Biotech and Pharma Roundup
October 23, 2019
Image Source: e-Magine Art Some big news in the world of biotech and pharmaceuticals has come out this week, starting Monday October 21, that we want to get out in front of our members. In alphabetical order by ticker symbol: BIIB, BMY, MRK, NVS. By Callum Turcan Biogen Inc (BIIB) reported third quarter 2019 earnings on Tuesday October 22 that easily beat both top and bottom line estimates. That was partially due to strong sales at its SPINRAZA offering, which is used to treat spinal muscular atrophy. Shares of BIIB rocketed higher during the trading session as investors priced in the upside that Biogen’s Aducanumab treatment could generate, with the company announcing that it was going to ask the US
Our Reports on Stocks in the Computer Hardware Industry
October 23, 2019
Structure of the Computer Hardware Industry The computer hardware space, which spans the personal computer to the iPhone and iPad, is highly competitive. The industry is characterized by frequent product introductions and rapid technological advances that can cause dramatic market share shifts. Though some firms benefit from a strong brand, participants often price aggressively, pressuring margins. Firms are also subject to potential component shortages/disruptions, which can punish performance. Obsolescence may be an eventuality for some, and services revenue has become critical for others. We’re neutral on the space. We’ve optimized our tehnology coverage. To access the reports, please select here.
Ford Provides an Update on Its Self-Driving Plans
October 22, 2019
Image Source: Ford Motor Company – 2018 Annual Report By Callum Turcan On October 21, Ford Motor Company (F) published a blog post on Medium providing an update on its self-driving ambitions. Jim Farley, who was promoted to president of Ford’s ‘New Businesses, Technology & Strategy’ division effective May 2019 (previously Mr. Farley worked at Ford’s ‘Global Markets’ division), authored the Medium blog post. The company reiterated that the goal was to begin commercializing its autonomous driving investments starting in 2021 via a self-driving service, likely something akin to a fleet of taxi cabs with built-in autonomous driving equipment and software. Self-driving taxi cab services could in theory create substantial recurring revenue streams that are less cyclical than demand for
Morgan Stanley Could See Lower Capital Requirements
October 22, 2019
“…the Wealth Management and Investment Management segments…are the crown jewels at Morgan Stanley with returns on tangible equity of 37% and 36%, respectively, in the quarter. Flows are positive and market levels have been friendly, though that can change on a dime.” — Matthew Warren By Matthew Warren On October 17, Morgan Stanley (MS) reported third-quarter results. The bank posted revenue of $10.03 billion, which was up 1.62% versus last year and $405.3 million ahead of consensus. Earnings came in at $1.27 per share, up 9% from last year, and were 15 cents ahead of consensus. The bank’s efficiency ratio worsened to 73% from 71% last year, and it posted a return on equity (ROE) of 11.2% and return on
Coca-Cola Posts a Nice Quarter But Shares Too Pricey
October 21, 2019
By Callum Turcan The Coca-Cola Company (KO) reported third-quarter earnings for fiscal 2019 (period ended September 27) on October 18, which were positively received by the market as the beverage giant showed signs that there’s strong demand worldwide for its offerings. Coca-Cola’s GAAP net revenues jumped 8% year-over-year while its non-GAAP organic revenues increased 5%, supported by higher prices and a favorable product mix that offset the negative impact from reduced concentrate sales. Management noted that Coca-Cola continued to “gain value share” in the ready-to-drink non-alcoholic beverage market. Shares of KO yield 2.9% as of this writing and ended up over 2% during normal trading hours on Friday October 18. Coca-Cola As an aside, it’s important to remember that Coca-Cola
Johnson & Johnson’s Talc Problems Hit Another Bump
October 20, 2019
Image Shown: Johnson & Johnson’s embattled ‘Baby Care’ segment performed poorly during the third quarter of 2019. Image Source: Johnson & Johnson – IR Presentation. By Callum Turcan Johnson & Johnson (JNJ) was back in the news Friday October 18 when the company announced it was voluntarily recalling “a single lot” of its embattled Johnson’s Baby Powder product in the US due to alleged asbestos contamination risks. The US Food and Drug Administration tested a single bottle from this lot, according to Johnson & Johnson, with the federal regulator noting that sub-trace levels (no greater than 0.00002%) of chrysotile asbestos had been detected in the bottle. Johnson & Johnson plans to vigorously contest these allegations and maintains that its talc
Our Reports on Stocks in the Restaurants – Fast Casual & Full Service Industry
October 20, 2019
Structure of the Restaurants – Fast Casual & Full Service Industry The restaurant industry has benefited from a long-term trend toward eating out, but the space has become increasingly more competitive as new concepts are introduced and successful chains expand. Not only are there pricing pressures and trade-down threats, but rising costs for commodities and labor have pressured profits. Barriers to entry are low, and many constituents have a difficult time differentiating themselves. We tend to like larger chains that benefit from scale advantages and international expansion opportunities, though niche franchises can be appealing. We’re neutral on the structure of the group. For coverage of firms in the Restaurant – Fast Casual & Full Service Industry, please click here.
Goldman Sachs’ Return Metrics Remain Subpar
October 20, 2019
Image Source: Goldman Sachs 3Q2019 Earnings Presentation By Matthew Warren Goldman Sachs (GS) reported third-quarter results October 15. The bank missed analyst consensus estimates for revenue by $10 million, and GAAP EPS of $4.79 per share missed by $0.09. Overall firm revenues dropped 6% versus the year-ago period, operating expenses increased 1%, net earnings were down 26%, and diluted EPS tumbled 24%. The weakness was most pronounced in investment banking where revenues fell 15% versus last year’s quarter and Investing & Lending where revenues plummeted 17%. Goldman Sachs generated a sub-par return on equity (ROE) of 9% (down 2.1 percentage points versus last year) and return on tangible equity (ROTE) of 9.5% during the quarter. While Goldman management tried to
Buffett Favorite, Bank of America a Bargain
October 18, 2019
“If Bank of America can continue to narrow the return on capital gap to JPMorgan, we expect its shares will grow into our $35 fair value estimate.” — Matthew Warren By Matthew Warren and Brian Nelson, CFA On October 16, Bank of America (BAC) reported third-quarter results that showed adjusted EPS of 75 cents per share, as compared to the average analyst estimate of 68 cents per share, and 66 cents in the year-ago quarter. The adjustment was for the previously announced $2.1 billion pre-tax impairment charge related to Bank of America’s investment in its merchant services joint venture from 2009, which negatively impacted EPS by 19 cents per share. The bank plans to create this capability in-house going forward.
Philip Morris International: Free Cash Flow King With Upside Potential
October 18, 2019
Image Shown: Philip Morris International’s Marlboro cigarette brand remains very popular worldwide. Pricing power is essential to offsetting declines in traditional cigarette sales volumes as the company positions itself for alternative tobacco products to become a larger part of its revenue streams. Image Source: Philip Morris International – Third quarter 2019 earnings presentation By Callum Turcan Philip Morris International (PM) posted third quarter 2019 earnings on October 17. As of this writing, Philip Morris International yields 5.8%, and we include shares of PM in our simulated High Yield Dividend Newsletter portfolio. While the company cut its full-year forecast for 2019 partially due to a tax charge, the deconsolidation of a subsidiary, and foreign currency headwinds, Philip Morris International is still
