Plus, the chances for stimulus being passed ahead of the election are looking evermore slim, Dunkin’ Brands shares are up on takeover reports, and Hasbro shares are down after the toy maker reported third quarter earnings.
Stocks fell sharply to start Monday with the Dow dropping 424 points, or more than 1%. The S&P 500 slid 1.1%, while the Nasdaq traded 0.5% lower.
The average of new daily coronavirus cases in the U.S. surged to a new record, with the seven day average hitting 68,767 – 22% higher than the seven-day average a week ago. “We are likely to see a very dense epidemic,” said former FDA Commissioner Dr. Scott Gottlieb this morning. “I think we are right now at the cusp of what is going to be exponential spread in parts of the country.” More than 20 states reported record-high numbers of average daily new cases over the weekend, with cases rising by 5% or more in 40 states. “We have one more cycle to get through with this,” Gottlieb added. “I know people are exhausted. It’s been very hard on families and on individuals, on businesses especially, but we really have two or three months of the acute phase of this pandemic to get through. This is going to be the hardest phase probably.” With cases rising sharply, White House chief of staff Mark Meadows said Sunday, “We’re not going to control the pandemic. We are going to control the fact that we get vaccines, therapeutics and other mitigations.”
Speaking of vaccines, AstraZeneca shares are up nearly 2% at the time of writing following the pharmaceutical giant saying today that its COVID-19 vaccine candidate produced a similar immune response in older and younger results. “It is encouraging to see immunogenicity responses were similar between older and younger adults and that reactogenicity was lower in older adults, where the COVID-19 disease severity is higher,” an AstraZeneca spokesperson said. “The results further build the body of evidence for the safety and immunogenicity of AZD1222.” As vaccine hopes rise, White House coronavirus advisor Dr. Anthony Fauci said Sunday, “We will know whether a vaccine is safe and effective by the end of November, the beginning of December. The question is: Once you have a safe and effective vaccine, or more than one, how can you get it to the people who need it as quickly as possible?” Fauci said a vaccine that has been deemed safe and effective would be rolled out according to a set prioritization, with individuals such as health care workers and those in higher risk categories would be likely to receive the firs doses, with it being “several months into 2021” before a vaccine is widely available.
Any lingering hopes of a stimulus deal happening prior to the election have been all-but dashed after a lack of breakthroughs in negotiations over the weekend. House Speaker Nancy Pelosi said she’s waiting for another counteroffer from Treasury Secretary Steven Mnuchin as she and White House chief of staff Meadows accuse each other of “moving the goalposts” in negotiations. Senate Republicans remain an obstacle to getting any deal passed, with Meadows saying the administration can’t confirm if whether 13 Republican senators—the minimum necessary tog et a bill to the Senate floor—would support a deal when one is reached. “Obviously we’ve identified those Senate Republicans most likely to vote for it,” Meadows said. “I do have a commitment from Leader McConnell that if we have an agreement, he’s willing to bring it to the floor and get it passed.”
Dunkin’ Brands shares are up more than 15% this morning following the company’s confirmation of takeover talks with Inspire Brands, the privately held owner of Arby’s and Jimmy John’s. The New York Times said in a report that the deal is valued at $8.8 billion, or $106.50 per share. “If this Dunkin deal comes to fruition, it would mark Inspire’s largest, and one of the biggest deals in restaurant history,” wrote Michael Dick, managing director at Mizuho Securities. Credit Suisse analyst Lauren Silberman, who has an Outperform rating on Dunkin’, said that at the rumored price of $106.50 per share, the acquisition would be the biggest since Restaurant Brands International’s takeover of Tim Horton’s in 2014, and represents “the highest takeout multiple we have seen on reported deals int he sector in at least the last decade.”
And Hasbro shares are down more than 9% today after it reported third quarter earnings results. Hasbro reported it earned $220 million, or $1.61 per share, in the quarter, compared to $1.67 per share earned in the same quarter last year. Adjusted EPS came in at $1.88 on revenue of $1.78 billion, beating analysts expectations for EPS of $1.63 on revenue of $1.74 billion. Despite the earnings beat, shares have taken a beating this morning as investors continue to be skeptical about the company’s outlook amid the pandemic. The toy maker said that revenue at its Entertainment One division—which oversees movie, television, and music production—fell 32% in the third quarter, while its entertainment, licensing, and digital business revenues fell 23% in the quarter. Hasbro noted in its earnings release that “demand for stories and content as well as viewership remain high,” but that “live-action productions and theaters globally were shut down for most of the quarter,” and are “gradually reopening, depending on geography.”
Stocks We’re Watching
Boston Beer Company (NYSE: SAM): Boston Beer shares jumped nearly 19% on Friday after the maker of Samuel Adams and Truly hard seltzer reported third-quarter earnings and updated guidance. The company reported posted earnings per share of $6.51—beating estimates for earnings per share of $4.63—on revenue of $492.8 million, representing a year-over-year increase of 30%. The strength of its hard seltzer brand Truly this year was one reason for the earnings beat, with Boston Beer co-founder and chairman Jim Koch telling CNBC, “Truly is the only one of the leading seltzer’s to actually gain share this year, partly I think because of very successful innovation. We launched the first hard seltzer lemonade, which has a lot of flavor. It kind of amped up the flavor game, so we’ve actually been growing share, even as dozens of competitors have been pilling in.”