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From: Julius Wong5/14/2022 7:42:47 AM
1 Recommendation   of 7094
Billionaire CEO Stock Buys Could Signal The Market Bottom

May 14, 2022 1:03 AM ET ARVL, CHPT, COIN, FUV, HOOD, JOBY, MARA, MTTR, SOFI, UPST 3 Comments4 Likes


* Billionaire CEOs have been buying stocks through the past several days as the stock market crashes to new lows.

* Elon Musk started the trend of scooping up companies with his Twitter bid and now the CEOs of Starbucks, Spotify, and FTX have followed suit.

* When billionaire insiders buy stocks then investors should pay attention. This could be the bottom of the market.

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From: Julius Wong5/15/2022 7:37:43 AM
1 Recommendation   of 7094
Wall Street Breakfast: The Week Ahead

May 15, 2022 7:09 AM ET

Listen on the go! A daily podcast of Wall Street Breakfast will be available by 8:00 a.m. on Seeking Alpha, iTunes, Stitcher and Spotify.

Economic reports in the week ahead

The retail sector will dominate the earnings calendar with Walmart (NYSE: WMT), Target (NYSE: TGT), Home Depot (NYSE: HD), Lowe's (NYSE: LOW) and Macy's (NYSE: M) all set to report. The report on retail sales is also one of the bigger economic updates expected to drop. Fedspeak picks up again in the week ahead, highlighted by Federal Reserve Chairman Jerome Powell giving a talk at a Wall Street Journal conference on May 17. Powell will take the stage, with the market anticipating a half-point interest rate hike at the June and July meetings of the Fed's policymaking committee. Block (NYSE: SQ) and Caterpillar (NYSE: CAT) will hold investor events of high interest, while Hyundai ( OTCPK:HYMTF) is expected to shake things up in the electric vehicle sector with a formal announcement on a plan to build a $7B EV plant near Savannah, Georgia.

Earnings spotlight: Monday, May 16 - Tower Semi ( TSEM), Take-Two Interactive ( TTWO), Tencent Music ( TME), and Global-E Online ( GLBE).

Earnings spotlight: Tuesday, May 17 -, Walmart ( WMT), Home Depot ( HD), Macy's ( M)

Earnings spotlight: Wednesday, May 18 - Lowe's ( LOW), Analog Devices (NASDAQ: ADI), Cisco (NASDAQ: CSCO), and Target ( TGT).

Earnings spotlight: Thursday, May 19 - Kohl's (NYSE: KSS), Applied Materials ( AMAT), Palo Alto Networks ( PANW), Ross Stores (NASDAQ: ROST) and Kohl's ( KSS).

Earnings spotlight: Friday, May 20 - Deere (NYSE: DE) and Foot Locker ( FL).

IPO watch: No new IPOs are expected to start trading next week. Quiet periods expire on JE Cleantech ( JCSE) and Aclarion (NASDAQ: ACON) to free up analysts to post ratings. Companies rolling off their IPO lockup periods include Sono Group (NASDAQ: SEV), UserTesting ( USER), E-Home ( EJH), Vivakor ( VIVK), Finwise ( FINW), Snow Lake Resources (NASDAQ: LITM), Sweetgreen (NYSE: SG), and Advanced Human Imaging ( AHI).

Projected dividend increases: Companies forecast to boost their quarterly dividend payouts include Packaging Corporation of America ( PKG) to $1.20 from $1.00, Haverty Furniture ( HVT) to $0.28 from $0.25, Lennox International (NYSE: LII) to $1.03 from $0.92, Ashland Global ( ASH) to $0.325 from $0.300, Northrop Grumman ( NOC) to $1.70 from $1.57, Leggett & Platt(NYSE: LEG) to $0.44 from $0.42, and Chubb Limited (NYSE: CB) to $0.82 from $0.80.

Corporate events: A large number of healthcare companies will be presenting drug data at the American Society of Gene & Cell Therapy Annual Meeting from May 16-19, including REGENXBIO Inc. (NASDAQ: RGNX), AVROBIO ( AVRO), Athenex ( ATNX), Ultragenyx Pharmaceutical Inc. (NASDAQ: RARE), Mustang Bio ( MBIO), and Fortress Biotech (NASDAQ: FBIO). Bank of America has highlighted Rocket Pharmaceuticals ( RCKT) for having some key readouts and clinical updates at ASGCT. Also, within the healthcare sector, Moderna (NASDAQ: MRNA) will host its first in-person Science and Technology Day on May 17 for analysts and investors. The event will feature presentations with a focus on the company's newest advances. Also of high interest, Caterpillar ( CAT) is holding its annual investor day event next week with higher demand for commodities seen adding to the company's backlog of machine orders. New Relic ( NEWR) will be hosting an Analyst Day on May 18 in conjunction with FutureStack 2022, the company’s annual customer and developer conference. Other investor events on the calendar that stand out are the presentations from OneSpan ( OSPN), Wingstop (NASDAQ: WING), Cowen (NASDAQ: COWN), (NASDAQ: WIX), Wabash National Corporation (WNV), EPAM Systems (NYSE: EPAM), and Flywire Corporation (NASDAQ: FLYW). Analysts think guidance resets are more than likely with next week's rush of investor events due to the shifting macroeconomic backdrop. Read more about the events next week that could impact shares prices in Seeking Alpha's Catalyst Watch.

Conference schedule: The conference schedule is headlined by the J.P. Morgan Homebuilding and Building Products Conference that runs from May 17-19 and includes presentations from PulteGroup ( PHM), JELD-WEN Holding ( JELD), DoorDash ( DOOR), AZEK Company ( AZEK), M.D.C. Holdings ( MDC), KB Home ( KBH), and Stanley Black & Decker (NYSE: SWK). Other conferences of note include the Needham Technology & Media Conference, the BofA 2022 Global Metals, Mining & Steel Conference, the RBC Global Healthcare Conference, the BMO Global Farm to Market Conference and the Wells Fargo Financial Services Investor Conference.

Block Investor Day preview: Block ( SQ) will hold its 2022 Investor Day event on May 18 with appearances scheduled for CEO Jack Dorsey and CFO Amrita Ahuja. Bank of America said to expect a fresh deep-dive into both the Seller and Cash App ecosystems, with details on total address markets, product roadmap, and cohort economics, as well as integration progress and synergies related to the recent Afterpay acquisition. Also look for an update on the company's digital asset/crypto strategy with the recent sell-off in the background. "While we don’t necessarily anticipate formal and specific multi-year guidance to be issued, we think it is important for management to provide some form of a financial framework, to enable the Street to understand how SQ is thinking about trade-offs between growth and margins, as well as ROI on opex initiatives." previewed BofA.

Earnings preview: The retail sector takes center stage next week with big earnings reports due in from Walmart ( WMT), Target ( TGT), Home Depot ( HD), Lowe's ( LOW), Kohl's ( KSS) and Macy's ( M). Morgan Stanley thinks the round of Q1 reports will be mostly solid even as the sector laps the stimulus period and faces headwinds with weather, geopolitical uncertainty, gas prices, wallet share reversion, rising interest rates, and recession concerns. In the home improvement, the firm thinks Home Depot's ( HD) track record of execution in tougher environments sets it apart from Lowe's ( LOW). Meanwhile, Evercore ISI issued a tactical underperform on Lowe's with Q1 results expected to disappoint. Lowe's is also said to be over-indexed to do-it-yourself projects and seen getting off to a late start to the spring selling season. UBS thinks Ross Stores ( ROST) will deliver disappointing Q2 results and warns on FY22 guidance coming in below expectations. Analyst Jay Sole said the likely natural follow through from that development will be sell-side consensus EPS estimates coming down and market sentiment crumbling, which could take the stock's P/E lower. The firm said it likes Target ( TGT) the best of all the names reporting next week. As for the biggest retailer of all, Walmart ( WMT) landed higher estimates from Gordon Haskett with the Bentonville giant expected to smash U.S. same-store sales estimates. However, the same firm warned of a same-store sales and profit miss from Kohl's ( KSS) due to a weaker macro backdrop and recent data showing softer foot traffic.

Annual meetings of note: AMD ( AMD) will hold its annual meeting on May 17.

Barron's mentions: Citizens Financial Group (NYSE: CFG) is recommended, with the company expected to see higher profitability after going on an acquisition spree. Citizens is noted to trade at 1.3X tangible book value, which falls in line with the five-year average but lower than peers like Fifth Third Bancorp ( FITB) and Huntington Bancshares ( HBAN) at 1.6X. The publication also breaks down the massive collapse in Terra USD ( LUNA-USD) and the implications for other stablecoins like Tether ( USDT-USD) and USDC Coin ( USDC-USD). The question that could attract attention from regulators is what is the potential contagion effect of another stablecoin problem if the problem impacts an exchange like Coinbase Global (NASDAQ: COIN) then feeds to PayPal Holdings ( PYPL) and then feeds to a major bank.

Sources: EDGAR, Bloomberg, CNBC, Reuters, Renaissance Capital

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From: Julius Wong5/17/2022 8:17:45 AM
2 Recommendations   of 7094
Morgan Stanley screens 10 most unappreciated post-COVID stocks

May 15, 2022 2:42 AM ET NIKE, Inc. (NKE) WING, SONO, SPG, ONON, DTC, NYT, FIVE, DKS, BBWIBy: Kim Khan, SA News Editor 30 Comments

Pyrosky/E+ via Getty Images

"In our view, it's not a transitory 'Covid Bump' for these 10 stocks," Morgan Stanley says. "Many companies garnered outsized boosts to revenues in 2020 and 2021, as their business models were leveraged to the sharp changes in the economy and consumer behavior during the peaks of the pandemic, and saw their shares perform strongly as a result."

Morgan's equity strategy team said in a note they have "observed that some stocks have underperformed in recent months amid market fears these companies only did well amidst the Covid pandemic."

"Our analysts view these names not as narrowly-defined Covid beneficiaries but instead as solid businesses that are structurally positioned for long-term outperformance. We believe this disconnect has left many of them at a meaningful discount to intrinsic value."

The stocks are:

Bath & Body Works ( BBWI): "This topline growth and margin profile is best-in-class amongst our coverage. But BBWI currently trades at 7x forward EV/EBITDA, which equates to less than half the level of businesses with similar growth and margin trajectories (e.g., Off-Price, CPG, etc.). As such, we see a multiple re-rating opportunity into the mid-teens+ EV/EBITDA range, which would yield a stock price more than double current levels."

Dick's Sporting Goods ( DKS): "Clearly some reversion on sales and margins is inevitable, but we believe this reversion could be slower and shallower than is generally expected."

Five Below ( FIVE): "While we believe some degree of de-rating is justified based on higher interest rates, we think the stock is being unfairly categorized as a recession-exposed retailer – even though the business performed well during the financial crisis (delivering +6%/+12% comps in ‘08/’09) and should be a beneficiary of trade-down given its value-oriented, low-price-point offering."

New York Times ( NYT): "While variability in the news cycle remains a driver of quarterly volatility in net adds, NYT in fact delivered 2021 digital net adds ahead of 2019 levels, and we expect net adds to further accelerate in ‘22E pro forma for The Athletic."

Nike (NYSE: NKE): We "believe Covid permanently accelerated NKE’s transition from a traditional wholesale business into a digitally-driven, direct-to-consumer ( DTC) brand, which should lift its revenue, margin, and EPS growth trajectory over time."

On Running ( ONON): Sportswear "spend appears robust YTD, and we see ample opportunity for ONON to continue to grow the top line at least +DD% for the next 15+ years given the brand remains in nascent stages across channels, products, and geographies. This makes ONON a rare compounding growth opportunity, in our view."

Simon Property ( SPG): "At current levels, the stock’s valuation looks attractive through a number of lenses: 1) It trades at an FFO Multiple of ~10x on ’23 MSe FFO $11.87, which compares to 2-/5-/10-year avg NTM FFO multiples of 10.6x/12.0x/15.0x; 2) In our published model (before incorporating 1Q22 actual results), our DCF of FCF using a cost of equity of 7.7% (0.9 beta, 5.23% ERP, and 3% risk free rate) suggests intrinsic value of $141 per share; 3) SPG trades at a dividend yield of ~5% (and in our view will continue to grow their dividend), 5 above closest peer MAC at ~4.5% (which will likely not grow their dividend)."

Sonos ( SONO): "While we admit, revenue growth accelerated during the pandemic - to a 2-year CAGR of 17% between FY20 and FY21 – we believe Covid helped to permanently accelerate underlying demand and engagement trends, aided by the proliferation of streaming audio and video."

Wingstop ( WING): Changes "to the business that have improved unit economics, digital mix, scale, and brand awareness for what is still a relatively early-stage growth company."

Zoom ( ZM): Our survey "shows 96% of key decision makers on office strategies note video conferencing is a key component of future workplace plans, to be leveraged to enable hybrid work and to reduce travel expenses."

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From: Julius Wong5/18/2022 7:31:33 AM
   of 7094
13F Watch: What Buffett, SoftBank, Ackman and more bought and sold


PPAMPicture/E+ via Getty Images

Here are the highlights of the latest disclosed Q1 holdings of major hedge funds and money managers.

Also check out how to trade a 13F filing.

Berkshire Hathaway takes 2.5% stake in Citi in Q1, exits Wells Fargo

Warren Buffett's Berkshire Hathaway ( BRK.B) ( BRK.A) disclosed a new stake in Citigroup (NYSE: C) with ~55.2M shares, amounting to ~2.5% of Citi's outstanding shares.

Gates Foundation exits Alphabet, pares Microsoft, Walmart, Berkshire holdings

Bill & Melinda Gates Foundation Trust exits its holdings in Alphabet (NASDAQ: GOOG) ( GOOGL), shedding 62K of class A shares and 62K of class C shares in the first quarter of 2022

Saudi Arabia takes stakes in Meta Platforms, Sea

Saudi Arabia's sovereign wealth fund took a stake in Facebook-owner Meta Platforms (NASDAQ: FB) and Sea ( SE).

SoftBank cuts stake in SoFi, adds positions in Satellogic, Sweetgreen

SoftBank ( OTCPK:SFTBY) ( OTCPK:SFTBF) reduced its stake in SoFi Technologies ( SOFI) and Innoviz Technologies ( INVZ) and added new positions in nano satellites operator Satellogic ( SATL) and fast casual chain Sweetgreen ( SG).

Bill Ackman's Pershing Square trims Hilton stake, boosts Canadian Pacific

Pershing Square Capital Management reduced its stake in Hilton Worldwide ( HLT) to 9.95M shares from ~12.6M, during the first quarter of 2022.

David Einhorn's Greenlight adds Southwestern Energy, International Seaways

Greenlight Capital took a new stake in Southwestern Energy ( SWN), amounting to ~2.53M shares, as well as new holdings in International Seaways ( INSW), ~1.02M shares, and TD Synnex ( SNX) with ~168K shares.

David Tepper's Appaloosa bumps up Uber stake in Q1, exits Alliance Data

David Tepper's Appaloosa has increased its holdings in ride-hailing app Uber ( UBER) to 2.02M shares in the first quarter vs. 225K in Q4 2021.

Dan Loeb's Third Point adds stakes in CSX, Alcoa; exits Alphabet, Upstart

Dan Loeb's Third Point has added new stakes in rail services company CSX ( CSX) with ~7.39M shares, Alcoa ( AA) with ~2.38M shares, and petroleum producer Ovintiv ( OVV) with 2.25M shares.

George Soros's fund buys Zynga, exits Activision in Q1

New stakes: Zynga ( ZNGA) with 13.2M shares, Freshworks (FRSH) with 1.95M shares, and Atlassian ( TEAM) with 62K shares. The firm exited its stakes in Activision Blizzard ( ATVI), which is being sold to Microsoft ( MSFT) at $95 per share; General Motors ( GM), and Ally Financial ( ALLY).

Melvin Capital doubled up on Amazon, slashes stake in Live Nation Entertainment, Holdings

New positions include Capri Holdings ( CPRI), Group ( TCOM), Visa ( V), MGM Resorts International ( MGM), Spotify Technology ( SPOT).

Paulson & Co. adds Agnico Eagle Mines, slashes stake in BP, expands position in Bausch Health

John Paulson's fund added Agnico Eagle Mines ( AEM) with 10.3M shares and SPDR Gold Trust ETF ( GLD) with 10M shares in new positions.

Lone Pine Capital raises stakes in Square, adds Meta Platforms, exits Adobe, slashes MasterCard

Stephen Mandel's Lone Pine Capital acquired new positions in TSMC ( TSM), Meta Platforms ( FB), Atlassian ( TEAM) with 1.40M shares, Dick's Sporting Goods ( DKS) with 3.73M shares, ( BILL) 1.36M shares and Thermo Fisher ( TMO) with 520,709 shares.

3G Capital boosts stakes in Carvana, Microsoft, exits DoorDash, ZoomInfo

3G Capital boosted its positions in online used car retailer Carvana ( CVNA), tech giant Microsoft ( MSFT) and outsourcing company TaskUs ( TASK).

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From: Julius Wong5/19/2022 8:26:36 AM
1 Recommendation   of 7094
Stocks to buy as a recession approaches: UBS screens for high quality

May 19, 2022 6:07 AM ET Synopsys, Inc. (SNPS), BR XLK, IGV, XLRE, XLV, XLP, XLF, XLI, CF, CTRA, XOM, CVX, DFS, PFE, GOOG, GOOGL, TRMB, PAYX, V, NEE, KO, CBRE, LAMR, USB, COP, NOV, AEE, OGE, ASH, AON, ITT, NFLX, CAG, CG, ORLYBy: Kim Khan, SA News Editor 18 Comments

Adam Smigielski/E+ via Getty Images

UBS highlights what to own and avoid as the stock market moves to its next phase and recession risks rise.

Its screens favor higher and improving quality over lower quality and less improvement, strategist Keith Parker wrote in a note.

The definition of "quality" is not absolute. UBS has said before, but a higher return on capital, higher and more reliable profits and a low debt-to-equity ratio are good hallmarks.

To position, UBS is upgrading technology ( XLK) to Overweight from Underweight, led by software ( IGV).

It is upgrading Real Estate ( XLRE) to Overweight, keeping Healthcare ( XLV) Overweight and keeping Consumer Staples ( XLP) Underweight.

Financials ( XLF) remain Overweight and Industrials ( XLI) remain Underweight.

The higher and improving quality stocks:

Synopsys (NASDAQ: SNPS), delta quality 100%

CF Industries ( CF), 99%

Coterra Energy ( CTRA), 97%

Exxon Mobil ( XOM), 97%

Chevron ( CVX), 97%

Discover Financial ( DFS), 96%

Pfizer ( PFE), 95%

Alphabet ( GOOG) ( GOOGL), 94%

Trimble ( TRMB), 94%

Paychex ( PAYX), 94%

Visa ( V), 94%

NextEra Energy ( NEE), 94%

Coca-Cola ( KO), 94%

CBRE Group ( CBRE), 92%

Lamar Advertising ( LAMR), 92%

U.S. Bancorp ( USB), 91%

ConocoPhillips ( COP), 90%

The lower and less improving stocks:

Broadridge Financial (NYSE: BR), delta quality 4%

NOV ( NOV), 5%

Ameren ( AEE), 6%

OGE Energy ( OGE), 6%

Ashland Global ( ASH), 8%

Aon ( AON), 9%

ITT ( ITT), 10%

Netflix ( NFLX), 11%

Conagra ( CAG), 12%

See stocks with strong earnings that Quant Rating grades at the top of the class.

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From: Julius Wong5/19/2022 9:02:47 AM
1 Recommendation   of 7094
A bear market reading listMay 18, 2022

Source: YCharts

As you can see the S&P 500 and Dow have yet to officially enter bear market territory, but by every other measure we are in a bear market. For even the most stalwart, a bear market will put you on edge. My colleagues at Ritholtz Wealth Management have been on a roll this past week writing about what is happening and how you should react. Here is a sampling.

The State of Things

“We’re in a rangebound market. One day the Dow Jones is up 800 points, the next day it’s down 1,000. The world we live in did not suddenly lurch from one condition to another in a 24 hour span. That’s pure emotion.” – Joshua Brown

“In good markets, investors value growth. In bad markets, investors focus on survival. And that’s where we are today.” – Michael Batnick

“What is going on in 2022? Perhaps it’s nothing more complex than mean reversion. If you prefer to contextualize this in terms of adjusting to a new rate regime or a future increase in the cost of capital, well sure, whatever narrative explanation works for you.” – Barry Ritholtz

In every bear market, it feels like the end of the world is near while it’s happening…Things seem bleak right now. The stock market wouldn’t be falling if things were fine. It’s always this way though.” – Ben Carlson

“There has been way too much exuberance in financial markets over the past 5 years. It’s time to flush it out. Flush it all out.” – Blair duQuesnay


“Sentiment readings can be fantastic contrary indicators, but they are rarely actionable, and then only when at extremes.” – Barry Ritholtz

“Are things really that bad? Looking at some of the sentiment data, you would think the unemployment is 10% and the stock market is down 50%.” – Michael Batnick

“Bear markets function as full-body cleansers for investors’ psyches.” – Tony Isola

Lessons Learned

“Diversification is the only answer to an unpredictable future. If everything is working, you’re not really diversified.” – Michael Batnick

“The most important thing right now is not to panic and to stick to your plan, assuming you had one. But every market environment presents an opportunity to do something to improve your portfolio or your total financial picture. These actions can help scratch the urge to DO SOMETHING to ease the pain of seeing red on your statements.” – Blair duQuesnay

“Fill your head with junk and it all but guarantees future behavioral mistakes. Reducing your consumption of the worst kinds of media will go a long way towards better results of all kinds.” – Barry Ritholtz

“Nothings fixed. Bull markets arrive and pass. Bear markets burst onto the scene and eventually flame out, and so it goes. Change is your friend regarding the stock market. Bull markets last much longer.” – Tony Isola

“The problem is trying harder does not guarantee better results. Doing more offers the illusion of control but often hurts performance more than it helps, especially when emotions are running high.” – Ben Carlson

Startups and Crypto

“This is a good time for self-reflection. Maybe you weren’t a business genius all this time. Maybe you just stumbled into a moment where capital was free and flowing like wine at a wedding. ” – Joshua Brown

“Looking back now it seems so obvious that valuations of speculative cryptocurrencies and high growth tech stocks would collapse. The prices made no sense and we all knew they made no sense. But, in the moment, it’s hard to imagine how everything could come undone. It’s hard to imagine when everyone would wake up. But, they always do.” – Nick Maggiulli

The Economy

“The point here is recessions don’t always have to mean the world is coming to an end. Sometimes the U.S. economy just needs a pit stop. Every time inflation spikes it doesn’t mean it has to be a repeat of the 1970s or the onset of hyperinflation. Sometimes all it takes is a minor recession to reset prices.” – Ben Carlson

“It doesn’t take a genius to figure out why the stock market tends to fall a lot during a collapse in economic growth.” – Ben Carlson

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From: Julius Wong5/20/2022 10:24:16 AM
   of 7094
The stocks recession manual from Goldman Sachs

May 19, 2022 2:07 PM ET SPDR S&P 500 Trust ETF (SPY) XLE, XLP, XLV, XLU, SP500By: Kim Khan, SA News Editor 29 Comments

LilliDay/E+ via Getty Images

Goldman Sachs does not predict a U.S. economic recession, but the equity team has a playbook in case that happens.

"A recession is not inevitable, but clients constantly ask what to expect from equities in the event of a recession," strategist David Kostin wrote Thursday. "Our economists estimate a 35% probability that the US economy will enter a recession during the next two years and believe the yield curve is pricing a similar likelihood of a contraction."

"Rotations within the US equity market indicate that investors are pricing elevated odds of a downturn compared with the strength of recent economic data," Kostin said. "Additionally, the dividend futures market implies S&P 500 ( SP500) (NYSEARCA: SPY) dividends will decline by nearly 5% in 2023. During the last 60 years, S&P 500 dividends have not declined outside of a recession."

Here are the four things Goldman highlights from past recessions:

Index: "Across 12 recessions since World War II, the S&P 500 index has contracted from peak to trough by a median of 24%. A decline of this magnitude from the S&P 500 peak of nearly 4800 in January 2022 would bring the S&P 500 to approximately 3650 (11% below current levels). The average decline of 30% would reduce the S&P 500 to 3360 (-18% from today)."

Earnings: "Since 1948, S&P 500 earnings have dropped from peak to trough around recessions by a median of 13%. EPS have recovered by a median of 17% four quarters after troughing."

Valuation: "The S&P 500 forward P/E multiple has contracted by a median of 21% between its pre-recession peak and its eventual trough. During the typical recession since 1980, the index P/E multiple peaked 8 months in advance of the onset of a recession and declined by 15% between its pre-recession peak and the beginning of the recession."

Sectors: "During the 12 months before a recession, defensive sectors and 'quality' factors have generally outperformed. Across 5 recessions since 1981, the average experience saw Energy ( XLE), Consumer Staples ( XLP), Health Care ( XLV), and Utilities ( XLU) outperform the index."

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From: Julius Wong5/21/2022 2:05:03 PM
1 Recommendation   of 7094
Monkeypox plays indicate further upside as global toll climbs

May 21, 2022 12:00 PM ET Emergent BioSolutions Inc. (EBS) CMRX, BVNRY, TNXP, SIGABy: Dulan Lokuwithana, SA News Editor 12 Comments

Abu Hanifah/iStock via Getty Images

Pharma companies focused on vaccines and therapeutics against the smallpox virus surged this week amid an ongoing outbreak of its close relative, monkeypox. However, their recent price performance and valuations suggest further upside ahead.

The World Health Organization said on Friday that over 80 cases of monkeypox have been confirmed in at least 12 countries. Another 50 suspected cases are currently under investigation, according to the global body, which called the recent outbreaks “atypical as they are occurring in non-endemic countries.”

Meanwhile, the officials in New York said Friday they were monitoring a suspected case of monkeypox in the city. The U.S. confirmed its first monkeypox infection on Wednesday following reports of scattered cases in Europe.

Monkeypox is a rare viral disease endemic in Nigeria, the Democratic Republic of the Congo, and the Central African Republic. While the virus does not readily spread between humans, smallpox vaccines can offer 85% effectiveness in preventing monkeypox, which has a mortality rate ranging from 1% to 15%.

As the U.S. stopped routine smallpox vaccinations in 1972 following the eradication of the disease, the young Americans will become particularly vulnerable in the event of a monkeypox outbreak, a narrative that supported companies targeting smallpox this week.

Drug makers SIGA Technologies ( SIGA) and Chimerix ( CMRX) added more than 68% and 41%, while vaccine makers Emergent Biosolutions (NYSE: EBS) and Bavarian Nordic ( OTCPK:BVNRY) surged over 23% and 79%, respectively.

Despite announcing its fifth reverse stock split in history, Tonix Pharmaceuticals ( TNXP), a developer of a monkeypox vaccine, eked out a ~32% gain in the final two days of the week as the case counts increased. Valuations suggest further room for upside for some of the players.

In terms of EV/Sales, Emergent ( EBS) currently trades at ~1.7x with a ~44% discount to its 5-year average multiple, partly reflecting the waning benefit of the pandemic. The contract manufacturer reported over fivefold rise in net income in 2020 even as its ACAM2000 smallpox vaccine sales dropped ~17% YoY.

After another ~3% YoY decline in 2021, the company set its 2022 smallpox vaccine sales guidance at $190 - $210M compared to $206.5M sales in the prior year. The modest expectations suggest potential for an upward revision if monkeypox spreads in countries where the disease is not currently endemic.

While SIGA ( SIGA) has clearly outperformed over the past 12 months with a rise of about 87%, rivals Emergent ( EBS) and Chimerix ( CMRX) have lost more than 39% and 70%, further highlighting the extent of undervaluation subject to the future course of the outbreak.

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From: Julius Wong5/22/2022 7:50:47 AM
2 Recommendations   of 7094
Wall Street Breakfast: The Week Ahead

May 22, 2022 7:18 AM ET1 Like

Listen on the go! A daily podcast of Wall Street Breakfast will be available by 8:00 a.m. on Seeking Alpha, iTunes, Stitcher and Spotify.

Economic reports in the week ahead

The S&P 500 Index tracked back late on Friday to avoid sitting in official bear market territory, but has now logged seven straight losing weeks for the first time since 2001. Investors may be jittery going into next week with more retailers due to report, following on the jarring reports from Target (NYSE: TGT) and Walmart ( WMT) that precipitated broad selling across sectors. Costco ( COST), Best Buy (NYSE: BBY), Advance Auto Parts (NYSE: AAP), Nordstrom ( JWN), Dick's Sporting Goods ( DKS) and Macy's ( M) are a few of the key reports to watch from consumer-facing companies. Fed speakers are back on the circuit next week and FOMC minutes will be released just as traders began to assess the impact of recession talk on future rate hike plans. On the corporate calendar, JPMorgan (NYSE: JPM) will hold a key analyst day event and annual meetings at McDonald's (NYSE: MCD) and Amazon (NASDAQ: AMZN) hold more intrigue than normal.

Earnings spotlight: Monday, May 23 - Zoom Video ( ZM), XPeng (NYSE: XPEV) and Advance Auto Parts ( AAP).

Earnings spotlight: Tuesday, May 24 -
Intuit ( INTU), Best Buy ( BBY), AutoZone ( AZO), Luckin Coffee ( OTCPK:LKNCY), Ralph Lauren ( RL) and Nordstrom ( JWN).

Earnings spotlight: Wednesday, May 25 - Nvidia (NASDAQ: NVDA), Snowflake ( SNOW), Dick's Sporting Goods ( DKS), Williams-Sonoma ( WSM), and Box ( BOX).

Earnings spotlight: Thursday, May 26 -
Alibaba (NYSE: BABA), Costco ( COST), Dollar General ( DG), Gap ( GPS) and Workday ( WDAY).

Earnings spotlight: Friday, May 27 - Sanderson Farms ( SAFM) and Canopy Growth Corporation ( CGC).

IPO watch: No new IPOs are expected to start trading. Quiet periods end on Tenon Medical (NASDAQ: TNON), Ostin Technology Group ( OST), HilleVax ( HLVX) and Belite Bio ( BLTE) to free up analysts to post ratings. BLTE is the only one of the groups to trade over its IPO pricing level.

Projected dividend increases: Companies forecast to boost their quarterly dividend payouts include Lowe's ( LOW) to $0.96 from $0.80, Insperity ( NSP) to $0.50 from $0.45, National Storage ( NSA) to $0.55 from $0.50, Ralph Lauren ( RL) to $0.75 from $0.6785, Ashland Global (NYSE: ASH) to $0.325 from $0.30, Medtronic ( MDT) to $0.68 from $0.63, and Flowers Foods ( FLO) to $0.22 from $0.21.

Corporate events: Didi Global ( DIDI) will hold an extraordinary general meeting on May 23 to vote on its delisting plans in the United States. NXP Semiconductors ( NXPI) CEO Kurt Sievers will deliver the keynote on May 24 for the Computex 2022 CEO Keynote series. CarGurus ( CARG) will host an Investor Day event on May 25 with the executive leadership team planning to address the company’s strategic evolution, consumer and dealer value propositions, synergies, and financial outlook. On May 26, NV5 Global ( NVEE), Vroom ( VRM), John Deere ( DE), and Nurix Therapeutics ( NRIX) all hold investor events. Analysts have the Vroom event circled as one that could spark a share price rally if the company successfully addresses profitability and liquidity concerns. Read more about the events next week that could impact shares prices in Seeking Alpha's Catalyst Watch.

Conference schedule: The conference schedule is headlined next week by the highly-anticipated. J.P. Morgan 50th Annual Global Technology, Media and Communications Conference. Notable companies making an appearance will include Visa ( V), Intel ( INTC), eBay ( EBAY), Lyft ( LYFT), Alphabet ( GOOG), Verizon ( VZ), Comcast ( CMCSA), and Cisco ( CSCO). The conference has led to some share price jumps in the past for presenters. Other conferences next week that could generate some buzz or guidance updates include the H.C. Wainwright Global Investment Conference, the UBS Global Healthcare Conference, the Cowen Future of the Consumer Conference, the Truist Securities Financial Services Conference, the Jefferies Automotive Aftermarket Investor Conference and the KBW Real Estate Finance & Technology Conference.

JPMorgan analyst day preview: Analysts expect JPMorgan's ( JPM) Investor Day to focus on the path back to a 17% medium-term ROTC, with color around investment spend ROI. The analyst day event will take place in a rising interest rate environment for the first time in years, which may factor into the projections for net interest income. Another key area of focus from JPM management may be justifying the tech budget, which may be lifted from the current level of $12.9B to stay in-line with peers. Bank of America previews to look for the banking giant to highlight how it is creating a digital global payments network that will be able to deliver trading, clearing, settling and custody across domestic and global cross-border transactions of stocks, bonds and cash at T+0. That system includes Liink by JPM, JPM Coin Systems, Onyx Digital Assets, and Blockchain Launch.

Nvidia earnings preview: Nvidia's ( NVDA) first quarter results are due after market close on May 25. Revenue growth of 42% to $8.09B is forecast for the quarter. Analysts expect data center revenue to surpass the gaming segment revenue for the first time in the company history, driven by strong demand from hyperscale data centers and enterprise customers investing in AI, per Bloomberg. Bank of America continues to like the stock, which after a ~50% peak-trough correction is observed to now stand at ~25X the 2023 PE mark. Upcoming company keynotes at the Computex event on May 24 just ahead of earnings and at ISC 22 on May 30 are called other potential catalysts for Nvidia. JPMorgan thinks investors may see a positive surprise from the $8B auto pipeline that kicks off in the second half of this year and calls the crypto impact for the company overstated. Shares of Nvidia are down 44% on a year-to-date basis.

Annual meetings of note: Amazon ( AMZN) shareholders will meet to vote on executive pay packages at the company’s annual meeting on May 25. Proxy firms ISS and Glass Lewis have recommended voting against the packages, which were called excessive and unconnected to any performance criteria. Separate resolutions challenge injuries, high-turnover, retaliation, and racial disparities at Amazon. McDonald's ( MCD) will hold its annual meeting on May 26 and see shareholders vote on board nominees. A group of dissident investors including Trinity College, Cambridge and Carl Icahn are challenging the restaurant operator over its use of antibiotics in meat production.

Barron's mentions: The publication takes on how investors can avoid getting mauled in a bear market in a timely cover story. The advice is not to catch falling knives, but to look for clear technical signs of a bottom. "When the bounce does come, don’t be surprised if it is explosive," said Instinet Chief Market Technician Frank Cappelleri. He noted that following the end of the three previous stock market losing streaks of seven weeks or more, the index went on to gain an average of 39%. Looking at some of the beat-up names. Barron's delves into the wreckage of the IPO class of 2021. Allbirds (NASDAQ: BIRD), Poshmark (NASDAQ: POSH), Rivian Automotive ( RIVN), Robinhood Markets ( HOOD), and Warby Parker ( WRBY) all have the cash position to ride out the tough stretch and are called potential turnaround plays.

Sources: EDGAR, Bloomberg, CNBC, Reuters, Renaissance Capital

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Jim Rogers says this one commodity is 'still incredibly cheap' and worth buying to fight inflation

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