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beats Street

Ford beats Wall Street earnings expectations after coronavirus shuttered factories – CNBC

Visitor walk past a Ford Escape Titanium at the Shanghai Auto Show in Shanghai on April 17, 2019.

Greg Baker| AFP | Getty Images

Ford Motor performed far better than Wall Street expected during the second quarter, even beating its own expectations as the coronavirus caused rolling shutdowns of its plants across the globe.

The company was profitable, reported less operational losses than expected and has already started repaying against credit lines it drew down earlier this year to manage through the coronavirus pandemic.

Here’s how Ford performed versus what Wall Street expected, based on average analysts’ estimates compiled by Refinitive.

  • Adjusted EPS: A loss of 35 cents per share versus a loss of $1.17 per share expected.
  • Automotive revenue: $16.6 billion versus $15.95 billion expected.

Shares of Ford jumped more than 4% in post-market trading after releasing its earnings Thursday evening. The stock closed at $6.74, down 2.6%.

Ford reported an adjusted pretax loss of $1.9 billion – more than $3 billion better than expected. 

Ford CFO Tim Stone warned investors in April that the company expected to lose more than $5 billion, on an adjusted pretax basis, during the second quarter as the pandemic shuttered factories and severely hampered auto sales.

Quicker recovery

A faster-than-expected recovery in sales, including favorable pricing and better mix, as well as “operational execution” contributed to the company’s second-quarter performance, Stone told reporters Thursday.

Ford expects an adjusted pretax profit of between $500 million and $1.5 billion in the third quarter as long as economic conditions remain favorable without production disruptions, Stone said.

The company managed to report a net profit of $1.1 billion during the second quarter, including a $3.5 billion gain on a previous investment in autonomous vehicle startup Argo AI.

An Argo-modified Ford autonomous vehicle parked in Manhattan on Friday, July 12, 2019.

Paul Eisenstein | CNBC

Cash burn

Ford burned through $5.3 billion during the second quarter, up from $2.2 billion during the first quarter — numbers that are being closely tracked by Wall Street. The automaker said it ended the second quarter with automotive liquidity of $39.8 billion.

Investors are also watching for any guidance on when Ford might pay down its debt and for updates to an $11 billion restructuring plan led by Ford CEO and President Jim Hackett.

“They’ve got a ton of cash. They’re certainly not going to run out of money this year,” Morningstar analyst David Whiston told CNBC ahead of Ford’s earnings release. “Ford’s problem, as they’ve said in their own words, they’re not physically fit.”

General Motors, which reported its second-quarter earnings Wednesday, said it lost $536 million on an adjusted basis, which was better than Wall Street expected.  On an unadjusted basis, the company lost $806 million and it burned through $7.8 billion in cash during the quarter.

Both Ford and GM roughly doubled their automotive debt to $30 billion during the first quarter to help bolster their balance sheets and get through the Covid crisis.

GM said Wednesday it expects to repay a $16 billion revolving credit line it drew down in March by the end of the year.

Ford said Thursday it has already repaid $7.7 billion against revolving credit lines, and also extended $4.8 billion of its three-year revolving credit lines. 

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shifts Street

Wall Street shifts bets to big pharma as COVID-19 vaccine race progresses – Yahoo Finance

FILE PHOTO: A logo for Pfizer is displayed on a monitor on the floor at the NYSE in New York

By Carl O’Donnell and Sujata Rao

(Reuters) – Wall Street is moving some bets on COVID-19 vaccines to large pharmaceutical companies with robust manufacturing capabilities, signaling that a love affair with small biotech firms might be ending after the sector’s best quarter in almost 20 years.

Early signs of the shift came Wednesday, when positive data for one of Pfizer Inc’s COVID-19 vaccine candidates sent shares of the large U.S. drugmaker up more than 3%. Shares of its partner on the vaccine, Germany’s BioNTech SE, have been flat on the data.

Although the news had little effect on shares of Pfizer’s large rivals in the vaccine race, smaller peers Moderna Inc and Inovio Pharmaceuticals Inc, both of which have previously shown promising COVID-19 data of their own, ended down more than 4% and 25%, respectively. Inovio partially rebounded Thursday.

For the week so far, shares of bigger players in the vaccine race, such as Johnson & Johnson and Merck , have also outperformed Inovio and Moderna.

Some of the selling was likely driven by end-of-quarter profit-taking, locking in dizzying gains in an otherwise turbulent market. Moderna and Inovio shares have risen nearly 200 percent and 540 percent in the year-to-date, respectively, greatly eclipsing gains for large pharmaceutical companies.

Analysts say investors are changing their strategy to focus on companies that can make, as well as discover, a vaccine and that the risk reward profile for some biotechs is less favorable after their stunning gains so far this year.

“I would certainly say success by Pfizer, AstraZeneca, or Johnson & Johnson could make it more challenging for smaller companies, given size and scale and manufacturing capability,” said Vamil Divan, a biotechnology analyst at Mizuho.

Smaller biotechnology companies with promising COVID-19 vaccines pose a special challenge for investors, said Justin Onuekwusi, a portfolio manager at Legal & General Group Plc.

Because of their limited manufacturing capabilities, investors in those stocks are effectively betting that the company or its drug will be bought by larger companies, he said.

“In smaller cap stocks like biotech, it all tends to be quite binary so fundamental or detailed analysis don’t always work,” Onuekwusi said.

Medical manufacturers have never faced a challenge like that of producing a global COVID-19 vaccine.

Companies including Pfizer and Johnson & Johnson have said they each aim to produce as many as 1 billion doses by the end of 2021.

There are more than 17 vaccine candidates being tested on humans in a frantic global race to end a pandemic that has infected 10 million people and killed more than half a million. Drugmakers have released early stage human trial data for five vaccine candidates so far.

Bernstein Research analyst Vincent Chen said COVID-19 vaccines could generate in excess of $10 billion in annual revenue, but many investors are struggling to determine their value.

“In

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futures Street

Dow futures fall as Wall Street weighs states’ reopenings, China-U.S. tensions – MarketWatch

Market Snapshot

‘We have to get it back open safely but as quickly as possible,’ says Trump at a town hall meeting hosted by Fox News

President Donald Trump speaks during a Fox News virtual town hall from the Lincoln Memorial on Sunday.


AP

U.S. stock-index futures fell sharply in thin trading Sunday evening as investors contended with states’ reopenings amid signs of brewing conflict between China and the U.S. over Beijing’s handling of the coronavirus outbreak, which was first identified in Wuhan.

How are benchmarks performing?

Futures for the Dow Jones Industrial Average
YMM20,
-1.00%

were headed 228 points, or 1%, lower at 23,391, those for the S&P 500 index
ESM20,
-0.89%

were off 26.70 points, or 1%, at 2,795, while Nasdaq-100 futures
NQM20,
-0.75%

retreated 87 points, or 1%, at 8,631.

NQ00,
-0.75%

The major benchmarks booked losses for the week after a sharp decline on Friday, with the Dow
DJIA,
-2.55%

and S&P 500
SPX,
-2.80%

losing 0.2% and the Nasdaq Composite Index
COMP,
-3.20%

ending the week 0.3% lower.

What’s driving the market?

An attempt to restart the economies of dozens of U.S. states hasn’t come without problems, amid warmer weather that has lured larger gatherings of people out onto the streets in the midst of the worst viral outbreak in more than a century.

Some 51 summonses were issued by New York police, the Wall Street Journal reported, with the majority for social-distancing violations, in the state where there have been some 70,000 hospitalizations from COVID-19, the highest number of any state.

President Donald Trump, fielding questions from a virtual town-hall meeting Sunday night aired by Fox News, suggested that the need is strong to reopen the country’s businesses, which have been shuttered due to measures in place to slow down the spread of the deadly disease.

“We have to get it back open safely but as quickly as possible,” Trump said.

Trump’s comments come as the economy has gone into contraction, with data for the first quarter showing that a 4.8% decline in the annual rate of growth, while more than 30 million people, and counting, have filed for unemployment benefits since the end of February.

Against that backdrop, markets have managed to mostly rebound on hopes of success with experimental treatments for the deadly disease, including Gilead Sciences’
GILD,
-4.82%

remdesivir, and signs of a stabilization of new cases.

However, the main equity benchmarks snapped a streak of two straight weeks of gains on Friday, as markets digested the recent moves and as the U.S. continued to place blame on China for its handling of the pandemic.

On Sunday, U.S. Secretary of State Mike Pompeo, in an interview on ABC’s “This Week, ”said he has seen “enormous evidence” that the virus originated in a laboratory in Wuhan, China.

Trump during his Sunday night Fox appearance said: “I think they made a horrible mistake and they didn’t want to admit it.”

Meanwhile, investors may also focus on remarks made by Warren Buffett on Saturday, during Berkshire Hathaway’s
BRK.B,
-2.50%

annual shareholder meeting, which was via webcast. The venerated, 89-year-old investor adopted a reassuring posture, but also noted that the virus created a lot of uncertainty in financial markets. “We’ve faced tougher problems, and the American miracle, the American magic, has always prevailed, and it will do so again,” Buffett declared.

The billionaire investor, however, acknowledged that he dumped his holdings of airlines, including Delta Air Lines Inc.
DAL,
-6.90%
,
American Airlines Group Inc.
AAL,
-11.40%
,
United Airlines Holdings Inc.
UAL,
-10.00%

and Southwest Airlines Co.
LUV,
-6.46%
.

Which stocks are in focus?

Shares of Delta, American Airlines, Southwest and United Airlines will be in focus on Monday, as well as airline-focused exchange-traded fund U.S. Global Jets ETF
JETS,
-7.24%
.

Boeing Co.
BA,
-5.42%
,
the aeronautics and defense contractor, also may be in focus after Buffett on Saturday referred to the company as “hard to evaluate.”

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