Companies in the news ... and how they were assessed
AstraZeneca: churlish reaction
“Bored already. That’s stock markets for you,” said Alistair Osborne in The Times.
“If AstraZeneca and Oxford Uni had been first out of the lab with their vaccine data, the reaction would have been euphoric.” But they were pipped by Pfizer/BioNTech and Moderna – and “who gets a snazzy prize for third?” The market reaction to Astra’s breakthrough was so “churlish” that the share price actually slipped 3.8% to £80, wiping around £4bn off the value of the UK pharma. But “whatever the debate about an efficacy rate of 70%” (Astra’s two rivals scored 90% plus), we should ignore the markets and celebrate this jab – not least because “Britain has usefully pre-ordered 100 million doses”. It looks like investors are “quibbling” over the early stats, agreed Nils Pratley in The Guardian. In most vaccine trials, 70% efficacy is a “good score”, and the 90% it scored in one dosage study is excellent. The Astra/Oxford vaccine “also has the significant advantage of being easier to distribute and manufacture”. True, the company “has pledged to distribute the vaccine at cost during the course of the pandemic” – and “it’s a little vague who decides when that’s over”. But the long-term market could be worth up to £25bn if an annual Covid jab becomes the norm. All in, this is a “highly encouraging” development. “Investors have to react somehow, but the strong response looks odd.”
Co-op Bank/Cerberus: hound of hell?
City regulators are under “mounting pressure” to block a takeover of the Co-op Bank by the “aggressive” US private equity firm Cerberus for a knock-down £200m, said Lucy White in the Daily Mail. It isn’t just Little Englandism. Campaigners say that Cerberus – which has “snapped up billions of pounds of UK loans in cut-price deals” – has bad form. Many borrowers are “stuck paying sky-high interest rates of up to 10%” and, in some cases, “threatened with sudden eviction”, according to the UK Mortgage Prisoners campaign. A three-headed “hound of hell” doesn’t look the ideal owner of an “ethically led” bank, said Patrick Jenkins in the FT. “The Co-op was woke before the woke woke up”, but that didn’t stop losses widening to £152m last year. Moreover, “a knee-jerk resistance to private equity would be short-sighted”. Buyout groups have helped transform the payments industry. Maybe Cerberus, which also owns stakes in Deutsche Bank and Commerzbank, could stage a similar coup in banking. Finally, consider the current owners. Following its near-collapse in 2013, the Co-op fell under the control of its bondholders – many of them US hedge funds. “Swapping the short-term interests of hedge funds for the long-term backing of a private equity buyer has got to be a good trade.”
Cineworld: disaster movie
“The management of Cineworld deserve an Oscar for the way they’ve continued to churn out the cliffhangers,” said Ben Marlow in The Daily Telegraph. The company has gained a $750m lifeline by refinancing. But it may be only a temporary reprieve. Covid has been a double whammy. When cinemas weren’t closed between lockdowns, there was a dearth of new releases – ensuring that the “spectacular rise of Netflix” and other streamers threatened to become an “extinction-level event” for movie theatres. “With cinemas facing an uncertain future even in a post-Covid world, and Cineworld sitting on more than £6bn of debt”, we can expect “further nail-biters in this dramatic saga”.