CAPIS Morning Note – 02/08/23: Stocks Lower After Yesterday’s Volatility, S&P 500 -20

Overnight Summary: The S&P 500 closed Tuesday higher by 1.29% at 4164 from Monday lower by -0.61% at 4111.08.  The overnight high of 4179.25 was hit at 1:00 a.m. EST. The low was hit at 4157.50 at 6:50 a.m. EST, a range of ~22 points high to low.  At 7:15 a.m. EST, the S&P 500…

Overnight Summary: The S&P 500 closed Tuesday higher by 1.29% at 4164 from Monday lower by -0.61% at 4111.08.  The overnight high of 4179.25 was hit at 1:00 a.m. EST. The low was hit at 4157.50 at 6:50 a.m. EST, a range of ~22 points high to low.  At 7:15 a.m. EST, the S&P 500 (mini) was lower by -10.75 points which is -0.26%.

Congrats to LeBron James who last night broke the NBA career scoring record passing Kareem Abdul-Jabbar’s record as James hit his 38,388th point. (NYT)

Chart of the Day: Yesterday saw stocks rally as Fed Chairman Powell was interviewed. Then the S&P 500 fell to support at $408.19 which was support before rallying all the way back to resistance and beyond. Quite the intraday action. Click here for a video explanation of Erlanger Value Lines.

Earnings Out After The Close: 

  • Beats: RRR +0.97, AIZ +0.86, VOYA +0.64, INSP +0.64, CSL +0.29, ENPH +0.25, VRTX +0.25, PAYC +0.24, ENTA +0.21, LUMN +0.20, NEWR +0.17, EEFT +0.15, VFC +0.13, CCK +0.12, HRB +0.11, OMC +0.10, WERN +0.07, QGEN +0.06, EHC +0.06, EGP +0.05, EXEL +0.05, RXO +0.05, FRSH +0.05, TENB +0.05, FTNT +0.05, ESS +0.04, FMC +0.03, MODN +0.01, RAMP +0.01, PEAK +0.01, CNO +0.01 of note.
  • Flat: YUMC, ICHR, HIW, SSNC of note.
  • Misses: CMG (0.60), CMP (0.55), VSAT (0.52), SIMO (0.43), KD (0.16), PRU (0.09), ILMN (0.08), BKH (0.06), WU (0.03), ZWS (0.01), DEI (0.01), NCR (0.01), JKHY (0.01), ATO (0.01), HMN (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:
    • ASST: Closes Initial Public Offering.
    • GPCR: Announces Closing of Upsized Initial Public Offering and Full Exercise of the Underwriters’ Option to Purchase Additional American Depositary Shares.
  • New SPACs launched/News: None of note.
  • Secondaries Priced:
    • CVAC: Prices 27.02 Million shares offering @$9.25 per share.
    • DT: Prices offering of 15 million shares of common stock by selling stockholders.
    • LBPH Announces Pricing of Public Offering of Common Stock.
    • RXST: Pricing of Public Offering of Common Stock 4 Million @$12.50. BAC Bookmanager.
    • SINT: Pricing of $12.0 Million Public Offering.. Priced @$5.60.
    • STAF: Pricing of $5 Million Public Offering.
    • TMCI: Announces Pricing of $100.0 Million Public Offering of Common Stock.
    • XPOF: Announces Pricing of Secondary Offering of Class A Common Stock by Selling Stockholders.
  • Notes Priced of note:
    • COLL: Prices offering of $210 million of 2.875% convertible senior notes.
  • Common Stock filings/Notes:
    • ACER: Filed Form 424B2.. $11 Million Common Stock.
    • AEHR: Enters At-The-Market offering of common stock of up to $25 million of shares of the Company’s common stock.
    • AVXL: Files prospectus related to issuance, sale of up to $150 million in shares of common stock from time to time.
    • FRC: Common Stock Offering.. 2 Million shares. (BAC, JPM, GS and MS Bookmanager)
    • LBPH: Commencement of Public Offering of Common Stock.. $20 Million of shares. (Evercore and Cantor Bookmanager)
    • RXST: Proposed Public Offering of Common Stock,, $40 Million. (BAC Bookmanager)
    • TMCI: Proposed Public Offering of Common Stock.. $100 Million common stock. (JPM and MS Bookmanagers)
  • Direct Offering:
    • MDWD: Closing of $27.5 Million Registered Direct Offering of Ordinary Shares.
  • Selling Shareholders of note:
    • DT: Proposed Public Offering by Selling Stockholders. 15 Million shares. (BAC Underwriter)
    • XPOF: Secondary Offering of Class A Common Stock by Selling Stockholders. 5 Million shares. (BAC and Jefferies bookmanager)
  • Private Placement of Public Entity (PIPE):
    • RNLX: Announces a c.$20.3 million private placement.
    • VAPO: Announces $23 Million Private Placement.
  • Mixed Shelf Offerings:
    • BRTX: Filed Form S-3.. $75 Million Mixed Shelf.
    • HAL: Filed Form S-3ASR.. Mixed Shelf.
    • HIW: Filed Form S-3ASR.. Mixed Shelf.
    • PLUS: Files mixed securities shelf offering.
    • TMCI: Filed Form S-3ASR.. Mixed Shelf.
  • Debt Filing/Notes:
    • RCL: Announces proposed offering of senior guaranteed notes to refinance debt.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed:
    • ELBM: Announces US$51 Million Convertible Note Offering, Intention to Repurchase and Cancel Existing Convertible Notes and Discussions With Respect to Potential Additional Sources of Funding.

