Morning Reads

Morning Reads




This Morning

  •  S&P 500 futures are 0.6% below fair value; the Nasdaq 100 futures are 0.7% below fair value; and the DJIA futures are 0.5% below fair value
  • Key factors driving the futures market:
    • Festering worries that rate hikes will lead to a hard landing for the economy
    • Continued rise in Treasury yields
    • Inclination to wait and see if stock market can rebound from sharp losses or succumbs to follow-through selling interest
  • White House reportedly prepping a contingency plan in the event of a railroad workers strike that could begin Friday
  • UK August CPI +9.9% yr/yr, down from 10.1% in July, as some energy price relief helps; core CPI +6.3% yr/yr versus 6.2% in July
  • IEA says there has been continuation of deceleration in global oil demand growth
  • MBA Mortgage Applications Index -1.2% wk/wk (refinancing -4.0%/purchase +0.2%)
  • Chatter picking up about Japanese officials potentially intervening to support the yen; USD/JPY -0.8% to 143.31
  • Johnson & Jonson (JNJ) authorizes share repurchase up to $5 bln and reaffirms FY22 guidance
  • Nucor (NUE) sees Q3 EPS well below consensus estimate due to metal margin contraction and reduced shipping volumes
  • Brokerage research calls of note:
    • Downgrades: AVTR, SQ, UNP, BMY, OFC, CSX, EMN, MTCH, MSI, NVS, SYNH, WWD
  • WTI crude futures -0.7% to $86.68/bbl; nat gas futures +0.9% to $8.36/mmbtu; copper futures -1.3% to $3.51/lb.
  • 2-yr note yield +5 bps to 3.81% and 10-yr note yield +4 bps to 3.46%


  • Evercore ISI upgraded Akero Therapeutics (AKRO) to Outperform from In Line with a price target of $50, up from $10. The firm notes the company's FGF21 inhibitor, EFX, for NASH delivered a statistically significant win on key endpoints of NASH resolution and fibrosis improvement. Considering the small size of the study and short duration, this bodes well for the medicine in the upcoming phase studies, the firm adds.
  • Truist upgraded Brandywine Realty (BDN) to Buy from Hold with an unchanged $11 price target as part of a broader research note on Office REITs. The firm notes the company's occupancy bottomed in Q1 and good earnings growth could be in store for 2024 as interest rate headwinds normalize. The stock's "extremely discounted valuation" at 6.1-times expected 2022 FFO also provides a compelling entry point ahead of that recovery, the firm adds.
  • Raymond James upgraded PayPal (PYPL) to Outperform from Market Perform with a $123 price target. After several consecutive challenging quarters of meaningful negative estimate revisions, the firm now has increased confidence forward estimates have bottomed and expects PayPal's depressed multiple to grind higher as estimates rise. The firm thinks the Street's estimates do not fully reflect incremental revenue from rising rates within OVAS, which could help offset to any macro related transaction revenue weakness in 2H22/FY23.


  • Cowen downgraded Avantor (AVTR) to Market Perform from Outperform with a price target of $28, down from $39, following the company's guidance cut. The firm notes a  "series of shortfalls" and risk to second half of 2022 and 2023 forecasts despite the guidance cut make a Market Perform rating more appropriate.
  • Wells Fargo downgraded Eastman Chemical (EMN) to Equal Weight from Overweight with a price target of $95, down from $110, as the firm trims 2022 and 2023 estimates. With the stock trading near the midpoint of its seven-year EV/EBITDA average range of 7-9-times, and given the firm's projections for second half of 2022 EPS to be down double digits percentage year-over-year, the firm believes the company lacks a near-term catalyst to drive multiple expansion. Further, the firm thinks mid-single-digit volume declines, natural gas cost inflation, and FX headwinds will bring Q3 EPS down 19% year-over-year to $2.00 versus the firm's prior estimate of $2.65.
  • Morgan Stanley downgraded Motorola Solutions (MSI) to Equal Weight from Overweight with a price target of $260, up from $240. The firm thinks the stock's current price-to-earnings multiple appropriately credits the company's defensibility and health in growth drivers. The firm does not believe his estimates are overly conservative, with any upside likely already anticipated in the valuation. The firm says current expectations for Motorola Solutions are not overly conservative.


  • Berenberg initiated coverage of Kronos Bio (KRON) with a Buy rating and $12 price target. The late clinical-stage biotech company presents an attractive opportunity for near-term value drivers entospletinib and lanraplenib, which may treat a large portion of acute myeloid leukemia, or AML, patients, said the firm. There is also "substantial upside" potential from KB-0742, which is "potentially best-in-class and may become a cornerstone therapy for MYC-altered cancers," the firm added.
  • Loop Capital initiated coverage of Masimo (MASI) with a Buy rating and $206 price target. The firm notes the company's Sound United acquisition this February "makes strategic sense" in the context that consumer tech is increasingly moving toward healthcare, and physicians and providers are increasingly looking to remote monitoring. The firm adds that Masimo is capitalizing on Med-Tech migration to home, and the firm believes that the assets should help create a significant opportunity for the company to leverage its technology outside of the hospital.
  • BofA reinstated coverage of Church & Dwight (CHD) with an Underperform rating and $75 price target. The firm sees downside risk to estimates given the backdrop of pervasive cost inflation and lower consumer elasticity, questioning if C&D will capture value sales as consumers trade-down to lower cost products.

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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