CAPIS Morning Note – 01/31/23: Stocks Off The Lows But Still Down as Earnings Season Heats Up

Overnight Summary: The S&P 500 closed Monday lower by -1.17% at 4017.77 from Friday higher by 0.25% at 4070.56.  The overnight high of 4044 was hit at 7:05 p.m. EST. The low was hit at 4007.50 at 6:35 a.m. EST, a range of ~37 points high to low.  At 7:15 a.m. EST, the S&P 500 (mini) was lower by -11.50 points which is -0.29%.

Earnings Out After The Close: 

• IPOs Priced or News: None of note.
• New SPACs launched/News:
  • Lotus Technology to Go Public through Business Combination with L Catterton Asia Acquisition Corp (LCAA), Accelerating Lotus’s Vision to Deliver All-Electric, Sustainable Luxury Vehicles Globally..
• Secondaries Priced: None of note.
• Notes Priced of note:
  • CHTR: Prices $1.1 Billion Senior Unsecured Notes.
  • STZ: Prices Offering of $500 million Senior Notes.
• Common Stock filings/Notes:
  • ALV: Retires Treasury Shares, Decreases Number of Issued Shares.
  • MYSZ: Filed Form S-1.. 2,572,832 Shares of Common Stock.
  • RGCO: Filed Form S-3.. $40 Million Common Stock.
  • SNX: Closing of Secondary Public Offering of Common Stock and Concurrent Share Repurchase.
• Direct Offering:
  • Cadiz Inc. (CDZI) Announces $40 Million Registered Direct Offering Backed By Largest Shareholders..
• Selling Shareholders of note:
  • BBAI: Filed Form S-3.. 27,777,778 Shares of Common Stock by selling shareholder.
• Private Placement of Public Entity (PIPE): None of note.
• Mixed Shelf Offerings:
  • ETNB $500 Million shelf.
• Debt Filing/Notes: None of note.
• Tender Offer: None of note.
• Convertible Offering & Notes Filed:
  • ITGR: Launch of Convertible Notes Offering $375 million.
  • PBA: Provides Notice of Series 21 Preferred Share Conversion Right and Announces Reset Dividend Rates.

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: SYM +11%, CRK +6% of note.
  • Trading Down: HLIT -8%, BBAI -6%, ITGR -5% of note.
• News After The Close:   
  • Stocks making the biggest moves after hours: WHR, UNH, NXPI, HLIT  (CNBC)
  • IMF hikes global growth forecast as inflation cools and household spending surprises. (CNBC)
  • Apple (AAPL) Executives Violated Worker Rights, Labor Officials Say. (Bloomberg)
  • President Biden To End Covid-19 Emergency Declarations On May 11. (AP)
  • Jim Chanos: Bear market is doing something unheard of in my career. (CNBC Interview)
  • Ford (F) and General Motors (GM) enter a new phase of uncertainty on prices and demand. (CNBC)
  • DoorDash (DASH) announces expected stock sales from co-founders. (MarketWatch)
  • Bed Bath & Beyond (BBBY) Preparing To File Bankruptcy As Soon As This Week – RTRS sources – Has Lined Up Liquidators For Going Out Of Business Sales.
  • Aecom (ACM) awarded $239 million Navy contract.

• Exchange/Listing/Company Reorg and Personnel News:
  • Index Changes: Agree Realty (ADC) set to Join S&P MidCap 400; Comstock Resources (CRK) to Join S&P SmallCap 600
  • AIG Fired Interim CFO Lyons Over Non-disclosure Obligations. (MarketWatch)
  • Allegiant Travel (ALGT) appoints Robert Neal CFO.
  • Dollar General (DG) CFO John Garratt to retire. (MarketWatch)
  • Invitation Homes (INVH) Announces CFO Succession.
  • Wellous (KACL – Spac) Announces Key Leadership Appointments
  • Logitech Int’l SA (LOGI) names Charles Boynton as CFO.
  • Novo Integrated Sciences (NVOS) Announces Receipt of Notice from Nasdaq.
  • Optinose (OPTN) Announces CEO Transition and Business Update.
  • Six Flags (SIX) has appointed Marilyn Spiegel to its Board of Directors.
  • The Simply Good Foods Company (SMPL) Announces CEO Succession Plan.
  • Workday (WDAY) announced a realignment of resources resulting in the elimination of jobs.  This will impact around 3.0% of its workforce.
  • XPON names Brian Schaffner as new CEO, Greg Aydelott as new CFO.
• Buyback Announcements or News: 
  • IGIC Executes Repurchase of Approximately 2.3 Million Common Shares.
  • MPC Announced Incremental $5 Billion Share Repurchase Authorization.
  • Silo Pharma (SILO) Announces Stock Repurchase Program.
  • UBS To Buy Back More Than $5 Billion Of Shares In 2023. (See Dividends too)
  •  UPS $5 Billion buyback. 
  • Victoria’s Secret & Co. (VSCO) Plans $125 Million Accelerated Share Repurchase Program.
• Stock Splits or News: None of note.
• Dividends Announcements or News:
  • Capital Southwest Corp. (CSWC) increases total quarterly dividend 1.7% to $0.58 per share.
  • First Financial Northwest, Inc. (FFNW) Announces 8.3% Increase in its Quarterly Cash Dividend to $0.13 per share.
  • German American Bancorp, Inc. (GABC) Declares 9% Cash Dividend Increase to $0.25 per share.
  • PBA: Announces Reset Dividend Rates.
  • Shutterstock (SSTK) Increases Quarterly Dividend by 13% to $0.27 per share.
  • UBS is increasing dividend by 10% YoY to $0.55 per share.
  • Woodward (WWD) Increases Dividend by 16 Percent to $0.22 per share.

