{"id":12783,"date":"2020-06-03T09:49:51","date_gmt":"2020-06-03T14:49:51","guid":{"rendered":"https:\/\/www.eoption.com\/2020\/06\/03\/mid-morning-look-june-03-2020\/"},"modified":"2020-06-03T09:49:51","modified_gmt":"2020-06-03T14:49:51","slug":"mid-morning-look-june-03-2020","status":"publish","type":"post","link":"https:\/\/www.eoption.com\/mid-morning-look-june-03-2020\/","title":{"rendered":"Mid-Morning Look: June 03, 2020"},"content":{"rendered":"
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Mid-Morning Look<\/o:p><\/span><\/b><\/p>\n

Wednesday, June 03, 2020<\/span><\/b><\/o:p><\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n
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Index<\/o:p><\/span><\/p>\n<\/td>\n

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Up\/Down<\/o:p><\/span><\/p>\n<\/td>\n

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%<\/o:p><\/span><\/p>\n<\/td>\n

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Last<\/o:p><\/span><\/p>\n<\/td>\n

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 <\/o:p><\/p>\n<\/td>\n<\/tr>\n

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DJ Industrials<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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310.48<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.21%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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26,053<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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S&P 500<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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28.90<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.94%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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3,109<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Nasdaq<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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51.98<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.54%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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9,660<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Russell 2000<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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27.39<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1.93%<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,445<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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U.S. equities are higher for a 4th<\/sup> straight day, extending gains on optimism over global economies emerging from virus-led shutdowns, while investors continue to chase performance amid fear of missing out on of further gains (S<\/span>&P 500 moves above 3,100 – record high 3,393 on 2\/19 and off the 2,191 3\/23 low – and the Dow tops 26,000). The German Dax rises over 7% the last 2-trading days as the recovery in Europe also picking up steam. U.S. economic data remains weak historically, but continues to show gradual improvement over the last few weeks on the jobs front, manufacturing and confidence. The Nasdaq 100 index entered today’s action less than 1% from its record high set Feb. 19 and has surged 42% from an intraday low set on March 23, led by large cap and software stocks. Software names get a boost following blowout quarterly results from Zoom Media (ZM<\/span>) the poster child of “stay at home” beneficiaries, along with internet security name CrowdStrike (CRWD<\/span>). Protest violence eased overnight for the first time in a few days in the U.S. following the death of George Floyd at the hands of a Minneapolis police officer, as market fears ease of additional damage to stores. In more tension news with China, Reuters reported the U.S. is set to bar Chinese passenger airlines from flying to the United States which is in response to China refusing to allow U.S. airlines to resume passenger service, and is expected to take effect June 16th. Despite the trade talk, violence and ongoing lockdowns (though has been thawing over last few weeks), stocks markets have defied odds with a straight up “V<\/span>” shaped rebound from the March lows. Financials, industrials and energy early leaders while healthcare lags. Gold prices slide with the further rebound in stocks and Treasury yields rise with the 10-year yield at the high end of its 1-month trading range, up around 6 bps to 0.74%. <\/o:p><\/p>\n

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Economic Data<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Private payrolls data better than expected<\/b> as ADP said U.S. firms cut -2.76M jobs in May, which was better than economist estimate for -9M jobs being lost while April was revised by 679k to -19,557M from -20,236M as reported last month (comes ahead of nonfarm payroll Friday)<\/o:p><\/p>\n

·     <\/span><\/span><\/span>U.S. IHS Markit May final composite PMI<\/b> at 37.0 (vs. flash 36.4) and said the May final services PMI at 37.5 (vs flash 36.9); services sector final new business index for May at 36.9 vs flash reading 36.5 and final April 26.1<\/o:p><\/p>\n

·     <\/span><\/span><\/span>ISM Non-Manufacturing rises<\/b> to 45.4 vs. est. 44.4 and above 41.8 prior month; business activity rose to 41.0 vs 26.0 prior month (biggest increase in records back to 1997); new orders rose to 41.9 vs 32.9, employment rose to 31.8 vs 30.0 and prices paid rose to 55.6 vs 55.1<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Factory Goods Orders for April fell<\/b> (-13%), in-line with estimates as Factory orders for March revised down to -11.0%; new orders ex-trans fell 8.5% in April after falling 4.0% the prior month and new orders ex-defense for April fell 12.3% after falling 11.2% in March; capital goods non-defense ex aircraft new orders for April fell 6.1% after falling 1.3% in March<\/o:p><\/p>\n

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Macro<\/o:p><\/span><\/p>\n<\/td>\n

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Up\/Down<\/o:p><\/span><\/p>\n<\/td>\n

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Last<\/o:p><\/span><\/p>\n<\/td>\n

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 <\/o:p><\/p>\n<\/td>\n<\/tr>\n

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WTI Crude<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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-0.01<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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36.80<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Brent<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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-0.32<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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39.15<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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Gold<\/span><\/b><\/o:p><\/span><\/p>\n<\/td>\n

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-22.50<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n

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1,711.50<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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EUR\/USD<\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.0054<\/o:p><\/span><\/p>\n<\/td>\n

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1.1224<\/span><\/o:p><\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

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JPY\/USD<\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.03<\/o:p><\/span><\/p>\n<\/td>\n

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108.70<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

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10-Year Note<\/o:p><\/span><\/b><\/p>\n<\/td>\n

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0.055<\/o:p><\/span><\/p>\n<\/td>\n

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0.74%<\/o:p><\/span><\/p>\n<\/td>\n<\/tr>\n

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Sector Movers Today<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Restaurants; CBRL <\/span><\/b>upgraded to buy and raise tgt to $133 at SunTrust as believe restaurants should trade on the pace of the recovery (implications for liquidity), the health of the LT model and interim risks; RRGB<\/span><\/b> said it expects to have re-opened about 270 dining rooms with limited capacity by June 7, representing about 65% of currently open company-operated restaurants; Cowen raised its tgts on CMG<\/span><\/b> from $950 to $1,160 & WING <\/span><\/b>from $134 to $140 based on digital’s trajectory following a surge in digital orders in April and the optimism we encountered surrounding digital at our recent conference; DNKN<\/span><\/b> said QTD comp sales as of May 23 week was -23% for open stores, and during the week SSS -15%, a “significant” sequential improvement from -25% seen in week of April 25\/as of May 23, 650 of the 9,637 U.S. stores were temporarily closed; CAKE<\/span><\/b> said Q2 to-date through May 31, 2020 comparable sales at cheesecake factory restaurants are down approximately (-63%); reopened cheesecake factory restaurants have recaptured, on average, approximately 75% of prior year sales levels<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Casino & Leisure movers; cruise lines CCL<\/span>, RCL<\/span>, NCLH<\/span><\/b> were all downgraded at Morgan Stanley and cut price targets saying three things need to happen for the cruise industry to resume sailing and we think there is a risk this might not happen until ’21, and possibly later\/see negative EPS until 2023 and then at only 20-50% of 2019 levels given lower EBITDA and higher finance costs, and we do not see 2019 EPS levels returning at all during our forecast period (CCL<\/span> $11, RCL $33, NCLH $13); in gaming, PENN <\/span><\/b>tgt raised to $41 at Bank America as believes the sports betting and iGaming oppty alone could be valued at $20-$25\/share while raise PO’s across our entire Regional & Gaming REIT coverage; SPCE<\/span><\/b> 5.6M share Block Trade priced at $15.20; PLNT<\/span><\/b> said it reopened 800 clubs (40%) and plans to open 200 more by mid-June while average membership levels in reopened clubs have remained relatively consistent since the store reopened.<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Transports; truckers upgraded at Bank America, raising the rating on ARCB<\/span><\/b> to buy from Underperform with a price target of $26, up from $21 as medium-term prospects for the company improved in the post-COVID environment and CHRW<\/span><\/b> raised to neutral from underperform as well with tgt to $86 from $67; SAIA<\/span><\/b> presented data for the first two months of Q2, saying LTL shipments per workday declined 16.2% in April and LTL shipments per workday declined 9.2% in May; ODF<\/span><\/b>L said revenue per day decreased 16.2% as compared to May 2019 due to a 12.1% decrease in LTL tons per day and a decrease in LTL revenue per hundredweight<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Retailers; GOOS <\/span><\/b>reports adjusted EBIT of -C$9.7M for FQ4 vs. C$13.0M a year ago and -C$10.3M consensus while gross margin was 66.4% of sales during the quarter vs. 65.6% a year ago and 64.0% consensus; VRA<\/span><\/b> reported e-commerce sales growth of 20.5% in FQ1 to take some of the sting off of stores being closed\/said expects a majority of stores to be open by the end of June; AEO<\/span><\/b> shares surge despite weaker quarterly results as rebound in retailers continues; MAT<\/span><\/b> was upgraded to buy with a $13 PT at Jefferies following a virtual chat with MAT’s senior team, augmented by our own channel checks and data matrix pointing to a stable; KTB<\/span><\/b> was upgraded to overweight from neutral at Piper citing attractive valuation, low risk of material downside to Street estimates and the underappreciated investor view of Wrangler brand potential<\/o:p><\/p>\n

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Stock GAINERS<\/o:p><\/span><\/p>\n

·     <\/span><\/span><\/span>ALK<\/span><\/b> +6%; as airlines among top gainers in transport index with the Dow Transports up over 2%, extending recent gains on reopen optimism<\/o:p><\/p>\n

·     <\/span><\/span><\/span>CRWD<\/span><\/b> +5%; reported stronger-than-expected FQ1 results from the top down, guided FQ3 ahead, and increased its outlook for the year while Q1 growth of 88% y\/y likely exceeded bullish buy side expectations<\/o:p><\/p>\n

·     <\/span><\/span><\/span>HUGE<\/span><\/b> +232%; receives U.S. FDA approval to design and submit for clearance a clinical trial to test its anti-inflammatory drug, FSD-201, in suspected or confirmed COVID-19 patients<\/o:p><\/p>\n

·     <\/span><\/span><\/span>LYFT<\/span><\/b> +8%; issued a business update showing May rides increasing by 26% vs. April\/said rideshare rides have increased week-over-week for 7 consecutive weeks since week ended April 12, 2020<\/o:p><\/p>\n

·     <\/span><\/span><\/span>MCHP<\/span><\/b> +11%; boosted its JunQ rev\/EPS guidance by 3%\/7%, citing easing supply chain disruptions and customer manufacturing reopening in China, US and Europe<\/o:p><\/p>\n

·     <\/span><\/span><\/span>SECO<\/span><\/b> +64%; after QD<\/span><\/b> agreed to purchase a total of up to 10.2 million newly issued Class A ordinary shares of Secoo at a per-share purchase price of $9.80 in $100M investment<\/o:p><\/p>\n

·     <\/span><\/span><\/span>ZM<\/span><\/b> +5%; quarterly earnings and guidance steals the show highlighted by 169% Y\/Y top-line growth and a doubling of its full-year revenue outlook as quarterly results and guidance far surpass even the most bullish of expectations prompting many analysts to raise tgt prices (RBC<\/span> upgraded to outperform and tgt to $250) – shares had rallied into earnings<\/o:p><\/p>\n

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Stock LAGGARDS<\/o:p><\/span><\/p>\n

·     <\/span><\/span><\/span>AMBA<\/span><\/b> -7%; posted in-line Q1 revenue of $54.6M but guided Q2 revs $50M, missing the $55M est. <\/o:p><\/p>\n

·     <\/span><\/span><\/span>DGX<\/span><\/b> -2%; disclosed that since its Q1 report on April 22, it has continued to experience a material decline in testing volumes due to COVID-19 disruptions<\/o:p><\/p>\n

·     <\/span><\/span><\/span>HQY<\/span><\/b> -8%; reported F1Q21 results that were generally in-line with consensus expectations, but withdrew its F21 outlook and offered F2Q guidance that was below consensus<\/o:p><\/p>\n

·     <\/span><\/span><\/span>NEM<\/span><\/b> -4%; as gold miners dip given the pullback in gold prices with investors adding to riskier bets such as equities<\/o:p><\/p>\n

·     <\/span><\/span><\/span>TTWO<\/span><\/b> -2%; in general video game weakness with ATVI, EA also lower<\/o:p><\/p>\n

Syndicate:<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Arco Platform (ARCE<\/span>) 5.56M share Spot Secondary priced at $47.70<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Dynatrace (DT<\/span>) 30M share Secondary priced at $35.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Evofem (EVFM<\/span>) 28.5M share Spot Secondary priced at $3.50<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Hamilton Lane (HLNE<\/span>) 2.995M share Spot Secondary priced at $70.85<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Intellia Therapeutics (NTLA<\/span>) 5.48M share Secondary priced at $18.25<\/o:p><\/p>\n

·     <\/span><\/span><\/span>OraSure (OSUR<\/span>) 8M share Secondary priced at $11.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Pliant Therapeutics (PLRX<\/span>) 9M share IPO priced at $16.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>RenaissanceRe (RNR<\/span>) 5.5M share Spot Secondary priced at $166.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Reinsurance Group (RGA<\/span>) 6.173M share Spot Secondary priced at $81.00<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Virgin Galactic (SPCE<\/span>) 5.6M share Block Trade priced at $15.20<\/o:p><\/p>\n

·     <\/span><\/span><\/span>Warner Music (WMG<\/span>) 75M share IPO priced at $25.00<\/p>\n<\/div>\n

<\/p>\n