AMD Is Reportedly In Talks To Buy Rival Xilinx

Plus, there’s more confusion on the stimulus front, GE got a big upgrade from Goldman Sachs, and Disney’s newest Pixar film is skipping theaters.

Stocks were higher to start Friday with the Dow rising 101 points, or 0.4%. The S&P 500 added 0.5%, while the Nasdaq gained 0.7%.

The White House signaled that the Trump administration is again leaning toward a large-scale stimulus bill after House Speaker Nancy Pelosi pushed back on President Donald Trump’s push this week for a piecemeal approach after halting negotiations entirely. Pelosi spoke with Treasury Secretary Steven Mnuchin for 40 minutes yesterday where Mnuchin indicated that Trump wants imminent agreement on a comprehensive stimulus package, according to Pelosi spokesman Drew Hammill. But White House spokeswoman Alyssa Farah sowed confusion saying, “we’ve made very clear we want a skinny package,” though Farah later clarified that position, telling reporters the administration is “open to going with something bigger.” However, “we’re not going to operating from the $2.2 trillion that the speaker laid out,” Farah said. Making matters more confusing, Senate Majority Leader Mitch McConnell said this morning that the passage of a stimulus deal is unlikely in the three weeks prior to the election.

Gilead just scored another win for its remdesivir treatment. The New England Journal of Medicine published the final results of a clinical trial that confirmed the drug’s benefit for hospitalized COVID-19 patients, confirming earlier positive results. Gilead CEO Daniel O’Day told CNBC, “These results are meaningful. They’ll definitely help patients around the world who have the misfortune of entering into the hospital to get better, and I’m really pleased to say that we have ample supply. …This is a medicine that woks by reducing the viral replication in the body, which is important earlier in the diseased and earlier in your hospital stay, which is why it has its greatest effect there.” SVB Leerink analyst Geoffrey Porges said in a note that the new report confirms what was known from the interim results released from the study in May. “Remdesivir is emphatically not a miracle drug,” Porges said, but “it does appear to confer significant benefit.”

AMD is reportedly in advanced talks to buy rival chip maker Xilinx in a deal that could be valued at more than $30 billion, the Wall Street Journal said. The deal could come together as soon as next week, though things remain in flux, according to people familiar with the matter. A tie-up with Xilinx would give AMD CEO Lisa Su more of the pieces needed to break Intel’s stranglehold on the profitable market for data center computer components. “We see the combination as opportunistic,” wrote New Street Research analyst Pierre Ferragu in a note. “Both companies are sub scale in the leading-edge logic world, dominated by giants like Intel, Broadcom, Qualcomm, and Nvidia, and neither has the organic opportunity to change that. This, combined with healthy valuation on the side of AMD, makes the deal something attractive for management teams, but without tangible value creation for shareholders. It won’t lead to material synergies and won’t affect the competitive landscape.”

GE shares are up nearly 4% this morning after Goldman Sachs analyst Joseph Ritchie called the stock the “ultimate self-help, vaccine-leverage story in Industrials.” Ritchie issued a Buy rating on the stock with a $10 price target – 44% above the price as of this writing. “We are at a bottom from both a fundamental and sentiment perspective,” Ritchie wrote. “Admittedly, we might be a little early on the turn in the stock, but we believe we are at a bottom… and that is typically the best time to own industrial cyclicals.”

And in another blow to movie theaters, Disney said its new Pixar animated picture, “Soul,” would bypass theaters and appear exclusively on the company’s Disney+ streaming service in the U.S. and Europe. The film will begin streaming on Christmas Day, and will be shown in theaters in countries where Disney+ isn’t available. Last month, Disney made “Mulan” available for streaming customers for an additional $30 rental fee to great success. “Soul” will be available at no additional cost to Disney+ customers. “A new original Pixar film is always a special occasion, and this truly heartwarming and humorous story about human connection and finding ones place in the world will be a treat for families to enjoy together this holiday season,” said Disney CEO Bob Chapek in a statement.

Stocks We’re Watching

GameStop Corp (NYSE: GME): GameStop shares gained as much as 45.7% yesterday and is up another 4.5% this morning following the company’s announcement that it has entered into a multi-year strategic partnership agreement with Microsoft, further advancing its strategy to expand its physical and digital video game offerings and retail technology infrastructure. “We believe Microsoft’s integrated retail technology platform will enable the continued development of our frictionless omni-channel digital environment, providing customers with an exceptional cross-channel experience for all things video gaming,” said GameStop CFO Jim Bell in a statement. “By standardizing on Microsoft 365 and Dynamics 365, all accessed with Microsoft Surface devices at our fingertips, we will be able to create a better connection with our associates and provide them with powerful new tools to deliver rich engaging experiences to our customers while significantly enhancing our cross-channel view of inventory ensuring the most efficient delivery of products to our customers.”


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