Tag: usnews

Today’s Big Picture

Asia-Pacific equity indexes ended today’s session up across the board to close out a mixed week. China and Hong Kong extended gains achieved over the past month while the other regional markets (Japan, India, Australia, Korea, and Taiwan) gained back lost ground. While volatility in these markets has settled down, we are still seeing the occasional 2%+/- day. Resolution of the global energy picture, China’s pandemic response, and supply chain issues will go a long way to normalizing overall growth. We’re getting there but as the old cliche goes, we’re not out of the woods yet.

By mid-day trading, European equity indices are up across the board and U.S. futures point to a positive open later this morning.

As we exit the week, equities are looking to put in the first positive week in June as falling commodity prices and weak new order data contained in yesterday’s various Flash June PMI data have sparked questions over the potential pace of interest rate hikes in 2023. Following recent comments by Fed Chair Powell that a surprise drop in the preliminary consumer sentiment reading was a factor in the Fed’s 75-basis point rate hike exiting its June monetary policy meeting, we expect the final reading for that metric out later today will be scrutinized more than usual. While it may seem counter-intuitive, the harder that sentiment data falls, the more likely equities will rebound as it will feed the evolving narrative the Fed could take its foot off the interest rate hike pedal sooner than expected.

Note from the authors: The next edition of Daily Markets will be published on Tuesday, July 5th as we take some time off to rest and recharge ahead of the June quarter earnings season. 

Data Download

International Economy

May Retail Sales in the UK fell 4.7% YoY, a tad worse than the expected 4.5% decline, but a sequential improvement compared to the upwardly revised 5.7% fall in April. 

The Ifo Business Climate indicator for Germany fell to 92.3 in June from a 3-month high of 93 in the prior month, missing the expected reading of 92.9. The index of the current situation slipped to 99.3 in June from 99.6 the prior month, while the gauge assessing companies’ expectations decreased to 85.8 from 86.9. Per the report, manufacturing companies assessed the current situation as slightly less good and are considerably more pessimistic about the second half of the year. 

Economy Minister Robert Habeck shared Germany is heading for a gas shortage if Russian gas supplies remain as low as they are now, and certain industries would have to be shut down if there is not enough come winter.

Domestic Economy

At 10 AM ET, we’ll get the May New Home Sales report, which is expected to show a dip to 0.588 million homes sold vs. 0.591 in April. Also at 10, we’ll see the final reading for the Michigan Consumer Sentiment Index. The preliminary reading for that index plummeted to 50.2 from 58.4 in May, and the final June reading is expected to be unchanged. With inflation increasingly on the minds of investors and consumers, readers should look to the index’s sub-components, particularly the current economic conditions and consumer expectations figures for June, sizing them up against April and May.

Markets

Equities had a bit of a ride yesterday, testing intraday lows soon after the open and again after lunch, but rallied from 2:00 pm to the close. On the day, the Dow was up 0.64%, S&P 500 gained 0.95%, the Russell 2000 advanced 1.27% and the Nasdaq Composite led the way, rising 1.62%. Energy names once again came under some pressure, joined by materials, industrials, and financial names but optimism in everything else provided a good offset, pushing markets ahead.

Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: -15.58%
• S&P 500: -20.36%
• Nasdaq Composite: -28.21% 
• Russell 2000: -23.77%
• Bitcoin (BTC-USD): -55.49%
• Ether (ETH-USD): -69.21%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, CarMax (KMX) and Carnival (CCL) are expected to report their latest quarterly results. 

LendingTree (TREE) issued downside guidance for its June quarter, now calling for revenue in the range of $259-264 million vs. its prior guidance of $283-293 million and the $287.1 million consensus. In revising its guidance, the company noted the challenging interest rate environment combined with annual inflation persistently running above 8%, which presented additional challenges for many of its mortgage lending and insurance partners. The most significant impact has been seen in its Home segment as mortgage rates have nearly doubled over the last six months, causing a sharp decline in refinance volumes and on purchase activity. LendingTree is reviewing its full-year guidance for 2022 and intends to provide a revised outlook when it formally announces its June quarter results. 

FedEx (FDX) reported May quarter EPS of $6.87, $0.01 below the consensus forecast, with revenue for the quarter climbing 8.1% YoY to $24.39 billion, which also narrowly missed the consensus of $24.56 billion. For its forthcoming year, fiscal 2023, the company sees EPS of $22.50-24.50, which nicely bookends the current consensus of $22.40.

The May quarter bottom-line loss at CalAmp (CAMP) came in greater than expected as revenue fell 18.8% YoY to $64.7 million, missing the $69.4 million consensus. The company did not offer any formal forward guidance but shared visibility into product shipments still remains uncertain due to the global component supply shortages. 

Blackberry (BB) reported a modest top and bottom line beat for its May quarter even though revenue was down 3.4% YoY. Its IoT revenue rose 19% YoY while its cybersecurity revenue climbed 6% YoY. Management shared the company continues to invest in both the IoT and cybersecurity markets, and this is likely to result in negative EPS and cash flow this year but Blackberry targets becoming EPS and cash flow positive beginning in its fiscal 2025.

Intel (INTC) announced it put the groundbreaking ceremony for its $20 billion chip plant in Ohio on hold sharing that, “the scope and pace of our expansion in Ohio will depend heavily on funding from the CHIPS Act. Unfortunately, CHIPS Act funding has moved more slowly than we expected and we still don’t know when it will get done.” The CHIPS Act allots more than $52 billion for semiconductor production and research has stalled in Congress as lawmakers look to work out differences between two versions of legislation recently passed in each chamber.

Following a Wall Street Journal article that buyout firms are circling Zendesk (ZEN), its shares popped in aftermarket trading last night.

The Fed released the results of its annual bank stress test, which showed that banks continue to have strong capital levels, allowing them to continue lending to households and businesses during a severe recession. While this will news will affect a number of banks, the larger ones including Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS), and Wells Fargo (WFC), are likely to receive more attention on this news than others. Typically soon after the passage of these stress tests, if their Boards are so inclined, banks tend to announce fresh dividend increases that will be paid out over the coming 12 months.

NerdWallet (NRD) looks to acquire On the Barrelhead, Inc., a data-driven platform that provides consumers and SMBs with credit-driven product recommendations. subject to customary purchase price adjustments, consisting of approximately $70 million in cash and $50 million in NerdWallet Class A common stock.

IPOs

Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

There are no companies expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Monday, June 27

• US: Durable Orders – May 
• US: Pending Home Sales – May 
• US: Dallas Fed Manufacturing Index – June 

Tuesday, June 28

• Germany: GfK Consumer Climate – July 
• France: Consumer Confidence – June 
• US: Retail Inventories – May 
• US: S&P Case-Schiller Housing Price Index – April
• US: CB Consumer Confidence – June 
• US: Richmond Manufacturing Index – June 

Wednesday, June 29

• Japan: Retail Sales – May
• Japan: Household Confidence – June
• UK: Bank of England Consumer Credit – May
• Eurozone: Business Climate and Consumer Confidence Surveys – June
• US: Weekly MBA Mortgage Applications 
• US: PCE Price Index – 1Q 2022 
• US: Weekly EIA Crude Oil Inventories 

Thursday, June 30

• China: Manufacturing, Services, and Composite PMIs – June
• Japan: Construction Orders, Housing Starts – May
• Germany: Import Price Index, Retail Sales – May
• France: Consumer Spending, Producer Price Index – May
• Italy: Producer Price Index – May
• Eurozone: Unemployment Rate – May
• Germany: Consumer Price Index – June
• US: Weekly Initial & Continuing Jobless Claims 
• US: PCE Price Index – May 
• US: Personal Income & Spending – May 
• US: Weekly EIA Natural Gas Inventories 

Friday, July 1

• Japan: Tokyo Core Consumer Price Index – June
• Japan: Unemployment Rate – May
• China: Caixin Manufacturing PMI – June
• Eurozone: Manufacturing PMI, Consumer Price Index – June
• UK: Manufacturing PMI – June
• Italy: Consumer Price Index – June
• US: S&P Global Manufacturing PMI – June
• US: ISM Manufacturing Index – June
• US: Construction Spending – May 

Thought for the Day

“To model yourself after Steve Jobs is like, ‘I’d like to paint like Picasso, what should I do? Should I use more red?’” – Larry Ellison

Disclosures

• Blackberry (BB) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index
• Intel (INTC) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The following companies are expected to report earnings prior to market open on 06/24/2022. Visit our Earnings Calendar for a full list of expected earnings releases.

CarMax Inc (KMX)is reporting for the quarter ending May 31, 2022. The wholesale retail company’s consensus earnings per share forecast from the 5 analysts that follow the stock is $1.54. This value represents a 41.44% decrease compared to the same quarter last year. Zacks Investment Research reports that the 2023 Price to Earnings ratio for KMX is 14.59 vs. an industry ratio of 15.70.

Carnival Corporation (CCL)is reporting for the quarter ending May 31, 2022. The leisure (recreational) company’s consensus earnings per share forecast from the 5 analysts that follow the stock is $-1.13. This value represents a 37.22% increase compared to the same quarter last year. Zacks Investment Research reports that the 2022 Price to Earnings ratio for CCL is -4.18 vs. an industry ratio of 9.30.

Quotient Limited (QTNT)is reporting for the quarter ending March 31, 2022. The medical instruments company’s consensus earnings per share forecast from the 1 analyst that follows the stock is $-0.34. This value represents a 12.82% increase compared to the same quarter last year. Zacks Investment Research reports that the 2022 Price to Earnings ratio for QTNT is -0.34 vs. an industry ratio of -22.80, implying that they will have a higher earnings growth than their competitors in the same industry.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Wyoming-based activist firm Cannell Capital said this week that it’s accumulated a just under 13% stake in medical technology firm Neronetics and wants to put a director on the board at the company.

The fund, run by J. Carlo Cannell, said it bought the shares between February 22 and June 1 for $3.5 million. The position accounts for just over two percent of Cannell’s assets under management.

Cannell Capital said it and its investment group bought the shares as a long term investment and “not with the intent to change or influence control of the company.”

But in the following sentence, the activist made clear his wish for change, noting in Item 4 of its filing that Cannell, the manager, made the filing after “a June 21, 2022, call which Mr. Cannell enjoyed with Robert Cascella, Chairman of the Board of the company, during which CC, the largest shareholder, requested the appointment of a certain board member.”

While not identifying the director he wants, Cannell said the person would help the company as he lives in the company’s home base, “enjoys a predilection to buy a lot of stock in the company,” and is experienced in the medical technology sector.

Cannell Capital LLC is an employee owned hedge fund manager. The firm primarily provides its services to high net worth individuals. It also caters to pooled investment vehicles and proprietary accounts. The firm also manages separate-client focused equity portfolios.

The firm typically invests in stocks of small-cap companies employing long/short equity strategies. It uses fundamental analysis with bottom-up stock picking approach to make its investments. The firm employs internal and external research to make its investments. Cannell Capital LLC was founded in 1996 and is based in Alta, Wyoming, with additional offices in Sausalito, California.

The move to seat a new Neuronetics director is Cannell’s nineteenth activist campaign since 2016.

According to the company’s bylaws, the board of directors has the exclusive right to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director.

On March 31, cash and its equivalents were $80.8 million; the company added, “Due to typical seasonality, we expect first quarter cash burn to be the highest of the year, stepping down throughout the rest of the year.”

For the full year, Neuronetics expects revenue between $58 and $62 million, and, for the second quarter, $15 million to $16 million. “The company expects year-over-year growth in each of the remaining quarters, along with a more normalized seasonal pattern with a slowdown in the third quarter before a strong fourth quarter, which is typically the largest of the year,” said.

Additionally, the company sees operating expenses totaling $86 million to $90 million for the full year. And said it remains on track to post a profit before interest and taxes in 2024.

By Greg Morcroft for Fintel.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Rigel Pharmaceuticals (NASDAQ:RIGL) CEO, President and Director Raul R. Rodriguez bought 1 million shares of RIGL stock for $688,400 over the past week.

• The transaction is the largest purchase by any insider over the last twelve months.
• The shares of the company have climbed 82.0% over the last seven days.

Rigel Pharmaceuticals is a biotechnology company involved in developing drugs to treat patients suffering from hematologic disorders, cancer, and rare immune diseases.

Rigel stock has been soaring higher, led by a purchase of 1 million shares by the company’s CEO, President, and Director Raul R. Rodriguez.

The transaction lends a positive outlook as it aligns management and shareholders’ interests. The transaction marks a 521% increase in stake by the CEO, which appears considerably positive. The purchase of shares is the largest transaction by an insider over the last 12 months. However, overall insider ownership remains low. Following the transaction, insiders own only 1.2% of the total stock. Overall, the insider ownership percentage remains low despite large transactions. As per the data by Fintel, the insider accumulation score on the stock is 27.7, indicating a lower accrual score compared to its peers.

RIGL shares have gained 82.1% over the last seven days, subsequent to the CEO Raul R. Rodriguez transaction.

What happened?

Rigel Pharmaceuticals reported in an 8-K it has been unsuccessful in its Phase 3 clinical trial for its fostamatinib drug, FORWARD. The medicine is used to treat patients with premature destruction of healthy red blood cells (hemolysis). The phase 3 trial came on the heels of very successful results in Phase 2, which was conducted solely in the United States.

In the post-trial evaluation, management assessed that although the clinical trial had failed to have a significant effect on the patients in the Eastern European region, it was well received in western Europe and the United States. This means there has been a different result based on regions. Management now aims to analyze the data based on geographic differences.

The company’s success in other markets gives hope that it might succeed in the eastern European countries.

Currently, there is no approved medicine or therapy for treating patients with warm autoimmune hemolytic anemia (wAIHA). In the US, the company’s drug is already approved under the name Tavalisse. It is a kind of fostamatinib, used in treating patients with chronic immune thrombocytopenia who have had an insufficient response to a previous treatment.

The current stock price remains near its 52-week low price of $0.64.

Based on the recommendations of seven Wall Street analysts, three have given the stock a buy rating, four have recommended a hold rating, and none of them have given a sell rating. The 12-month price target is $2.61, reflecting an upside potential of 113.93% from the last price of $1.22.

Riley equity researchers have raised their FY2022 earnings estimate for Rigel Pharmaceuticals to an earnings loss of $0.52 per share, up from their prior estimated loss of $0.53 per share. The consensus estimate for Rigel Pharmaceuticals’ current full-year earnings is $0.52 per share.

The options market is bullish, with a put-to-call ratio of 0.17.

Tavalisse is gaining traction in the US market.

In the Q1 2022 earnings results, RIGL delivered strong sales for TAVALISSE. The company shipped 1,836 bottles of the medicine directly to patients and clinics, the highest since its launch. Net product sales increased by an impressive 31% compared to the prior year. The increasing number of interactions with physicians, along with the company’s marketing initiatives, propelled top-line growth. Management expects this strength to continue as the company enhances its sales initiatives.

RIGL ended the quarter with cash and cash equivalents of $107.5 million. The company also has $30 million remaining in its credit facility with MidCap. In addition to this, RIGL is also eligible for potential development milestone payments totalling up to an additional $835.0 million. This should be sufficient to support its ongoing project requirements.

Institutional investors are bullish on the stock.

Institutional investors have grown their positions in Rigel Pharmaceuticals during the second quarter. Of the 328 institutional owners, 320 held long positions in the stock, according to the data by Fintel. Major investors have been FMR LLC, BlackRock Inc., FDGRX-Fidelity Growth Company Fund, Vanguard Group Inc., State Street Corp, and Invesco Ltd.

Hedge funds and other institutional investors own 80.33% of the company’s stock.

Concluding remarks

Rigel Pharmaceuticals is focused on bringing drugs for treating rare blood diseases to patients globally. The company has been successful in the US and western European countries. However, it is still evaluating the difference in results due to the geographies. According to Coherent Market Insights, the haematology market is estimated to grow at a CAGR of 7.64% between 2021 and 2028 to reach USD 13.44 billion by 2028. If RIGL is successful in launching its drug, it will significantly benefit the shareholders. However, uncertainty prevails.

Currently, the stock is trading at a discount at a P/S multiple of 2.69x, lower than the industry average of 4.24x. A risk-seeking investor can consider investing in the stock from a long-term perspective.

By Sakshi Agarwalla for Fintel.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.