 2000 -10. (as of 7:57 a.m. EST).  Asian markets are higher ex the ASX 200.  Europe markets are trading lower. VIX Futures are at 20.55 from 20.95 yesterday.  Gold, Silver and Copper lower.  WTI Crude Oil and Brent are higher with Natural Gas lower. US 10-year Treasury sees yields at 3.43% from 3.50% from yesterday. The U.S. Dollar is higher versus the Euro, higher versus the Pound and lower against the Yen. Bitcoin is at $22,715 from $22,911  yesterday, lower by -1.10%.

Sector Action – (1/3/6/12/YTD Updated Weekly with Monday release):  

  • Daily Positive Sectors: Utilities, Basic Materials, Industrials of note.
  • Daily Negative Sectors: Communication Services, Healthcare, Energy of note.
  • One Month Winners:  Communication Services, Consumer Cyclical, Basic Materials of note.
  • Three Month Winners: Basic Materials, Real Estate, and Financial  of note.
  • Six Month Winners: Industrials, Energy, and Basic Materials of note.
  • Twelve Month Winners: Energy and Utilities of note.
  • Year to Date Winners: Basic Materials, Consumer Cyclical, and Communication Services of note.

U.S. stock indexes finished mixed Tuesday, as a series of major companies reported earnings.  The Dow Jones Industrial Average added 104.40 points, or 0.3%, to 33733.96, after sliding earlier in the morning. The S&P 500 fell 2.86 points, or 0.1%, to 4016.95, and the Nasdaq Composite was down 30.14 points, or 0.3%, to 11334.27.  The S&P 500 had gained a decisive 1.2% the day before, to close at its highest since early December. Stocks had also rallied Friday as investors bet that easing inflation would allow the Federal Reserve to slow the pace of its interest-rate rises and potentially even cut rates later this year. Officials at the central bank are considering a smaller rate increase for the meeting next week. (WSJ)

Click here for a video explanation of Erlanger Value Lines.

Upcoming Earnings Of Note: (From Chartroom Software – sorted by market cap, highest to lowest with most visible names)

  • Wednesday After the Close: 

  • Thursday Before the Open:

Earnings of Note This Morning:

  • Beats: BPOP +0.94, TDY +0.40, ASML +0.27, BOKF +0.25, HES +0.14, RES +0.12, ABT +0.10, USB +0.06, GD +0.04, ELV +0.04, EXTR +0.03, T +0.03, KMB +0.03, NEE +0.02, TEL +0.02, ADP +0.02, GPI +0.02, PB +0.01, MKTX +0.01 of note.
  • Flat: MNRO +0.00, TXT +0.00 of note.
  • Misses: BA (1.95), NEP (0.09), SF (0.06), NDAQ (0.01) of note.
  • Still to Report: APH, FCX, LKFN, NSC, PGR of note.

Guidance:

  • Positive Guidance: AGYS, NXGN, LRN, ASML, TXT, ADP, EXTR of note.
  • Negative Guidance: KNBE, FFIV, TEL, ASH, T, KMB, APH of note.

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: GOEV +26%, EHTH +17%, LRN +15%, DCPH +6%, NWS +4%, FOX +4% of note.
  • Gap Down: PGEN -17%, ISRG -8%, HMN -7%, PACB -6%, AREN -6%, BORR -6%, MRTN -5%, PLRX -5%, FFIV -4% of note.

Insider Action: FULC sees Insider buying with dumb short selling.  No stock sees Insider buying with smart short sellers.

Rags & Mags: Repeated stories from prior days never listed, i.e. “rehashed news”. Sorted by Global, U.S. and stock specific.

  • 5 things to know before the stock market opens. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story:  Hindenburg’s Short Sell Call Shaves $12 Billion off Adani Stocks. (Bloomberg)
  • Germany reverses course and will send tanks to Ukraine. (CNBC)
  • Natural Gas shortages hit China as temperatures plunge. (NYT)
  • Bloomberg Most Read Story:  U.S. confronts China over companies tied to helping Russian war efforts. (Bloomberg)
  • House Speaker McCarthy blocks two Democrats (Adam Schiff and Eric Swalwell) from rejoining the Intelligence Committee. (Bloomberg)
  • Weekly mortgage demand up 7% as interest rate drops to lowest level since September. (CNBC)
  • Merck (MRK) ends Keytruda trial in prostrate cancer patients after dismal results. (Reuters)
  • Outlook and Team down this morning for thousands of Microsoft (MSFT) users. (WSJ)
  • Boeing (BA) misses as labor and supply issues hurt increased jet sales. (CNBC)

Moving Average Update:

  • Score goes to 91% from 88%.  Just a few more stragglers.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 8:30 a.m. EST
    • The President has lunch with The Vice President, 12:30 p.m. EST
    • Press Briefing by Press Secretary Karine Jean-Pierre, 1:30 p.m. EST

Economic: 

  • MBA Mortgage Applications 7:00 a.m. EST
    • U.S MBA 30-YEAR Mortage Rate Actual: 6.20% VS 6.23% PREVIOUS
    • US MBA Mortgage Applications Jan 20: 7.0% (prev 27.9%) – US 30-Yr MBA Mortgage Rate Jan 20: 6.20% (prev 6.23%)
  • EIA Petroleum Report 10:30 a.m. EST
  • The latest NYSE and NASDAQ Short Interest Data is due out after the close. The collection period is December 28th through January 11th. During that period, the S&P 500 rose 4.93%. Expect to see some covering by the shorts.

Federal Reserve / Treasury Speakers: With the FOMC announcement coming we do have a Fed blackout period set for January 21 until Feb 2.

M&A Activity:

  • BrightView (BV) announced the acquisition of Smith’s Tree Care.

Meeting & Conferences of Note:

Top Tier Sell-side Upgrades & Downgrades:

The recommendations listed below in this “Upgrade/Downgrade” section are compiled from what we believe are Tier I, II and III firms. Recommendations posted are taken from a variety of sources each day and we only post upgrades or significant initiations as well as downgrades to underweight or sell. The purpose of this posting it to make the reader aware of market moving recommendations. None of these recommendations should be interpreted as actual recommendations from CAPIS or its employees.

Today’s Upgrades and Downgrades:

Previous Day’s Upgrades and Downgrades: