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- 🪛 The Money Is in the Maintenance
🪛 The Money Is in the Maintenance
Plus, healthcare stocks are losing weight.
Happy Sunday to everyone on The Street.
The worst of the pandemic is well behind us, which is good news for almost everyone… except for Moderna.
Moderna’s stock ended this past week down roughly 30%.
The pharmaceutical company reported second-quarter revenue of $241 million, well above the $128 million FactSet consensus estimate. It also reported a $3.33 loss per share, a bit better than the projected $3.35 loss.
The reason for Moderna’s pullback lies in its full-year revenue guidance, which it cut by 25%.
Moderna is suffering from “very low” vaccine sales in Europe and tightening competition in the US. Its CEO, Stéphane Bancel, said that a number of large European nations told his company that they would not be buying COVID-19 doses this year
There are some expectations of new growth potential for Moderna. Last month, fears of a coming bird flu pandemic resulted in the US government providing $176 million in funding to accelerate Moderna’s pandemic influenza vaccine.
And this past week, a team of US researchers found evidence of highly pathogenic H5N1 avian flu infections in two Texas farmworkers — potentially great news for Moderna and terrible news for the rest of us.
Plus, American retirees need to watch this video…
TOGETHER WITH RETIREMENT WATCH
The U.S. government, according to retirement whistleblower Bob Carlson, is coming after your retirement money. It's all because of a crippling new law, The Wall Street Journal reports, "...upends 20 years of retirement planning and sticks it to the middle class." Find out what's at stake for your retirement savings here in Bob Carlson's shocking new video – along with his #1 strategy and what you can still do about it.
Going for Gold
A Luxurious Olympic Partnership
LVMH (LVMUY) is everywhere at the 2024 Olympics in Paris.
The medals, VIP lounges, and even the trunk that held the torch have LVMH’s handprint on them. The partnership cost a pretty penny, reportedly priced at $166 million.
The luxury goods company hopes the Olympic exposure will inspire consumers worldwide to seek its offerings. LVMH brands include Hennessy, Dior, and Tiffany & Co.
Luxury Is for Everyone
Analysts in the luxury sector note that this partnership is part of a broader change in how these companies market themselves.
In the past, brands would link with sports that were catered to the ultra-wealthy. For example, Rolex put its signage all over tennis tournaments.
Now, luxury companies seek to expand their consumer base by teaming up with sports for the masses. Prada recently partnered with the Chinese women’s soccer team, and in 2020, Louis Vuitton entered a sponsorship with the NBA.
Industry analysts have called this the “democratization of luxury.”
Flipping the Script
LVMH’s partnership with the Olympics comes at a challenging time for the business.
Its stock has fallen about 10% this year and over 20% in the last twelve months.
Revenues, profits, and margins have all declined. Analysts largely attribute the lackluster performance to economic headwinds and consumer pullback in China.
Over the coming months, investors will judge the partnership to see if it's worthy of any medals.
How do you see LVMH (LVMUY) stock? |
The Money Is in the Maintenance
Something Doesn’t Add Up
Despite constant issues with their products, jet engine manufacturers are rolling in cash. Analysts and investors are starting to take notice. Several global jet engine builders beat expectations when they reported earnings this week despite their engines causing problems for customers.
Jet engines need more maintenance than ever before. Engines are being built less frequently and old planes are in service for longer. Unfortunately for the rest of the supply chain, this setup is prime for engine manufacturers, and there isn’t much incentive to improve the current system.
A Conflict of Interest
Slow engine production has resulted in sluggish plane production, ultimately dwindling orders for new planes. Planes are also visiting the shop for maintenance more frequently.
Typically, turbofan engines are sold at a loss, and profits are derived from ongoing maintenance and upgrades. This is why some question whether engine manufacturers are driven to improve supply and build better models. Airbus (EADSY) CEO Christian Scherer admitted that it continuously cuts production goals, saying suppliers won’t take them seriously.
Will The Market Find a Way?
The upfront costs to start building engines are massive, and without new programs pressuring suppliers, engine makers can impose their will on the market.
However, the free market always finds a way to even the scales. At some point, someone will find a way to circumvent the supply chain bottleneck.
Are you bullish or bearish on jet engine makers over the next 12 months? |
Healthcare Stocks Are Losing the Weight
Move Over, GLP-1
Healthcare stocks like Bristol Myers Squibb (BMY), which have underperformed this year, are starting to heat up, outperforming obesity stocks like Novo Nordisk (NVO). Analysts believe this is evidence that the healthcare industry is moving past its obesity drug era and smoothly navigating new regulatory red tape.
The Inflation Reduction Act introduced drug-pricing controls and Medicare negotiations for certain therapies, to the disdain of many healthcare companies.
Surviving Regulatory Fears
How much of a pricing discount the government aimed for was unclear, but industry executives are now hinting that it won’t be as detrimental as originally feared. New prices will be announced on September 1, and the companies affected already have their final offers in hand.
With the crucial information available to them, healthcare executives are reporting back to Wall Street with updated growth outlooks, and they’re looking strong. AbbVie (ABBV), one of the companies affected, informed analysts that it’s predicting 3% revenue growth over the next 12 months.
More Bang for Your Buck
BMY is up 15% in the past month, and AbbVie is up almost 9% over the same period. According to analyst Jared Holz, healthcare stocks seem to be turning over a new leaf as investors look for value.
Most healthcare stocks currently trade below the S&P’s 20 times earnings multiple and appear to offer a strong risk versus reward outlook. The healthcare sector might have shed the weight that was holding it back.
Which stock do you think will outperform over the next 12 months? |
TOGETHER WITH RETIREMENT WATCH
The U.S. government, according to retirement whistleblower Bob Carlson, is coming after your retirement money. It's all because of a crippling new law, The Wall Street Journal reports, "...upends 20 years of retirement planning and sticks it to the middle class." Find out what's at stake for your retirement savings here in Bob Carlson's shocking new video – along with his #1 strategy and what you can still do about it.
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