It’s hard to put a positive spin on the market’s action over the last week. The bottom line is investor sentiment is the pits and most stocks have been sliding. We owe Microsoft (MSFT) a debt of gratitude for stepping up with a good report and showing that things aren’t actually as bad in tech land as everybody seems to think!
Perhaps the most bullish angle is that the broad market is at a key support zone again (i.e., could see a bounce soon) and Q1 GDP numbers (down 1.4%) may just get the Fed to pull back a little on the “hike ‘til something cracks” lever. That said, the numbers showed consumers continue to spend (+2.7%) in Q1 and business spending is also strong (+9.2%), so it’s not as if the economy is tanking.
Stepping back, we remain in a messy transition zone as the Fed tries to engineer a soft landing. It’s just going to take some time before we have a better handle on what a new normal is going to look like.
In the meantime, earnings season is driving a lot of individual stock action out there. The two reports we received this week from Repligen (RGEN) and Shutterstock (SSTK) were decent. Next week things heat up as we’ll have five more names report, including several software positions.
It’s still a time to be very cautious. And it’s foolish to try to pick a market bottom. That said, with so much negative sentiment out there it just might be that we’re at or near a point where things could turn up. We’ll wait for more evidence before getting more aggressive, however.
Recent Changes
None
Updates
Avalara (AVLR) remains at hold and we’re looking at the 74 area closely (stock at 77 and change) as this was the support zone from March. Earnings next Thursday are key. Analysts see Q1 2022 revenue up 29% to $198 million and adjusted EPS of -$0.12. For the full year the company is expected to deliver 23% revenue growth ($860 million) and EPS of -$0.26. HOLD
Earnings Date: Thursday, May 5
CS DISCO (LAW) has been relatively stable over the last week (still beat up in 2022 though). Management reports in two weeks. Analysts are looking for 45% revenue growth ($30.7 million) and adjusted EPS of -$0.21. For 2022 Disco is expected to generate revenue of $150 million (+31%) and EPS of -$0.80. I want to maintain exposure to because I think the longer-term potential will prove to make the wait worthwhile. BUY
Earnings Date: Thursday, May 12
Inspire Medical Systems (INSP) fell with the broader MedTech group over the past week (IHI back down to support near 55). Management just announced two small equity investments in privately held companies as it tries to bring better digital platforms to market that can support patients in obstructive sleep apnea (OSA) trials and testing. The end goal here is that better digital solutions can help patients get from test to solution (i.e., Inspire Therapy) more quickly. The first investment ($10 million) is in EnsoData, an FDA-approved sleep study analysis platform. It can be used at home, integrates with sleep center technologies and is used by over 500 sleep centers in the U.S. analyzing over 30,000 sleep studies per month. The second investment (amount not disclosed) is in Ognomy, an application/web portal that connects patients with sleep physicians and can start patients off with a digital consultation and move them through to a sleep study. Completed sleep evaluation and clinician follow-up can take just a few days. Management is sure to talk more about these investments next week. Earnings will be reported Tuesday. Inspire is expected to grow revenue by 59% to $64.3 million and deliver adjusted EPS of -$0.79. Full-year revenue is seen up 41% to $330 million while EPS is seen near -$2.14. HOLD
Earnings Date: Tuesday, May 3
Procept BioRobotics (PRCT) was moved to hold two weeks ago to let it cool off after a nice run. This morning we learned the company has received positive coverage from two more large commercial insurers, Aetna (third largest with 21 million covered lives) and Independence Blue Cross Blue Shield (4 million covered lives), a licensee of Blue Cross Blue Shield Association. Suffice to say this is a positive development, though not unexpected. Procept reports next Thursday. First-quarter revenue is expected to be up 56% to $12.2 million and adjusted EPS should be around -$0.46. Full-year revenue is seen up 74% to $60 million while EPS of around -$1.85 is expected. HOLD
Earnings Date: Thursday, May 5
Nova LTD (NVMI) has been sold. No update. SELL
Earnings Date: Thursday, May 12
Rani Therapeutics (RANI) was flat this week until late yesterday afternoon when shares sold off hard. There’s no news behind the move. I suspect it was a larger investor (a relative term in a company like this) taking down its position. RANI is bouncing back some today. BUY
Revolve (RVLV) heads into next week’s earnings report with investors increasingly concerned about consumer spending. Amazon’s (AMZN) earnings tonight – specially the parts about e-commerce – may well determine how RVLV trades up until its own earnings report. Revolve should be among the more resilient e-commerce players (which is why we’re still holding it), especially as people (and lots of younger people) look to get back into social activities. We’re looking for revenue growth of 42% to $255 million and adjusted EPS of $0.26. Full-year revenue should land near $1.12 billion (+26%) while EPS should be around $1.23. HOLD
Earnings Date: Tuesday, May 3
Repligen (RGEN) reported this week, and I detailed the results in a Special Bulletin. Larger peer Thermo-Fisher (TMO) reported last night and is getting a little bump today. We will see if this helps to firm up players in the bioprocessing space, including RGEN. Maintaining at hold until stock looks more solid. HOLD
Earnings: Done
Shutterstock (SSTK) reported earlier this week, and I detailed the results in a Special Bulletin. The stock remains at hold as we look to SSTK to firm up following a solid report. HOLD
Earnings: Done
Silvergate Capital (SI) has come back to pre-quarterly report levels over the last week. No new news. Earnings reports from other banks have been mixed while the trends in major cryptocurrencies are uninspiring. Maintaining at buy as our entry point affords us some more flexibility. BUY
Earnings: Done
Sprout Social (SPT) has slipped with the broader software group this week but next week’s earnings report could turn things around. Revenue is seen up 38% to $56.2 million while adjusted EPS is seen near -$0.04. Full-year revenue is expected to be up 33% to $250 million while EPS is seen near -$0.13. HOLD HALF
Earnings Date: Tuesday, May 3
Xometry (XMTR) has been moving sideways on low trading volume. Earnings aren’t due out until the week after next. For Q1 analysts see revenue up 86% to $81.7 million and adjusted EPS of -$0.35. On the last earnings call management issued full-year 2022 revenue guidance of $390 - $400 million, implying +83% at the high end. That’s where consensus estimates are pegged. BUY
Earnings Date: Wednesday, May 11
Please email me at tyler@cabotwealth.com with any questions or comments about any of our stocks, or anything else on your mind.
| Stock Name | Date Bought | Price Bought | Price on 4/28/22 | Profit | Rating |
| Avalara (AVLR) | 2/1/19 | 40 | 79 | 97% | Hold |
| CS Disco (LAW) | 9/2/21 | 57 | 33 | -42% | Buy |
| Inspire Medical (INSP) | 10/4/19 | 59 | 210 | 258% | Hold |
| Procept BioRobotics (PRCT) | 3/3/22 | 25 | 35 | 39% | Hold |
| Rani Therapeutics (RANI) | 10/7/21 | 17 | 13 | -26% | Buy |
| Repligen (RGEN) | 11/2/18 and 12/31/18 | 59 | 156 | 163% | Hold |
| Revolve Group, Inc. (RVLV) | 4/1/21 | 46 | 46 | 1% | Hold |
| Shutterstock (SSTK) | 11/4/21 | 121 | 80 | -34% | Hold |
| Silvergate Capital (SI) | 4/7/22 | 133 | 126 | -5% | Buy |
| Sprout Social (SPT) | 9/3/20 | 36 | 64 | 75% | Hold Half |
| Xometry (XMTR) | 1/6/22 | 53 | 35 | -33% | Buy |