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Today's big stories

Pharmaceutical giant Roche’s stock rose after announcing its first-quarter update
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Delta Air Lines reported a first-quarter loss after grounding almost all of its fleet due to coronavirus

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Slowly But Curely

What’s Going On Here?

Roche, the world’s second-biggest pharmaceutical company, released a first-quarter update on Wednesday that suggested it’s – very gradually – getting the upper hand on coronavirus.

What Does This Mean?

Roche’s sales were 7% higher than the same time last year, and it mostly had its diagnostics business to thank: demand for its COVID-19 testing kits helped bump up the segment’s revenue by almost 30%. And that was without sales from the firm’s new coronavirus antibody test, which will show whether someone’s already beaten the virus. That’ll launch in May, and it’s likely to give this quarter’s earnings another shot in the arm.

Why Should I Care?

For markets: Oh my Roche.
Roche’s update seemed well-received: the Swiss giant’s stock rose 2%. Investors have been buying up pharma companies’ stocks in their droves, apparently in response to the reported progress of various coronavirus treatment programs. And they’ve been showing biotech stocks some love too. That may partly be because of the companies' own successful efforts against the virus, but also because a bigger pharma firm is more likely to acquire them to get early access to effective drugs. Case in point: Pfizer-partnered BioNTech’s stock shot up on Wednesday after it won approval to begin clinical trials of its coronavirus vaccine in Germany.

The bigger picture: Long walk to freedom.
While Roche has gone down the antibody testing route, European rivals Novartis and AstraZeneca are instead looking into how existing drugs can be used to treat coronavirus. Sanofi and GlaxoSmithKline, meanwhile, are focused on developing new vaccines. But don’t get too excited: Roche cautioned on Wednesday that between development, testing, and production, a vaccine’s unlikely before the end of 2021 (tweet this). At that point, investors may want to start thinking about how much the successful companies might actually earn from their treatments – especially given the pressures on typical price structures and the higher costs associated with breakneck production speeds.

Recommended: How to profit from a potential vaccine.

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2/3 Premium

Much Ado About Deflation

What’s Going On Here?

As oil prices sit at historic lows and the US approves another $500 billion rescue package, a once-controversial theory looks set to be put to the test.

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3/3

Flight Of Fancy

What’s Going On Here?

No matter how much Delta Air Lines wants to achieve liftoff, the coronavirus-induced first-quarter loss it reported on Wednesday suggested that it won’t happen any time soon.

What Does This Mean?

Delta was among the US airlines that reached a bailout agreement with the government last week, and it’s been beefing up its bank balance with additional loans of its own. But a glance at the airline’s last quarter shows just how much wreckage the pandemic caused: revenue was down almost one-fifth from the same time last year – even though coronavirus didn’t shut Western economies down until March – and the company’s loss was bigger than expected. That was partly down to the $100 million a day Delta was burning by the end of March – a figure it hopes to halve by the end of this quarter by parking its aircraft and deferring spending plans.

Why Should I Care?

The bigger picture: It’s oil to play for.
Between additional loans, government support, and – in United Airlines’ case – a share sale that raised $1 billion this week, US airlines are well-placed to survive the crisis. They might even find cheaper fuel actually makes their lives easier once they take to the skies. That is, as long as major oil producers haven’t gone broke, having sold their products at loss-making prices or ceased production altogether. It’s so expensive to restart production once it’s stopped, after all, that demand might temporarily outstrip supply later in the year, pushing up oil prices again.

For markets: Hold your horses.
Delta didn’t beat predictions, breaking with what’s fast becoming a tradition among recent earnings updates: around 70% of the companies that have reported so far have topped expectations, even taking into account their coronavirus profit warnings. Still, the airline’s stock price barely moved on Wednesday. Given how quickly companies’ fortunes are turning in this pandemic, professional analysts’ formal estimates might not have matched the investor forecasts that were already reflected in its share price.

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💬 Quote of the day

“I am patient with stupidity, but not with those who are proud of it.”

– Edith Sitwell (a British poet and critic)

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🇷🇺 Russia: Personal Finance in a Crisis – 2pm EET, April 23rd
🇺🇸 USA: Understanding the Impact of COVID-19 – 6pm PDT, April 23rd
🇭🇰 Hong Kong: COVID-Proof Your Portfolio with Stephen Chiu – 9pm HKT, April 28th
🌍 Global: COVID-19’s Impact on Retail & Luxury – 6pm UK time, April 29th
🇺🇸 USA: Your Money During a Pandemic – 6pm EST, April 30th

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Finimize - 💪 Roche takes on coronavirus

📉 Why do some investors think US stocks will fall another 40%?

Today's big stories

Slowly But Curely

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Much Ado About Deflation

👜 Stay-at-home style inspiration

Flight Of Fancy

What’s Going On Here?

What Does This Mean?

Why Should I Care?

💎 Live a life of luxury

💪 Fix up, look sharp

Older messages

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