It was another brutal session for stocks on Monday, with the S&P dropping 3.2% while the Nasdaq tumbled over 4% with big cap tech stocks joining the sell-off party. Asia markets closed lower overnight while Europe indexes are in the green this morning. U.S. futures are pointing to a bounce as I write this, the Dollar is higher while Yields, Oil, and Gold are all lower.
It was another ugly day for stocks yesterday as investors continue to press the reset button on valuations and multiples. It seems like we are near peak fear but it is hard to tell if we are anywhere near a bottom as of yet, despite the fact that the Nasdaq just had its worst 3 session performance in history, losing over 10%:
Would want to see some indiscriminate capitulation selling and this does not feel like it just yet, though the Biotech sector is showing signs. This morning PFE announced it was acquiring BHVN for $11 billion in cash. Maybe the start of a long awaited bottom here for Bio and maybe can save the market this week(a little sarcasm). IBB has been beaten to shreds and could offer a nice bounce play today if the market holds this gap today. I may look at some speculative calls to play for a move back over $112 or so:
The SPY lost $400 yesterday and closed at 13 month lows. Maybe a playable bounce here as well if it holds the morning gap:
I added some speculative JDST calls yesterday as Gold and stocks were falling. I was looking for a hedge play and the miners offer a decent risk/reward scenario. If you had asked a Gold bull 10 years ago what would be the ideal scenario for Gold they would say runaway inflation, the Fed printing money, Geopolitical uncertainty, ect. ect. Here we are 10 years later and the backdrop could not be any better for a Gold bulls thesis on owning and holding Gold, yet all it has done is drop since the start of March. It is nearing its 200dma at $1836 and think there is more downside coming if it breaks that in the next day or to and could test $1775 or so quickly. The US dollar at 20 year highs does not help things for Gold and the new world of crypto currency and its role as a store of value is still in the early innings... eventually the Gold market will start pricing that in. I may look to add some later dated DUST calls as another hedge:
IBM was actually having a decent day for most of the session yesterday before pulling back into the close to finish down 1.16%. The stock has been trading in a tight range since its earnings move to $140. Only a matter of time before it breaks that level:
CUTR got absolutely destroyed yesterday with the rest of the market and med-tech space. There was no negative news or catalyst... there actually was an upgrade yesterday. Will be on watch again today for some calls:
BTAI also fell to 52 week lows yesterday with the rest of the Bio space. This morning an analyst remained bullish with the Truist analyst keeping a $71 PT and buy rating. Certainly not adding anything here yet but one I will be watching:
ZYME is going to need some buyout news to get the stock over my call strike price. Have to think the market is forcing their hand to accept the offer.
RNG reported a great beat and raise yesterday. This is another name that has been completely destroyed but could be a nice bounce play today and this week if the market does not fall of the cliff:
And lastly, the last 3 times CMG has gotten down to this level, it has staged some nice $200+ rallies. WIll be watching for possible spec calls:
Will be using TZA and DUST as possible hedges if the market reverses today.
Here are the analyst changes of note for today:
| Microchip price target lowered to $85 from $95 at BMO Capital |
| BMO Capital analyst Ambrish Srivastava lowered the firm's price target on Microchip to $85 from $95 to reflect continued multiple compression but keeps an Outperform rating on the shares. The company's Q4 results were better and its guidance was higher while its management still sees "strong fundamentals", the analyst tells investors in a research note. Microchip is among the higher rungs of diversified businesses that he "likes to recommend", Srivastava adds |
| Plug Power price target lowered to $31 from $49 at Craig-Hallum |
| Craig-Hallum analyst Eric Stine lowered the firm's price target on Plug Power to $31 from $49 and keeps a Buy rating on the shares. The analyst notes Plug reported Q1 results below Street expectations and reiterated its revenue outlook for 2022 and its 2025 revenue, gross margin and operating margin goals |
Zscaler price target lowered to $275 from $335 at Truist |
| Truist analyst Joel Fishbein lowered the firm's price target on Zscaler to $275 from $335 and keeps a Buy rating on the shares as part of a broader research note on valuations in Software space. While he continues to believe that enterprise software fundamental drivers will prove resilient despite the potential macro deterioration around rate hikes, geopolitical events, and recession fears, he also notes the "moderately increased probability" of downside risk for the group, the analyst tells investors in a research note |
| Market missing PayPal outperforming e-commerce growth, says Morgan Stanley |
| Morgan Stanley analyst James Faucette lowered the firm's price target on PayPal to $137 from $139 and keeps an Overweight rating on the shares, citing his view that the market is missing PayPal's outperformance as it continues to outpace underlying e-commerce growth. Though its top-line trajectory has normalized coming out of the pandemic, he thinks a subset of investors are viewing this as a structural issue and questioning if PayPal growth is beginning to lag the underlying e-commerce market, though he is "confident this is not the case," Faucette said |
| O'Reilly Automotive upgraded to Buy at BofA, price target unchanged at $730 |
| BofA analyst Elizabeth Suzuki upgraded O'Reilly Automotive to Buy from Neutral with an unchanged $730 price target as part of a broader research note on Auto Aftermarket names. Given the recent downturn in stocks across her hardline retail coverage, the analyst states that the auto parts retail stocks are often considered more defensive, "staples-like" within the Consumer Discretionary sector. Suzuki adds that her review of O'Reilly's Q1 earnings miss reflects "primarily a function of sell-side mis-modeling of SG&A growth", which did not properly account for the unsustainably low level of SG&A as a percentage of sales in the quarter. |
| ShockWave Medical price target lowered to $190 from $221 at Canaccord |
| Canaccord analyst William Plovanic lowered the firm's price target on ShockWave Medical to $190 from $221 and keeps a Buy rating on the shares. The analyst said he expects the company to continue its growth through continued adoption into the remaining target accounts for its US coronary launch, adding new and improved products to the bag, and benefitting from its international expansion |
And here is what I am watching today: RNG, CMG, DUST, TZA, IBB, LABU, APPS, DRV, OLED, IRTC, DDOG, MDB, TEAM, and ZS.
Let's have a great day!
-JB