In today’s briefing:
- EQD | SPX Vs SX5E: Trade a Relative Value Vol Spread
- Google Stock Could Be Losing Its Moat
- MicroStrategy Inc (MSTR US): 12.4% Profit Target Achieved in 5 Days
- Kimball International, Inc. (Nasdaq: Kbal) – Initiating Coverage
- Margin Improvement Evident in 4Q22; Sales Headwinds Remain into 2023
- Contract Backlog Supports 2023 Revenue Outlook
- The Importance of Asymmetry
EQD | SPX Vs SX5E: Trade a Relative Value Vol Spread
- European markets have begun to outperform their US peers over last few months
- The differences in market sentiment have driven both the implied and realised vol spread wider
- Trade a relative vol spread that should hold up in multiple market scenarios
Google Stock Could Be Losing Its Moat
- Microsoft is improving its search market share, according to analysts.
- The arrival of ChatGPT hammered Alphabet stock may be ahead as revenue effects sink in, says analyst.
- The company is also improving its market share and improving its search market share.
MicroStrategy Inc (MSTR US): 12.4% Profit Target Achieved in 5 Days
- TSS or “Trend Sustainability Score” is our proprietary momentum based tactical methodology. TSS has a proven record of identifying the exhaustion points in interim trends.
- On 17 February 2023 TSS identified exhaustion in the MSTR US uptrend and targeted a minimum 10% reversal in 1-2 weeks.
- On 24 February 2023 MSTR US completed a 12.4% reversal from 284.03 to 248.87.
Kimball International, Inc. (Nasdaq: Kbal) – Initiating Coverage
- We are initiating research coverage of Kimball International. For shareholders and potential investors, Kimball’s relevant history began in 1949 when Arnold Habig led the acquisition and reorganization of Midwest Manufacturing, a struggling manufacturer based in Jasper, Indiana.
- Kimball management initiated its current strategy in 2014, focusing exclusively on commercial furniture.
- Its strategy differs from other commercial furniture manufacturers by emphasizing ancillary products (88% of TTM revenues as of 2Q23) and concentrating on secondary geographic markets (79% of TTM revenues as of 2Q23).
Margin Improvement Evident in 4Q22; Sales Headwinds Remain into 2023
- Before market open on February 23, HNI reported 4Q22 results that were better than we expected on both the top line (a modest beat) and margins (a significant beat).
- Results were also ahead of consensus. HNI reported 4Q22 sales of $569 million versus $603 million in 4Q21, ahead of our estimate by $7.5 million and consensus by $9 million.
- Adjusted EPS was $0.63, or $0.17 ahead of our estimate of $0.46 (also consensus).
Contract Backlog Supports 2023 Revenue Outlook
- We expect the steep revenue ramp, which commenced in 2Q22, to continue into 2023 as Flotek continues to expand service to a growing number of ProFrac’s pressure pumping fleets to meet the terms of the 10-year supply agreement signed in February 2022.
- Flotek will supply the greater of 70% of ProFrac’s stimulation chemistry requirements or 30 frac fleets. For its part, ProFrac expects to have up to 49 active fleets by mid-year 2023.
- We have built a 2023 reported revenue estimate of ~$224 million based on supplying an average of 26 ProFrac crews.
The Importance of Asymmetry
- In theory, the fundamental building blocks of the universe, matter and anti-matter, should exist at a 1:1 ratio, a positron for every electron, a yin to each yang.
- However, owed to some miraculous flaw in the simulation’s code, a perturbation in the motion of the universe’s marionette, this is not the case.
- Rather than the big-bang resulting in the almost immediate annihilation of matter and anti-matter into photons, matter prevailed, surviving in excess to its counterpart.
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