Plus, the U.S. set another record daily average of new coronavirus cases, Merck and 3M delivered earnings beats, Las Vegas Sands is considering a sale of its U.S. properties, and Tiffany and LVMH are in indirect discussions about a possible settlement.
Stocks were mixed to start Tuesday with the Dow dropping 100 points, or 0.4%. The S&P 500 slid 0.2%, while the Nasdaq rose 0.2%.
The U.S. set another record average daily new COVID-19 cases on Monday or 69,967, topping the prior all-time high set on Sunday. The seven-day average of daily cases represents a roughly 20% increase compared with a week ago, and 36 states have reported a concerning increase in the number of hospitalizations due to the virus. “This is a harbinger of a very tough winter that’s coming,” said Dr. Bill Schaffner, an epidemiologist at Vanderbilt University. “I think hospitals are going to be very, very stressed this fall and winter.” In other coronavirus news, U.S. government officials put an early end to a study testing Eli Lilly’s antibody drug for people hospitalized with COVID-19 because it hasn’t shown a positive impact. “These are patients who had symptoms many, many days ago. They advanced in the hospital. Many were on supplemental oxygen,” said Lilly Chairman and CEO Dave Ricks. “It’s disappointing, of course. We would have liked to have shown a benefit in the hospital. It doesn’t appear that that benefit is there, so this chapter of that study will close.” In a statement, Lilly said that the government is continuing on with a separate study testing the antibody drug in mild to moderately ill patients in an effort to prevent hospitalization and sever illness.
Advanced Micro Devices said it has reached an agreement to acquire semiconductor maker Xilinx for $35 billion. The all-stock deal is expected to close at the end of 2021 and could be transformative for AMD, giving it more resources and new business lines to better compete with Intel, especially with chips designed for data centers and other cloud computing applications. “Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world,” said AMD CEO Lisa Su. Separately, AMD delivered an earnings beat, posting third-quarter earnings per share of $0.41 on revenue of $2.80 billion, compared to analysts’ estimates for earnings per share of $0.36 on revenue of $2.57 billion. “Our business accelerated in the third quarter as strong demand for our PC, gaming, and data center products drove record quarterly revenue,” Su said.
In other earnings news, Merck delivered an earnings beat and raised its adjusted earnings forecast for the full year. Merck said it earned $2.94 billion, or $1.16 per share, in the quarter, up from $0.74 per share the year prior. For the full year, the drug maker said it expects adjusted profit of between $5.91 and $6.01 per share, compared with its prior forecast of between $5.63 to $5.78 per share. 3M also delivered better than expected results amid strong personal safety and health equipment sales. The company reported earnings of $2.43 per share on revenue of $8.35 billion, versus estimates for earnings per share of $2.26 on revenue of $8.32 billion. “Our third-quarter performance demonstrated once again the strength of the 3M model as we executed well, served customers and continued to fight the pandemic,” CEO Mike Roman said in a statement. “Though economic uncertainty and challenges due to the COVID-19 pandemic remain, we returned to positive organic sales growth with sequential improvement across businesses and geographies.” But it wasn’t all good news on the earnings front. Industrial machinery manufacturer Caterpillar reported a 54% drop in earnings in the third quarter as equipment sales declined across all regions and segments.
Las Vegas Sands shares are down more than 1% this morning following reports that it is mulling the sale of its flagship casinos in Las Vegas for around $6 billion, with the move likely to mark the exit of the group’s chairman from the U.S. gambling industry for now. The properties included in the potential sale are the Sands Expo Convention Center, the Venetian Resort Las Vegas, and the Palazzo, concentrating the company’s portfolio of casinos in Macau and Singapore. Bloomberg reported that the world’s largest casino company is working with an adviser to solicit interest for the U.S. properties. “The growing insignificance of the U.S. market explains to you why Las Vegas Sands is looking to offload their U.S. properties,” said Ben Lee, a Macau-based managing partner at IGamiX. “It is 15% of revenue but 80% of regulatory pain and burden.”
And Tiffany shares are up nearly 5% today on news that it is in talks with Louis Vuitton-owner LVMH on potentially settling their ongoing dispute over the $16 billion takeover deal. The companies are said to be looking to possibly lowering the price of the deal, or potentially move to a tender offer. CNBC’s David Faber said the two companies are in “indirect conversations” about the possible settlement, and there’s a possibility of the price paid by LVMH for control of Tiffany being “slightly” reduced. The global coronavirus pandemic has threatened to derail the $16 billion, with both sides launching lawsuits against the other. LVMH has argued that Tiffany has botched its response to COVID-19, thus creating a material adverse effect that will allow it to invalidate the agreement, while Tiffany has countered that its sales are improving and that the deal should proceed as planned.
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Mirati Therapeutics (NASDAQ: MRTX): Mirati shares are up 13.5% over the last two days after biotech announced on Sunday the preliminary results from its mutant KRAS selective inhibitor program examining adagrasib (MRTX849)—its KRAS G12C inhibitor—as well as initial preclinical in vivo data of MRTX1133, its selective and potent potential first-in-class KRAS G12D inhibitor. “The adagrasib preliminary data presented today showed deep and durable anti-tumor activity in non-small cell lung cancer (NSCLC), colorectal cancer (CRC) and other solid tumors, providing renewed hope for patients that harbor a KRAS G12C mutation. A 45% confirmed objective response rate for adagrasib as a monotherapy in advanced NSCLC is compelling. While this data is still maturing, adagrasib also demonstrated clinically meaningful duration of treatment for NSCLC patients in the Phase 1/1b cohort,” said Charles M. Baum, M.D., Ph.D., President and Chief Executive Officer of Mirati. “Enrollment is complete in the Phase 2 cohort of adagrasib as a monotherapy treatment for patients in 2nd / 3rd line NSCLC and we anticipate submitting a New Drug Application for accelerated approval in the second half of 2021. Adagrasib has been well tolerated as a monotherapy and in combination with pembrolizumab, cetuximab and TNO-155, a SHP-2 inhibitor. We are initiating additional registration-enabling global clinical studies of adagrasib as both a monotherapy and in combinations as we expand the program to earlier lines of therapy in NSCLC and CRC.”