Companies in the news ... and how they were assessed
Pfizer: Covid bonanza
“Investors piled into pandemic-battered stocks” last week after Pfizer published trial data about its “game changer” Covid-19 pill, which “slashed” the risk of hospitalisation and death for high-risk patients by 89%, said Hannah Kuchler in the FT. The hope is that the antiviral, Paxlovid, puts the end of the pandemic “in clear view”. “Salivating” investors pushed Pfizer’s own shares 11% higher, said Grady McGregor in Fortune. The announcement came a week after the UK became the first country in the world to approve a Covid-19 antiviral pill, molnupiravir, which was jointly developed by US pharmas Merck and Ridgeback. Doctors say the pills “should be considered as supplements to vaccines rather than alternatives”. Investors aren’t so sure – shares in several vaccine-makers fell on the news. But overall, “the Covid bonanza” is on course to transform the pharma industry, “which has been in the doldrums” for decades, said Matthew Lynn in The Daily Telegraph. The pandemic may be ending but the virus looks like it’s becoming “endemic”, ensuring Covid vaccines and drugs will remain “the industry’s largest products, and by a very large margin”. Pfizer has raised its guidance for full-year sales of its vaccine to $36bn, making it easily the biggest drug of all time. Pharma is the new tech. “If Apple’s power to generate cash is legendary, just wait to see what Covid medicines can deliver.”
Tesla: Twitter vote
Director share sales can be a “minefield”, especially for a founder boss, said Alistair Osborne in The Times. There’s always a risk “the stock can tank”. Hence Elon Musk’s plan to “warm everyone” up with a poll of his 63.1 million Twitter users. Should he sell a tenth of his stake in Tesla, equating to $20bn worth of shares, he asked last weekend. Yes, said 58% of those who replied, so Musk duly went ahead. The world’s richest man “was probably going to have to sell anyway to settle a big tax bill” from a soon-to-be-vesting 2012 stock award. Even so, the stunt backfired badly, said Bloomberg. The Tesla boss lost $50bn in two days as investors took fright – “a record wealth plunge”. Musk has “a history of market-moving online pronouncements”, said The Wall Street Journal. That could now come back to bite. Nailed by regulators for misleading investors in 2018, he “agreed to have his social-media statements reviewed by Tesla lawyers”. Watchdogs will doubtless want to double-check that he followed procedure to the letter this time.
Metro Bank/Carlyle: dog-eat-dog
“Deal fever has finally reached the long-unloved banking sector,” said Alex Lawson in The Mail on Sunday. Shares in the “canine-obsessed” UK challenger bank Metro – renowned for dishing out free dog treats – rocketed 26% last week on news of a possible bid from the US private equity giant Carlyle. A takeover would be an “intriguing turn” for Metro, whose shares were “kyboshed” by an accounting scandal in 2019. The question, though, is what’s in it for Carlyle, said Patrick Jenkins in the FT. In a nutshell, “an interest rate windfall”. Ultra-low rates have driven a boom for investment banks, at the expense of their retail banking cousins. But as central banks tighten, the cycle is turning. Buyout bosses will be “eyeing the consolidation opportunity” of “rolling up” bedraggled lenders. If Carlyle bags Metro, “it could look at the Co-op and TSB too”.