Mid-Morning Look: March 11, 2022

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Mid Morning Look March 11 2022

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Mid-Morning Look

Friday, March 11, 2022

Index

Up/Down

%

Last

DJ Industrials

160.73

0.48%

33,334

S&P 500

2.39

0.06%

4,261

Nasdaq

-55.40

0.42%

13,074

Russell 2000

-5.00

0.25%

2,006

Stocks are losing steam after Russian President Vladimir Putin acknowledged positive developments in negotiations with Ukraine sent markets soaring around 6AM. However, the optimism has faded with the S&P falling back to flat and the Nasdaq going red as volatility surrounding the Russia-Ukraine conflict continues to plague markets. Several companies are rolling after earnings/guidance misses including EV company Rivian and tech companies Docusign and Oracle. Chinese stocks are also notably weaker and extending yesterday’s losses after the U.S. SEC warned companies will be delisted from American exchanges if they do not comply with a detailed audit process. President Biden is also revoking Russia’s most-favored nation status along with the EU and G7 allies that will allow the United States to impose tariffs on Russian imports. The U.S. is also banning exports of luxury goods to Russia and the G7 countries are levying further sanctions against Russian oligarchs. These moves have bipartisan support and proponents argue it will deliver further blows to an economy that is already reeling.

Economic Data

· University of Michigan surveys of consumers sentiment prelim March 59.7 (consensus 61.4) vs final Feb 62.8

Macro

Up/Down

Last

WTI Crude

2.39

108.41

Brent

2.01

111.34

Gold

-20.50

1,979.90

EUR/USD

-0.0032

1.095

JPY/USD

0.81

116.93

10-Year Note

-0.005

2.004%

Sector Movers Today

· Consumer Staples; ULTA Q4 EPS $5.41 topped est. $4.58 on revs $2.73B vs est. $2.17V, same-store sales +21.8% with a new $2B buyback authorization and guidance for FY EPS $18.20-18.70 vs est. $17.84 on sales $9.05-9.14B vs est. $9.14B; NAPA Q2 adj EPS 17c vs est. 15c on sales $98.7M vs est. $92.7M, guides FY adj EPS 55-58c vs est. 58c; SKIN initiated at OW with a $24 PT at JPMorgan who believes the company is on track for another year of solid 20%+ growth even with challenges from Omicron; ALTO posted stronger Q4 EPS and revenue ahead of consensus; BMO designated BRBR as its Top Pick for 2022 given its likely earnings power recovery

· REITs; WE Q4 revenue rose 9% sequentially to $718M and occupancy improved to 66% from 60% in Q3, and they see Q1 revs $740-760M and Q2 $775-825M before reaching positive adj EBITDA in Q3-Q4 with revenue $900M-$1B with full-year physical occupancy 75-80%; in healthcare, Bank of America remains constructive after earnings and upgraded VTR to Buy on accelerated senior housing fundamentals and SBRA to Neutral as they see fewer tenant issues than peers despite remaining cautious on skilled nursing facilities, and downgraded MPW to Neutral as they see it trading in line with its historical average given uncertainty around a dilutive tenant repurchase option; BMO also upgraded VTR to OP with increased confidence in the senior housing recovery and its discount to WELL leaving room for relative multiple expansion and downgraded CONSUMER to Market Perform as they turn more cautious on skilled nursing; RBC initiated CSR at Sector Perform with a $16 target on underappreciated potential offset by single-market risk

· Utilities & Solar; SHLS was upgraded to Buy at Gugg as they expected the softer Q1 outlook reported last night with inline Q4 results; Mizuho upgraded EXC to Buy on valuation as an attractive opportunity trading at a P/E discount; Evercore downgraded PNW to Underperform on Arizona’s uncertain regulatory environment with the latest rate case having a worse than expected outcome that should cap its valuation at a meaningful discount vs electric utilities who are growing earning and have more diversified service territories; UBS downgraded DTE to Neutral as its recent outperformance vs the XLU over the past 3 months leaves limited upside to their price target with it now trading among the highest P/E valuation in the group

Stock GAINERS

· PSO +19%; its board rejected two unsolicited, preliminary cash offers from APO after concluding the offers significantly undervalued the company

· LAZY +23%; received a $25/share cash buyout offer from RILY

· T + 2%; reiterated 2022 guidance for growth in revenues, adj EBITDA, and earnings excluding WarnerMedia and Xandr and sees 2023 continued lsd revenue growth with adj EPS $2.50-2.60, adj EBITDA $44.3-44.5B, and FCF reaching $20B from $16Bin 2022

· BSET +8%; declared a special $1.50 dividend and increased its buyback to $40M

· LZ +11%; reversing overnight losses after reporting Q4 EPS (11c) vs est. (1c) with revenue guidance for Q1 of $150-152M and FY of $650-660M below expected $160.9M, $686.6M; also authorized a $150M buyback

Stock LAGGARDS

· DOCU -20%; Q4 results came in better than expected but revenue growth slowed to +35% YoY from +42% in Q3, and guided Q1 revenue $579-583M vs est. $594.4M, FY revenue $2.47-2.48B vs est. $2.61B

· ORCL -2%; Q4 adj EPS $1.13 missed est. $1.18 on in-line sales $10.5B but was downgraded to UW at Piper due to more than 70% of revenues tied up in traditional product categories where Q4 revenue declined -1.6% YoY

· RIVN -7%; shares fell to a record low below $38 this morning after reporting Q4 adj EPS ($2.43) was wider than expected ($1.97) loss on revenue $54M vs est. $60M with supply constraints limiting 2022 production

· DIDI -37%; halted its plans to list in Hong Kong after Chinese authorities said their proposals to prevent security and data leaks were insufficient

· CURRENTLY -13%; Q4 results missed expectations with EPS $1.70 vs est. $1.76 non sales $346.7M vs est. $353.2M with weak guidance of Q1 EPS 0-10c vs est. 42c on sales $215-221M vs est. $258.2M

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