Mid-Morning Look

Wednesday, July 16, 2025

U.S. stocks are flat after trading mixed on Tuesday, as the tech heavy Nasdaq pulls back from record highs prior amid weakness in semiconductors, while the S&P and Dow are up slightly and the Russell 2000 rebounds after sliding 2% Tuesday amid rising yields/rates. Semi stocks (SOX) see a pullback after ASML topped bookings numbers for Q2 but warned that it may not achieve growth in 2026, sending shares of equipment names (AMAT, KLAC, LRCX) lower. Banks get another heavy does of large cap earnings with BAC, GS, MS reporting this morning (after JPM, WFC, Citi, BK, STT yesterday). Crypto assets rebound with bitcoin back above $118K (but off record highs above $123K on Monday). U.S. Treasury yields extended their decline after inflation data showed tame producer prices last month, suggesting that the Federal Reserve could begin to move toward cutting interest rates sooner rather than later. Headline U.S. producer prices were unchanged in June, data showed, compared with expectations for a 0.2% rise, while core or underlying prices were flat as well. The dollar extends its recent rebound, as the euro dips back below $1.16.

• June industrial production rose +0.3%, above consensus +0.1% while May was unchanged; June industrial output ex cars/parts +0.5% vs May -0.3%. Capacity utilization rate rose to 77.6% from 77.5% in May and above consensus of 77.4%.

• Bank earnings: BAC Q2 EPS $0.89 vs. est. $0.86; Q2 revs $26.5B vs. est. $26.6B; Q2 Trading revenue (ex-DVA) $5.38B vs $4.68B y/y and $4.94B est., Investment Banking revs $1.43B vs $1.27; FICC (ex-DVA) $3.25B +19% y/y; equities (ex-DVA) $2.13B +10% y/y; provision for credit losses $1.59B vs. $1.48B q/q; net charge-offs $1.53B vs. est. $1.45B q/q vs. est. $1.45B; GS profit jumped 22% in Q2 to $3.7B or $10.91 per share, compared with $3.04B, or $8.62 per share y/y; equities trading revenue rose 36% to $4.3B, while fixed income, currencies and commodities hauled in $3.47B, 9% higher y/y; Q2 investment banking fees stood at $2.19B, rising 26% y/y; Revenue from Goldman’s asset and wealth management arm dipped 3% to $3.78B; Goldman set aside $384M as provisions for credit losses, compared with $282M y/y; MS reported Q2 EPS $2.13/$16.79B in revs topping ests $2.01/$16.04B as equities revenue surged 23%, while jumped 9% in fixed income y/y; Q2 Investment banking revenue declined 5% in the quarter. Advisory revenue slid to $508M, compared with $592M y/y; Q2 equity underwriting surged 42% to $500M, while fixed-income underwriting decreased 21% to $532M
• In Hospitals/Facilities: UHS was downgraded to Underperform from Neutral at Bank America and cut PT to $185 from $215 on lower estimates as it sees increasing headwinds from cuts to Medicaid and ACA exchanges within the recently passed Reconciliation Bill. UHS has some of the highest exposure to these headwinds, specifically SDPs (State Directed Payments) and the expiration of enhanced subsidies. The firm also downgraded HCA to Neutral from Buy (tgt to $394 from $410) as it sees increasing headwinds from cuts to Medicaid and ACA exchanges within the recently passed Reconciliation Bill (OBBB). ARDT was also downgraded to Underperform noting it has the highest exposure to the headwinds in the out years from the cuts to Medicaid SDPs (State Directed Payments).
• In Medical Equipment/Supplies: CMS issued proposed rule for rate of Medicare facility reimbursement in the HOPD/ASC (outpatient) settings for calendar-year 2026 last night. Piper noted overall rates were up ~2.6%, though there were several codes rated higher in the ASC proposed rule for names across Piper’s universe, including BSX (specifically Rezum), PRCT (Aquablation), and GKOS (iDose). On the negative side of the ledger, MDT received a potential reimbursement cut for tibial neuromodulation procedures as did BSX for sacral neuromodulation procedures. Stephens noted PRCT’s Aquablation’s proposed HOPD payment increased +5.8% y/y and the ASC payment increased 4.2% y/y; GKOS proposed HOPD/ASC payments for iStent, iStent Infinite, and iDose all increased between +5% to +7% y/y and VCEL’s MACI’s proposed HOPD payment increased 6% y/y and the ASC payment increased +5% y/y.
• In the E&C Sector: Jacobs (J) was upgraded to Overweight from Sector Weight at Keybanc with $155 PT and downgraded FLR to Sector Weight from Overweight with $41 PT in the E&C sector saying the pause on tariffs and reiteration of datacenter CAPEX plans made DeepSeek and Liberation Day seem like distant memories. E&Cs were unperturbed by the on-again, off-again tariff gyrations, and even the whiplash of IRA tax credits through the OBBB legislative process did not shake investor confidence. B Riley raised its tgt on BWMN to $43 from $33 and called it their best idea in E&C space. For E&C, said despite tariff concerns related to increasing input costs and delayed project timing, approximately 60% of contractors expect their sales to increase over the next two quarters.

• BMNR +14%; after Billionaire investor Peter Thiel discloses 9.1% stake in the company as per SEC filing; earlier this month, co announced $250 million private placement to initiate ethereum treasury strategy; Thomas Lee to serve as chairman.
• CRCL +6%; along with rebound in crypto assets as President Donald Trump said the House of Representatives will pass the GENIUS Act stablecoin bill today after a procedural vote Tuesday failed.
• GPN +3%; follows a report from the Financial Times that said hedge fund Elliott Management has established a large stake in the payments processing company. The stock has declined 31% this year after it reached a deal in April to acquire rival Worldpay for $24.25 billion. https://tinyurl.com/mh4sf4py
• JNJ +4%; reported Q2 adj EPS $2.77 topping consensus $2.68 on better revenue $23.7 vs. est. $22.86B; raises FY25 adjusted operational EPS view to $10.63-$10.73 from prior $10.50-$10.70 (est. $10.61) and boosts FY25 operational sales view to $92.7B-$93.1B from $91.6B-$92.4B (est. $91.33B).
• RGTI +16%; shares jumped after saying it raised $350 mln by selling ~30.3 mln shares under recently disclosed ATM (at-the-market) equity sales program in agreement with Jefferies.
• U +10%; after positive comments by Edgewater and Jefferies; Jefferies sad on Unity’s Vector model, the # of positive mentions increasing to 9 in Q2 from 7 in Q1 and quantifying the ROAS lift in 10%-20% range.

• HCA -3%; along with weakness in rival hospital operator UHS after both were downgraded at Bank America on lower estimates as it sees increasing headwinds from cuts to Medicaid and ACA exchanges within the recently passed Reconciliation Bill.
• LNTH -9%; after CMS decided to maintain its mean unit cost-based reimbursement approach for high-cost diagnostic radiopharmaceuticals, disappointing investors who had anticipated a shift to a reimbursement system based on average selling prices.
• RNLSY -12%; after the French carmaker lowered its 2025 full-year operating margin to 6.5%, compared with a target of at least 7% previously and said it aims for free cash flow of 1 billion to 1.5 billion euros ($1.16 billion to $1.74 billion), versus more than 2 billion previously.