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: NEWR +15.%, FTNT +13%, MANU +12%, ENPH +7%, KD +5%, PANW +4% of note.
    • Trading Down: LUMN -16%, XPOF -9%, TMCI -6%, RXST -5%, DT -5%%, BKH -5%, JKHY -5%, CMG -4%, SSNC -4% of note.
  • News After The Close:   
    • Stocks making the biggest moves after hours: CMG, ENPH, FTNT, YUMC, VFC, LUMN (CNBC)
    • Enphase (ENPH) stock rallies 8% after Q4 earnings blow past expectations, guidance. (MarketWatch)
    • Chipotle Mexican Grill (CMG) misses expectations for earnings, revenue and same-store sales. (CNBC)
    • Microsoft (MSFT) will make ChatGPT tech available for other companies to customize, source says.(CNBC)
    • Qatari investors will bid for Manchester United (MANU) within DAYS and are ‘confident’ of blowing any competitors out of the water – and they want to hand Erik ten Hag a HUGE transfer kitty. (DailyMail)
    • The Investor Behind the $1 Billion Bet on Bed Bath & Beyond (BBBY). (WSJ)
    • EBAY: EBay to lay off 500 employees, about 4% of its workforce. (MarketWatch)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Coherent Corp. (COHR) Moves to the NYSE.
    • Globe Life (GL) Senior Vice President and Global Operating Officer Darren Saumur informed the co of his decision to resign.
    • Invesco Ltd. (IVZ) President and CEO Marty Flanagan to retire; Andrew Schlossberg, Invesco Senior Managing Director and Head of Americas, to become President and CEO.
    • NextGen Healthcare (NXGN) Chief Technology Officer David A. Metcalfe notified the Company of his resignation.
    • PainReform Ltd. (PRFX) Announces Receipt of Extension to Meet the Nasdaq’s Minimum Bid Price Requirement.
    • PERI announces six-month CEO transition period, names Tal Jacobson as CEO.
  • Buyback Announcements or News: 
    • CDW has authorized a $750 million increase to the company’s share repurchase program.
    • KKR Real Estate Finance Trust (KREF) increased share repurchase program on Feb. 3 to repurchase up to an aggregate of $100.0 million of its common stock.
    • New York Times (NYT) approves a new $250 mln Class A share repurchase program.
    • Prudential (PRU) authorizes repurchase of up to $1.0 billion of outstanding common stock.
    • Zurn Elkay Water Solutions (ZWS) announces $500 million share repurchase authorization.
  • Stock Splits or News:
    • CZOO 1 for 20 reverse split.
  • Dividends Announcements or News:
    • 3M (MMM) increases quarterly dividend to $1.50 per share, $0.01 raise. (MarketWatch)
    • Atmos Energy (ATO) Board of Directors has declared a quarterly dividend of $0.74 per common share.
    • New York Times (NYT) increases dividend by 22%.
    • Primerica (PRI) increases quarterly divided $0.10 to $0.65 per share.
    • TotalEnergies (TTE) Proposes an Ordinary Dividend of 2.81 € per Share for Fiscal Year 2022, a 6.4% Increase, and the Confirmation of the 1 € per Share Special Dividend.
    • V.F. Corp (VFC) reduces quarterly dividend to $0.30 per share from $0.51.
    • Yum! Brands (YUM) increases quarterly dividend 6.1% to $0.605 per share.
    • Yum China (YUMC) announced increase to quarterly dividend to $0.13 from $0.12 per share.

