May The Pfourth Be With You
Great Ones, I don’t know if we officially have a winner in the COVID-19 vaccine race, but we certainly have a new front-runner: Pfizer (NYSE: PFE).
I know. I didn’t see it coming either. Apparently, Pfizer makes more than just Viagra. Who knew?
OK, I knew. But I didn’t want to spoil it for you. Pfizer is “Big Pharma,” after all.
There are two critical points you need to know about Pfizer today — if you didn’t know them already.
First: Pfizer reported blowout first-quarter results this morning. I mean, Pfizer killed it. Earnings spiked 47% to $0.94 per share as revenue jumped 45% to $14.58 billion.
Now, I know y’all are used to seeing big year-over-year gains from tech startups and new IPOs, but remember this: Pfizer is a 172-year-old blue-chip company. It doesn’t post gains like that typically.
Naturally, the biggest line item in Pfizer’s quarterly report was its COVID-19 vaccine. In fact, vaccine revenue more than tripled from $1.61 billion to $4.89 billion. And we’re just at the start of Pfizer’s COVID-19 vaccine revenue run.
Speaking of which, Pfizer also lifted its 2021 guidance above Wall Street’s expectations. Helping to drive those gains, once again, is Pfizer’s COVID-19 vaccine. The company now expects revenue of $26 billion from its COVID vaccine this year.
Second: Pfizer’s COVID-19 vaccine just completed clinical trials in children aged 12 to 15. The U.S. Food and Drug Administration (FDA) is expected to approve the vaccine for this age group next week, making Pfizer the first to offer a vaccine for kids.
I cannot stress how big a deal this is — for both kids and Pfizer’s bottom line. Can you cheer a major corporation and feel good about helping kids at the same time? It feels weird, man.
Anyway, news of next week’s approval comes from the infamous “federal officials speaking on the condition of anonymity,” so you know it’s serious. Furthermore, these ephemeral “people familiar with the process” expect the FDA to approve Pfizer’s vaccine for even younger kids this fall.
Such a development would put Pfizer ahead of Moderna (Nasdaq: MRNA), which just began testing its vaccine in children under 12 in March.
So, let’s wrap this up. Pfizer posts very impressive quarterly results, driven by soaring COVID-19 vaccine demand. The company boosts its outlook, in part banking on FDA approval of its vaccine for children. So far, so good for Pfizer.
However, there is one thing that could pfinally pfut Pfizer over the top. According to researchers, COVID-19 herd immunity may be unattainable in the foreseeable future. What that means is that COVID-19 could become a persistent virus just like influenza, which would need to be vaccinated against on a yearly basis.
In other words, Pfizer’s COVID-19 vaccine revenue could be around for quite a while. And if another solid revenue stream doesn’t make your interest in PFE rise from the dead like Viagra, I don’t know what would … except for “Imperium,” that is.
According to experts, “Imperium” is set to go from virtually unknown to having 2 billion users in the next four years, launching a stock market “gravy train” almost nobody sees coming, with one small Silicon Valley company at the center of it all.
The Good: Never Tell Me The Odds
Remember earlier this year when drugstores like CVS Health (NYSE: CVS) warned that sales might be down?
It wasn’t just pandemic lockdowns keeping retail consumers at bay. It was also one of the mildest flu seasons on record, which undercut drug sales.
Whaddaya know? Seems like wearing masks actually works.
(And, yes … I know that triggered more than a few of you out there, and you’re going to write in to GreatStuffToday@BanyanHill.com to let me know about it.)
But, all that panic was for naught. CVS had a banger first quarter despite not selling as much Flonase or green-death NyQuil.
Big “N.” Little “Y.” Big freaking “Q.” The Q is talking to me! — Denis Leery.
CVS earnings beat the consensus estimate by a whopping $0.31 per share. Revenue edged 3.5% higher to $69.10 billion, also topping Wall Street’s expectations. The drugstore giant even lifted its 2021 forecast above analysts’ expectations.
I know what you’re thinking: “Beat-and-raise quarter? Get ready for a drop!” But CVS isn’t doing the 2020-two-step. The stock actually rallied nearly 4% on the news. Interesting…
I have a theory on this if you want to hear it? (Like you have a choice…) Both CVS and PFE rallied following beat-and-raise quarterly reports. Both are also widely considered value stocks.
In other words, neither CVS nor PFE went on crazy speculative rallies during the pandemic like so many more popular investments last year. Therefore, neither stock needed a massive correction, nor did they spark sell-on-the-news profit-taking.
This is how investing has historically worked. And if, Odin forbid, we enter an economic recession, both PFE and CVS wouldn’t be bad picks to help you preserve cash and weather the storm.
The only caveat here would be the U.S. government’s adoption of “Medicare for All” … and we all know that ain’t happening anytime soon.
The Bad: What A Piece O’ Junk!
Early in the pandemic, car rental agencies sold off much of their fleets to drum up cash and hunker down. It seemed like a reasonable enough move when travel ground to a halt.
Presumably, many of those agencies thought it’d be no big whoop to scoop up a new fleet once the pandemic ebbed. But nay nay.
Now, as millions are freshly vaccinated folks are itching to stretch their legs out on the open road, it’s like Seinfeld-esque bedlam.
Many agencies in major vacation spots just plumb ran out of cars, raising rental rates as high as $500 a day to compensate. Oops.
Turns out, that same chip shortage that’s affecting automakers from rolling out new cars … also makes it rather difficult for operators like Avis Budget (Nasdaq: CAR) to buy new cars and restock rental fleets. Or at least, that’s what Avis said in its stinker of a report.
Avis’s revenue and earnings kept on dwindling last quarter, but it’s OK — analysts didn’t expect all that much from Avis anyway. Its losses still beat expectations somehow. But now that we’re in the weird lull between spring break and summer vacay, there’s not much more time to build up supply before demand further explodes.
The Street treated CAR shares as brash and rough as most of us treat Avis’s cars, sending the stock down about 5%. Car shortages … chip shortages … believe it or not, Avis isn’t the only one cursing shortages today.
The Ugly: These Are The Droids You’re Looking For
For a brief moment, Great Stuff Picks investors in iRobot (Nasdaq: IRBT) rejoiced … and then were suddenly silenced.
The OG vacuum robot maker reported a near double-beat-and-raise quarter before the stock swiftly sank 13%.
On paper, iRobot couldn’t have had a better quarter. Revenue’s up 58% year over year, reaching $303.3 million and besting estimates for $264.1 million. Per-share earnings hit $0.41 and quadrupled analysts’ expectations.
And better still, the company raised its previous revenue expectations for the year!
So, what could possibly be ugly today about iRobot?
It’s treason, then!
No, Palpatine … I’ll give you two guesses. And if your two guesses were “short-term inflation” and “that dang chip shortage again” … you’re right! While iRobot raised revenue guidance, its earnings outlook remains unchanged. What this means: More sales (yay!) but higher costs (not yay!) as the worldwide chip slowdown claims yet another victim.
I’ve talked about the combo of short-term inflation and chip shortages before. Both of these fears shall pass, but you wouldn’t know that going by Wall Street’s overreactions with IRBT. Remember, the chip shortage is totally not a surprise anymore. For anyone.
If you’re already in IRBT, rest assured that the Roomba purveyor is going nowhere. It probably already accounted for the headwinds Wall Street didn’t account for. And if you’re not in IRBT yet, today’s drop to $90 is a mighty fine entry point.
Where do y’all want to begin today?
Should we start with Apple’s play-the-victim game? That it wheeled out on Day 1 of its court battle against Epic Games over the App Store’s monopolistic might?
Or shall we ponder what “choice” Apple possibly thinks it gives its walled-garden customers?
How about we first clarify: Epic Games does not want Apple to become Android. Nobody does. Literally nobody wants Apple to be Android.
What Epic Games does want, however, is for Apple to relax its stranglehold over other payment options on the App Store.
Turns out, it’s rather difficult for a gamemaker to capture a mass audience when half of said audience can’t install anything that Daddy Apple won’t allow on its App Store.
Contrary to what Apple is pushing in its court defense, there are no barbarians at the gates of Apple’s walled garden … only businesses that are tired of their iOS users being forced to pay money to Apple for the same products.
This is Apple’s tried-and-true M.O. in action:
- Reframe what the fight’s actually about.
- Play up the victim angle (more tears, the better).
- Try to avoid any antitrust actions.
- ???
- Profit!
If anyone’s the victim here, it’s iOS users who are forced to jailbreak their phones — and possibly brick them — just to access non-Apple app stores. Or literally anything outside of Apple’s sacred ecosystem.
And the fact that Apple’s resorted to crying: “Don’t make me be like Android, pwease!” just shows how far the company has fallen down the user-unfriendly rabbit hole. Don’t believe me?
Think of ‘90s-era Microsoft (Nasdaq: MSFT) for comparison. Back then, all ol’ Softy got dinged for was making Internet Explorer a default browser. Now imagine if the only way you could buy any software to run on Windows was to buy it from Microsoft, who took a 30% cut off the top for the privilege of using its store!
PC users would have taken to the streets crying: “Gimme Netscape, or gimme … something else!”
Apple has taken this … and elevated it to App Store level, as evidenced by Epic not being able to promote alternative ways to pay for its products.
And Apple shouldn’t make its users feel like criminals for wanting to pay a game company directly and not line Apple’s pockets.
Apple knows that the whole world’s a-watchin’ it squirm under the monopoly-hunting limelight, and the only way out is to convince everyone it’s still the good guy. That Apple’s on the consumer’s side … giving you access to every available option, even if it doesn’t end up in Apple’s piggy bank.
Good luck with that one, Apple.
Anyway, jeez, this week has started on a ranty start! Here, you take over the soapbox for a sec and tell me: What’s on your mind?
Is Apple bold or boneheaded with its usual Android rhetoric? Do you have strong opinions on the vaccine rollout and Pfizer’s vax-for-kids trials? What am I saying? Of course you do!
Drop us a line right here, right now. Rant and rave away to GreatStuffToday@BanyanHill.com.
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Until next time, stay Great!
Joseph Hargett
Editor, Great Stuff
