Morning Reads

Morning Reads




  • Stifel upgraded Biogen (BIIB) to Buy from Hold with a price target of $299, up from $223. The firm notes stock gains have faded since the company announced positive lecanemab data and the firm does have some concerns about residual competitive and commercial risks, but the upcoming Roche (RHHBY) data is unlikely to live up to the bar that lecanemab has set. The firm adds that the setup on Biogen shares is tricky, but risk-reward is biased to the upside.
  • JP Morgan upgraded Colgate-Palmolive (CL) to Overweight from Neutral with a $79 price target. While Colgate will likely have to talk to more currency headwinds in Q3, it is one of the few companies that will likely be able to keep pricing power while cost pressures alleviate due to good brand equity and entry level price points with low exposure to private label. The firm thinks Colgate will be able to grow earnings in the high-single-digits in 2023 while recovering market share globally.
  • Guggenheim upgraded Ultragenyx (RARE) to Buy from Neutral with a $50 price target. With shares x trading at a meaningful discount to its midcap commercial biotech peers' valuation, sentiment on GTX-102 is at "a nadir" and this is reflected in the 78% decline in the stock from its peak. However, the "program may not be a write-off should cumulative drug exposure sustain efficacy," said the firm, who sees the company's commercial franchise and risk-adjusted pipeline providing a floor for the stock.


  • Citi downgraded American Express (AXP) to Sell from Neutral with a price target of $130, down from $159. The firm believes the potential for lower billed business at American Express has not been fully contemplated by investors. Spending volume in past recessions has turned negative, says the firm, who is modeling a slowdown to 2% growth but not negative. The firm believes even a mild U.S. recession will have a rather large earnings impact on the sector as credit losses build.
  • BofA downgraded Black Hills (BKH) to Neutral from Buy with a price target of $66, down from $87. The firm cites greater operating and financing expense pressures heading into 2023 and lingering into the future years. The firm also cuts its FY23 EPS view by 3% to $4.15 while noting that cost pressures could also lead to accelerated rate cases and higher rate requests, compounding the elevated commodity headwinds.


  • KeyBanc initiated coverage of Smartsheet (SMAR) with an Overweight rating and $46 price target. The firm believes Smartsheet is positioned to be a leading player in the work management software category. With one of the clearer paths to profitability among work management peers, the firm sees an underappreciated high growth plus margin improvement story.
  • Mizuho initiated coverage of Medtronic (MDT) with a Buy rating and $100 price target. The firm's thesis is supported by the company's large, diversified portfolio, multiple shots-on-goal in premier growth categories like robotics, RDN, and CGM, and the company's fortress balance sheet.
  • Raymond James initiated coverage of Lululemon (LULU) with a Strong Buy rating and $345 price target as the firm started coverage on athletic global brands. The stock is down year-to-date, with industry-specific challenges and macro headwinds to blame, and the firm expects a challenging 2H. While it's impossible to call the trough in stocks, the firm thinks investors should take a longer-term view.
  • Goldman initiated coverage of Kronos Worldwide (KRO) with a Sell rating and $9 price target. The firm started 16 U.S. chemical stocks, believing Street earnings expectations need to come down meaningfully on weak demand, especially on commodity companies. As such, the firm is more positive on defensive stocks. The firm notes Kronos has a significant production footprint in Europe where energy prices are upending normal production costs and end-demand is quite weak.




S&P 500 futures are up 32 points and are trading 0.9% above fair value. The Nasdaq 100 futures are up 69 points and are trading 0.7% above fair value. The Dow Jones Industrial Average futures are up 278 points and are trading 1.0% above fair value.

Equity futures trade higher this morning after six consecutive losing sessions for the S&P 500 and Nasdaq Composite. Market participants remain in wait-and-see mode ahead of the September Consumer Price Index at 8:30 a.m. ET.  

The behavior of the Treasury and gilt markets has provided underlying support for a rebound trade. This follows news that UK officials are discussing how the country can back down from its stimulus plan, according to Bloomberg. The 10-yr Treasury note yield is down five basis points to 3.85% and the 2-yr note yield is down two basis points to 4.27%. The 10-yr gilt yield is down 35 basis points to 4.17%.

The U.S Dollar Index dropped recently, down 0.5% to 112.74, acting as another supportive factor. GBP/USD +1.4% to 1.1262.

Several companies reported earnings since yesterday's close and the initial response has been positive.  

As an aside, Applied Materials issued an earnings warning for Q4, which is leading to related weakness in other semiconductor equipment names.

In corporate news:

  • Walgreens Boots Alliance (WBA 33.43 +1.49 +4.66%): beats by $0.03, reports revs in-line; guides FY23 EPS in-line
  • Delta Air Lines (DAL 30.40 +1.19 +4.07%): misses by $0.02, beats on revs; guides Q4 EPS above consensus, revs in-line
  • BlackRock (BLK 534.30 +3.20 +0.60%): beats by $2.28, beats on revs
  • Taiwan Semiconductor Manufacturing (TSM 65.71 +1.60 +2.50%): beats by NT$0.44, reports revs in-line; guides Q4 revs above consensus; expects to cut capex by at least 10%
  • Applied Materials (AMAT 75.04 -0.97 -1.28%):  Lowers guidance for OctQ due to new export regulations for US semiconductor technology sold in China; also expects JanQ to see similar impact
  • A.O. Smith (AOS 45.45 -3.68 -7.49%): reports prelim Q3 results below consensus; lowers FY22 guidance
  • Comcast (CMCSA 29.30 +0.61 +2.13%): Citigroup upgrades from Buy to Neutral
  • American Express (AXP 135.90 -0.32 -0.23%): Citigroup downgrades to Sell from Neutral 

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Thursday on a lower note. Japan's Nikkei: -0.6%, Hong Kong's Hang Seng: -1.9%, China's Shanghai Composite: -0.3%, India's Sensex: -0.7%, South Korea's Kospi: -1.8%, Australia's ASX All Ordinaries: -0.1%.
    • In economic data:
      • Japan's September PPI 0.7% m/m (expected 0.2%; last 0.4%); 9.7% yr/yr (expected 8.8%; last 9.4%). September Bank Lending 2.3% yr/yr (expected 2.0%; last 1.9%)
      • Australia's October Inflation Expectations 5.4% (last 5.4%)
      • New Zealand's September FPI 0.4% m/m (last 1.1%)
    • In news:
      • The approval rating of the Japanese government has dropped to 27.4%, the lowest level since last year's election.
      • A Bank of Japan survey showed that 85.7% of respondents expect higher prices a year from now, down from 87.1% in last quarter's report.
      • Taiwan Semiconductor Manufacturing Company announced that capital spending will be reduced by at least 10% for the fiscal year.
      • China Securities Times reported that some municipalities have purchased properties or encouraged buying by state-owned enterprises to boost confidence in the property market.
  • Major European indices trade in the green. STOXX Europe 600: +0.1%, Germany's DAX: +1.0%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.4%, Italy's FTSE MIB: +0.9%, Spain's IBEX 35: +0.9%.
    • In economic data:
      • Germany's September CPI 1.9% m/m, as expected (last 0.3%); 10.0% yr/yr, as expected (last 7.9%)
      • Swiss September PPI 0.2% m/m (last -0.1%); 5.4% yr/yr (last 5.5%)
    • In news:
      • Gilts are also on the rise, sending the U.K.'s 10-yr yield lower by 17 bps to 4.25%.
      • European Central Bank policymaker Holzmann said that he is in favor of a 75-bps rate hike at the October meeting, followed by a 50-bps increase in December.
      • British Prime Minister Truss is reportedly under pressure to allow for an increase to the corporate tax rate.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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