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

S&P 500 -19, Dow Jones -117,  NASDAQ -36, and Russell 2000 -13. (as of 8:02 a.m. EST).  Asia is higher ex the Nikkei. VIX Futures are at 20.52 from 20.95 yesterday.  Gold, Silver and Copper higher.  WTI Crude Oil and Brent are higher with Natural Gas lower. US 10-year Treasury sees yields at 3.645% unchanged from yesterday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $23,174 from $23,000 yesterday, lower by  -0.01%.

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

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

Stock indexes finished higher Tuesday after traders reacted to remarks from Federal Reserve Chair Jerome Powell in his first appearance since the job market’s surprisingly strong showing Friday.  Stocks started Tuesday morning lower, but gained ground shortly after Mr. Powell began speaking in a broadcast conversation with Carlyle co-founder David Rubenstein. A flurry of selling then sent indexes back into the red, but stocks regained positive territory later in the afternoon.  The S&P 500 rose 52.92 points, or 1.3%, to 4164.00 and the Nasdaq Composite added 226.34 points, or 1.9%, to 12113.79. The Dow Jones Industrial Average rose 265.67 points, or 0.8%, to end at 34156.69.  The ricochets up and down on Tuesday were evidence that tactical trading considerations—not the substance of Mr. Powell’s remarks—drove Wall Street’s reaction, said David Bahnsen, chief investment officer at The Bahnsen Group. (WSJ)

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: CRNC +0.27, UBER +0.27, PAG +0.25, INGR +0.20, PERI +0.17, NYT +0.16, BXMT +0.15, EPC +0.10, BDC +0.09, PFGC +0.08, COTY +0.07, UAA +0.07, CVS +0.06, YUM +0.05, CME +0.04, RITM +0.04, BG +0.03, CDW +0.02, D +0.02, COHR +0.02, ETN +0.01, FOXA +0.01, SITC +0.01 of note.
  • Flat: RDWR of note.
  • Misses: GPRE (0.42), CPRI (0.40), BAM (0.39), CRTO (0.12), VSH (0.11), EMR (0.09), REYN (0.04), TRMB (0.01) of note.
  • Still to Report: none of note.

Guidance:

  • Positive Guidance: CPRX, NEWR, FTNT, PAYC, QGEN, EPC, COTY, UAA, BDC of note.
  • Negative Guidance: JKHY, SSNC, ZWS, DEI, MODN, PEAK, BKH, ESS, CCK, EEFT, BG, CPRI, TRMB, CRNC, REYN, CRTO, PFGC, D of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: MANU +18%, NEWR +17%, FTNT +12%, ENPH +10%, EQNR +6%, KD +5%, PLUS +5%, OSH +5%, VOYA +5%, TENB +5%, HRB +4%, PANW +4%, WERN +4% of note.
  • Gap Down: LUMN -13%, XPOF -12%, RXST -9%, TMCI -7%, JKHY -5%, BG -5%, CMG -5%, DT -4%, ATO -4%, EXEL -4%, BKH -4%, AMCR -4% of note.

Insider Action: SMCI 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: Biden Baits Republicans With Unity Please That Provoke Cat Calls. (Bloomberg)
  • Bloomberg Most Read Story: Meta (META) Asks Many Managers To Get Back To Making Things or Leave. (Bloomberg)
  • Key Takeaways From Biden’s State of the Union Speech. (Bloomberg)
  • Mortgage refinance jumps 18% as interest rates drop. (CNBC)
  • Uber (UBER) beats estimates on the top and bottom line. Company will be free cash flow positive. (CNBC)
  • Yum Brands (YUM) tops estimates on strength at Taco Bell. (CNBC)
  • U.K. Regulator Calls Microsoft’s Takeover of Activision (ATVI) to be Anti-Competitive. (CNBC)

Moving Average Update:

  • Score bounced back up to 94% from 80%.

Geopolitical: 

  • President’s Public Schedule:
    • The President departs the White House en route Joint Base Andrews, 9:55 a.m. EST
    • The President departs Joint Base Andrews en route Madison, Wisconsin, 10:15 a.m. EST
    • Press Secretary Karine Jean-Pierre will speak aboard Air Force One en route Madison, Wisconsin, 11:00 a.m. EST
    • The President arrives in Madison, Wisconsin, 12:35 p.m. EST
    • The President discusses how his economic plan is creating good-paying, union jobs and delivering real results for the American people, 2:00 p.m. EST
    • The President departs en route Joint Base Andrews, 6:05 p.m. EST
    • The President departs Joint Base Andrews en route the White House, 7:55 p.m. EST
    • The President arrives at the White House, 8:05 p.m. EST

Economic: 

  • MBA mortgage Applications 7:00 a.m. EST
    • MBA mortgage Applications: Composite: +7.4% vs -9.0, Purchase: +3.1%, ReFi: +17.7%
    • 30-YEAR MORTGAGE RATE ACTUAL: 6.18% VS 6.19% PREVIOUS
  • Wholesale Inventories 10:00 a.m. EST
  • EIA Petroleum Report 10:30 a.m. EST

Federal Reserve / Treasury Speakers:

  • Federal Reserve New York President John Williams 9:20 a.m. EST
  • Federal Research Board of Governors Lisa D. Cook 9:30 a.m. EST
  • Federal Reserve Vice Chair for Supervision Michael S. Barr 10:00 a.m. EST
  • Federal Reserve Minneapolis President Neel Kashkari 12:30 p.m. EST
  • Federal Research Board of Governors Christopher Waller 1:45 p.m. EST

M&A Activity:

  • Acushnet Holdings Corp. (GOLF) Acquires Club Glove Brand, The Performance Leader in Golf Travel.
  • CVS Agrees to Buy Oak Street Health for $10.6 Billion, Including Debt. CVS Will Pay $39 a Share Cash for Oak Street. CVS, Oak Street Deal Expected to Close This Year, Companies Say — (WSJ)
  • Guild Mortgage (GHLD) Acquires Legacy Mortgage.
  • Inter & Co (INTR) acquires YellowFi to expand its product offering in the US.
  • MetLife (MET) to acquire Raven Capital Mgmt, a privately-owned alternative investment firm.
  • UniFirst (UNF) has signed an agreement to purchase Clean Uniform for $300 million.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • APAC Resources Conferences by Bank of America Securities (02/08/23-02/09/23)
    • Evercore ISI Travel & Transport Conference (02/08/23-02/09/23)
    • Guggenheim Healthcare Talks Oncology Conference (02/08/23-02/09/23)
    • Imperial Capital Advanced Manufacturing & Supply Chain Conference 2023 (02/08/23-02/09/23)
      • Previously posted and ongoing conferences:
        • Piper Sandler Biopharma Mogul Ski Summit
        • Stifel Transportation & Logistics Conference (02/07/23-02/08/23)
        • Stifel Biotech Ski Summit.

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: