Plus, it’s looking unlikely Congress will pass another coronavirus relief bill before the end of July, IBM reported an earnings beat, eBay sold its classified ads unit, and Men’s Wearhouse-parent Tailored Brands is laying off 20% of its workforce and considering closing up to 500 stores.
Stocks were higher to start Tuesday with the Dow adding 328 points, or 1.2%. The S&P 500 gained 0.8%, while the Nasdaq traded 0.3% higher.
As U.S. cases of the coronavirus surpass 3.8 million, its looking increasingly unlikely that Congress will pass a new coronavirus relief bill before the end of July and the start of Congress’ month-long recess. House Minority Leader Kevin McCarthy said this morning that he doesn’t expect Congress to pass a new bill by the end of the month, meaning key lifelines will expire creating what some experts warn will be an unprecedented financial crisis. “I envision that this bill doesn’t get done by the end of July,” McCarthy told CNBC today. If lawmakers cannot pass a plan by July 31, the $600 per week federal unemployment insurance benefit buoying millions of Americans will end. “Losing the $600 will mean people will put themselves in physical jeopardy by showing up to unsafe jobs to keep themselves afloat,” said Michele Evermore, senior policy analyst for the National Employment Law Project. “For the people who can’t find jobs, they’re going to lose their homes. They’re not going to be able to afford food, and they’re going to take on debt that will stay with them for years.”
Opko Health shares are up more than 21% this morning after the diagnostics company said that the National Football League and the CDC had signed contracts with Opko subsidiary BioReference Laboratories to conduct COVID-19 testing. “I am not going to discuss the specifics of our relationship right now with the NFL,” said BioReference Laboratories Executive Chairman Dr. Jon Cohen. “I will confirm for you that we are the tester. We will be testing all 32 teams in 30 different cities around the country.” According to a memo from the NFL Management Council, players will be tested for the coronavirus twice before entering club facilities, and will be in self-quarantine at home or in a hotel room in between testing, with players who test negative allowed to enter club facilities with daily self-screenings at home and temperature checks before entering club facilities thereafter, with all players and personnel with direct access to players tested regularly. On Opko’s contract with the CDC, Cohen said the company will offer antibody testing to help determine how widespread COVID-19 antibodies are in the population. “Many studies suggest that the majority of the public has not been infected with COVID-19, but multiple factors limit these findings,” Cohen said in a statement. “Together with the leading public health authority, we are leveraging extensive depth and breadth of testing expertise to increase overall understanding of the disease burden of the virus.”
On the earnings front, IBM reported reported a second quarter beat, posting earnings per share of $2.18 on revenue of $18.12 billion, compared to estimates of earnings per share of $2.07 on revenue of $17.72 billion. “Our clients see the value of IBM’s hybrid cloud platform, based on open technologies, at a time of unprecedented business disruption,” said Arvind Krishna, IBM CEO, in a statement. “We are committed to building, with a growing ecosystem of partners, an enduring hybrid cloud platform that will serve as a powerful catalyst for innovation for our clients and the world.” Logitech reported a more than 75% increase in non-GAAP operating income for its fiscal first quarter, boosted by demand for its webcams, and other video conferencing products and headsets as working from home accelerated amid the coronavirus lockdowns. “Logitech’s business was already positioned to grow from these long-term trends, and since early March they have accelerated, making Logitech more relevant to customers than ever before,” said Chief Executive Bracken Darrell. UBS reported an 11% fall in net profit to $1.23 billion for its second quarter, which came in ahead of analysts’ expectations for $973 million. And Coca-Cola said its earnings fell 33% in its second quarter, reporting earnings per share of $0.42 on revenue of $7.2 billion. CEO James Quincey said the company believes the second quarter will likely be the most challenging of the year, though the path to recovery is unlikely to be linear. “The pandemic is not behind us,” added Coca-Cola CFO John Murphy.
eBay has agreed to sell its classified ads business to Adevinta in a deal worth $9.2 billion, creating the world’s largest classified ads group with a market presence in 20 countries and covering one billion people with three billion visits every month. As part of the deal, eBay will receive $2.5 billion in cash and 540 million shares of the Norwegian Adevinta, giving it a 44% stake in the company. “Adevinta becomes the largest online classifieds company globally, with a unique portfolio of leading marketplace brands,” Adevinta CEO Rolv Erik Ryssdal said. “We believe the combination of the two companies, with their complementary businesses, creates one of the most exciting and compelling equity stories in the online classifieds sector.” The transaction is expected to close by the first quarter of 2021.
And Tailored Brands, the parent company of Men’s Wearhouse and Jos. A. Bank, announced it is eliminating roughly 20% of its corporate workforce by the end of its fiscal second quarter, and has selected up to 500 stores it may close “over time.” “Unfortunately, due to the COVID-19 pandemic and its significant impact on our business, further actions are needed to help us strengthen our financial position so we can navigate our current realities,” said Tailored Brands President and CEO Dinesh Lathi. “While today’s announcement is a difficult one, we are confident these are the right next steps to protect our business and position us to more effectively compete in today’s environment.” Earlier this month, the company skipped a $6.1 million payment to bondholders, rigging a 30-day grace period. With the layoffs, Tailored Brands said it expects to record a pretax charge of roughly $6 million in the second quarter for severance payments and other termination costs.
Stocks We’re Watching
BioXcel Therapeutics (NASDAQ: BTAI): BioXcel shares are up more than 5% this morning, following yesterday’s gain of as much as 35% yesterday, after it announced that BXCL501, its proprietary sublingual thin film of dexmedetomindine as a treatment for patients with bipolar disorder and schizophrenia, met the primary and secondary endpoints of its SERENITY I and SERENITY II trials. “These compelling Phase 3 results show that BXCL501, if approved, has the potential to become an important new treatment option for patients suffering from acute agitation,” said Vimal Mehta, Ph.D., CEO of BioXcel. “We are extremely pleased that rapid and robust reductions in agitation were demonstrated in both patient populations despite differing neuropsychiatric diagnoses. We believe these results suggest that BXCL501 may have potential to treat agitation across a wide range of conditions. As we initiate steps toward regulatory submissions in these first two indications, we are also rapidly advancing the investigation of BXCL501 in additional disorders with significant unmet medical need including dementia, hyperactive delirium and opioid withdrawal symptoms.”