Plus, Target and Kohl’s both delivered earnings beats, Taco Bell-owner Yum Brands bought an A.I. business to help it improve its marketing, and Instacart’s valuation has doubled.
Stocks traded around the flatline at the open on Tuesday with the Dow falling less than 1 point lower, or less than 0.1%. The S&P 500 added 0.05%, while the Nasdaq rose 0.08%.
Merck will help make Johnson & Johnson’s one-shot COVID-19 vaccine. The unusual deal between rivals was brokered by the White House and will be announced later today by President Joe Biden. Merck will dedicate two facilities in the U.S. to J&J’s vaccine as part of the arrangement, with one facility making the vaccine itself and the other providing “fill-finish” services, the last stage of the production process where the vaccine is placed in vials. While Merck scrapped its plans to develop its own COVID-19 vaccine back in January after a clinical trial showed that its shots were ineffective, the pharmaceutical giant said it “remains steadfast in our commitment to contribute to the global response to the pandemic and to preparing to address future pandemics.”
Target shares are down more than 4% this morning even after delivering an earnings beat. The big box retailer reported fiscal fourth quarter earnings per share of $2.67 on revenue of $28.34 billion, compared to estimates for earnings of $2.54 per share on revenue of $27.48 billion. “Following years of investment to build a durable, scalable and sustainable business model, we saw record growth in 2020, as our guests turned to Target to safely provide for their families throughout the pandemic,” Brian Cornell, chairman and CEO of Target, said in an earnings release. “With the strength of our unique, multi-category assortment and the flexibility we offer through our reliable and convenient fulfillment options, we gained nearly $9 billion in market share in 2020, and grew our revenue by $15 billion, which is more than the 11 prior years combined. As we look ahead to 2021 and beyond, we see continued opportunity to invest in our business and our team, building on the strong foundation we’ve established to drive market share gains and deliver profitable growth for years to come.”
In other earnings news, Kohl’s shares are up more than 1.5% this morning after it posted better-than-expected fourth quarter results. The department store retailer reported adjusted earnings per share of $2.22 on revenue of $5.88 billion, versus earnings of $1.10 per share on revenue of $5.86 billion expected. “After an extraordinary year managing through the pandemic, we ended the year in a very soldi financial position, and we enter 2021 with strong momentum,” said CEO Michelle Gass in a statement. The retailer said it added at least 2 million new customers last year thanks to its partnership with Amazon. “While the details of the partnership are confidential, we will continue to see that this is accretive to both sales and profit,” Gass said. “The company is clearly on a trajectory to recovery,” said Neil Saunders, Manning director of GlobalData. “It is also performing far better than most other department stores, which is both a function of the location of its shops and the effort it has put into developing its offer.”
Yum! Brands announced this morning that it has bought a Kvantum business unit that uses artificial intelligence for consumer insights and marketing performance analytics. The Taco Bell owner is expected to use the acquisition to optimize its marketing spending. “Technology strategies that elevate the customer and employee experience and lead to smart, data-driven marketing decisions are critical to keeping our brands R.E.D. (relevant, easy to access and distinctive) and delivering growth for our franchisees and shareholders,” Yum! Brands CEO David Gibbs said in a statement. “We’re excited about the opportunity this acquisition presents, and the potential to scale Kvantum’s proven technologies across our system to strengthen our data and advanced analytics capabilities and elevate our world-class marketing competencies globally.”
And Instacart’s value has doubled to $39 billion after a new round of funding added $265 million to the grocery delivery company’s pockets. Since the start of the pandemic, this is the second time Instacart’s valuation has doubled, and the company is now the second largest U.S.-based unicorn behind Elon Musk’s SpaceX which is worth $74 billion. “Today’s fundraising reflects the strength of Instacart’s business, the growth our teams have delivered and the incredible opportunity ahead,” said Nick Giovanni, Chief Financial Officer for Instacart. “This past year ushered in a new normal, changing the way people shop for groceries and goods. While grocery is the world’s largest retail category with annual spend of $1.3 trillion in North America alone, it’s still in the early stages of its digital transformation. As online grocery penetration increases over the coming years, we’ll continue to invest in our people, products and partners to support all of the communities we serve.”
Stocks We’re Watching
Jounce Therapeutics Inc (NASDAQ: JNCE): Jounce Therapeutics shares have gained 17% over the last week following the announcement of the clinical-stage biotech’s fiscal fourth quarter results. “2020 proved to be a year of important pipeline execution and corporate development at Jounce despite the challenges presented by the COVID-19 pandemic. As we enter 2021, we are strongly positioned to execute on our two proof of concept studies, INNATE and SELECT, and continue to advance our sustainable discovery pipeline. Our potential first-in-class programs and biomarker approaches are aimed at bringing meaningful clinical benefit to the growing population of PD-(L)1 inhibitor naïve and experienced patients,” said Richard Murray, Ph.D., chief executive officer and president of Jounce Therapeutics. “The need for novel approaches targeting different immune cells in the tumor microenvironment highlights the importance of our translational science platform and our productive discovery engine. This approach has allowed us to generate multiple targets beyond T-cells, most notably our highest priority program, JTX-8064, targeting LILRB2, also known as ILT4. As we enter 2021, Jounce is poised to further our goal of bringing the right immunotherapies to the right patients.”