Boeing’s CEO Is Out As Company Grapples With Continued 737 Max Grounding

Plus, China is lowing tariffs on more than 850 products from the U.S., Sarepta Therapeutics got a massive investment from Roche, and DraftKings is going public.

Stocks were higher to start Monday with the Dow adding 104 points at the open. The S&P 500 traded 0.1% higher, while the Nasdaq gained 0.2%.

Boeing CEO Dennis Muilenburg resigned this morning as the company struggles in the wake of the grounding of its 737 Max plane following two deadly crashes of the best-selling aircraft. This comes after the company announced last week that it was halting production of the 737 Max until further notice. Chairman David Calhoun will become Boeing’s new CEO starting January 13 and board member Lawrence Kellner will become the company’s non-executive chairman of the board, effective immediately. Boeing shares are up nearly 3% on the news of Muilenburg’s departure.

China is lowering its tariffs on 859 products worth $389 billion from the U.S. ranging from frozen pork and avocado to some types of semiconductors starting early next year, the country’s finance ministry said today. The changes on tariffs were made to “increase imports of products facing a relative domestic shortage, or foreign specialty goods for everyday consumption,” the ministry said in a statement, as it hopes to demonstrate its desire to open its economy as the country pursues a trade deal with President Donald Trump. “The move in lowering import tariffs reflects that the government wants to reaffirm its stance to the world on freer trade amid the trade war,” said Natixis economist Gary Ng. “Domestically, lowering import tariffs are helpful in reducing business and consumer costs.”

Senate Majority Leader Mitch McConnell said this morning that Republican’s haven’t ruled out the possibility of calling witnesses in President Trump’s Senate impeachment trial. “We haven’t ruled out witnesses,” McConnell told Fox News. “Fair is fair.” McConnell said that the Senate process should mirror that of the trial of former President Bill Clinton, the last president to be impeached. Whether Senate republicans would allow witnesses to testify in the trial was a sticking point for House Democrats. House Speaker Nancy Pelosi reiterated in a tweet what she said last week that she would not choose “impeachment managers until we know what sort of trial the Senate will conduct,” thus delaying sending the articles of impeachment passed by the House on to the Senate until after both houses of Congress are back from their holiday recess. “We’re at an impasse. We can’t do anything until the speaker sends the papers over,” McConnell said. “So, everybody enjoy the holidays.”

Sarepta Therapeutics shares are up more than 6% this morning after the biotech announced that Roche would pay $1.2 billion for the rights to sell Sarepta’s experimental gene therapy treatment for Duchenne muscular dystrophy outside of the United States. “We view this as a big win for the company,” Cantor Fitzgerald analyst Alethia Young wrote in a note from today. “We think validation from a company like Roche performing extensive diligence and choosing to partner should significantly increase investor confidence in [Sarepta’s] entire gene therapy program.”

Sports betting and fantasy sports company DraftKings is going public by agreeing to merge alongside SBTech with Diamond Eagle Acquisition Corp, a publicly traded special purpose acquisition company. The combined group will trade on the Nasdaq under the name DraftKings Inc with an estimated market cap of $3.3 billion. The deal includes a $304 million equity investment from several institutional investors that will close early next year at the time when the merger is completed. The money raised from the deal will be used to expand the company’s operations in additional states that have legalized gambling like Colorado and Michigan. “We have a lot of really exciting new markets that we’d like to launch, and that requires capital investment,” said DraftKings CEO Jason Robins. 

Stocks We’re Watching

Perma-Fix Environmental (NASDAQ: PESI): Shares of this nuclear services company are up 3% this morning following the announcement that the federal government has awarded Perma-Fix’s services segment a $15 million contract to support the Lawrence Berkeley National Laboratory through the Department of Energy with remediation, construction, and waste management services. CEO Mark Duff said that Perma-Fix “was able to leverage our recent experience conducting complex remediation and demolition in radiological environments with potential for additional expansion as the project evolves. This win builds on our momentum established over the last two quarters to position Perma-Fix for continued growth in our Services Segment.”

Winnebago Industries (NYSE: WGO): Winnebago shares are up nearly 8% over the last week after the company reported a big Q1 2020 earnings beat late last week. The company reported pro forma earnings per share at $0.73 on sales of $588.5 million, compared to analysts’ expectations for pro forma earnings of $0.57 per share on sales of $538.9 million. CEO Michael Happe noted Winnebago’s “strong” results and said the company’s “RV retail market share is now 10.8%… up 1.7 share points over the prior-year period and exceeding our 2020 goal of 10%.”


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