Earnings Season Kicks Off With Beats From JPMorgan & Citigroup

Plus, Delta Air Lines said it is cutting in half the number of flights it had planned to add next month as the coronavirus continues to roil flight demand, 3M has teamed up with MIT to develop a rapid coronavirus antigen test, Google is reportedly in talks to make a $4 billion in Indian telecom Jio Platforms, and Ford unveiled its new line of Bronco SUVs.

Stocks were mixed to start Tuesday with the Dow adding 100 points, or 0.4%. The S&P 500 dropped 0.5%, while the Nasdaq fell 1.2%.

JPMorgan shares are up nearly 1% this morning after the bank reported better-than-expected earnings. JPMorgan posted earnings of $4.69 billion, or $1.38 per share, while analysts were expecting earnings of $1.04 per share. “Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy,” said CEO Jamie Dimon in the earnings release. “However, we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm.” Citigroup also posted an earnings beat, reporting profits of $1.3 billion, or $0.50 per share. “While credit costs weighed down our net income, our overall business performance was strong during the quarter, and we have been able to navigate the COVID-19 pandemic reasonably well,” said Citi CEO Michael Corbat, adding that trading activity was up by 48% in the “exceptional quarter,” with a 68% increase in fixed-income trading activity. 

But it wasn’t all good news on the earnings front. Wells Fargo posted its first quarterly loss since the Great Recession this morning, as it set aside $8.4 billion in loan loss reserves tied to the coronavirus pandemic. Wells Fargo reported a net loss of $2.4 billion, or $0.66 per share, worse than the $0.20 loss expected by analysts. “We are extremely disappointed in both our second quarter results and our intent to reduce our dividend,” Wells CEO Charlie Scharf said in the release. “Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter, which drove the $8.4 billion addition to our credit loss reserve in the second quarter.” And Delta Air Lines reported a net loss of $5.7 billion in the second quarter, marking its biggest loss since 2008. The airline also said that it is cutting in half the number of flights it planned to add next month as the coronavirus continues to dampen demand. “Demand has stalled as the virus has grown, particularly down here in the South, across the Sun Belt, coupled with the quarantine measures that are going in place in many of the Northern states,” Delta CEO Ed Bastian said to CNBC. “Those two factors are causing consumers to pause.” Delta’s second quarter revenue fell 88% from the year prior to $1.47 billion, representing an adjusted per-share loss of $4.43.

Speaking of the coronavirus, researchers at Kings College London have found that antibody responses to the coronavirus tend to peak three weeks after the initial onset of symptoms, and then begin to decline after as little as two or three months meaning that immunity to the virus could be short-lived. In a study of more than 90 patients, researchers led by Dr. Katie Doores from KCL’s School of Immunology & Microbial Sciences, 60% of the people in the study had a “potent” level of antibodies an average of 23 days after the first onset of symptoms, while that figure dropped to 16.7% in those tested 65 days after the first signs of symptoms. “We need to continue to measure antibody responses in these individuals to see if antibody titles continue to drop or plateau to a steady state,” Doores said. In other COVID-19 news, White House coronavirus advisor Dr. Anthony Fauci said that the U.S. is seeing a spike in new infections because the nation never fully shut down and reopened too early. “We did not shut down entirely,” said Fauci, director of the National Institute of Allergy and Infectious Diseases. “We need to draw back a few yards and say, ‘OK, we can’t stay shut down forever.’…You’ve got to shut down but then you’ve got to gradually open.” And 3M announced today a partnership with MIT to develop a rapid coronavirus antigen test they say will be widely available in the U.S. “We’re really looking forward to understanding whether we can create a low-cost, high-accuracy device to be able to detect the antigen,” said 3M senior technical manager Cathy Tarnowski, adding that the test will be a paper-based point-of-care testing device, helping to reduce the cost of the test. “Our focus right now really is understanding and demonstrating that we have a device that has the accuracy that we’re looking for.”

Google is reportedly in advanced talks to invest $4 billion in Jio Platforms, an Indian telecommunications firm. According to a report from Bloomberg, an announcement about the investment could come in the next few weeks, though it could still be delayed or canceled as the details are ironed out. If the deal does go ahead, Google would become the latest tech giant to back Jio Platforms, which is owned by Mukesh Ambani’s Reliance Industries. Facebook announced a $5.7 billion investment in the firm in April, and Intel announced a $250 million investment earlier this month. Jio Platforms operates the Jio Infocomm wireless network, which has amassed almost 400 million 4G subscribers since its launch in 2016. The company is currently India’s top telecom, and also has several apps and other services in e-commerce and broadband.

And Ford shares are up nearly 4% this morning following the unveiling of its new line of Bronco SUVs last night, in a head-on run at the nation’s top off-road seller, the Jeep Wrangler. The new Ford Bronco—the original of which was discontinued in 1996—starts at $29,995, while higher-end models will sell for upwards of $60,000. “With Bronco, Ford is making a clear push into the off-road segment of the SUV market,” said Credit Suisse analyst Dan Levy in a note. “While we expect Wrangler to remain the leader in the off-road segment, we nevertheless see attractive opportunity for Bronco given its heritage.” Levy added that the new Bronco would contribute nearly $1 billion to Ford’s North American pretax earnings if sales reach 125,000 units based on profits per vehicle of around $7,500, making the SUV potentially one of Ford’s most profitable models. In the unveiling video of the new Broncos narrated by actor Bryan Cranston, the actor said, “This time it’s not just one horse. It’s a whole family. Built with the toughness of an F-Series and spirit of a Mustang. Built to be the future of off roading.”

Stocks We’re Watching

electroCore (NASDAQ: ECOR): electroCore shares rocketed as much as 288% yesterday after the commercial-stage bioelectronic company said that the FDA had issued Emergency Use Authorization for its gammaCore Sapphire CV non-invasive vagus nerve stimulation (nVNS) at home or in a healthcare setting to treat adult patients with known or suspected COVID-19 cases who are experiencing exacerbation of asthma-related dyspnea and reduced airflow. “Needless to say, we are very pleased to have received this EUA, and we intend work vigorously to make this novel therapy available to physicians treating known or suspected COVID 19 patients who are experiencing exacerbation of asthma-related breathing difficulty,” said Dan Goldberger, Chief Executive Officer of electroCore. JP Errico, electroCore Board member, and co-founder and co-inventor of gammaCore, added, “This FDA decision is an encouraging first step toward developing evidence that may provide a basis for electroCore to pursue expansion of nVNS into reactive airway disease (RAD), which was the first area of research for electroCore.”


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