Author Archives: Scalper1

Novo Nordisk Pops As Diabetes Drug Cuts Heart Disease Deaths

Shares of diabetes giant Novo Nordisk ( NVO ) jumped Friday after the company said its drug Victoza reduced heart attacks and strokes. Novo released few details about the results of the study, which it’s saving for the next American Diabetes Association meeting in June. However, it did say that there was a statistically significant reduction in all three of its metrics — heart attack, stroke and death from all cardiovascular causes — among the 9,000 patients taking the diabetes drug over five years, compared to the placebo group. The subjects were all over age 50 and either had cardiovascular disease or multiple risk factors. Novo Nordisk’s stock was up about 8% in afternoon trading on the stock market today , near 57. It’s the highest-rated stock in the low-rated Medical-Ethical Drugs group, with a Composite Rating of 82. The effect of diabetes drugs on cardiovascular health has been the subject of several studies lately, notably from Eli Lilly ( LLY ), whose drug Jardiance reduced deaths from heart failure by 32% in a similar large, long-term study reported last September. On the other hand, Merck ‘s ( MRK ) Januvia showed no effect either good or bad in its outcomes trial reported a few months earlier. A similarly neutral result was reported for an outcomes trial of the Sanofi ( SNY ) drug Elixa, which is noteworthy because Elixa is in the same class as Victoza. Both are glucagon-like peptide-1 (GLP-1) analogs, similar to Bydureon from AstraZeneca ( AZN ) and Lilly’s Trulicity, while Jardiance is an sglt2 inhibitor, in the same class as Invokana from Johnson & Johnson ( JNJ ) and Farxiga from AstraZeneca. Merck’s Januvia belongs to another class, called DPP-4 inhibitors. On a conference call with analysts Friday, Novo’s Chief Scientific Officer Mads Thomsen said that the different results may have come from subtle differences between the drugs, which he thinks extend to Victoza’s planned successor, semaglutide. “It’s not only the question of being a member of the given class of GLP-1 agonist,” said Thomsen. “It’s also a part of the kinetics, dynamics, distribution, half-life, and so on. And as we got semaglutide, we have done rather detailed investigations. . . . There is nothing from the animal pharmacology to negate the notion that semaglutide should do at least as well on cardiovascular performance.”

The Growing Disconnect Between Fundamentals And Headlines

By Francis Gannon While small-caps remain in a bear market and the world tries to gauge the condition of the global economy, we continue to focus on what we know and believe that fundamentals look better than the dire headlines suggest. Volatility in the equity markets, as measured by the Volatility Index (VIX), has subsided recently, yet the daily fitfulness of macro news remains on the upswing as the world searches for new clues in the seemingly endless debate over the condition of global economies. With the Russell 2000 Index making a fresh low in the middle of February, small-caps remain in a bear market . In fact, about 75% of Russell 2000 stocks are off more than 20% from their 52-week highs, with the median stock down 35%. So far in 2016, nine out of the small-cap index’s 10 sectors are in negative territory, with only Utilities showing a slight gain. To be sure, sentiment remains markedly negative, and investors are positioned for the worst. On the other hand, many fourth-quarter earnings reports have shown that fundamentals look better than the dire headlines suggest. This has created an environment in which expectations for stocks are low, valuations look attractive (at least to us), and corporate cash levels continue to build. Indeed, one wonders when the disconnect will resolve itself between fatalistic sentiment and headlines on the one hand and respectable-to-strong fundamentals on the other. For our part, we continue to focus on what we know and not worry about what we cannot control. In general, we have been pleased with the relative showings for a number of economically sensitive small-cap sectors. Within the Russell 2000, the Industrials sector is outperforming the index as a whole year-to-date through 2/19/16. Its down-market strength has been driven by several cyclical industries such as machinery, road and rail (in positive territory year-to-date), and transportation infrastructure. So while many investors continue to focus on economic volatility, seizing on every piece of macroeconomic or political news to gain a sense of the overall health of the global economy, we remain focused on individual companies . An old Wall Street adage says it well: “Psychology may run the market in the short term, but earnings run the market in the longer term.” Stay tuned… Disclosure: None.

Is Facebook Ready To Unleash A Multi-Billion-Dollar Opportunity?

Speculation is rising that Facebook ( FB ) will open its Messenger chat service to content publishers and advertising, creating a big multi-billion-dollar revenue opportunity and posing a growing threat to Alphabet ( GOOGL ). It’s a battle of stock market champions — both companies get a top IBD rank. Additions to the Messenger instant messaging platform are expected to be unveiled when Facebook holds its annual F8 developer’s conference April 12-14. Richard Windsor, an analyst at Edison Investment Research, said in emailed comments that Facebook’s top new announcement will be the opening of its messaging platform to allow publishers to distribute their content on Messenger. That could enable publishers to engage in direct conversation with users of Messenger and open the door for advertising sales pitches or product upgrades. “We suspect that Facebook will actually go much further and open up the platform entirely to developers to allow other functions within the messaging platform,” Windsor wrote. He expects Facebook will use its messaging platform to creating thriving multiplayer gaming environments, which would accelerate its move to add both media consumption and gaming to its digital content services. The goal would be to entice uses to do more with Facebook than just social networking and instant messaging. “This is the key to changing from being just an app into a fully-fledged ecosystem where users spend an increasing amount of their digital lives,” he wrote. The result is that Facebook would have a greater opportunity to monetize its 1.5 billion users and the 800 million users on Messenger. Facebook still has a very long way to go, but once this is complete, Windsor estimates Facebook will have the capacity to generate over $40 billion in revenue, compared to the $18 billion it generated in 2015. He also said Facebook’s apparent direction is why it’s emerging as Alphabet’s No.1 competitor, “as a large piece of this new opportunity that it hopes to generate is likely to come from Google.” Facebook has already expanded Messenger’s utility to include allowing users to send money to others, though Facebook currently does not charge a fee for the service. It’s also testing a feature that allows people to book an Uber ride through Messenger. More transportation services will be coming to the platform soon, including airlines, Facebook said. Nomura analyst Anthony DiClemente said in a research note Thursday that an advertising network which Facebook announced two years ago is gaining on a similar platform from Alphabet. The ad platform, called Facebook Audience Network (FAN), uses Facebook data to help advertisers place ads across multiple websites, beyond Facebook. FAN is in direct competition with AdSense and AdMob from Alphabet. DiClemente estimates FAN will add $2 billion to Facebook revenue in 2016, more than double that of 2015. The emerging growth drivers of FAN and Messenger will complement the strong revenue growth Facebook is getting from Instagram and video ads, he wrote. DiClemente raised his price target on Facebook to 135 from 125. Facebook stock fell 1.1% in the stock market today to 108.39. It hit an all-time intraday high of 117.59 on Feb. 2. The company gets a best-possible Composite Rating of 99 from IBD. So does Alphabet, which slipped 0.2% Friday to 730.22. Alphabet hit an all-time high of 810.35, also on Feb. 2. Image provided by Shutterstock .