Plus, the coronavirus finally has a name, Carnival Cruise Line said that the virus outbreak could dent full-year earnings, and Nissan is suing former Chairman Carlos Ghosn.
Stocks traded higher to start Wednesday with the Dow gaining 204 points, or 0.7%, to a new record. The S&P 500 also hit a new all-time high, adding 0.4%, while the Nasdaq also rose 0.4%.
COVID-19: That’s the official name the World Health Organization has given to the novel coronavirus that has now infected more than 45,000 globally, with the death toll surpassing 1,115. The name is an acronym—CO for corona, VI for virus, D for disease, 19 for 2019, the year the virus was first discovered—and WHO Director-General Tedros Adhanom Ghebreyesus said that the name had to “not refer to a geographical location, an animal, an individual or group of people, and which is also pronounceable and related to the disease. Having a name matters to prevent the use of other names that can be inaccurate or stigmatizing.” In other COVID-19 news, the number of passengers testing positive for the virus on the Diamond Princess cruise ship under quarantine in Japan have risen from 10 to 175, and the MS Westerdam, the Holland America Line cruise ship that has been turned away by five countries due to the outbreak despite no sick passengers on board, has been approved to dock in Cambodia.
Carnival Cruise Line, which owns the Diamond Princess cruise ship quarantined in Japan, said today that the COVID-19 outbreak could dent earnings by as much as $0.65 per share this year if the cruise line is forced to suspend its operations in Asia. “While not currently planned, if the company had to suspend all of its operations in Asia through the end of April, this would impact its fiscal 2020 financial performance by $0.55 to $0.65 per share, which includes guest compensation,” the company said in a statement. “As a result of Coronavirus, the company believes the impact on its global bookings and cancelled voyages will have a material impact on its financial results which was not anticipated in the company’s previous 2020 earnings guidance.” Carnival said in December that it expects full year 2020 earnings of between $4.30 and $4.60 per share, and will report Q1 results at the end of March.
Oil was up as much as 3% this morning following deeper production cuts from OPEC and as the number of new coronavirus cases slowed overnight. In its monthly report released this morning, OPEC slashed its forecasts for global demand for oil in the wake of the virus outbreak that has severely slowed demand in China, the world’s biggest crude importer. The cartel reduced its demand projection in the first quarter to 440,000 barrels a day, down roughly a third. In light of the slowed demand, Saudi Arabia is pressuring global oil producers to agree to a supply cut as a delay to action could lead to costly price collapses. A source told Reuters that the kingdom wants the supply cut to “put a floor under the prices. …The Saudis want to be proactive and to keep oil prices at $60 a barrel or above.” “The market is keeping a close watch on the possible move by Russia and its oil companies to get on-board with the proposal to deepen the OPEC+ production cuts,” said Again Capital’s John Kilduff to CNBC. “The companies seem to be willing to extend the time frame of the deal, but not deepen. Any cooperation is a positive, however.”
In earnings news, Shopify shares are up nearly 13% after it delivered better-than-expected Q4 earnings and issued upbeat guidance for the year ahead. Shopify reported earnings per share of $0.43 on revenue of $505.2 million—a 47% year-over-year jump—compared to estimates for earnings per share of $0.24 on revenue of $482.1 million. For the full year, Shopify expects revenue in a range between $2.13 billion and $2.16 billion, compared to expectations for $2.11 billion. And Bed Bath & Beyond shares are down more than -23% this morning after the retailer reported preliminary Q4 earnings that showed a 5.4% drop in same-store sales. The home-goods retailer has pinned the sales decline on slower store traffic and “inventory management issues.” “We are experiencing short-term pain in our efforts to stabilize the business, including the pressures of store traffic trends coupled with our own executional challenges,” said CEO Mark Tritton in a statement. “However, we did achieve a notable positive shift in sales in our digital channels during this period, with growth of approximately 20%.”
Nissan has filed a civil suit against former Chairman Carlos Ghosn, seeking $90 million in damages. The carmaker said in the suit, which was filed in Japan’s Yokohama District Court in Kanagawa, that it was filed “in order to recover a significant part of the monetary damages inflicted on the company by its former chairman as a result of years of his misconduct and fraudulent activity,” and claimed the damages are linked to Ghosn’s “breach of fiduciary duty as a company director and his misappropriation of Nissan’s resources and assets” in a statement. Ghosn was arrested in Japan in November 2018 for alleged financial misconduct and was smuggled out of the country in December 2019, escaping to Lebanon. Ghosn has flatly denied all allegations against him and has accused former Nissan colleagues and Japanese government officials of framing him. The former chairman also recently hired Creative Artists Agency founder Michael Ovitz to evaluate film and TV projects based on Ghosn’s life and Hollywood-worthy escape from Japan.
Stocks We’re Watching
Genprex Inc (NASDAQ: GNPX): Genprex shares jumped 40% yesterday after the clinical-stage gene therapy company announced that it had signed an exclusive license agreement with the University of Pittsburgh for a diabetes gene therapy that may have the potential to cure Type 1 and Type 2 diabetes. “One of the biggest advantages of this gene therapy is that it could eliminate the need for insulin replacement therapy for diabetic patients,” said Dr. George Gittes, the lead researcher at the Rangos Research Center at UPMC Children’s Hospital of Pittsburgh. “Lifting this huge burden for the millions of patients who must continuously monitor blood glucose levels and inject insulin daily would be a breakthrough in modern medicine. This therapy has the potential to truly disrupt the diabetes market.”
PAVmed (NASDAQ: PAVM): Shares of this medical device company have surged more than 23% this week after PAVmed announced that it had received Breakthrough Device designation from the U.S. Food and Drug Administration for its EsoGuard Esophageal DNA Test on esophageal samples collected using its EsoCheck Cell Collection Device in a prevalent well-defined group of patients at elevated risk for esophageal dysplasia due to chronic gastroesophageal reflux disease (GERD). “EsoGuard’s FDA Breakthrough Device designation represents a major milestone for PAVmed and Lucid,” said Lishan Aklog, M.D., PAVmed’s Chairman and CEO and Executive Chairman for PAVmed subsidiary Lucid Diagnostics. “This designation validates our belief that EsoGuard is a groundbreaking technology that has the potential to have as great an impact on esophageal cancer as widespread Pap screening has had in preventing deaths from cervical cancer. We look forward to working closely with the FDA to advance our EsoGuard in-vitro diagnostic (IVD) clinical development program at an expedited pace.”
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