Thursday, April 23, 2020

Biogen Shares Plummet 9% Despite Q1 Beat

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What’s happening: Shares of Biogen plunged more than 9% on Wednesday, despite the drug maker exceeding expectations for the first quarter.

What happened: The Cambridge, Massachusetts-based company reported stronger-than-expected results at a time when most companies are struggling for survival.

Biogen’s revenue grew 1% to $3.53 billion in the quarter, exceeding the consensus estimate of $3.41 billion. The company earnings climbed to $9.14 per share in the quarter, versus $6.98 per share reported in the same quarter last year, easily surpassing expectations of $7.73 per share.

However, investors shrugged off news of the results and focused on the recent update on the company’s controversial Alzheimer's drug, sending the stock lower yesterday.

Why it matters: While releasing its quarterly results, Biogen announced plans to delay the submission of its Alzheimer's drug, aducanumab, to the US Food and Drug Administration. The biotech company, which had been planning to submit the drug for approval in early 2020, is now gearing up for an FDA filing by the end of the third quarter.

Biogen is developing the Alzheimer's drug in partnership with Eisai Co. Shares of Biogen had jumped more than 25% on the day in October when the company indicated that aducanumab-related talks with the FDA were good enough to file for an approval. Since then, however, the company has been silent and not issued any update on the progress of the drug.

The company reported a rise in its drug sales in the first quarter, with people stocking up on prescriptions amid stay-at-home orders. Biogen’s sales of spinal muscular atrophy drug Spinraza grew 9% to $565 million during the quarter.

How the shares responded: Shares of Biogen declined 9.4% during regular trading hours on Wednesday, only to move lower gain, by 0.2% in after-hours trading. The company’s stock so far has been immune to the recent decline in markets and has gained 3.5% in the past three months. The drug maker’s stock is up 7% in the past month.

What to watch: Investors are hopeful of Biogen continuing with its clinical trials even during the pandemic. Markets will also look for any news related to the company’s supply chain and the impact of COVID-19 on this.

The Markets Today

     

US stocks will be in focus today, as investors await the release of various economic reports.

Context: US stocks closed higher on Wednesday, after declining for two consecutive days. Investor sentiment was lifted by stability in crude prices and some strong earnings reports.

Details: After declining more than 1,000 points over the first two trading days of the week, the Dow delivered a rebound yesterday. Battered oil prices found a floor and then began recovering, with US crude oil spiking more than 19% on Wednesday.

A slew of companies also traded higher on solid quarterly results, which added to the positive market sentiment. According to Refinitiv data, around 67% of 84 companies from the S&P 500 reported upbeat earnings.

The Dow spiked 457 points to settle at 23,475.82 on Wednesday, while the S&P 500 rose 2.3% to 2,799. The Nasdaq 100 surged 2.7%, to close at 8,495.38.

Netflix reported better-than-expected quarterly results, while Kimberly-Clark also exceeded earnings and sales expectations for the first quarter. Chipotle Mexican Grill’s shares surged 12% on better-than-expected profit, while Snap’s shares skyrocketed around 37%.

In other news, June futures for gold rose 3% to settle at $1,738.30 an ounce, while the 10-year Treasury note yield rose 4.7 basis points to 0.618%.

What to watch: Investors continue to monitor the daily coronavirus figures, with the total number of cases surpassing 2,630,770 around the world. The number of positive COVID-19 cases in the US has exceeded 842,620 with around 46,780 deaths.

Investors are awaiting a basket of economic reports from the country, including initial jobless claims, new home sales, Kansas City Fed's manufacturing production index, manufacturing and services PMI. The number of people claiming for jobless benefits is expected to total 4.2 million in the recent week. The IHS Markit manufacturing PMI is expected to drop to 38 in April, versus a revised reading of 48.5. Services PMI is also projected to decline to 31.5, from the previous 39.8. Sales of new homes, which fell 4.4% in February, are likely to decline 15% in March.

Other Markets: European indices were trading lower at 9:00a.m. GMT, with the FTSE 100, German 30 and French 40 down by 0.4%, 0.4% and 0.1%, respectively.

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News shaping
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What else to watch today

     

Mexico’s retail sales, Russia’s producer prices and GDP, Argentina’s consumer confidence and retail sales as well as the US natural gas stocks change.