21/08/23 Briefing

The S&P 500 futures are up 22 points and are trading 0.5% above fair value. The Nasdaq 100 futures are up 103 points and are trading 0.7% above fair value. The Dow Jones Industrial Average futures are up 121 points and are trading 0.4% above fair value.

Stock futures indicate a higher open after last week's losses. Some buy-the-dip interest in the mega cap space has boosted the broader market. NVIDIA (NVDA), which had its price target raised to $780 from $600 at HSBC, is a standout winner in pre-open action ahead of its earnings report after the close on Wednesday. 

The People's Bank of China lowered its one-year loan prime rate by ten basis points to 3.45% while the 5-yr rate was left unchanged at 4.20% against expectations for bigger cuts.

The 2-yr Treasury note yield is up five basis points to 4.96% and the 10-yr note yield is up five basis points to 4.30%.

In corporate news:

• NVIDIA (NVDA 444.02, +11.03, +2.6%): HSBC raised its price target to $780 from $600

• Palo Alto Networks (PANW 235.84, +26.15, +12.5%): beats by $0.15, reports revs in-line; guides Q1 EPS above consensus, revs below consensus; guides FY24 EPS above consensus, revs below consensus

• Regeneron Pharma (REGN 822.10, +9.70, +1.2%):  receives FDA approval for EYLEA HD

• Old Dominion (ODFL 394.00, +0.51, +0.1%): aiming to bid $1.5 bln for Yellow (YELL) terminals, according to WSJ

• Broadcom (AVGO 829.54, +3.70, +0.5%): confirms UK CMA clears Broadcom's deal to buy VMware (VWM)

• DuPont (DD 76.23, +0.83, +1.1%): confirms a definitive agreement to sell an 80.1% ownership interest in the Delrin acetal homopolymer business to TJC LP in a transaction valuing the business at $1.8 bln

• Napco Security Systems (NSSC 24.74, -13.77, -35.9%): guides Q4 revs below consensus; raises quarterly dividend 28% to $0.08/share

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a mixed note. Japan's Nikkei: +0.4%, Hong Kong's Hang Seng: -1.8%, China's Shanghai Composite: -1.2%, India's Sensex: +0.4%, South Korea's Kospi: +0.2%, Australia's ASX All Ordinaries: -0.4%

• In economic data:

• Hong Kong's July CPI 0.0% m/m (last 0.2%); 1.8% yr/yr (expected 2.0%; last 1.9%)

• New Zealand's July trade deficit NZD1.107 bln (last deficit of NZD111 mln) and July Credit Card spending 0.0% m/m (last 2.4%)

• In news:

• The People's Bank of China lowered its one-year loan prime rate by ten basis points to 3.45% while the 5-yr rate was left unchanged at 4.20% against expectations for bigger cuts.

• Bank stocks underperformed in Hong Kong after the PBoC action was announced.

• Hong Kong's Hang Seng fell back into bear market territory after a brief appearance in that zone in June.

• South Korea's exports fell 16.5% yr/yr during the first 20 days of August with chip exports falling 24.7%.

• Major European indices trade in positive territory. STOXX Europe 600: +0.7%, Germany's DAX: +0.8%, U.K.'s FTSE 100: +0.5%, France's CAC 40: +1.2%, Italy's FTSE MIB: +1.6%, Spain's IBEX 35: +0.8%.

• In economic data:

• Germany's July PPI -1.1% m/m (expected -0.2%; last -0.3%); -6.0% yr/yr (expected -5.1%; last 0.1%)

• In news:

• Italy nominated its former economy minister Franco to replace Fabio Panetta at the European Central Bank.

• British Prime Minister Sunak is reportedly planning on a smaller cabinet reshuffle than originally expected.

• The U.K.'s foreign secretary is planning to visit China by the end of this month.

U.S. equity futures:

• S&P 500 Futures +24 @ 4,394

• DJIA Futures: +131 @ 34,632

• Nasdaq 100 Futures: +100 @ 14,795

Overseas:

• Europe: DAX +0.8%, FTSE +0.5%, CAC +1.2%

• Asia: Nikkei +0.4%, Hang Seng -1.8%, Shanghai Composite -1.2%

Commodities:

• Crude Oil +1.19 @ 82.44

• Nat Gas +0.0980 @ 2.6490

• Gold +4.30 @ 1920.80

• Silver +0.29 @ 23.02

• Copper +0.0130 @ 3.719

Earnings/Guidance:

• Axonics Modulation (AXNX) CFO to retire; appoints Kari Keese as successor; reaffirms FY23 revs guidance

• Macerich (MAC) reports record leasing volumes

• Napco Security Systems (NSSC) guides Q4 revs below consensus; raises quarterly dividend 28% to $0.08/share

• Palo Alto Networks (PANW) beats by $0.15, reports revs in-line; guides Q1 EPS above consensus, revs below consensus; guides FY24 EPS above consensus, revs below consensus

• RE/MAX Holdings (RMAX) reaffirms Q3 and FY23 revenue guidance; announces a 7% workforce reduction

• Taiwan Semiconductor Manufacturing (TSM) maintains its guidance provided at the Company's July 20 Investor Conference

News:

• China urging banks to increase lending to boost recovery, according to Bloomberg

• US, Japan, and South Korea expand mutual security arrangements, according to the New York Times

• Scientists monitoring new coronavirus variant, according to CNN

• Tropical Storm Hilary makes landfall

• Bitcoin had worst week since November

• UK will spend GBP 100 mln on artificial intelligence chips, according to Telegraph UK

• Amicus Therapeutics (FOLD) announces that Simon Harford has been appointed Chief Financial Officer, effective immediately

• AppLovin (APP) entered into an agreement to repurchase 15 mln shares of its Class A common stock beneficially owned by KKR Denali Holdings in a private transaction at a price per share of $36.85, for an aggregate purchase price of $552.75 mln

• Arcutis Biotherapeutics appoints John Smither as interim CFO, effective August 31

• Aurinia Pharma (AUPH) appointed Dr. Daniel G. Billen as Chair of the Board of Directors

• AxoGen (AXGN) announces the successful first week of processing for Avance Nerve Graft at the newly opened Axogen Processing Center, in Dayton, Ohio

• Bristol Myers Squibb (BMY) to Showcase Data Across its Innovative Cardiovascular Portfolio at the European Society of Cardiology Congress 2023

• Calliditas Therapeutics AB (CALT): Everest Medicines announces partner Calliditas Therapeutics receives FDA Priority Review for full approval of Nefecon

• Citigroup (C) considers overhaul, according to Financial Times

• Duke Energy (DUK) responds to constructive North Carolina Utilities Commission decision on Duke Energy Progress' Performance-Based Regulation Application; discloses it will recognize one-time accounting charge of approximately $75 - 100 million related to settlement order

• Exelixis (EXEL) and Ipsen (IPSEY) announce positive results from Phase 3 CONTACT-02 pivotal trial evaluating Cabozantinib in combination with Atezolizumab in metastatic castration-resistant prostate cancer

• General Motors (GM): California ordered Cruise to cut its robotaxi fleet by 50% following accident, according to Bloomberg

• Hawaii Electric (HE) was warned of system issues prior to wildfires, according to the New York Times

• HUTCHMED (HCM) Announces that the Sovleplenib Phase III ESLIM-01 Study Met Its Primary Endpoint in Primary Immune Thrombocytopenia in China

• HYZON Motors (HYZN) announces proven global innovator Erik Anderson to become chairman of the board

• IDEAYA Biosciences (IDYA) announces clearance of IND application for Pol Theta Helicase development candidate GSK101

• Kenvue (KVUE): Johnson & Johnson (JNJ) announces preliminary results of KVUE exchange offer

• Kontoor Brands' (KTB) CFO to retire; appoints Joe Alkire as successor

• Kraft (KHC) sees market opportunities in school lunches, according to the Wall Street Journal

• Masimo (MASI) reports new study evaluating the use of Masimo PVi as an indicator of fluid responsiveness to guide goal-directed fluid therapy in elderly patients undergoing gastrointestinal surgery

