Plus, there’s fresh hope on the stimulus front, Target delivered a blowout earnings report, and Johnson & Johnson is buying Momenta Pharmaceuticals.
Stocks were mixed to start Wednesday with the Dow adding 114 points, or 0.4%. The S&P 500 was up 0.1% to a fresh record, while the Nasdaq traded 0.3% lower.
Democratic and Republican leaders are looking for a new path forward on reviving stalled negotiations on the next round of stimulus amid the ongoing coronavirus crisis. House Speaker Nancy Pelosi said yesterday that Democrats are “willing to cut our bill in half to meet the needs right now,” and come back to the table with additional agenda items after the November elections. On the GOP side, Senate Majority Leader Mitch McConnell and Treasury Secretary Steven Mnuchin said that Pelosi’s decision to break out $25 billion in funding for the Postal Service from the original Democratic relief plan acts as an opening for talks. The move “could open the opportunity for discussion about something smaller than what the speaker and the Democratic Senate leader were insisting on at the point of impasse,” McConnell said in an interview with the Louisville Courier Journal, while also adding that the Senate is unlikely to take up the Democrats’ post office bill, which is expected to be passed by the House on Saturday, setting up another potential fight between the two parties.
As U.S. confirmed coronavirus cases near 5.5 million, Regeneron and Roche are teaming up on an investigational antibody cocktail against COVID-19 where Regeneron will sell it in the U.S. and Swiss-drugmaker Roche selling it internationally should the drug win approval. Regeneron said it expects initial data from its ongoing trial of the antibody cocktail, called REGN-COV2, in September. “REGN-COV2 could provide a much-needed treatment option for people already experiencing symptoms of COVID-19, and also has the potential to prevent infection in people exposed to the virus, thus slowing the spread of the global pandemic,” Roche CEO Bill Anderson said in a statement. In other coronavirus news, the CDC said the federal government is teaming up with local health departments to begin testing sewage systems for the coronavirus in an effort to catch the virus before it spreads rapidly.
Target shares are up nearly 12% this morning after posting earnings that blew past every forecast on Wall Street. The big box retailer reported fiscal second quarter earnings per share of $3.38 on revenue of $23 billion, compared to expectations of earnings per share of $1.62 on revenue of $20.09. Target said sales online and at stores open for at least a year rose by 24.3%, driving profits up by an eye-popping 80.3% to $1.7 billion. CEO Brian Cornell credited the blowout quarter to canceled summer vacations, not stimulus checks, telling CNBC, “In the pandemic, we’re not going to restaurants, we’re not going to movies. Those traditional summer trips have been canceled. We’re not on planes. We’re not spending dollars on lodging, so many of those dollars have been redirected into retail.” Cornell did, however, encourage lawmakers to approve additional aid for consumers. “It’s very important the House and Senate come together and put forward a new stimulus plan,” Cornell said.
Johnson & Johnson said today that it has agreed to buy Momenta Pharmaceuticals in an all cash deal valued at around $6.5 billion. The deal will give J&J’s Janssen unit access to Momenta’s experimental therapy, nipocalimab, which is being tested for myasthenia gravis, a neuromuscular disease that causes weakness in muscles, and other diseases where the immune system attacks the body. “Janssen will have the potential to introduce multiple launches, many as first-in-class indications with potential for significant peak year sales, some of which could exceed $1 billion,” Johnson & Johnson said in a statement. The news sent Momenta shares up more than 69% today.
$2 Trillion. Apple shares rose more than 1% this morning, bringing the iPhone maker’s market cap to $2 trillion for the first time. Apple has doubled in valuation in just over two years and is the first publicly traded U.S. company to reach the $2 trillion milestone. While the number is largely symbolic, it does underscore Apple CEO Tim Cook’s success at changing the company’s story. Investors now see Apple’s business less like other hardware makers and more like a software company, as evidenced by Apple’s rising PE ratio, which is now over 33. “It’s a poll position in investors’ minds,” said Gene Munster, Loup Ventures founder. “When you cross the milestone first, it’s a signal of leadership.”
Stocks We’re Watching
Resonant Inc (NASDAQ: RESN): Resonant shares jumped 14% yesterday after the company announced that its patented 5G XBAR filters for non-mobile applications have been successfully manufactured by two different foundry partners using a standard surface acoustic wave (SAW) front end process. “This technological breakthrough—which for the first time demonstrates the production of high-performance 5G filters on a standard, off the shelf SAW front end process—fundamentally validates Resonant’s ability to produce filters faster, better and cheaper,” said George B. Holmes, Chairman and CEO of Resonant. “Our ISN software platform has allowed us to crack the code of complex filter technology, while using only proven, high-volume manufacturing processes—as opposed to traditional BAW foundry processes which are more complex and expensive than SAW processes.”