CAPIS Morning Note – 05/04/23: Big Corporate Action Day: JNJ Takes Kenvue Public, Arconic Bought By Apollo Global. Stocks Lower.

Overnight Summary: The S&P 500 closed Wednesday at 4090.75 lower by -0.70% while Tuesday at 4119.68 lower by -1.16%. The overnight high of 4118 was hit at 12:40 a.m. EDT. The low was hit at 4075.50 at 6:10 p.m. EDT, a range of ~43 points high to low which is what you find when volatility…

Overnight Summary: The S&P 500 closed Wednesday at 4090.75 lower by -0.70% while Tuesday at 4119.68 lower by -1.16%. The overnight high of 4118 was hit at 12:40 a.m. EDT. The low was hit at 4075.50 at 6:10 p.m. EDT, a range of ~43 points high to low which is what you find when volatility is high.  At 7:05 a.m. EDT, the current price was 4096.75 which is -0.26% and -10.75 points. As we move into mid-May we will use a 10-day moving average of overnight ranges.

Earnings Out After The Close: 

  • Beats: ALB +3.26, EQIX +3.26, PDCE +1.77, HCC +1.07, SEDG +0.95, MELI +0.66, MKSI +0.66, VAC +0.61, RHP +0.48, CIVI +0.44, FATE +0.43, QDEL +0.37, HUBS +0.37, TTEC +0.32, WTS +0.28, ANSS +0.24, ZG +0.24, RDN +0.23, CTVA +0.23, APA +0.22, AVT +0.21, IOSP +0.21, NARI +0.19, VSTO +0.18, VMEO +0.14, CW +0.13, LMND +0.13, IR +0.13, PCOR +0.13, QRVO +0.13, ACLS +0.13, AMED +0.12, KLIC +0.12, RSI +0.11, FLT +0.11, AEIS +0.10, CODI +0.10, SUM +0.10, MRO +0.09, SITM +0.09, STAA +0.09, CCRN +0.09, PSA +0.09, UDMY +0.08, NE +0.08, HST +0.07, WMB +0.07, ES +0.07, BKH +0.06, CTSH +0.06, PLMR +0.06, UPWK +0.06, OPK +0.06, GL +0.06, CFLT +0.05, ERII +0.05, OPCH +0.05, QGEN +0.05, SRI +0.05, ESTE +0.04, MTG +0.04, RVLV +0.04, INFN +0.04, QNST +0.04, NUS +0.04, USPH +0.04, O +0.03, FORM +0.03, FROG +0.03, PGRE +0.03, SYNA +0.03, ATO +0.02, DCP +0.02, EQH +0.02, ETSY +0.02, KTOS +0.02, OLED +0.02, EQC +0.01, EVH +0.01, FSLY +0.01, RPT +0.01, ULCC +0.01 of note.
  • Flat: ATUS +0.00, BHE +0.00, INFA +0.00, RGLD +0.00 of note.
  • Misses: TNDM (1.39), AMWL (1.24), RUN (0.93), HOUS (0.47), KW (0.37), MET (0.34), FNF (0.34), NSTG (0.32), ALL (0.29), ECPG (0.28), FARO (0.25), RGR (0.16), RGNX (0.14), SIGI (0.14), UGI (0.13), WES (0.13), ALKT (0.12), MOS (0.11), RELY (0.11), WERN (0.11), CPE (0.10), OUT (0.09), RYN (0.09), GNK (0.08), REZI (0.08), GIL (0.07), CORT (0.07), ALLO (0.06), TXG (0.06), ADPT (0.03), MGY (0.03), LESL (0.03), NVST (0.03), MMS (0.03), NGVT (0.02), DHT (0.02), MYGN (0.02), DEN (0.02), QCOM (0.01), AMK (0.01), CDAY (0.01), GKOS (0.01), NFG (0.01), SRC (0.01), TRIP (0.01), CXW (0.01) of note.

Unusual Options Activity:

Daily Screen in Erlanger Chartroom that highlights unusual Call and Put Options activity in the S&P 500.  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:
    • J&J’s (JNJ) Kenvue Said to Price IPO at $22 per Share. (CNBC)
  • New SPACs launched/News:
    • Corner Growth Acquisition Corp. (COOL) and Noventiq announce bunsiness combination agreement; plans to list on Nasdaq under symbol “”NVIQ”..
  • Secondaries Priced:
    • JOBY: Announces Pricing of Public Offering.. 43,985,681 shares of its common stock at a public offering price of $4.10 per share.
    • RPHM: 6.87 million shares offering priced at $8 per share.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • ADXN: Filed Form F-1.. Up to 13,231,445 American Depositary Shares Representing 79,388,670 Shares.
    • IMGN: Proposed Public Offering of Common Stock. $200Million. (Jefferies, GS and Guggenheim bookmanager)
    • PRVA: Privia Health Announces Secondary Offering.
    • RPHM: Proposed Public Offering of Common Stock. (Jefferies, BAC and Piper bookmanagers)
    • ZYXI: Proposed Secondary Public Offering of Common Stock.. 2M Shares. (RBC Bookmanager) (see Convertible Notes)
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • RYI: Secondary Offering of 2,630,700 Shares of Common Stock by its Principal Shareholder and a Concurrent Stock Repurchase.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • LIN: Filed Form S-3ASR Mixed Shelf.
    • UBER: Filed Form S-3ASR.. Mixed Shelf Offering.
  • Debt/Credit Filing and Notes:
    • SIX: Six Flags Announces Closing of Amendments to Credit Facility.
  • Tender Offer:
    • JNCE: Announces Closing of Tender Offer.
  • Convertible Offering & Notes Filed:
    • ZYXI: Announces proposed $50 million offering of convertible senior notes.

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:  RSI +13%, LMND +11%, ATUS +8%, FROG +8%, PCOR +8%, CFLT +7%, SEDG +7%, INFN +6%, QRVO +6%, CPE +6% , CTSH +5%, ZG +5%, HCC +5%, HUBS +5%, CODI +4%, RELY +4%, HST +4%, MGY +4%, DHT +4% of note.
    • Trading Down: PACW -57%, WAL -32%, HOUS -25%, ZYXI -22%, MCB -21%, SYNA -20%, OPCH -17%, FARO -12%, RPHM -11%, TNDM -10%, UPWK -8%, TRIP -8%, ARDX -7%, ALKT -7%, QCOM -6%, OM -5%, GIL -4%, RGR -4%, CDAY -4%, AMWL -4% of note.
  • News After The Close:   
    • Stocks making the biggest moves after hours: PACW, WAL, CMA, SEDG, ETSY, QCOM, ZG, TRIP, ULCC (CNBC)
    • SEC Official: Not Considering Short Selling Ban As Worries Over Bank Soundness Hurt Shares.
    • Qualcomm (QCOM) gives light forecast, phone chip sales fall 17%. (CNBC)
    • PacWest (PACW) stock plummets more than 50% after report of potential sale; other bank stocks fall too. (MarketWatch)
    • Costco (COST) online April sales drop nearly 6%. (MarketWatch)
    • Apple’s (AAPL) Unionized Store Workers Seek Tips and Higher Holiday Pay. (Bloomberg)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Actelis Networks (ASNS) Regains Compliance With Nasdaq Minimum Bid Price Requirement.
    • BJ’s Wholesale (BJ) announces that its board of directors has appointed President and Chief Executive Officer Bob Eddy as chairman of the board
    • Brendan S. Jones Named President and Chief Executive Officer of Blink Charging (BLNK).
    • Bright Health Group (BHG) Appoints Jay Matushak as Chief Financial Officer.
    • BrightView (BV) Announces CEO Transition.
    • Enthusiast Gaming (EGLX) Receives 180-day Extension to NASDAQ Minimum Bid Price Deficiency Deadline.
    • FARO Technologies (FARO) Announces Retirement of President & CEO Michael Burger and appointment of Yuval Wasserman as Executive Chairman and Interim CEO.
    • Marvell (MRVL) Announces Changes to its Board of Directors.
    • Q2 Holdings (QTWO) announces that Kirk Coleman has been promoted to President.
  • Buyback Announcements or News:
    • ArcelorMittal (MT) To Repurchase Up To 85 Million Shares Through May 2025.
    • FUN announces new $250M share repurchase program.
    • MetLife (MET) Announces New $3 Billion Share Repurchase Authorization.
    • Perfect Corp. (PERF) Announces US$20 million Share Repurchase Plan by the Company.
    • Shift4 Payments (FOUR): Authorized a $250 mln share buyback program.
    • STERIS (STE) Announces $500 million Share Repurchase Authorization. (see Dividends)
    • Synaptics (SYNA) authorizes $500 million repurchase program
    • TTM Technologies, Inc. (TTMI) Board of Directors Approves $100 million Share Repurchase Program.
  • Stock Splits or News:
    • MULN trading r/s price.
  • Dividends Announcements or News: 
    • Cogent Communications (CCOI) Increases its Regular Quarterly Dividend on its Common Stock.
    • COP: Declares Quarterly Dividend and Variable Return of Cash Distribution.
    • FactSet (FDS) increases quarterly cash dividend $0.09 to $0.98 per share.
    • SIGA Declares Special Cash Dividend of $0.45 Per Share.
    • TXN Goes ex div tomorrow for $1.24.
    • Clearway Energy (CWEN)is increasing the quarterly dividend by 2% to $0.3818 per share.
    • Cognizant Tech (CTSH) raises dividend 7%.
    • Innospec (IOSP) approves 10% dividend increase.
    • Ryman Hospitality (RHP) increases quarterly dividend $0.25 to $1.00 per share.
    • STERIS (STE) Declares $0.47 per share Dividend.
    • Sturm, Ruger & Company, Inc. (RGR) Declares Quarterly Dividend of 32¢ Per Share.
    • Telus (TU) raises quarterly dividend to CAD$0.3636 from CAD$0.3511 per share.
    • UGI Corp (UGI) increases quarterly dividend to $0.375 per share.
    • Vistra Energy (VST) increases quarterly dividend 15% to $0.204 per share.

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

S&P 500 -14, Dow Jones -113,  NASDAQ +1, and Russell 2000 -15. (as of 7:59 a.m. EDT).  Asia is lower ex the Nikkei for a second day while Europe is lower. VIX Futures are at 20,50 from 19.40 yesterday.  Gold, Silver and Copper higher. WTI Crude Oil unchanged while Brent Crude Oil higher with Natural Gas lower. US 10-year Treasury sees yields at 3.347% from  3.403% yesterday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $29.253 from $28,612 yesterday, higher by 3.16%.

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

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

U.S. stocks closed near session lows on Wednesday after the Federal Reserve raised rates as expected by another 25 basis points, bringing the policy rate to its highest level since 2007. The Dow Jones Industrial Average shed about 270 points, or 0.8%, ending near 33,414. The S&P 500 index shed 0.7% and the Nasdaq Composite Index closed 0.5% lower, with shares of regional banks ending the session off by about 34% on the year. Federal Reserve Chairman Jerome Powell wouldn’t rule out additional rate hikes, but said the central bank will continue to monitor tightening credit conditions following the collapse of Silicon Valley Bank and Signature Bank in early March.   (WSJ – edited by QPI)

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: PENN +2.69, MRNA +1.93, LAMR +1.41, MLM +1.14, TGLS +1.01, PH +0.92, WLK +0.90, W +0.58, REGN +0.53, BPMC +0.51, MT +0.48, DINO +0.48, HII +0.37, BLD +0.35, SWK +0.33, VMC +0.33, BGNE +0.32, COP +0.31, DFH +0.31, IRM +0.29, MGPI +0.29, WRK +0.27, GOLF +0.27, AGIO +0.25, CAH +0.25, NTLA +0.23, WD +0.22, MSGS +0.20, RACE +0.18, BALL +0.18, LNTH +0.18, UPBD +0.17, WCC +0.17, IDA +0.16, ITCI +0.16, SRE +0.15, FOUR +0.14, DLX +0.14, PWR +0.12, NWN +0.11, IBP +0.11, BDX +0.11, TFX +0.11, XPO +0.10, XYL +0.10, BERY +0.10, BRKR +0.09, BCE +0.08, VNT +0.07, NFE +0.07, SHAK +0.07, BKI +0.06, ZTS +0.06, ENOV +0.06, BUD +0.05, SABR +0.05, SHOP +0.05, ITT +0.05, DDOG +0.04, AUPH +0.04, CGNX +0.04, SBH +0.04, TIXT +0.03, PBH +0.03, DNOW +0.03, RITM +0.03, HEP +0.02, HAYW +0.02, BV +0.02, PRVA +0.02, OGE +0.02, CIM +0.01, APG +0.01, IRWD +0.01, TU +0.01, ATI +0.01, PZZA +0.01, MTSI +0.01, FOCS +0.01, ICE +0.01, ECVT +0.01 of note.
  • Flat: PRMW +0.00, CCOI +0.00, DNB +0.00, PLTK +0.00, IMOS +0.00, PCG +0.00, COMM +0.00, APTV +0.00 of note.
  • Misses: BHC (1.23), JLL (1.11), GPRE (0.73), WOW (0.72), CEG (0.66), GEL (0.34), PTON (0.31), CARS (0.27), NVCR (0.16), XPRO (0.15), THRY (0.13), NTCT (0.12), PACK (0.10), KRTX (0.10), BBIO (0.09), PARA (0.09), IMXI (0.08), OGN (0.08), MODV (0.07), INSM (0.07), ARNC (0.06), PLNT (0.05), RCM (0.05), CG (0.04), LANC (0.04), KTB (0.04), ESMT (0.04), NJR (0.03), ACIW (0.03), BWA (0.02), ERJ (0.02), STVN (0.02), KYMR (0.01), STWD (0.01), OCSL (0.01), AEP (0.01), PBI (0.01), MAC (0.01) of note.
  • Still to Report: ALNY , ARW , DGII , FTDR , GTES , H , IDCC , ITRI , K , MMP , MDU , MFA , DOC , PNW , PTLO , PPL , RCL , UNIT of note.