• Medical Properties Trust (MPW) updates capital allocation strategy to further enhance long-term value creation

• Meta (META) to introduce new web version of Threads, according to the Wall Street Journal

• Meta (META): Threads daily active users has fell below 10 mln, according to the Wall Street Journal

• Neurocrine Biosciences (NBIX) Announces FDA Approval of INGREZZA Capsules for the Treatment of Chorea Associated With Huntington's Disease

• NexGen Energy (NXE) completes the Provincial Environmental Assessment Technical Review and submission of the Final Environmental Impact Statement

• PNM (PNM) and parties reach unanimous settlement agreement for customer rate credits to resolve remaining steps of San Juan coal plant retirement

• Regeneron Pharma (REGN) receives FDA approval for EYLEA HD

• ReNew (RNW) reports JunQ results

• Woodside (WDS) unions might strike in Australia, according to Reuters

M&A:

• DuPont (DD) confirms a definitive agreement to sell an 80.1% ownership interest in the Delrin acetal homopolymer business to TJC LP in a transaction valuing the business at $1.8 bln

• Earthstone Energy (ESTE): Permian Resources (PR) to acquire Earthstone Energy in all-stock transaction, creating a $14 billion Premier Delaware Basin Independent E&P

• Goldman Sachs (GS) mulling sale of the investment advisory unit it acquired 4 years prior, according to Financial Times 

• Old Dominion (OPFL) aiming to bid $1.5 bln for Yellow (YELL) terminals, according to the Wall Street Journal

• Sculptor Capital (SCU) issues statement regarding receipt of unsolicited, insufficiently funded proposal

• SDCL EDGE Acquisition Corporation (SEDA) announces Letter of Intent for a business combination with Magnet Joint Venture GmbH and certain assets of KME SE Comprising the KME Specialty Aerospace Business

• Stratasys (SSYS) and Desktop Metal (DM) received a request for additional information under HSR Act in connection with the proposed merger

• VMware (VMW): UK CMA clears Broadcom's (AVGO) deal to buy VMware

Syndicate:

• BioVie Inc. (BIVI) files $300 mln mixed shelf securities offering; also files for 311,002 shares common stock by selling shareholders

• Extra Space Storage (EXR) files for 1,674,748 share common stock offering by selling shareholders

• Finance of America (FOA) files for 33,893,666 shares of common stock by selling shareholders

• Ikena Oncology (IKNA) files for 5,954,091 shares of common stock by selling shareholders

• Li-Cycle (LICY) files for $200 mln common stock offering

• TotalEnergies SE (TTE) acquires a 26% interest in the Cash-Maple Gas Discoveries for the long-term supply of Ichthys LNG

IPOs:

• Expected to Price:

• No IPOs expected.

Gapping Up/Down

• Gapping up:

• BIVI +34.9%, PANW +12.2%, CALT +6%, CABO +5%, ZS +4.3%, CRWD +2.9%, TTE+2.5%, NVDA +2%, EQNR +1.8%, FTNT+1.6%, CYBR +1.6%, REGN +1.6%, VMW+1.6%, RMAX +1.5%, LICY +1.3%, AZN+1.3%, EXEL +1.3%, KVUE +1.2%, MRVL+0.9%, HCM +0.8%, BNTX +0.8%, OKTA+0.7%, NBIX +0.7%, LQDA +0.6%

• Gapping down:

• NSSC -33.7%, FOA -4.4%, NKLA -4.1%, RNW-2%, IDYA -1.3%, NXE -1.2%, AVA -0.8%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

• Acushnet (GOLF) upgraded to Buy from Hold at Jefferies; tgt raised to $84

• AppFolio (APPF) upgraded to Overweight from Equal-Weight at Stephens; tgt raised to $212

• Cogent Communications (CCOI) upgraded to Neutral from Sell at Goldman; tgt raised to $64

• Insulet (PODD) upgraded to Buy from Neutral at Citigroup; tgt lowered to $265

• Liberty Media (LSXMA) upgraded to Buy from Neutral at Seaport Research Partners; tgt $32