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

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

• Daily Positive Sectors: None of note.
• Daily Negative Sectors: Consumer Cyclical, Technology, Energy, Communication Services of note.
• One Month Winners:  Consumer Cyclical, Communication Services, and Technology of note.
• Three Month Winners: Basic Materials, Real Estate, and Financial  of note.
• Six Month Winners: Basic Materials, Energy, and Financial of note.
• Twelve Month Winners: Energy, Basic Materials and Utilities of note.
• Year to Date Winners: Consumer Cyclical, Communication Services, and Technology of note.

U.S. stocks fell Monday, with investors growing cautious at the start of a bumper week of central-bank meetings and corporate earnings.  The S&P 500 was down 52.79 points, or 1.3%, to 4017.77, while the Dow Jones Industrial Average fell 260.99 points, or 0.8%, to 33717.09. The Nasdaq Composite declined 227.90 points, or 2%, to 11393.81.  Stock markets have been volatile in recent weeks, driven by signs of softening inflation and hopes that the Federal Reserve will continue to moderate—and eventually halt—its interest-rate increases. U.S. indexes registered solid weekly gains last week, with the S&P 500 adding 2.5%, the Nasdaq Composite jumping 4.3% and the Dow Industrials rising 1.8%.   In the S&P 500, 48 of last year’s 50 worst-performing stocks are up this year, notching an average gain of 17% through January, according to Dow Jones Market Data. In comparison, 30 of last year’s 50 best-performing S&P 500 stocks are up, posting an average advance of less than 1%.  (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)

• Gap Up: SYM +7%, SANM +7%, CRK +6%, GM +6%, SPOT +5%, FENC +4% of note.
• Gap Down: BBAI -15%, HLIT -13%, ITGR -5%, HTLF -5%, NXPI -4%, PCH -4% of note.

Insider Action: FCF 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.

• Stocks making the biggest moves premarket: MCD, UPS, GM, IP, XOM, CAT, F, PFE, LCID, PHM (CNBC)
• 5 things to know before the stock market opens. (CNBC)
• 5 Things You Need to Know to Start Your Day. (Bloomberg)
• Bloomberg Lead Story: US Futures Dip As Earnings Roll In; Dollar Rises. (Bloomberg)
• Bloomberg Most Read Story: Trump Sues Journalist Bob Woodward for releasing Interview Recordings. (Bloomberg)
• Chinese factory growth returns as economists cheer it on. (CNBC)
• Exxon (XOM) posts a record profit of $56 billion in 2022. (Bloomberg)
• General Motors (GM) smashes expectations and guides towards a strong 2023, despite margin squeeze. (CNBC)
• McDonald’s (MCD) profit grows as inflation-weary customers flock to its restaurants. (CNBC)
• UPS falls short of revenue expectations. (CNBC)
• Pfizer (PFE) forecasts weak 2023 sales of COVID products. (Reuters)
• Caterpillar (CAT) misses on profits estimates as costs rise. (Reuters)

Moving Average Update:

• Score pulls back to 77% from 100%.

Geopolitical: 

M&A Activity:

• BrightView (BV) Acquires Island Plant Company.
• COHU Acquires MCT Worldwide.
• Northstar Recycling Acquires Sonoco Sustainability Solutions (SON).

• Company Meetings: AUY, CFRX, HRL
• Fireside Chat: None of note.
• Investor/Analyst Day/Calls: JSPR, NLSP, NXST, RA 
• Update: None of note.
• R&D Day: None of note.
• Company Event:
  • SELLAS Life Sciences (SLS) to Host Key Opinion Leader Webinar on Galinpepimut-S Acute Myeloid Leukemia Program.
• Industry Meetings:
  • NAHB International Builders Show (IBS) 2023 (01/31/23-02/02/23)
  • Manifest 2023 – The Future of Logistics is Here) (01/31/23-02/02/23)
  • 7th European Annual Microbiome Movement (01/31/23-02/02/23)
  • NKBA Kitchen & Bath Industry Show 2023 (01/31/23-02/02/23)
  • DesignCon 2023 (01/31/23-02/02/23)
    • Previously posted and ongoing conferences:
      • 2nd Allogeneic Cell Therapies Summit Europe 2023 (01/30/23-02/01/23)
      • Metro Connect USA 2023 (01/30/23-02/01/23)
      • BankDirector 29th Annual Acquire or Be Acquired Conference 2023 (01/29/23-01/31/23)

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: