In today’s briefing:
- 2023 Kickoff Trades
- Norfolk Southern Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report
- Hormel Foods Corporation: Initiation of Coverage – Investment In Garudafood & Other Drivers
- New Relic: $1B+ Revenue By FY24. Cost Discipline Will Drive Profitability
- Wayfair Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
- International Paper Company: Initiation of Coverage – Business Model & Key Drivers
- The True Meaning of Liquidity
- Viatris Inc: Initiation of Coverage – Recent Acquisitions & Other Drivers
- Norfolk Southern Corporation: Initiation of Coverage – Business Strategy & Other Drivers
- The Sherwin-Williams Company: Initiation of Coverage – Recent Acquisitions & Key Drivers
2023 Kickoff Trades
- SPX macro top and sell call from 4,150 targets 3,300/200 where a base and low is expected ahead of a more bullish 2H23.
- Cycle: Equity weak bias into January 8 if not closer to the 18th. From January 20 onwards we see a tactical rally cycle unfolding (still within the more bearish Q1 framework).
- Asian positioning outlined with charts and details to follow once markets come online.
Norfolk Southern Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report
- Norfolk Southern is a rail transport major, known to offer its services in the Southeast, East and Midwest U.S.
- The company’s recent financial performance has been decent and the management has shown its commitment to productivity and efficiency by significantly improving its operating ratio.
- They are actively qualifying conductors, carrying out and fine-tuning their TOP|SPG operating strategy, and bolstering their leadership group and operations.
Hormel Foods Corporation: Initiation of Coverage – Investment In Garudafood & Other Drivers
- This is our first report on Hormel Foods Corporation, one of the leading protein food companies across the globe.
- Hormel achieved another quarter of growth in organic sales led by its solid performances from its food service businesses and its center store grocery portfolio.
- In the quarter, Hormel saw growth from its food and ethnic forward portfolios.
New Relic: $1B+ Revenue By FY24. Cost Discipline Will Drive Profitability
- We double down on New Relic stock as we see operational improvement and a clear path to non-GAAP profitability. A strong balance sheet will help to survive an economic downturn.
- The company will repay 0.5% senior convertible notes in 2023 and is not interested in diluting existing shareholders. New Relic ended 2QFY23 with $833M in cash and cash equivalents.
- American activist investor Jana Partners held ~3.2M New Relic shares as of Nov-22. New Relic Inc (NEWR US) shares underperformed in 2022, with shares down ~49%
Wayfair Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
- Wayfair is a renowned e-commerce platform providing a wide variety of products such as furniture, decor, housewares, and home improvement offerings.
- Wayfair has seen strong momentum in CastleGate as it drives various advantages for suppliers, lower retail prices because of ship cost savings, reduced damage rates, better visibility on sites, and quicker conversion via quick delivery.
- The company has been driving operational cost savings, which could reduce the cost of goods.
International Paper Company: Initiation of Coverage – Business Model & Key Drivers
- This is our first report on International Paper Company, one of the largest producers of renewable fiber-based industrial packaging and pulp products.
- It has been a challenging and dynamic environment for International Paper and the company experienced a sharp decline in the demand for its Industrial Packaging segment and higher cost headwinds significant from higher distribution and energy costs.
- Operating margins were lower because of significant macro headwinds and International Paper saw a decline across all the end-use segments.
The True Meaning of Liquidity
- Liquidity is deeply misunderstood in crypto markets. Specifically, the metric “market depth”.
- Unless you are a trader, it can be hard to wrap your head around the meaning of “2% Bid Depth” and how it relates to the value of an asset.
- As FTX collapsed, we took a hard look at liquidity for FTT, specifically aggregated market depth across all active markets.
Viatris Inc: Initiation of Coverage – Recent Acquisitions & Other Drivers
- This is our first report on global healthcare giant, Viatris.
- The company had an interesting set of developments which included a strategic agreement to sell off their biosimilars business to Biocon Biologics.
- Due to the Famy Life Sciences acquisition, five more front-of-the-eye programs in diverse indications that are in Phase III or are ready for Phase III will be added.
Norfolk Southern Corporation: Initiation of Coverage – Business Strategy & Other Drivers
- This is our first report on rail transport major, Norfolk Southern.
- The company delivered strong financial results in Q3 surpassing Wall Street expectations in terms of revenues as well as earnings.
- We initiate coverage on the stock of Norfolk Southern Corporation with a ‘Hold’ rating.
The Sherwin-Williams Company: Initiation of Coverage – Recent Acquisitions & Key Drivers
- This is our first report on Sherwin-Williams, one of the largest distributors of paints and coatings in the U.S.
- The company had a stellar third quarter, with high teen sales growth leading to the first $6 billion sales quarter and significant sequential and year-over-year gross margin improvement which resulted in an all-around beat.
- In contrast to China’s and Europe’s persistent weakness, demand is still robust in the pro-architectural and North American industrial end sectors.
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