• XPeng (XPEV) upgraded to Buy from Neutral at BofA Securities; tgt $22

• Downgrades:

• Alpha Metallurgical Resources (AMR) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $194

• Insulet (PODD) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $219

• Medical Properties Trust (MPW) downgraded to Underweight from Neutral at JP Morgan; tgt lowered to $7

• Napco Security Systems (NSSC) downgraded to Mkt Perform from Outperform at William Blair

• Others:

• FMC Corp (FMC) initiated with a Neutral at JP Morgan; tgt $90

• GameSquare (GAME) initiated with a Buy at ROTH MKM; tgt $7

• Merus (MRUS) initiated with an Outperform at TD Cowen

• Peloton (PTON) removed from Tactical Underperform List at Evercore ISI

• Restaurant Brands Int'l (QSR) initiated with an Overweight at JP Morgan; tgt $82

• Subsea 7 SA (SUBCY) resumed with an Equal-Weight at Morgan Stanley

Econ Data:

• No economic data of note.

Earnings:

• Monday (Aug 21)

• Afternoon: FN NDSN ZM

• Tuesday (Aug 22)

• Morning: BIDU BJ CSIQ COTY DKS GDS KC LOW M MDT PINC SCSC SPHR

• Afternoon:  LZB TOL URBN

• Wednesday (Aug 23)

• Morning:  ANF AAP ADI BBWI DY FL GRAB KSS LANC PTON WSM

• Afternoon:  ADSK GES NTAP NVDA SNOW SPLK ZUO

• Thursday (Aug 24)

• Morning: BURL DLTR FRO HAIN NTES OSIS WOOF RY TD WB

• Afternoon:  AFRM CRDO GPS INTU MRVL JWN ULTA WDAY

Asia & Europe detail:

Asia: Nikkei +0.4%, Hang Seng -1.8%, Shanghai Composite -1.2%

Equity indices in the Asia-Pacific region began the week on a mixed note. The People's Bank of China lowered its one-year loan prime rate by ten basis points to 3.45% while the 5-yr rate was left unchanged at 4.20% against expectations for bigger cuts. Bank stocks underperformed in Hong Kong after the PBoC action was announced. Hong Kong's Hang Seng fell back into bear market territory after a brief appearance in that zone in June. South Korea's exports fell 16.5% yr/yr during the first 20 days of August with chip exports falling 24.7%.

• In economic data:

• Hong Kong's July CPI 0.0% m/m (last 0.2%); 1.8% yr/yr (expected 2.0%; last 1.9%)

• New Zealand's July trade deficit NZD1.107 bln (last deficit of NZD111 mln) and July Credit Card spending 0.0% m/m (last 2.4%)

---Equity Markets---

• Japan's Nikkei: +0.4% 

• Hong Kong's Hang Seng: -1.8%

• China's Shanghai Composite: -1.2%

• India's Sensex: +0.4%

• South Korea's Kospi: +0.2%

• Australia's ASX All Ordinaries: -0.4%

---FX---

• USD/JPY: +0.4% to 145.92

• USD/CNH: UNCH at 7.3021

• USD/INR: UNCH at 83.11

Europe: DAX +0.8%, FTSE +0.5%, CAC +1.2%

Major European indices trade in positive territory. Italy nominated its former economy minister Franco to replace Fabio Panetta at the European Central Bank. British Prime Minister Sunak is reportedly planning on a smaller cabinet reshuffle than originally expected. The U.K.'s foreign secretary is planning to visit China by the end of this month.

• In economic data:

• Germany's July PPI -1.1% m/m (expected -0.2%; last -0.3%); -6.0% yr/yr (expected -5.1%; last 0.1%)

---Equity Markets---

• STOXX Europe 600: +0.7%

• Germany's DAX: +0.8%

• U.K.'s FTSE 100: +0.5%

• France's CAC 40: +1.2%

• Italy's FTSE MIB: +1.6%

• Spain's IBEX 35: +0.8%

---FX---

• EUR/USD: +0.4% to 1.0910

• GBP/USD: +0.2% to 1.2760

• USD/CHF: -0.2% to 0.8793