The Call @ Hedgeye | Wednesday, February 28, 2024 [REPLAY]

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TICKERS DISCUSSED LONGS: GO, PRGO, CCL, RCL, WRBY, LFST, TKO SHORTS: BYND, PK, BGFV, IPAR, PDCO, RDFN, RY, AAPL NEUTRAL: NCLH, URBN, RVLV, XBI, UNH, CPNG, WDAY

broadcast summary

Consumer Staples: Daniel Biolsi - 00:01:31

• Long – Grocery Outlet Holding Corp. (GO): Grocery Outlet reported Q4 EPS of $.18, vs. consensus expectations of $.16; SSS growth of 2.7% was above expectations of 2.1%, driven by transactions growth of 7.5%, partially offset by a 4.5% decrease in transaction size; acquisitions will be part of the company’s 10% store growth plans; finding IOs for the acquired stores will be a critical aspect of integrating the 40 stores but will not begin until next year; utilizing acquisitions adds visibility to the 10% store growth target and may provide upside to the stock multiple; GO remains a long.
• Long – Perrigo Company plc (PRGO): Perrigo reported Q4 EPS of $.86 vs. consensus of $.83; organic revenue decreased by 0.6% with SKU rationalization a 2.4% headwind compared to -1.2% with a 2.8% headwind sequentially; Perrigo is taking action in its infant formula business to improve the manufacturing processes because of the new guidelines from the FDA; PRGO remains a long.

Restaurants & Cannabis: Howard Penney - 00:08:15

• Short – Beyond Meat, Inc. (BYND): Up 60% this morning on nothing; the business is still shrinking; we still contend they have no business; BYND remains a short.

Gaming, Lodging & Leisure: Sean Jenkins - 00:10:27

• Cruise Lines: We got confirmation that the narrative around the industry has been wrong; the pace of bookings continues to be strong, and pricing is elevated; incremental demand is outpacing supply; Norwegian Cruise Line Holdings Ltd. (NCLH) has been a laggard especially on the cost side; Carnival Corporation (CCL) & Royal Caribbean Cruises Ltd. (RCL) remain longs.
• Short – Park Hotels & Resorts Inc. (PK): They had pre-announced Q4 in late January; guidance for Q1 does imply accelerating RevPAR growth; they do face easier comps; guidance for the full-year implies a RevPAR deceleration; facing tough comps in some of their leisure components, especially in Hawaii; elevated cost growth; PK remains a short.

Retail: Brian McGough - 00:19:54

• Short – Big 5 Sporting Goods Corporation (BGFV): We shorted BGFV at $20, stock is now at $5; we think it is going to zero; BGFV remains a short.
• Long Bench – Warby Parker Inc. (WRBY): We are being patient with this stock; this is a good TAIL long; waiting for an infection of the Pods; company missed slightly on EBITDA; Pods leveled off a bit; they had been opening stores in expensive locations; they sell a value product; they now have 225 stores; WRBY remains on the long bench.
• Short – Inter Parfums, Inc. (IPAR): IPAR is the largest 3rd party manufacturer of fragrances in the world; fragrances have been killing it the last 3 years; we’ve been wrong on the short, but the company just missed this morning; Pod 1 decelerated from +31% to +6%; this is a colossal deceleration; IPAR remains a short.
• Urban Outfitters, Inc. (URBN): The short didn’t play out; we took off our short bench this past weekend; the company did come out and miss; we will revisit if there is more Pod 1 and Pod 2 downside.
• Revolve Group, Inc. (RVLV): We shorted RVLV at $70, stock is now at $17; we covered this name ahead of the quarter; company came out and beat and had a Pod 1 acceleration; we are inclined to go long; company’s return rate is 60%; we are about to comp the comp on this elevated return rate.

Health Care: Tom Tobin - 00:31:12

• Long – LifeStance Health Group, Inc. (LFST): Hindenburg short report a couple weeks ago; many of the issues they highlighted were the same issues we discussed when we were short; had been a poorly run company that is now better run; huge demand curve; adding clinicians; guidance for Q1 looks solid; this is a broken story that is now turning; LFST remains a long.
• Short – Patterson Companies, Inc. (PDCO): Weakness in dental and vet; they are guiding down again; stock is trading lower; the miss was marginal; screens short in our Quad Factor model; PDCO remains a short.

Healthcare Policy: Emily Evans - 00:37:18

• SPDR S&P Biotech ETF (XBI): XBI closed over $100 yesterday mostly on the strength of Viking Therapeutics; doesn’t mean problems for the biotech sector are over; lot of the performance this year has been due to expectations around the interest rate environment; cost of capital is a problem.
• UnitedHealth Group Incorporated (UNH): WSJ report that UnitedHealth Group is under investigation from the DOJ related to antitrust issues.

Macro, Housing & Financials: Josh Steiner - 00:42:15

• Short – Redfin Corporation (RDFN): The company’s market share dropped to 72 basis points, down 6 basis points QoQ; missed on the quarter and issued disappointing guidance; when rates do come down, volumes are likely to pick up; so long as the yield TREND at the long end is bullish, this will be an event for another day; no change in our fundamental view; RDFN remains a short.
• Short – Royal Bank of Canada (RY): Earnings down 6% YoY; credit deterioration continues; Canada is largely in a balance sheet recession; no change in our bearish view on Canadian banks; RY remains a short.

Communications & Software: Billy Zegras - 00:51:11

• Long – TKO Group Holdings, Inc. (TKO): Reported last night; stock was down off the print; they gave a pretty weak guide; new deal with Netflix doesn’t start until January 1st 2025; the report was better than the stock price reaction; TKO remains a long.

Software: Nick Balch - 00:54:05

• Workday, Inc. (WDAY): Workday reported earnings earlier this week; they are a large player in the human capital management space in software; revenues grew 16.7% YoY; subscription revenues grew 17.7% YoY; bought back stock in the quarter.

Global Technology & Software: Felix Wang - 00:55:45

• Coupang, Inc. (CPNG): Beat earnings estimates last night on revenue and EBITDA; saw decent gains on customer growth; they are being challenged by Chinese competitors.

Telecom-Media Policy: Paul Glenchur - 00:58:24

• Short - Apple Inc. (AAPL): Last rights meetings going on at the Justice Department; talk of a monopolization case against Apple.

Macro Policy: JT Taylor - 01:00:38

• Congress: Talk of an intense meeting at the White House yesterday; still no agreement; some of the pressure is off on the government spending side in the short term; chances are lessened that we will be heading towards a government shutdown; Speaker Johnson still doesn’t have an agreement yet on the foreign aid supplemental.