Guidance:

  • Positive Guidance: STAA, NARI, FROG, CFLT, AVT, HUBS, GKOS, PCOR, GL, VAC, NSTG, IR, HST, LMND, RHP, CTVA, BDX, APG, XYL, DDOG, LNTH, PTON, XPRO, PH, NTCT, ATI, CAH of note.
  • Negative Guidance: RDWR, KTOS, QRVO, CTSH, VSTO, QCOM, QGEN, KLIC, SYNA, NUS, RYN, SRC, ALB, CDAY, FSLY, VMEO, CCRN, TTEC, INFN, QNST, ANSS, FARO, REZI, UGI, CXW, INFA, ECVT, ACIW, PBH, APTV, SHAK, MTSI, SABR  of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: LMND +11%, SEDG +11%, FROG +10%, UDMY +7%, PCOR +7%, CPE +7%, RSI +6%, QRVO +6%, OCSL +6%, AUPH +6%, CFLT +6%, INFN +6%, AVT +5%, HUBS +5%, OPK +5%, BALL +5%, PGRE +5%, EQNR +4%, HST +4%, NFE +4%, CTSH +4%, ZG +4%, GFI +4%, HCC +4% of note.
  • Gap Down: FHN -40%, PACW -39%, ZYXI -23%, MCB -19%, WAL -19%, HOUS -18%, UPWK -18%, SYNA -17%, OPCH -16%, RPHM -16%, RVLV -12%, TNDM -11%, FARO -8%, ECVT -8%, ALKT -7%, ARDX -7%, QCOM -7%, EVA -6%, TRIP -5%, LESL -5%, NVO -5%, RGR -5%, CORT -5%, NVST -5%, OUT -5%, AMWL -4%, SITM -4%, FNF -4% of note.

Insider Action: ZION, AAT, BMRC 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) 
  • Stocks making the biggest moves before the open. PACW SHOP FHN PTON QCOM SHAK TRIP SEDG (CNBC)
  • Bloomberg Lead Story: TD Bank and First Horizon Agree To Terminate $13 Billion Merger. (Bloomberg)
  • Bloomberg  Most Shared Story: PacWest is Weighing Strategic Options, Including Possible Sale. (Bloomberg)
  • Ex-Fed Presidents getting worried about Regional Bank Turmoil. (Bloomberg)
  • Nearly half of all Americans worry that their bank deposits are not safe. (Bloomberg)
  • Treasury yields may drop to 2% as Gundlach notes that banks eye recession. (Bloomberg)
  • Johnson & Johnson (JNJ) takes unit Kenvue public in biggest IPO of the year. (Bloomberg)
  • Moderna (MRNA) posts surprising quarterly profits despite waning Covid vaccine revenues. (CNBC)
  • Arconic (ARNC) agrees to be bought by Apollo Global (APO) for $30 a share. (Business Wire)

Moving Average Update:

  • Score goes even lower to 31% from 48%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing; The Vice President attends, 11:00 a.m. EDT
    • Press Briefing by Press Secretary Karine Jean-Pierre, 2:00 p.m. EDT

Economic:

  • Challenger Job Cuts 7:30 a.m. EDT
    • US CHALLENGER APRIL JOB CUTS RISE 176% Y/Y
    • U.S CHALLENGER JOB CUTS (APR) ACTUAL: 66.99K VS 89.703K PREVIOUS
    • U.S CHALLENGER JOB CUTS (YOY) ACTUAL: 175.9% VS 319.4% PREVIOUS
  • The March Trade Balance is due out at 8:30 a.m. EDT and is expected to fall to $-68.70 billion from -$70.5 billion.
  • The European Central Bank (ECB) is out with its latest decision at 8:45 a.m. EDT.
  • Jobless Claims 8:30 a.m. EDT
  • Productivity and Costs 8:30 a.m. EDT
  • EIA natural Gas Report 10:30 a.m. EDT

Federal Reserve / Treasury Speakers: None of note.

M&A Activity:

  • Arthur J. Gallagher & Co. (AJG) Acquires AccurART.
  • Option Care (OPCH) to Buy Amedisys (AMED) in Deal Valued at About $3.6 Billion.
  • VSE Corp (VSEC) Partners with The Loar Group to acquire Desser Aerospace.

Meeting & Conferences of Note:

  • Sellside Conferences: None of note.
      •  Previously posted and ongoing conferences:
        • Aegis Virtual Conference

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: