Election day morning chai

The S&P 500 futures trade 37 points, or 1.1%, above fair value on Election Day, as the market looks to extend its rebound effort to a second straight day. Despite the new wave of coronavirus cases in the U.S. and Europe, and renewed lockdown measures, cyclical stocks have caught a bid of outperformance. The market might be looking ahead to the prospects of a large stimulus package should Democrats take control of the White House like the polls suggest, although there's no guarantees in polls. Shares of PayPal (PYPL 177.45, -10.31) are down 5.5% in pre-market action after the company issued downside Q4 EPS guidance, which has overshadowed its Q3 EPS beat. Wayfair (W 287.00, +31.36, +12.3%) and Arista Networks (ANET 243.17, +27.05, +12.5%) are both up 12% following their positive results. In economic data, investors will receive Factory Orders for September (Briefing.com consensus 1.1%) at 10:00 a.m. ET and auto and truck sales for October throughout the day. U.S. Treasuries trade near their flat lines. The 2-yr yield is flat at 0.16%, and the 10-yr yield is up one basis point to 0.86%. The U.S. Dollar Index is down 0.6% to 93.60. WTI crude futures trade 3.4% higher at $38.06/bbl to extend yesterday's 3% rebound. In U.S. Corporate news: PayPal (PYPL 177.45, -10.31): -5.5% after guiding Q4 EPS below consensus, which has overshadowed its Q3 EPS beat. Wayfair (W 287.00, +31.36): +12.3% after beating top and bottom-line estimates. BMO Capital Markets upgraded Dominion Energy (D) to Outperform from Market Perform; Dominion has had a string of positive announcements that will enhance its business mix, improved earnings visibility and should allow the company to grow its earnings and dividends more in line with its high-quality peers. However, D shares are now nearly all the way back to their early July relative lows. Firm thinks this pullback represents a compelling opportunity to gain exposure to a visible regulated renewable growth story at an attractive valuation to its high-quality ESG peers. Both Cowen and Morgan Stanley upgraded Royal Dutch Shell (RDS.A) to Buy-equivalent recommendations. The former said RDS's recent earnings update introduced lower capex guidance from refocusing its Upstream portfolio, setting a trajectory to materially improve FCF with potential acceleration of shareholder returns by early '22. What's more, they highlighted RDS's peer-leading leverage to int'l gas that will serve as an offset during a period of commodity volatility. Morgan Stanley upgraded Monster Beverage (MNST) to Overweight from Equal Weight; firm feels the market is not appropriately pricing in Monster's growth potential, particularly given firm expects above-consensus results going forward, which should act as a catalyst for the stock. Morgan Stanley also upgraded Constellation Brands (STZ) in the beverage space to an Overweight recommendation; firm views valuation as very attractive here post significant STZ stock underperformance on overdone concerns, and ahead of a potential sequential rebound in beer topline growth going forward as COVID consumer demand and production supply issues dissipate. Northland Capital and Oppenheimer both downgraded shares of SolarEdge Technologies (SEDG) this morning. Northland moved to Underperform (Sell equivalent) on valuation, as analysts said they can't make a case for a higher multiple without numbers increasing. Susquehanna downgraded Skechers USA (SKX) to Neutral from Positive; despite beating 3Q20 EPS and revenue expectations, firm noted the outlook was not as robust as expected. In sum, firm said that, historically, SKX's investments in the future that look aggressive today often prove worthwhile tomorrow, but they see tomorrow as more than a day away. Robert W. Baird started coverage on Editas Medicine (EDIT) with an Underperform, $14 tgt (~55% downside); they see little basis for EDIT share upside by combining 1) the limited market opportunity for EDIT's lead indication Leber's congenital amaurosis type 10 (LCA10); with 2) skepticism about IVS26 LCA10 asset, CEP290 CRISPR gene editing (GE) drug EDIT-101; plus 3) competition in IVS26 LCA10 and sickle cell disease (SCD)/ß-thalassemia (ß-thal). BofA Securities launched coverage on NICE (NICE) with a Buy, $280 tgt (~22% upside); at 28% operating margin and 22-25% FCF margin, firm highlights an attractive mix of growth and profitability and see upside potential from multiple expansion and upward estimate revisions as NICE's cloud business scales. Recent IPOs Kronos (KRON), Shattuck Labs (STTK), and Spruce Biosciences (SPRB) all received bullish sell side initiations this morning. ________________________________________________________________________________________________________________________________________________ Gapping up In reaction to earnings/guidance: INSP +13.3%, W +13%, MED +12.7%, ANET +12.7%, HALO +9.2%, CPE +8.5%, WBT +8.1%, AMC +7.9%, CRUS +7.8% (also names new CEO), PAA +7.7% (also announces $500 mln common equity repurchase program), JAZZ +7.3%, KFRC +7.2%, JCOM +6.6%, GWPH +6.3%, CDLX +6%, VNOM +5.3%, BHC +5.3%, WLKP +5.1%, IT +4.8%, AGCO +4.8%, MATX +4.2%, RACE +4%, FANG +3.8%, LPX +3.8%, OPCH +3.6%, JELD +3.4%, MIME +3.2%, MCK +3.2%, ZBRA +3.1%, SIMO +3%, EXC +3%, HSC +2.9%, CDK +1.9%, OMI +1.7%, ETN +1.7%, ONTO +1.6%, TREX +1.6%, EMR +1.6%, WMB +1.5%, HUM +1.5%, ATH +1.4%, CTLT +1.2%, FI +1.1%, WPX +1%, LGIH +0.9% Other news: IEA +14% (announces JV with FH Paschen for the West Lake Corridor rail expansion, valued at over $550 mln) PVAC +7.2% (announced a strategic transaction to improve its balance sheet and liquidity position; transaction is expected to close in the first quarter of 2021) KPTI +6.9% (announces Phase 3 SEAL study of XPOVIO met primary endpoint; also announces earnings) AQST +6.5% (signs royalty monetization agreement with Marathon Asset Management for up to $125 million) PAGP +6.1% (PAGP and PAA announce $500 mln common equity repurchase program) HGEN +5.9% (announced the execution of its first licensing transaction in the Asia-Pacific Region with Telcon RF Pharmaceutical and KPM Tech for development and commercialization rights to lenzilumab for COVID-19 for South Korea and the Philippines) OSUR +5.4% (OraSure's DNA Genotek subsidiary receives FDA Emergency Use Authorization for its ORAcollect·RNA saliva collection device for SARS CoV-2) GLPG +4.3% (GILD and GLPG announce EMA validation of marketing application for filgotinib for ulcerative colitis) BMY +3.5% (announces deucravacitinib (BMS-986165) demonstrated superiority to placebo and Otezla (apremilast) in Pivotal Phase 3 psoriasis study) BIIB +1.9% (positive data from the 24-week SLE portion of the Phase 2 LILAC study (part A) demonstrating that BIIB059 (anti-BDCA2) was associated with a statistically significant reduction in total active joint count) HII +1.7% (awarded $280 mln Navy contract) TWTR +1.6% (announces conclusions from Mgmt Structure Committee evaluation; to begin authorized share repurchase program) NEE +1.4% (to sell interests in portfolio of renewable assets for $1.3 bln in total proceeds, to NEP and KKR) BTI +1.3% (acquires Dryft Modern Oral business) NGL +1.2% (provides update on bankruptcy proceedings) Analyst comments: PDD +3.9% (upgraded to Buy from Neutral at Goldman) DBI +3.7% (upgraded to Neutral from Negative at Susquehanna) NGG +2.8% (upgraded/resumed to Overweight from Equal-Weight at Morgan Stanley) BBVA +2.7% (upgraded to Hold from Sell at Societe Generale) MNST +2.7% (upgraded to Overweight from Equal-Weight at Morgan Stanley) BP +2.5% (upgraded to Equal-Weight from Underweight at Morgan Stanley) CDAY +2.3% (upgraded to Neutral from Underweight at JP Morgan) STZ +1.9% (upgraded to Overweight from Equal-Weight at Morgan Stanley) RDS.A +1.8% (upgraded to Overweight from Equal-Weight at Morgan Stanley) D +0.9% (upgraded to Outperform from Market Perform at BMO Capital Markets)