CAPIS Morning Note – 01/26/23: S&P 500 Higher By +20 On Tesla Beat As It Rebounds Off Recent Lows

Overnight Summary: The S&P 500 closed Wednesday lower by -0.02% at 4016.22 from Tuesday lower by -0.07% at 4016.95.  The overnight high of 4049.25 was hit at 3:20 a.m. EST. The low was hit at 4026 at 4:10 p.m. EST, a range of ~23 points high to low.  At 7:20 a.m. EST, the S&P 500…

Overnight Summary: The S&P 500 closed Wednesday lower by -0.02% at 4016.22 from Tuesday lower by -0.07% at 4016.95.  The overnight high of 4049.25 was hit at 3:20 a.m. EST. The low was hit at 4026 at 4:10 p.m. EST, a range of ~23 points high to low.  At 7:20 a.m. EST, the S&P 500 (mini) was higher by 8.75 points which is 0.22%.

Earnings Out After The Close: 

  • Beats: STLD +0.73, LRCX +0.71, AMP +0.46, RLI +0.35, NOW +0.26, ETD +0.21, TER +0.17, AXS +0.17, PKG +0.12, HXL +0.08, TSLA +0.08, LBRT +0.07, STX +0.07, LEVI +0.04, AXTA +0.03, WOLF +0.03, SEIC +0.03, CSX +0.02, CLS +0.02, FLEX +0.02, PLXS +0.02, RJF +0.01, XM +0.01 of note.
  • Flat: CASH +0.00 of note.
  • Misses: AZPN (0.97), URI (0.54), LVS (0.10), CALX (0.09), CCI (0.09), CACI (0.06), CATY (0.05), LC (0.03), CNS (0.02), CVBF (0.01), SLG (0.01), BOOT (0.01), IBM (0.01) of note.

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:
    • Genelux Corporation (GNLX) – 2.5 Million share IPO priced at $6.00.
  • New SPACs launched/News:
    • Ares Acquisition Corp. (AAC) announces monthly contribution to trust account in connection with proposed extension.
    • Longevity Biomedical, Inc. and Denali Capital Acquisition Corp. (DECA) Announce Business Combination to Create Nasdaq-Listed Biopharmaceutical Company Focused on Advancing New Technologies to Promote Human Health and Longevity.
    • NorthView Acquisition Corp (NVAC) files registration statement for proposed business combination with Profusa.
  • Secondaries Priced:
    • FNA: Prices offering of 6.5 mln shares of common stock at $17.00 per share.
    • SNX: Announces Pricing of Secondary Public Offering of Common Stock at $97.00 per share and Concurrent Share Repurchase.
  • Notes Priced of note:
    • CZR: Announces Pricing of New $2.5 Billion Senior Secured Term Loan Facility and Expected Repayment of All Outstanding CRC Term B Loans due 2024 and Term B-1 Loans due 2025.
  • Common Stock filings/Notes:
    • ATXG: Filed Form S-1.. 197,227,433 Shares of Common Stock.
    • FNA: Announces Proposed Public Offering of Common Stock.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • SNX: Announces Launch of Secondary Public Offering of 4.5 million shares of Common Stock by selling stockholders and Concurrent Share Repurchase of 900,000 of those shares.
  • Private Placement of Public Entity (PIPE):
    • MAG: Announces US$40 Million Bought Deal MJDS Prospectus Offering and C$20 Million Bought Deal Flow-Through Private Placement.
  • Mixed Shelf Offerings: None of note.
  • Debt Filing/Notes: None of note.
  • Tender Offer:
    • MDT: Recommends rejection of below-market mini-tender offer by TRC Capital Investment.
  • Convertible Offering & Notes Filed:
    • SHPH: Filed Form S-1.. Up to 9,744,605 Shares of Common Stock Issuable Upon Conversion of 5% Senior Secured Convertible Notes Up to 1,018,079 Shares of Common Stock Issuable Upon Exercise of Warrants.

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: DV 8%, STX +7%, LEVI +6%, URI +4%, ETD +4%, LVS +4%, TSLA +4% of note.
    • Trading Down: FNA -10%, SNX -7%, WOLF -7%, TER -5%, FLEX -4% of note.
  • News After The Close:   
    • Stocks making the biggest moves after hours: TSLA, CVX, NOW, LEVI, IBM, CSX, LVS  (CNBC)
    • Tesla (TSLA) Warns of Economic Uncertainty in Posting Record Profit. (WSJ)
    • Tesla (TSLA) posts record quarterly profit amid challenges, offers sunny outlook. (MarketWatch)
    • Chevron (CVX) raises dividend by 6%, announces $75 billion stock buyback program. (MarketWatch)
    • DOT Probes Southwest Airlines (LUV) Scheduling After Holiday-Travel Meltdown. (WSJ)
    • IBM To Eliminate About 3,900 Jobs or 1.6% of workforce. (Bloomberg)
    • Lam Research (LRCX) announces approximately 7% workforce reduction to be substantially completed by the end of June.
    • Levi Strauss (LEVI) beats estimates, offers upbeat guidance for fiscal year. (CNBC)
    • Facebook (META) and Instagram to end Trump’s suspension from platforms. (NBCNews)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Berkshire Hills Bancorp (BHLB) names David Rosato as CFO. (See Buybacks)
    • Campbell Soup (CPB) announces the appointment of Carrie Anderson as EVP and CFO.
    • CBL announced that Jonathan Heller is resigning as Chairman of the Board.
    • DoubleVerify (DV) to join S&P SmallCap 600.
    • Integra (IART) CFO Carrie Anderson plans to resign.
    • Jacobs (J) Announces CFO Transition.
    • Organigram (OGI) receives Nasdaq listing non-compliance notification.
    • Takung Art (TKAT) Receives Notice of Noncompliance from NYSE American Exchange.
    • Travelers (TRV) Europe Names Peter McConnell Chief Financial Officer.
    • Toyota Motor Corp. ADR (TM) President and CEO Akio Toyoda to step down, become chairman.
    • Western Union (WU) Appoints Matthew Cagwin as Chief Financial Officer.
  • Buyback Announcements or News: 
    • American National Bankshares Inc. (AMNB) Announces Share Repurchase Authorization.
    • Berkshire Hills (BHLB) Announces $50 Million Share Repurchase Program.
    • CLST Approval of Share Repurchase Plan.
    • CACI Announces $750 Million Share Repurchase Authorization.
    • Chevron (CVX) Announces $75 billion Stock Repurchase Program.
    • Liberty Energy (LBRT) the Board approved an increase to Liberty’s existing share repurchase authorization  to $500 million, a $250 million increase.
    • S&T Bancorp (STBA) authorizes a one-year extension of its $50 million repurchase plan.
    • Teradyne (TER) Board authorized a $2 billion share repurchase program and the company expects to repurchase up to $500 million of its common stock in 2023.
    • United Rentals (URI) says it plans to restart its share repurchase program, with the intent to buyback $1 billion of common stock in 2023. (See Dividends) (MarketWatch)
  • Stock Splits or News:
    • Lannett (LCI) announces 1-for-4 reverse stock split.
    • Reed’s (REED) revises effective date for reverse stock split to January 27.
    • SWVL and EDBL trading reverse split price this morning.
  • Dividends Announcements or News:
    • ADM Increasing Quarterly Dividend 12.5% to $0.45 per share.
    • Arthur J. Gallagher (AJG) increases quarterly cash dividend by $0.04 to $0.55 per share.
    • Bankwell Financial Group (BWFG) Declares First Quarter Dividend.
    • Blackstone (BX) has declared a quarterly dividend of $0.91 per share to record holders of common stock.
    • Cadence Bank (CADE) increases quarterly cash dividend $0.015 to $0.235 per share.
    • California Water (CWT) increases quarterly dividend $0.01 to $0.26 per share.
    • Chevron (CVX) Increases Quarterly Dividend to $1.51 per share, a 6% increase.
    • Comcast (CMCSA) Increases Dividend by $0.08 to $1.16 Per Share on an Annualized Basis In 2023.
    • East West Banc (EWBC) Dividend Increase — The first quarter 2023 common stock dividend was increased by 20%, or eight cents per share. The new quarterly dividend is $0.48 per share.
    • Energy Transfer (ET) increases quarterly cash distribution to $0.305 per common unit. a 15% increase.
    • FS Bancorp, Inc. (FSBW) announces the Fortieth Consecutive Quarterly Dividend including a 25% Dividend Increase to $0.25 Per Share.
    • Hexcel (HXL) Board approves increase of quarterly dividend to $0.125 from $0.10 per share.
    • Home Bancshares (HOMB) increases its quarterly dividend to $0.18 per share, a 9.1% raise.
    • Murphy Oil (MUR) lifts dividend by 10% to $0.275 per share.
    • Nokia (NOK) Board is proposing an increase in the dividend to € 0.12 per share.
    • OFG Bancorp (OFG) increases quarterly cash dividend $0.02 to $0.22 per share.
    • United Rentals (URI) initiates a quarterly dividend of $1.48 per share, equating to an initial annualized yield of approximately 1.5%. (MarketWatch)
    • UNITIL Corporation (UTL) increases its quarterly dividend to $0.405 per share, a 3.8% bump.

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

S&P 500 +20, Dow Jones +60,  NASDAQ +116,  and Russell 2000 +8. (as of 7:58 a.m. EST).  Asian markets are lower ex the Kospi.  Europe markets are trading higher ex Germany. VIX Futures are at 19.95 from 20.55 yesterday.  Gold, Silver and Copper lower.  WTI Crude Oil and Brent are higher with Natural Gas lower. US 10-year Treasury sees yields at 3.487% from 3.43%  from yesterday. The U.S. Dollar is higher versus the Euro, higher versus the Pound and higher against the Yen. Bitcoin is at $23,058 from $22,715  yesterday, higher by 0.75%.

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

  • Daily Positive Sectors: Basic Materials, Consumer Cyclical, Financial of note.
  • Daily Negative Sectors: Utilities, Communication Services, Industrials 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. stocks ended mixed Wednesday, as another busy day of earnings gave investors a fresh sense of how companies are coping with an economic slowdown and higher interest rates.  The S&P 500 edged down less than a point, ending at 4016.22, as the benchmark index extended its losses into a second day. The Dow Jones Industrial Average rose 9.88 points to 33743.84, finishing less than 0.1% higher after spending most of the day in the red. The Nasdaq Composite dropped 20.91, or 0.2%, to 11313.36.  (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)

  • Thursday After the Close: 

  • Friday Before the Open:

Earnings of Note This Morning:

  • Beats: CNX +5.07, VLO +1.23, NOC +0.93, ROK +0.59, XRX +0.41, AIT +0.38, NTCT +0.30, ADM +0.29, STM +0.22, BFH +0.13, BX +0.12, MBLY +0.10, AAL +0.10, TSCO +0.08, MMC +0.06, CMCSA +0.04, SHW +0.04, TROW +0.03, NOK +0.03, JBLU +0.02, XEL +0.02 of note.
  • Flat: BHLB of note.
  • Misses: SAP (0.34), HZO (0.29), LUV (0.27), VIRT (0.15), MKC (0.14), SASR (0.13), DOW (0.11), WBS (0.06), EXP (0.03), MUR (0.02), VLY (0.02), PPBI (0.01), ALK (0.01) of note.
  • Still to Report: CRS, CFR, EWBC, MA, NUE, OSIS, UBSI of note.

Guidance:

  • Positive Guidance: XM, LEVI, CALX, URI, AXTA, FLEX, PLUG, IART, CLS, STM, AIT, MBLY, NOC, ROK, AAL, NTCT of note.
  • Negative Guidance: GD, WOLF, LRCX, PLXS, TER, HZO, LUV, SHW of note.

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: XM +31%, DV +8%, STX +8%, TSLA +7%, LEVI +5%, STM +5%, LTRX +4%, ETD +4% of note.
  • Gap Down: FNA -10%, SNX -8%, WOLF -8%, DEO -6%, AZPN -5%, LC -5%, SAP -4% of note.

Insider Action: No stock 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:  Morgan Stanley Fines Its Bankers Over Messaging Breaches. (Bloomberg)
  • Bloomberg Most Read Story:  NYSE Mayhem Traced To A Staffer Who Left a Backup System Running. (Bloomberg)
  • South Korean economy shrank for the first time since the pandemic. (CNBC)
  • Hong Kong exports drop the most since the 1950s. (Bloomberg)
  • American Airlines (AAL) beat estimates as higher fares help revenues. (CNBC)
  • Comcast (CMCSA) beats estimates despite slowing broadband customer growth. (CNBC)
  • Smartphone shipments decline to 2013 low in largest decline ever. (CNBC)
  • SAP to cut 3,000 jobs and look to sell Qualtrics stake. (CNBC)
  • Wells Fargo (WFC) Problems are far from over. (Bloomberg)
  • Southwest Airlines (LUV) warns of first quarter loss after December tech meltdown. (Reuters)
  • Northrup Grumman (NOC) beats estimates and raises sales guidance but in a potential bottom to its pullback. (MarketWatch)

Moving Average Update:

  • Score remains at 91%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:00 a.m. EST
    • The President departs the White House en route Springfield, Virginia, 1:40 p.m. EST
    • The President delivers remarks on our economic progress since taking office, 2:45 p.m. EST
    • The President arrives at the White House, 3:50 p.m. EST
    • The President and The First Lady host a Lunar New Year Reception, 5:30 p.m. EST

Economic: 

  • Q4 GDP isdue out at 8:30 a.m. EST and is expected to come in at 2.6% from 3.2% in Q3.
  • December Durable Orders are out at 9:15 a.m. EST and are expected to come in at 2.9% from -2.1% in November.
  • Int. Trade in Goods 8:30 a.m. EST
  • Initial Jobless Claims 8:30 a.m. EST
  • Wholesale Inventories 10:00 a.m. EST
  • December New Home Sales are due out at 10:00 a.m. EST and are expected to come in at 614,000 from 640,000 in November.
  • EIA Nat Gas Report 10:30 a.m. EST

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:

  • Dell (DELL) has acquired cloud orchestration startup Cloudify, sources tell us for around $100 million. (TechCrunch)
  • GasLog Partners (GLOP) – Board are in the process of reviewing unsolicited non-binding $7.70 per share acquisition proposal.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • Investor Summit Microcap Event
      • Previously posted and ongoing conferences:

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: