Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify
This is an abridged transcript of the podcast.
Our top story so far in today’s session:
Novo Nordisk (NVO) says the high-dose oral versions of its diabetes medication semaglutide significantly reduced weight and improved blood sugar.
That could make them a more convenient alternative to the therapy’s expensive injections.
Semaglutide is the active ingredient of drugs like Ozempic, which have surged in popularity as effective weight-loss treatments.
According to a late-stage trial of high-dose oral semaglutide in treating adults with type 2 diabetes, 25-miligram and 50-miligram pills showed statistically significant higher weight loss than the 14-miligram pills.
Another late-stage study in overweight or obese people without type 2 diabetes showed that the 50-mg pill led to significantly greater weight loss (about 15% of body weight) compared to placebo.
Novo plans to seek regulatory approval for the high-dose pill later this year, but its commercial launch and pricing are yet to be decided.
BMO Capital’s Evan David Seigerman forecasted that weight-loss pills could make up about 15% of the total market as “some people are just needle-phobic.”
Now, here’s a look at how trading is shaping up. Stock trading is choppy after the market broke a five-week winning streak.
The S&P (SP500) and Dow (DJI) are up slightly. The Nasdaq (COMP.IND) is getting a little of its groove back, up half a percent.
There’s more action in the bond market. Rates are off earlier lows after what looked like a move to safety following the events in Russia over the weekend.
The 2s10s curve is now inverted more than a full percentage point. The 10-year Treasury yield (US10Y) is down 1 basis point to 3.73%, while the 2-year (US2Y) is flat to 4.75%.
Oil (CL1:COM) is higher, but still below $70 per barrel. Bitcoin (BTC-USD) is easing back.
Among stocks to watch, Alphabet’s (GOOG) (GOOGL) shares were under pressure after UBS downgraded the stock, citing “limited upside” and near-term monetization worries. Analyst Lloyd Walmsley lowered his rating to Neutral from Buy, saying it is “difficult” to see upside for Google Sites revenue growth. He’s looking for high-single-digit growth.
Goldman Sachs joins the Tesla (TSLA) downgrade bandwagon. Goldman moved to Neutral from Buy, saying the share price now better reflects a positive long-term view on the automaker’s growth potential and competitive positioning. Analyst Mark Delaney said the primary reason for the change is that the market is now giving the stock more credit for its longer-term opportunities after the recent rally. But he’s also cognizant of the “difficult pricing environment” for new vehicles that it sees as a potential drag on the company’s automotive non-GAAP gross margin.
Lucid Group is up following an agreement to accelerate Aston Martin’s (OTCPK:AMGDF) high-performance EV plan Lucid will get a stake in the company of around 3.7%.
In other news of note –
Television usage continued a seasonal decline in May and it also declined year-over-year. Streaming continued to gain share against other uses that also saw drops in time spent.
Overall TV consumption fell for the fourth-straight month, down 4.4% from April and down 2.7% year-over-year, according to “The Gauge” from Nielsen.
But TV streaming volume rose 2.5% month-over-month and streaming’s share of TV usage rose to a new record 36.4%. A methodology change gave a small extra boost to the Streaming category, but it would have finished at a record high even without the change)
Meanwhile, other categories of usage declined again. Cable’s share of TV viewing fell to 31.1% from 31.5% last month. Broadcast’s share dropped to 22.8% from 23.1%. In absolute terms, cable viewing fell 5.4% and broadcast viewing dropped 5.5%.
Cruise operator Carnival (CCL) reported results, beating on the top and bottom lines. A Q2 Non-GAAP loss of 31 cents per share beat Wall Street estimates by 2 cents. Revenue of $4.9 billion beat by $130 million.
Looking to Q3, Carnival sees adjusted EBITDA of $2.05 billion to $2.15 billion, a significant improvement compared to the second quarter of 2023. Adjusted net income is forecasted to be between $950 million to $1.05 billion with Occupancy of 107% or higher.
In the Wall Street Research Corner –
Microsoft (MSFT), Amazon (AMZN) and Google (GOOG) (GOOGL) could be beneficiaries in increased cloud spending
Wedbush analyst Dan Ives says based on our recent channel checks “enterprise spending is holding up and showing some pockets of upticks on cloud spending.”
That means earnings estimates for the tech sector should move up from current levels into 2024, Ives said.
Of the trio, Ives believes that Microsoft may be best positioned to gain market share in the cloud and potentially expand its total addressable market by 35% to 40% in the coming years. The advancements in AI reflect “an immense monetization opportunity.”
Looking at technology as a whole, Ives said he continues to believe that technology stocks will be up another 12% to 15% in the second-half of 2023, led by software and chip stocks. AI has “changed the tech world” and investors are looking at AI as an “internet moment.”
AI-related spending could account for 8% to 10% of IT budgets in 2024, up from roughly 1% this year, he added.
Read the full article here