Walgreens is planning to close around 1,200 locations, as the drugstore chain and its rivals struggle to define their role for U.S. shoppers who no longer look to them first for convenience.
Drugstores that once snapped up prime retail space in towns and cities across the country are in retreat. They’ve been battered by shrinking prescription reimbursement, persistent theft, rising costs and consumers who have strayed to online retailers or competitors with better prices.
The boost they received from taking the lead on vaccinations during the COVID-19 pandemic has long since faded.
Walgreens’ announcement Tuesday morning comes as rival CVS Health wraps up a three-year plan to close 900 stores and Rite Aid emerges from bankruptcy, whittled down to about 1,300 locations.
Drugstore leaders and analysts who follow the industry say smaller versions of these chains have a future in U.S. retail, but they’re still trying to understand how that will play out.
“They’ve really got to rethink how they do business and, most importantly, what they mean and what value they bring to the customer,” said Neil Saunders, managing director of consulting and data analysis firm GlobalData.
Walgreens Boots Alliance Inc., which runs about 8,500 stores in the U.S., said in late June that it was finalizing a turnaround plan in the U.S. that might lead to hundreds of store closings.
The company said Tuesday that it will start by closing about 500 stores in its current fiscal year, which started last month.
Walgreens didn’t say where the store closings would take place. It will prioritize poor-performing stores where the property is owned by the company, or where leases are expiring.
CEO Tim Wentworth told analysts Tuesday that the majority of its stores, or about 6,000, are profitable and provide the company with a foundation to build on.
“This solid base supports our conviction in a retail pharmacy led model that is relevant to our consumers, and we intend to invest in these stores over the next several years,” said Wentworth, who became CEO nearly a year ago.
Wentworth said the remaining Walgreens stores will help the company respond more quickly to shifting consumer behavior and buying patterns. The company also is taking another look at what it sells in its stores and planning to offer more Walgreens-branded products.
Walgreens also is experimenting with some smaller stores that would be less expensive to operate.
Drugstores also have been pushing to offer more care, with pharmacists diagnosing and treating the flu, strep throat and COVID-19 in many states. Pharmacists say they can play a key role in keeping their customers healthy since they often see people more frequently than family doctors.
Pharmacists can help patients monitor their blood pressure, manage diabetes and quit smoking, among other things.
CVS also is squeezing primary care clinics with doctors into some of its stores. But Walgreens is backing away from a similar push.
The Deerfield, Illinois, company said in August that it was reviewing its U.S. health care operation, and it might sell all or part of its VillageMD clinic business. That announcement came less than two years after the company said it would spend billions to expand it.
Saunders, the analyst, said Walgreens has neglected its stores in recent years as it built its business through acquisitions. He said the appearance of the chain’s locations has suffered, and a lack of staffing hurts customer service.
He noted that store visits are slumping, and the company has lost market share.
“And that has unraveled some of the economics of these stores,” he said.
Saunders said drugstores “have really shot themselves in the foot” because they no longer have a clear way to differentiate themselves from other retailers.
“When you want to get the big bucks from consumers, you have to be a destination for something,” he said. “And unfortunately, drugstores have increasingly become destinations for nothing.”
Thinner benefits and coverage changes await many older Americans shopping for health insurance this fall. That’s if their plan is even still available in 2025.
More than a million people will probably have to find new coverage as major insurers cut costs and pull back from markets for Medicare Advantage plans, the privately run version of the federal government’s coverage program mostly for people ages 65 and older.
Industry experts also predict some price increases for Medicare prescription drug plans as required coverage improvements kick in.
“This could be bad news for Vice President Harris. If that premium is going up, that’s a very obvious sign that you’re paying more,” said Massey Whorley, an analyst for health care consulting company Avalere. “That has significant implications for how they’re viewing the performance of the current administration.”
Insurance agents say the distraction of the election adds another complication to an already challenging annual enrollment window that starts next month.
Insurers are pulling back from Medicare Advantage
Medicare Advantage plans will cover more than 35 million people next year, or around half of all people enrolled in Medicare, according to the federal government. Insurance agents say they expect more people than usual will have to find new coverage for 2025 because their insurer has either ended a plan or left their market.
The health insurer Humana expects more than half a million customers — about 10% of its total — to be affected as it pulls Medicare Advantage plans from places around the country. Many customers will be able to transfer to other Humana plans, but company leaders still anticipate losing a few hundred thousand customers.
CVS Health’s Aetna projects a similar loss, and other big insurers have said they are leaving several states.
Insurers say rising costs and care use, along with reimbursement cuts from the government, are forcing them to pull back.
Some people can expect a tough search
When insurers leave Medicare Advantage markets, they tend to stop selling plans that have lower quality ratings and those with a higher proportion of Black buyers, said Dr. Amal Trivedi, a Brown University public health researcher.
He noted that market exits can be particularly hard on people with several doctors and on patients with cognitive trouble like dementia.
Most markets will still have dozens of plan choices. But finding a new option involves understanding out-of-pocket costs for each choice, plus figuring out how physicians and regular prescriptions are covered.
“People don’t like change when it comes to health insurance because you don’t know what’s on the other side of the fence,” said Tricia Neuman, a Medicare expert at KFF, a nonprofit that researches health care.
Plans that don’t leave markets may raise deductibles and trim perks like cards used to pay for utilities or food.
Those proved popular in recent years as inflation rose, said Danielle Roberts, co-founder of the Fort Worth, Texas, insurance agency Boomer Benefits.
“It’s really difficult for a person on a fixed income to choose a health plan for the right reasons … when $900 on a flex card in free groceries sounds pretty good,” she said.
Don’t “sleep” on picking a Medicare plan
Prices also could rise for some so-called standalone Part D prescription drug plans, which people pair with traditional Medicare coverage. KFF says that population includes more than 13 million people.
The Centers for Medicare and Medicaid Services said Friday that premiums for these plans will decrease about 4% on average to $40 next year.
But brokers and agents say premiums can vary widely, and they still expect some increases. They also expect fewer plan choices and changes to formularies, or lists of covered drugs. Roberts said she has already seen premium hikes of $30 or more from some plans for next year.
Any price shift will hit a customer base known to switch plans for premium changes as small as $1, said Fran Soistman, CEO of the online insurance marketplace eHealth.
The changes come as a congressional-approved coverage overhaul takes hold. Most notably, out-of-pocket drug costs will be capped at $2,000 for those on Medicare, an effort championed by Democrats and President Joe Biden in 2022.
In the long run, these changes will lead to a “much richer benefit,” Whorley said.
KFF’s Neuman noted that the cap on drug costs will be especially helpful to cancer patients and others with expensive prescriptions. She estimates about 1.5 million people will benefit.
To ward off big premium spikes because of the changes, the Biden administration will pull billions of dollars from the Medicare trust fund to pay insurers to keep premium prices down, a move some Republicans have criticized. Insurers will not be allowed to raise premium prices beyond $35 next year.
People will be able to sign up for 2025 coverage between Oct. 15 and Dec. 7. Experts say all the potential changes make it important for shoppers to study closely any new choices or coverage they expect to renew.
“This is not a year to sleep on it, just re-enroll in the status quo,” said Whorley, the health care analyst.
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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group. The AP is solely responsible for all content.
CNBC’s Jim Cramer on Friday told investors what to watch for on Wall Street next week, highlighting JPMorgan‘s market-moving health-care conference in San Francisco. Taking place from Monday to Thursday, the conference is one of the year’s largest gatherings of major industry CEOs where they reveal earnings guidance and updates on clinical trial research.
“The new year has started with a redistribution of cash out of the ‘Magnificent Seven’ and on to the sidelines,” Cramer said, pointing to health-care stocks as a particularly notable group that will likely be “propelled by what people expect to hear from the JPMorgan Healthcare Conference.”
Cramer will interview several CEOs at the conference, starting with Walgreens CEO Tim Wentworth on Monday. Cramer said he’s interested to hear how the company plans to get its groove back after cutting its dividend nearly in half this week. Cramer will also speak with leadership from Amgen and Medtronic, as well as the new CEO of Bristol Myers, Chris Boerner, whom he’ll ask about the company’s rigorous biotech acquisition plans.
On Tuesday and Wednesday, Cramer will continue to interview the CEOs of major industry names, including Eli Lilly CEO David Ricks. Cramer said he’s particularly interested in the company’s diabetes and weight loss drug as well as its Alzheimer’s initiative. He’ll also speak with CVS Health CEO Karen S. Lynch to discuss the company’s ongoing transition from drug store to health-care provider. Cramer will also hear from the CEOs of Pfizer, Regeneron, Novartis, Abbott Labs and Cencora.
Thursday brings the consumer price index for December. Cramer said he thinks those hoping for soft figures will be disappointed. Cramer will also be tuning into CES, the Consumer Electronics Show, next week. The tech event will include commentary by leadership from Nvidia and Dell.
Earnings season kicks off Friday with reports from major banks including JPMorgan, Bank of America and Wells Fargo. BlackRock will also report, and Cramer said he thinks the company’s earnings could give investors a solid overview of the financial industry. He’ll also be paying attention to Friday reports from UnitedHealth Group and Delta.
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Eli Lilly.
Brandywine Global portfolio manager Patrick Kaser said his firm is positioning itself for a recession next year and eyeing defensive equities as a result. “We’re in the camp that a recession is much more likely than not,” Kaser told CNBC. “And so we’re really emphasizing … less economically sensitive sectors with attractive valuations.” The December CNBC Fed Survey showed respondents growing more optimistic about the probability of a “soft landing” in the U.S. economy in 2024. They also expect the central bank will begin cutting benchmark interest rates by the middle of next year. In a bid to tame inflation, the Federal Reserve has held its overnight borrowing rate at its highest level in more than 22 years. “We expect, based on history, some stress in the market over the next six months at some point, and we’ll be viewing that as an opportunity to redeploy out of these defensive areas,” he said. Kaser highlighted sectors that his firm remains overweight rated on including health care, consumer staples, utilities and telecommunications. Stocks have shown steady momentum as Wall Street nears the end of 2023, with all three major indexes riding an eight-week winning streak into the year’s final trading sessions. “Based on history, some stress in the market over the next six months, at some point, and, we’ll be viewing that as an opportunity to redeploy out of these defensive areas,” he said. However, Kaser expects 2024 to bring a market realignment to the forefront, which necessitates a defensive approach. Here’s a look at the portfolio manager’s top stock picks for 2024 to play an expected economic slowdown. In health care, Kaser highlighted CVS Health as a stock trading at a discount due to low expectations from investors, which makes it attractive. CVS YTD mountain CVS stock has fallen 15% from the start of the year. “[CVS is] still really trading at roughly nine times earnings [with] really low expectations, [and] people are skeptical of their ability to execute. So not only do you not have the economic sensitivity, but also it’s really kind of an execution within their control story,” he said. The company recently announced plans to redesign its prescription drug pricing model to change how its pharmacies are reimbursed beginning in 2025. Shares of CVS have fallen more than 15% since the start of 2023. Also on Brandywine’s list is supermarket chain Kroger , which Kaser says can benefit from the potential finalization of its merger with peer Albertsons . Although Kroger is the largest dedicated grocery chain in the U.S., its business combined with that of Albertsons’ would still rank behind the size of Walmart’s heft. Still, some U.S. lawmakers have objected to the merger, which comes at a time when consumers have seen huge food inflation at the checkout aisle. Kaser said Kroger can announce a large stock buyback if the Albertsons deal falls apart, and similarly boost its stock. Kroger shares have gained only 1.5% in 2023. KR YTD mountain Kroger stock has added nearly 2% from the start of the year. “So [there’s] not a lot being priced into the valuation,” Kaser said. “People seem to have more fear, but there’s really a win-win outcome in terms of the stock.” Aerospace company AerCap also ranks among Kaser’s picks as it’s expected to benefit from tight aircraft demand and higher lease rates. AerCap CEO Aengus Kelly recently echoed a similar outlook for the industry on CNBC earlier this month. AER YTD mountain AerCap stock has rise nearly 28% from the start of 2023. “AerCap is a really cheap stock with favorable industry dynamics for probably several years to come,” Kaser added. AerCap shares have seen bigger gains heading into the year-end, with a 27% increase in its stock year to date. On the spectrum of companies that have more exposure to macroeconomic conditions, Kaser pointed to General Motors as a stock that has already priced in the expectation of a recession and can benefit from the resolution of the United Auto Workers strike and a strong forecast for next year. “[GM] has a really positive backdrop,” he said. “I think people are skeptical about autos heading into an economic slowdown, but we think [GM] is already pricing that in.” UBS is also bullish on GM and named the legacy automaker stock a top idea for 2024. GM shares are up less than 8% year to date. GM YTD mountain General Motors stock has gained 8% in 2023. Kaser also lauded payment processing company Global Payments given its low valuation compared with its peers. He expects the company could emerge as more of a defensive play next year. GPN YTD mountain Global Payments stock has risen 27% year to date. Global Payments stock hit a 52-week high earlier this month and is up 27% for the year. “We think Global Payments [has] much more of a moat around its business than people seem to be fearing,” Kaser said.
The snack aisle is seen during a tour of a new Amazon Go store in the Capitol Hill neighborhood of Seattle, Washington, U.S., on Monday, Feb. 24, 2020.
Chona Kasinger | Bloomberg | Getty Images
For more than a century, frosted cornflakes have been the backbone of Kellogg’s business. That changes Monday, when the company will spin off its stable cereal business in favor of its faster-growing snack unit and rename itself Kellanova.
The spinoff comes weeks after another wager that consumers will graze between meals, when J.M. Smuckerbought Twinkie maker Hostess Brands for $5.6 billion in a bid to expand its snack lineup.
But food companies’ majorbets on snacking come as investors fear the looming danger of Big Pharma’s blockbuster obesity and diabetes drugs Wegovy and Ozempic. Many investors have high hopes for the pharmaceuticals’ future, but their success could mean slower sales for the companies that produce Oreos, Doritos and Hershey’s Kisses.
Big Food’s bet on snacking began roughly a decade ago, and it’s only accelerated as the rest of the grocery aisles see sales stagnate, particularly as prices rise. The U.S. market for savory snacks is expected to grow 6% annually from 2022 through 2027, and sweet snacks’ sales are expected to rise 4.6%annually during that time, according to HSBC. Roughly three-quarters of consumers plan to snack every day, according to Accenture data.
Millennials and Generation Z consumers are fueling the trend. Younger generations snack more often than older consumers, said Kelsey Olsen, food and drink analyst for market research firm Mintel. Millennials and Gen-Z consumers tend to eat smaller meals that are closer together, creating more occasions to grab a snack.
At the same time, Novo Nordisk’s Ozempic and Wegovy have taken off, fueled by prescriptions to help patients lose weight. The drugs, known as GLP-1 agonists, suppress appetites by mimicking a gut hormone. Some patients even report developing aversions to foods with higher sugar and fat content — a category that includes many big snack brands.
More than 9 million prescriptions for these kinds of drugs were written in the U.S. in the fourth quarter of 2022, according to a Trilliant Health report.
Morgan Stanley estimates that the number of patients taking GLP-1 drugs could reach 24 million, or nearly 7% of the U.S. population, by 2035.
If so, consumption of baked goods and salty snacks could fall 3% — or even more if the new eating habits of the people using the treatments extend to their broader households and friends, according to Morgan Stanley’s research. That puts companies like Hershey, Mondelez, PepsiCo, General Mills and Kellogg’s successor Kellanova at risk.
But not everyone in the industry agrees with that assessment.
Boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes and made by Novo Nordisk, is seen at a Rock Canyon Pharmacy in Provo, Utah, May 29, 2023.
George Frey | Reuters
After buying Hostess Brands, Smucker CEO Mark Smucker defended the future of Twinkies and Ding Dongs against the threat of GLP-1 drugs.
“There are multiple ways that consumers will continue to snack. … And given that consumers are going to continue to seek all different types of snacks, and sweet snacks are going to continue to be on the radar, we view that our projections here are sound,” he told analysts on a conference call.
For one, GLP-1 drugs like Wegovy and Ozempic are expensive, with a list price of roughly $1,000 a month. That high price has led some insurers to decide not to cover the treatments.
While some of the nation’s largest insurers, like CVS’s Aetna, cover prescriptions of these drugs, the federal Medicare program, many state Medicaid programs and some commercial insurers don’t, leaving patients to pick up the bills themselves.
Another factor could work in the favor of snack sales.Many of the consumers who eat the most junk food likely won’t be able to afford Wegovy or Ozempic.
“Consumption of indulgent salty snacks that would be considered ‘junk food’ generally over-indexes toward lower-income individuals, who are unlikely to be these drugs’ primary users, ” RBC analyst Nik Modi said in a research note Tuesday.
Modi wrote that he doesn’t believe the drugs will ultimately be problematic for the manufacturers of salty snacks.
What’s more, patients have to inject themselves once a week, and if they stop taking the treatments, their effects disappear, usually erasing any weight loss that had occurred over time.
“This sort of drug is super interesting in what it can do, but I think until it comes in a radically different formulation, in a pill or something like that, and something that has enduring impact and obviously the much lower price point, I think it’s going to be tricky,” said Oliver Wright, senior managing director of Accenture’s consumer goods and services unit.
Even if the drugs become more affordable and are more widely adopted, the change won’t happen overnight. Food companies will have time to adjust to shifting consumer behavior.
“We acknowledge that the impact in the near term is likely to be limited given drug adoption will grow gradually over time, but we could see a longer-term impact as drug prevalence increases,” Morgan Stanley’s Paula Kaufman wrote in a note to clients. “Moreover, we expect companies to adapt to changes in consumer behavior through innovation and portfolio reshaping efforts.”
That may mean slower sales growth than expected and moves to divest some brands. But Big Food has been making strides toward healthier options anyway. GLP-1 drugs could just put more pressure on companies to update their portfolios.
PepsiCo and Mondelez are among the companies that have snapped up smaller brands that make healthier snacks. Still, growing them into global powerhouses will take time.
Food companies are also looking internally, investing in their research and development teams to create new formulations that mirror the taste of their full-sugar and salt versions.
“My prediction is, before the end of the decade, we will have a healthy Oreo that can be put on a plate with an old one, and consumers won’t be able to tell them apart — and that will be a good thing,” Accenture’s Wright said.
A nurse prepares doses of the Pfizer vaccine during a COVID-19 vaccination event at Josephine’s Southern Cooking in Chatham, Illinois, Dec. 30, 2021.
Brian Cassella | Tribune News Service | Getty Images
A new round of Covid vaccines is finally here in the U.S.
The Centers for Disease Control and Prevention cleared single-strain shots from Pfizer and Moderna on Tuesday, following approvals from the Food and Drug Administration on Monday. Those mRNA vaccines are designed to target a relatively new omicron subvariant called XBB.1.5.
The first doses of the new shots will be available at some pharmacies and other vaccine distribution locations within 48 hours of the CDC’s recommendation, agency staff said Tuesday during a meeting of independent advisors to the CDC. That means jabs could reach Americans as soon as Thursday.
Meanwhile, the FDA is still reviewing a third updated vaccine from Novavax for people ages 12 and up.
The debut of the new shots comes after Covid hospitalizations increased for the seventh straight week in the U.S., hitting 17,418 as of the week ending Aug. 26, according to the latest data from the CDC. That number remains below the surge the nation saw in the summer of 2022.
But the recent uptick is raising concerns about how much traction Covid will gain inthe coming fall and winter months, when respiratory viruses typically spread at higher levels and people spend more time indoors.
Public health officials and health experts hope the arrival of new vaccines will help the U.S. avoid another severe Covid wave and “tripledemic” of Covid, the flu and respiratory syncytial virus, which inundated hospitals last winter. The Biden administration said last month that it will encourage eligible Americans to receive an updated Covid vaccine alongside an annual flu shot and an RSV jab approved for older adults or mothers.
Roughly 42% of Americans surveyed by the CDC in August said they “definitely will” or “probably will” get a Covid vaccine this fall, Dr. Megan Wallace, a CDC epidemiologist, said during the advisory meeting.
Here’s everything you need to know about the updated Covid vaccines, from where to find them, whether you can get them for free and when to get them.
The CDC on Tuesday recommended that all Americans ages six months and older get the new shots. The agency’s website outlines more specific guidelines for staying up to date on Covid vaccines, which differ depending on age group and risk level.
The CDC said that everyone ages 6 and older should get at least one dose of an updated mRNA vaccine this year, regardless of whether they’ve received any of the original Covid shots.
People ages 65 years and older may get an additional dose of an new Covid vaccine four or more months after their first new shot.
Children 6 months through 5 years of age who are getting their vaccines for the first time should complete their primary series with two doses of an updated Moderna shot or three doses of a new Pfizer jab, according to the CDC. If children previously received prior vaccines, the CDC has different recommendations for how many updated doses to get.
People who are moderately or severely immunocompromised should get one or more doses of a new shot, depending on their vaccination history. Those patients are at higher risk of getting severely sick from Covid, according to the CDC.
A sign advertises COVID-19 (coronavirus) vaccine shots at a Walgreens Pharmacy in Somerville, Massachusetts, August 14, 2023.
Brian Snyder | Reuters
The updated shots will soon be available to eligible people at pharmacies, health clinics and community centers, among other vaccine distribution sites. Those locations will stop offering last year’s bivalent boosters, which are no longer authorized for use in the U.S.
Several retail pharmacy chains told CNBC that they will start offering appointments for the new shots shortly after the CDC recommendation:
Walgreens will allow people to schedule appointments for the new shots within 24 hours after the CDC recommendation, “with available appointments starting that week,” a company spokesperson said. People can schedule those appointments through the Walgreens website orapp, or by calling 1-800-WALGREENS. The company will add more appointments on a rolling basis.
CVS Pharmacy locations will start receiving supply of the updated vaccines “later this week,” a company spokesperson said. Pharmacies will receive more doses on a rolling basis and appointments will be available to schedule on the CVS website and CVS Pharmacy app.
Albertsons expects its 1,700 pharmacies to begin administering the updated shots “as early as Friday,” a spokesperson said. The company’s pharmacies span stores like Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Amigos and Market Street. People can view and schedule appointments on the Albertsons website or app.
Kroger will allow people to walk in or schedule appointments to get the new Covid vaccine at the company’s pharmacies or clinics.
Americans will soon be able to use the federal website vaccines.gov to find other locations offering the updated Covid shots, according to a CDC spokesperson. The agency is still “unsure of the exact timing” for when the site will be updated to include a search filter for the new vaccines, the spokesperson added.
Later this week, uninsured and underinsured people will also be able to use the site to find locations offering the new vaccines for free through the Bridge Access Program. Around 85% of uninsured Americans live within five miles of a location participating in that program, according to the CDC’s Twentyman.
There are slight changes to how Covid vaccines are covered in the U.S this year. But the federal government aims to ensure all people can still receive them for free.
The U.S. Covid public health emergency ended in May, which means the federal government is shifting vaccine distribution to the private market this fall.
Manufacturers will sell their updated shots directly to health-care providers at more than $120 per dose. Previously, the government purchased vaccines directly from manufacturers at a discount to distribute to all Americans for free.
All three vaccine manufacturers shared the list prices of their new vaccines during the advisory meeting on Tuesday: Moderna’s shot is $129 per dose, Pfizer’s is $120 per dose and Novavax’s jab is $130 per dose.
Private insurers will provide the vaccines to beneficiaries at no cost. Government payers such as Medicare and Medicaid will also cover the new shots with no co-payments.
For the estimated 30 million uninsured Americans, the Biden administration aims to offer shots for free through its “Bridge Access Program” at health centers, clinics and pharmacies across the U.S.
“We’re setting up the Bridge Access Program as a temporary solution to maintain access to Covid-19 vaccines, specifically in the short term,” said Dr. Evelyn Twentyman, a CDC medical officer, during the advisory meeting on Tuesday.
The program will begin as soon as vaccines have reached participating providers, which include CVS and Walgreens, according to Twentyman. Free vaccines through the program will not be available after December 2024.
The CDC’s Vaccines For Children program will also provide free Covid shots to children whose families or caretakers can’t afford them after the shots move to the commercial market.
People should talk to their doctors about when to get an updated shot because it largely depends on individual risk levels and situations, health experts told CNBC.
Individuals at higher risk of getting severely ill from Covid, including older adults and those who are immunocompromised, should get a new vaccine as soon as they can, according to Dr. Taison Bell, an associate professor of medicine at the University of Virginia Health.
Younger, healthy adults can choose to wait so that immunity from the vaccine kicks in around the winter holidays or a specific event where they may be more exposed to Covid, Bell added.
He said Covid vaccines take around two weeks to produce an immune response against the virus, and that protection tends to last for a few months. So if a patient has upcoming travel or a large gathering to attend in mid-October, they could plan to get the new shot at the beginning of that month.
People recently vaccinated should wait two months before getting an updated vaccine, according to the CDC’s Wallace. Spacing out shots will allow people to maximize the protection they get from each shot.
Those who have been recently infected can wait three months, but they can also get it “as soon as they’re feeling better,” Wallace added.
“You have the option to wait for three months, but it is not a requirement,” she said during the advisory meeting.
The new shots from Pfizer, Moderna and Novavax are designed to target XBB.1.5, which has since been overtaken in prevalence by other, related strains. It only accounted for around 3% of all U.S. cases as of Sept. 2, according to the latest data from the CDC.
All three companies said that their updated vaccines produced robust immune responses against the now-dominant EG.5, or “Eris,” variant in trials. That omicron strain is closely related to XBB.1.5 and accounted for 21.5% of all U.S. cases as of Sept. 2, according to the CDC.
They also presented preliminary trial data in June indicating that their jabs will protect against all other XBB strains. Collectively, those variants make up more than 90% of all cases in the U.S., according to CDC microbiologist Dr. Natalie Thornburg.
“So the take-home message is that currently, almost all circulating lineages of viruses are XBB variants,” Thornburg said during the advisory meeting Tuesday.
Both Pfizer and Moderna have also released initial trial data indicating that their new shots were effective against another omicron variant called BA.2.86. Novavax on Monday said it was still testing its vaccine against that strain.
BA.2.86 has been detected in small numbers across the U.S., but health officials worldwide are watching it closely due to its high number of mutations.
Following the approvals on Monday, the FDA said the “extent” of protection provided by the updated shots from Pfizer and Moderna against currently circulating variants like EG.5 and BA.2.86 “appears to be of a similar magnitude” to the protection provided by previous Covid vaccines against prior variants of the virus.
“This suggests that the vaccines are a good match for protecting against the currently circulating Covid-19 variants,” the agency said in a release.
The FDA also said it is confident in the safety of the updated vaccines, noting that the benefits of the shots for people 6 months and older outweigh their risks.
U.S. stocks traded lower for a third straight day on Thursday as rising bond yields spurred weakness in some of the so-called Magnificent Seven megacap stocks, helping to drive the Nasdaq to a six-week low.
How are stocks trading
The S&P 500 SPX
was down 2 points, or 0.1%, to 4,401.
The Dow Jones Industrial Average DJIA
shed 42 points, or 0.1%, to 34,725.
The Nasdaq Composite COMP
fell by 46 points, or 0.3%, to 13,428.
The Dow and S&P 500 were on track to extend a losing streak to a third straight session as major indexes headed for another week in the red. The S&P 500 hasn’t fallen for three weeks in a row since February, FactSet data show.
What’s driving markets
Bonds have resumed command of the stock market of late as higher yields lash shares of megacap technology stocks, undermining their status as the undisputed market leaders.
Long-dated Treasury yields continued to rise Thursday, with the 10-year yield BX:TMUBMUSD10Y
touching its highest level since the 2008 financial crisis, rising north of 4.31%. Bond yields move inversely to prices.
Rising yields helped heap more pressure on shares of some of this year’s highflying tech stocks, including Tesla Inc. TSLA, -0.34%,
Apple Inc. AAPL, -0.91%
and Microsoft Corp. MSFT, -0.01%
The elite group of megacap tech stocks which also includes Amazon.com Inc., Meta Platforms Corp. META, -0.24%
and Alphabet Inc.’s Class A GOOGL, +2.42%
and Class C GOOG, +2.48%
shares has been credited with driving much of the Nasdaq Composite’s nearly 30% run-up year-to-date. But their market dominance has faded in recent weeks as investors have favored other cyclical sectors like energy and materials stocks. Those two sectors were the best performers on the S&P 500 on Thursday.
“That’s a theme that’s been bubbling up here over the last three to four weeks, but there’s more of an exclamation point on it now,” said David Keller, chief market strategist at Stockcharts.com, during a phone interview with MarketWatch.
“First you had Microsoft and Apple breaking down a few weeks ago, now you’re getting Meta breaking below its 50-day moving average.”
Keller added that rising bond yields tend to have a bigger impact on growth stocks like technology names, while sectors like energy are more resilient.
“Energy can do just fine in a rising rate environment. energy and materials should probably do better in a relative basis,” he said.
Minutes from the Federal Reserve’s July meeting released Wednesday afternoon were being blamed for the latest leg higher in global bond yields. They showed that Fed policy makers could continue raising interest rates amid concerns that inflation could reaccelerate, potentially pushing bond yields even higher.
“It’s really uncertain where terminal interest rates will land given the economy isn’t giving us a decisive picture of being too strong or too weak. It’s keeping the window open for more rate hikes potentially,” said Mohannad Aama, a portfolio manager at Beam Capital Management, during a phone interview with MarketWatch.
Shares of Cisco rose 2.6%, while Walmart shares turned lower, down 1.2%.
Economic updates released Thursday helped support the notion that the U.S. economy is growing at a faster pace than economists had expected, potentially complicating the Fed’s efforts to tamp down inflation.
Chesapeake Energy Corp. CHK, +6.03% will replaceMercury Systems Inc. MRCY, +2.99%
on the S&P MidCap 400, S&P Dow Jones Indices said on Wednesday. Shares of Chesapeake were up 6%.
Shares of Cigna Group CI, -7.10%
and CVS Health CVS, -8.89%
dropped following a report that a major nonprofit health insurer was preparing to shun the pharmacy-benefit industry.
A Solarpro employee installs a SolarEdge Technologies Inc. inverter at a residential property in Sydney, May 17, 2021.
Brendon Thorne | Bloomberg | Getty Images
Check out the companies making the biggest moves midday:
SolarEdge Technologies — The solar stock tumbled about 19% after the company reported $991 million in revenue, missing analysts’ estimates of $992 million, according to Refinitiv. SolarEdge also issued disappointing third-quarter revenue guidance.
CVS Health — The retail pharmacy stock gained 4% during midday trading Wednesday after the company posted strong earnings and revenue for the second quarter. CVS reported earnings of $2.21 per share on revenue of $88.9 billion, while Wall Street analysts expected $2.11 per share on earnings of $86.5 billion, according to Refinitiv.
Norwegian Cruise Line — The cruise stock sank 3.2%, a day after reporting weaker-than-expected guidance for the third quarter. Its second-quarter earnings, however, topped analysts’ estimates. Shares were also downgraded by Susquehanna to neutral from positive. The Wall Street firm said Norwegian’s return to pre-pandemic EBITDA margin will take some time.
Emerson Electric — Shares rallied 4% following Emerson Electric’s earnings and revenue beat for its fiscal third quarter. The company reported adjusted earnings per share of $1.29, topping the $1.10 expected from analysts polled by StreetAccount. Revenue was $3.95 billion, compared to the $3.88 billion expected by Wall Street.
Pinterest — The social media platform slid 4.9% despite beating expectations on revenue for the second quarter. Pinterest posted $708 million against FactSet’s $696.4 consensus estimate. Pintrest’s third-quarter revenue growth forecast, however, missed expectations.
Starbucks — Shares added 2.6% following the coffee giant’s earnings report was released. Starbucks adjusted earnings per share for the fiscal third quarter was $1, versus the 95 cents expected by analysts, per Refinitiv. However, revenue fell short at $9.17 billion compared to the $9.39 billion expected.
Advanced Micro Devices — The chipmaker’s shares declined 7.4% in reaction to its second-quarter earnings release on Tuesday after the bell. While the company posted better-than-expected earnings in the prior quarter, its forecast for the third quarter was weaker than analyst estimates amid a weak PC market. Several Wall Street firms, including Bank of America and JPMorgan, said that the company may be nearing the peak of its rally.
Humana — Shares popped 6% after the health insurer reported second-quarter adjusted earnings per share of $8.94, topping the $8.76 per share anticipated by analysts, per StreetAccount. Humana forecasted its Medicare Advantage business will grow by about 825,000 members in 2023.
Generac — Shares dropped nearly 24% after the company posted a second-quarter earnings miss. Adjusted earnings per share came in at $1.08, versus StreetAccount’s estimate of $1.16. The company also lowered its forecast for residential product sales in the second half, citing a softer-than-expected consumer environment.
Scotts Miracle-Gro — The stock sank 18% after the maker of consumer lawn, garden and pest control products reported an earnings and revenue miss for its third quarter. Scotts also forecast a bigger-than-expected revenue decline for the fiscal 2023 year.
Freshworks — Shares popped nearly 19% after the software-as-a-service company beat expectations for both earnings and revenue. Canaccord Genuity upgraded the stock to buy from hold and hiked its price target to$25 from $15, suggesting 37% upside from Tuesday’s close.
Robinhood — The retail brokerage’s stock shed more than 4% ahead of the company’s quarterly results, due after the bell. Analysts are expecting a quarterly loss of 1 cent, according to StreetAccount.
Paycom Software — Shares tumbled 18.6% despite the payroll provider’s earnings and revenue beat after the bell Tuesday. However, the company’s revenue guidance for the third quarter was $410 million to $412 million, compared to the $412 million expected from analysts polled by StreetAccount.
UnitedHealth Group has the highest price per share of any company on the Dow Jones Industrial Average and it’s the tenth heaviest-weighted stock on the S&P 500.
In fact, not only is UnitedHealth the biggest health-care conglomerate in the United States based on market cap and revenue, it’s even bigger than JPMorgan Chase, the nation’s largest bank.
And it is a Wall Street darling, with experts optimistic about the company’s future: 22 of 25 analysts currently label it a buy.
“If I had to pick one stock, only one stock to buy, I’d buy United[Health],” said Ana Gupte, principal at AG Health Advisors.
UnitedHealth “has had superior stock performance over everybody else for two reasons,” said Lance Wilkes, managing director and senior research analyst at Bernstein Research. “One would be strategic vision and the other is strategic capital management.”
UnitedHealth has increased its annual revenue since 2012 by more than $100 billion, when adjusted for inflation. It achieved this by engaging in a unique acquisition strategy. It started with smaller deals that have grown while many of UnitedHealth’s competitors such as Aetna and Humana or Anthem and Cigna tried to broker much larger ones, only to be stopped by regulators.
Conversely, UnitedHealth leaned into a vertical-integration strategy, buying up smaller companies and building them into its growing health-care business.
UnitedHealth’s size makes it “relatively immune to economic cycles” due to the company’s wide diversity, Gupte said. “It makes it very attractive from an economic cycle and a macro environment perspective.”
Until recently, its acquisition strategy allowed it to grow without catching too much scrutiny from regulators. But in January 2021, UnitedHealth and Change Healthcare announced a nearly $8 billion all-cash deal that was challenged by the Department of Justice due to antitrust concerns.
Health-care companies “are becoming more and more [like] utilities,” Wilkes said. “Consequently, I think they’re going to have very large market shares because … you wouldn’t want redundant services through the system.”
“I think at this point you we would consider UnitedHealth Group just kind of like … core health infrastructure at this point in America,” said Matt Stoller, director of research at the American Economic Liberties Project and author of “Goliath: The Hundred Year War Between Monopoly Power and Democracy.” “It’s too big to manage.”
“UnitedHealth Group is committed to improving the health system for everyone, advancing evidence-based practice and aligning incentives across the system to ensure people get the right care at the right time in the right place,” UnitedHealth Group told CNBC.
“Because we serve people throughout every aspect of the health system, we have a unique ability to identify opportunities to better integrate care and benefits, develop solutions and deploy them at scale to improve access, lower costs and make the experience better for patients and providers,” it said.
Watch the video above to learn how UnitedHealth Group grew so big and what that means for the U.S. health-care system.
Seniors with early Alzheimer’s disease will face major hurdles to get treated even if promising new drugs roll out more broadly in the coming years, putting them at risk of developing more severe disease as they wait months or perhaps years for a diagnosis.
The U.S. health-care system is not currently prepared to meet the needs of an aging population in which a growing number of people will need to undergo evaluation forAlzheimer’s, according to neurologists, health policy experts and the companies developing the drugs.
related investing news
There are not enough dementia specialists or the needed testing capacity in the U.S. to diagnose everyone who may benefit from a new treatment like Eisai and Biogen‘s Leqembi. After patients are diagnosed, the capacity may not exist — at least initially — to provide the twice monthly intravenous infusions for everyone who is eligible.
Researchers estimate that the wait time from the initial evaluation to the confirmatory diagnostic tests to the infusions could range anywhere from a year and a half to four years or longer. Those months are critical for people with Alzheimer’s.
“The whole process from that time of the family physician conversation to the point of infusion, I worry how long it will take and the complexities of the patient navigating through all of that to successfully get to the end,” Anne White, president of neuroscience at Eli Lilly, which is developing its own Alzheimer’s treatment, told CNBC.
There are promising innovations in development, such as blood tests and injections that patients would take at home, which could make it significantly easier to get diagnosed and treated in the future.
White also said Lilly is confident that more doctors will get into the field and help to alleviate capacity issues, as awareness grows that medicines are entering the market to treat Alzheimer’s.
But time spent waiting robs early patients of their memory and ability to live independently. Alzheimer’s gets worse with time, and as patients deteriorate into more advanced stages of the disease, they no longer benefit from treatments like Leqembi that are designed to slow cognitive decline early.
More than 2,000 seniors transition from mild to moderate dementia from the disease a day, according to estimates from the Alzheimer’s Association. At that stage, they become ineligible for Leqembi.
The central challenge is that a large and rapidly growing group of people have early memory loss and other thinking problems known as mild cognitive impairment. This condition is often, though not always, a sign of early Alzheimer’s disease.
An estimated 13 million people in the U.S. had mild cognitive impairment last year, according to a study published in the Alzheimer’s and Dementia Journal. As the U.S. population ages, the number of people with this condition is expected to reach 21 million by 2060, the study projected.
The U.S. health-care system will deal with major logistical challenges in diagnosing the growing population of people with early Alzheimer’s — even before patients face potential issues with accessing treatment.
“There’s a very large population of undiagnosed cognitive impairments that need to be evaluated in order to determine if people are eligible for treatment,” said Jodi Liu, an expert on health policy at the Rand Corporation.
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Access to drugs like Leqembi is severely restricted because Medicare for nowwill only cover the $26,500-per-year treatment for people participating in clinical trials. Medicare has promised to provide broader coverage if Leqembi receives full approval from the Food and Drug Administration, which Eisai expects to happen in July.
Eisai has estimated that 100,000 people in the U.S. will be diagnosed and eligible for Leqembi by the third year of the treatment’s rollout. The sum is a fraction of the total population that could benefit.
Those patients could have other options if new treatments emerge from trials with positive marks.
Eli Lilly will publish clinical trial data on its antibody infusion donanemab in the second quarter of this year. If the data is positive, the company will ask the FDA to approve the drug.
Eisai’s U.S. CEO Ivan Cheung and Lilly’s White said during the companies’ respective earnings calls in February that they are focused on working with the U.S. health system to address the challenges of rolling out of Alzheimer’s treatments.
“The primary goal right now during this launch phase […] is really get the market ready in terms of the diagnostic pathway, the infusion capacity, the education on how to monitor for this therapy, get all the hospitals and clinics ready,” Cheung said.
Long lines are expected at the offices of geriatricians, neurologists and radiologists as millions of people with mild cognitive impairment undergo evaluation to diagnose whether they have Alzheimer’s disease.
Demand for geriatricians — doctors who are experts in diseases that affect the elderly — is expected to outstrip the number of specialists available in the field through at least 2035, according to projections from the federal Health Resources and Services Administration.
The American Academy of Neurology told Medicare in a February letter that increased demand for Alzheimer’s treatments will put substantial pressure on neurologists, who will need additional resources. The federal data predicts a substantial shortage of these specialists in rural areas through at least 2035.
“You just look at the neurologists, look at geriatricians — there are fewer and fewer geriatricians per person in the U.S.,” Rand’s Liu said. “It’s just a few number of specialists to do this kind of work.”
White said Lilly has heard stories of patients waiting six to 12 months to see a neurologist or other doctors who treat dementia due to current capacity issues.
The number of radiologists — who also play a role in diagnosing the disease — is expected to decline in the U.S. through 2035 even as demand increases, the data shows.
In a study published in 2017, Liu and other Rand researchers estimated an initial wait of 18 months for patients to get evaluated by a dementia specialist, tested to confirm a diagnosis, and then treated in the first year that an Alzheimer’s antibody treatment becomes available. The wait would decrease to 1.3 months by 2030 as the patient backlog is cleared, they estimated at the time.
But more recent research found that the wait would actually increase as demand created by an aging U.S. population outstrips the supply of specialists.
Patients seeking a first specialist visit could face an initial wait of 20 months, according to a study by researchers at the University of Southern California published in the journal Alzheimer’s and Dementia in 2021. The delay could increase to about four years as early as 2028 and grow longer through 2050, the study found.
The journal is published by the Alzheimer’s Association.
Both studies are based on assumptions made before Leqembi received expedited approval from the FDA in January. Actual wait times could differ from the studies’ projections.
Two types of tests can diagnosis Alzheimer’s disease: PET scans and spinal taps. PET scans are accurate and safe diagnostic tools, but they are also cumbersome and expensive, said Dr. David Russell, a neurologist.
Patients are injected with a tracer that makes brain abnormalities visible to the machine that does the imaging. Tracers have to be made for each patient and used on the same day.
“We don’t have the infrastructure to roll out PET scanning on a major scale,” said Russell, director of clinical research at the Institute for Neurodegenerative Disorders in New Haven, Connecticut. He is the principal investigator on the clinical trials of Leqembi and donanemab at the institute.
Medicare coverage of PET scans for Alzheimer’s patients is also limited right now. The insurance program for seniors will only cover one scan per lifetime, and only when the patient is participating in a clinical trail approved by the federal Centers for for Medicare and Medicaid Services.
“That’s concerning because people may actually test negative at one point but then obviously as they age, they may need to get tested again,” White said.
Early Alzheimer’s disease can also be diagnosed with a spinal tap, in which fluid around the spinal cord is extracted with a catheter and tested. While there’s plenty of capacity to do spinal taps, this option isn’t attractive to many patients due to unfounded fears that it’s painful and dangerous, Russell said.
Though “there’s a lot of resistance” to the procedure, it is well tolerated and safe, he noted.
“There are certainly areas that don’t have a PET scanner, rural areas, so people would need to travel to a health center that has a PET scanner,” Liu said.
In a large, sparsely populated rural state like New Mexico, many patients would have to drive three to five hours to get a PET scan in a city such as Albuquerque, said Dr. Gary Rosenberg, a neurologist and director of the New Mexico Alzheimer’s Disease Research Center.
“It’s not California or the East Coast where everything’s very compressed and people can travel and get to a center pretty easily and go through these kinds of treatments,” Rosenberg said.
The state has an estimated population of 43,000 people with dementia, and there are very few neurologists outside of the Albuquerque area, Rosenberg said. The New Mexico Alzheimer’s Disease Research Center in Albuquerque is one of only three such facilities funded by the federal National Institute of Aging in a vast region stretching west from Texas to Arizona.
To do a PET scan, a tracer has to be made for each patient off-site in Phoenix, flown on a private plane to Albuquerque and used within hours because the tracers have a short shelf life, according to Rosenberg. The whole process costs more than $12,000 per patient, he added.
“It’s logistically going to be very challenging,” Rosenberg said.
After spending months or possibly years waiting to get diagnosed with early Alzheimer’s, patients would then be eligible for intravenous infusions of Leqembi. But the U.S. doesn’t currently have the capacity to give infusions twice monthly for everyone who likely has the disease, Russell said.
“Having an IV infusion every two weeks would sort of ration people to availability and that’s a problem,” Russell said.
The University of New Mexico Hospital is already maxed out with demand for infusion therapies for cancer, rheumatoid arthritis and autoimmune diseases, and could have a “problem” adding new capacity, said Rosenberg.
Intravenous infusions of monoclonal antibodies like Leqembi aren’t difficult to administer, Russell said.
The infrastructure to offer infusions should expand rapidly once industry sees there’s demand for treatments like Leqembi. But the process of building out capacity could still take a couple years, Russell said. He believes big players like CVS will provide infusions for Alzheimer’s disease on a major scale if they see there’s a large and stable market.
“In one sense, capitalism works, and if it looks like that’s going to be the future, I think infusion centers will explode onto the scene,” the neurologist said.
Eisai and Biogen hope to move early Alzheimer’s patients to a single monthly dose of Leqembi after they’ve completed their initial course of twice monthly infusions, which could help alleviate some of the capacity issues with infusions over time. They plan to ask the FDA to approve this plan in early 2024.
Eli Lilly’s Alzheimer’s candidate antibody treatment donanemab is a single monthly dose, potentially making the logistics of administration easier if the drug gets approved. Dr. Dan Skovronsky, Lilly’s chief medical officer, told analysts during the company’s first-quarter earnings call that he expects many patients will be able to stop taking donanemab at 12 months.
Though the projected wait times to get diagnosed and treated are sobering, innovations on the horizon promise to significantly improve access to Alzheimer’s drugs over time.
Blood tests for Alzheimer’s are in development and some are already on the market. Primary-care doctors could administer the tests, which would ease the burden on patients, especially those in rural communities where the closest PET scan machine is hours away.
These tests detect proteins in the blood associated with Alzheimer’s. They promise to help diagnose the disease before people display cognitive symptoms, potentially giving patients the chance to get treated before they suffer irreparable brain damage, according to the National Institutes of Health.
At least three blood tests made by C2N Diagnostics, Quest Diagnostics and Qaunterix are currently on the market. But they are used to evaluate people who are already presenting symptoms and aren’t available on the mass scale needed for the expected increase in Alzheimer’s patients.
C2N’s PrecivityAD test costs $1,250 and is not covered by insurance — though the company has a financial assistance program. Quest Diagnostics’ AD-Detect test costs $650. Quest’s test is covered by some insurance plans but not Medicare at the moment. The company also has a financial assistance program. Quanterix wouldn’t disclose the price of its test, which insurance does not cover.
Right now, these are not stand-alone tests that can definitively diagnose Alzheimer’s. But the tests could help identify the patients who likely have the disease, which would narrow the population that needs further evaluation and reduce wait times for dementia specialists or confirmatory PET scans.
A study in the journal Alzheimer’s and Dementia estimated that a cognitive test combined with a blood test could slash wait times for dementia specialists from 50 months down to 12 months.
Eisai believes that inexpensive blood tests could completely replace PET scans and spinal taps by the fourth year of Leqembi’s rollout. The quicker diagnosiscould increase the number of people eligible for treatment.
Rosenberg said widespread availability of blood tests will allow mobile clinics to go into rural communities and identify who has markers associated with Alzheimer’s. This would allow patients in remote towns avoid the hours-long drive to cities with PET scan machines, Rosenberg said.
“It’s a game changer,” the neurologist said.
Lilly is developing at least two blood tests. The company is already using one test in clinical trials and hopes to commercialize it sometime this year. It is developing a second test through a collaboration with Roche. White said it is reasonable to expect that in a few years blood tests could replace more burdensome PET scans.
Biogen and Eisai are also developing an injectable form of Leqembi which patients could administer themselves with an autoinjector similar to insulin pens, saving the trip to a site that provides intravenous infusions. They plan to ask the FDA to approve these so-called subcutaneous injections in early 2024.
Eli Lilly is also conducting clinical trials on an antibody treatment called remternetug as a self-administered injection. But the promise of injections that can be administered at home could make companies reluctant to invest in building out intravenous infusion capacity, Russell said.
In the future, Alzheimer’s diagnosis and treatment could be folded into routine checkups with a family doctor, Russell said. When people turn 50 and head in to get a colonoscopy or a cholesterol check, the doctor could also run a blood test for Alzheimer’s.
If the test comes back positive, the doctor could then schedule patients for an MRI and get them started on an autoinjector treatment, Russell said.
“That’s going to be the way that we’re looking at it in the not too distant future,” he said.
When is it a good time to buy stocks? Some investors would say the current negativity dominating the financial media means you are better off sitting on the sidelines. Others would say it is always a good time to buy stocks, provided you can get them for good prices.
Count John Buckingham, editor of the Prudent Speculator, in the latter camp. He is a value investor with decades of experience. During an interview, he emphasized the importance of remaining disciplined through all market conditions. While he favors the value…
Here are the biggest calls on Wall Street on Friday: Barclays names Dick’s a top pick Barclays named the sporting goods store a top pick and says it sees accelerating growth. “We view 2022 as the new solid foundation from which DKS can now reaccelerate • its growth algorithm through: 1) sustainable positive comp growth driving market share gains, 2) gross and operating margin expansion as it exits a period of supply chain disruption.” HBSC upgrades AT & T to buy from hold HSBC said in its upgrade of the stock after its earnings report that investors should buy the dip. “But a slowdown in market momentum has been widely flagged (by all operators) for months, and AT & T’ s absolute growth in mobile subs remained solid.” Read more about this call here . Bank of America reiterates Alphabet as buy Bank of America says it’s bullish heading into Alphabet earnings next week. “We think 1Q could show cost improvement upside, while in-line search results could be a modest positive for market share concerns (we think street will see better evidence of cost cutting and margin improvement by 2Q).” JPMorgan reiterates Amazon as a best idea JPMorgan says it’s bullish heading into the e-commerce giant’s earnings report next week. “We’re modeling continued e-comm share gains in 2023 as AMZN & other retailers gain share in key under-penetrated categories such as grocery, CPG, apparel & accessories, & furniture/appliances/equipment.” Morgan Stanley reiterates Blackstone as overweight Morgan Stanley says the alternative investment management company is “resilient.” “We believe BX is best positioned to navigate the backdrop, capitalize on dislocation with $190b dry powder & propel earnings power.” Argus upgrades Dollar General to buy from hold Argus said in its upgrade of the dollar store company that it’s “rare retailer.” “We are raising our rating on Dollar General Corp . to BUY from HOLD and setting a one-year price target of $250. DG is a rare retailer that is growing square footage and posting positive comparable sales. Our five-year growth rate is 11%.” UBS initiates Bill.com as buy UBS said in its initiation of the software billing company that shares are attractive at current levels. “Since we’re a bit more constructive than the Street and negativity already seems embedded in BILL shares (amongst worst performing software stocks YTD), we view risk/reward as biased upward at these levels.” Piper Sandler downgrades Big Lots to underweight from neutral Piper said in its downgrade of Big Lots that it sees demand slowing. “Big ticket discretionary demand appears to be deteriorating (despite easier y/y compares), and we are worried about companies with break-even EBITDA (or worse).” Morgan Stanley downgrades Seagate to equal weight from overweight Morgan Stanley said in its downgrade of Seagate that it sees a recovery pushout for the hard disc data drive company. “As a result, we believe path to outperformance has also been pushed out, with risk more elevated near term.” Wells Fargo names Starbucks a top pick into earnings Wells says Starbucks is a “best idea” heading into earnings on May 2 and the “China inflection adds upside.” “Shares are -2% post-Q1 & we see improving Q2 risk/reward behind ongoing domestic strength (positive Q2 traffic; Ex 29), a likely China inflection (vs. a very low Q2 bar) & anticipated upside to the FY23 outlook.” Cantor Fitzgerald initiates CVS as buy Cantor said in its initiation of the stock that it’s underappreciated. “We are initiating coverage of CVS Health with an Overweight rating and 12-month price target of $87; Investors are underestimating the power of the flywheel CVS is piecing together, in our opinion.” Cantor Fitzgerald initiates UnitedHealth as buy Cantor said in its initiation of the healthcare company that it sees near-term earnings upside. ” United is ahead of the market in using commercial product innovation to solve for the problem of employers wanting to hold price trends, while providers are looking for a three-year step-up from historical averages.” Benchmark initiates Sea Limited as buy Benchmark initiated the Singapore-based internet tech company with a buy and says it sees rapid growth ahead. “We believe that SE should remain a key beneficiary of Southeast Asia’s fast growing digital economy in years to come.” Benchmark initiates Grab Holdings as buy Benchmark said in its initiation of the Asian internet company that it’s a “significant market consolidator” “As part of our industry launch of Southeast Asia Ecommerce, we are initiating coverage of GRAB, a leading platform player offering mobility, delivery, fintech and enterprise services in SEA (Southeast Asia Ecommerce).” JPMorgan upgrades XPO to overweight from neutral JPMorgan said in its upgrade of the logistics company that it likes the company’s recent management changes. “Our estimates remain unchanged but we are upgrading to Overweight with a higher, yet still discounted, multiple compared to peers as we believe this strategic hire should help unlock the potential at XPO which is still not completely reflected in the stock.” Read more about this call here. Goldman Sachs reiterates Philip Morris as buy Goldman says the tobacco company is an “earnings compounder with attractive valuation.” “Ultimately, we believe mgmt’s Q2 guide is conservative and therefore we see a nice set up for a potential beat and raise quarter. This, in addition to PM’s Investor Day in September, should be positive catalysts for the stock.” Read more about this call here. Morgan Stanley reiterates Spotify as overweight Morgan Stanley raised its price target on the stock to $160 per share from $130 and says “price increases, margin expansion, and market share” will drive the stock. “We continue to see streaming music & audio as an attractive growth market and remain OW WMG and SPOT.” Wells Fargo reiterates Microsoft as overweight Wells says expectations are “mixed” heading into earnings next week, but that the firm is standing by the stock. “While optimizations and macro are likely to impact FQ3 results, we see favorable offsets forming beyond, inc. MSFT’s ability to both consolidate spend from incumbent categories (productivity, biz apps, security) & gain share in newer ones.” Truist downgrades Tesla to hold from buy Truist said in its downgrade of the stock that it was surprised by the company’s “willingness to accept lower margins.” “What surprised us is TSLA’s stated willingness to reduce price further, accepting still lower automotive margins, to broaden & deepen its ability to generate revenue from AI projects, most notably FSD.” Goldman Sachs reiterates ServiceNow as buy Goldman says it’s bullish heading into the work flow solutions company’s earnings report next week. “We expect investors to put more weight on NOW’ s 1Q results, despite it being a seasonally weak quarter, as they look for signs of continued durability.” Truist initiates CyberArk as buy Truist initiated the cyber security company with a buy and says it has a first mover advantage. ” CYBR is a leader in Privilege Access Management, which is becoming a critical layer of cybersecurity and center of identity security. The company’s transition to a subscription-based model has resulted in strong visibility and durability of its business as well as higher customer lifetime value.” Baird reiterates McDonald’s as outperform Baird says it’s bullish heading into earnings next week. “We see potential for Q1 comps/EPS to exceed estimates (perhaps already priced in?), and we continue to believe MCD can fuel solid operating momentum in the balance of 2023 despite possible economic headwinds.” Stephens upgrades Pool Corp. to overweight from equal weight Stephens said in its upgrade of Pool that it sees an “attractive entry point” for the pool company. “The stock could tread water in the ultra-near-term as seasonally it is still too early to fully gauge activity levels, which could keep investors waiting. However, we think 20x next year’s earnings for a best-in-class, high quality compounder that consistently puts up 25%-30% ROIC, consistent market out-performance and strong FCF is an attractive entry point.” Stephens initiates SentinelOne as overweight Stephens initiated the cyber security company with an overweight and says it has “best-in-class growth.” ” SentinelOne’s platform addresses many of the highest priority areas of security spending.” JPMorgan reiterates Charles Schwab as overweight JPMorgan says Charles Schwab could be worth more if it were to “de-bank.” “While earnings would fall materially were Schwab to de-bank, we believe Schwab would trade at a higher (possibly meaningfully higher) multiple, which would/ could justify a higher value than the stock is trading at today. … .Schwab could feasibly de-bank. Schwab is not a bank, but rather is a broker that operates a bank, and as such we see it feasible that Schwab could operate without a bank.”
US President Joe Biden meets with CEOs about the economy in the South Court Auditorium of the Eisenhower Executive Office Building, next to the White House, in Washington, DC on July 28, 2022.
Mandel Ngan | AFP | Getty Images
U.S. President Joe Biden has appointed the heads of Citigroup, United Airlines, CVS, 3M and FedEx, among other top executives, to sit on a White House advisory committee overseeing international trade.
The President’s Export Council gives recommendations and insight into the ways government policies impact U.S. trade performance. The group also provides feedback on how Biden’s trade policies are affecting businesses across sectors from industry and labor to agriculture.
D.C. businessman Mark D. Ein will chair the board. He currently serves as chairman of Lindblad Expeditions and Kastle Systems and is on the board of directors of Custom Truck One Source and Membership Collective Group. Walgreens Boots Alliance CEO Rosalind Brewer will serve at the council’s vice chair. She previously served as chief operating officer and group president of Starbucks and CEO of Sam’s Club.
The 25-member board includes: Dana Walden, co-chairman of Disney Entertainment; Jane Fraser, Citigroup CEO; Michael F. Roman, chairman and CEO of 3M; Rajesh Subramaniam, president and CEO of FedEx; Karen S. Lynch, president and CEO of CVS; John Lawler, chief financial officer of Ford; Gareth Joyce, CEO at Proterra; Brett Hart, president of United Airlines; Beth Ford, president and CEO of Land O’Lakes; and Qualcomm CEO Cristiano R. Amon.
The Export Council features expertise from labor, real estate, national security and law, and leaders of Fortune 200 companies. Biden has previously reached out to some of the executives for counsel on the state of the economy.
Other members include: Raymond E. Curry Jr., president of the UAW union; Rich Lesser, global chair of Boston Consulting Group; Patrick E. Murphy, a former congressman who is the chief investment officer of Coastal Construction Group; Robert G. Martinez Jr., international president of the International Association of Machinist and Aerospace Workers union; Daniel Rosen, CEO of real estate firm Rosen Partners; and Brett Isaac, co-founder and executive chairman of Navajo Power.
Other members of the council include:
Lisa Disbrow, a national security expert who served as the undersecretary of the Air Force;
Lacy M. Johnson, partner-in-charge of Taft’s D.C. law firm;
Juan Verde, strategist and consultant with stops at Santander Bank Investments and the World Bank;
Michelle W. Singer, senior vice president for political engagement at Comcast;
Farnam Jahanian, president of Carnegie Mellon University;
Paul A. Laudicina, chairman emeritus of the consulting firm A.T. Kearney; and
Deloitte Global CEO Emeritus Punit Renjen.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
CNBC’s Jim Cramer on Friday advised investors to ring the register on some of their positions to take advantage of the bull market.
“I don’t know if we can continue this week’s bizarrely bullish behavior, but it’s worth sticking around and … you can trim a bit of some stock that you’re up a lot,” he said
Stocks fell on Friday after a strong January jobs report renewed fears that the Federal Reserve will continue hiking interest rates. The S&P 500 and Nasdaq Composite still managed to end the week on the positive side, with the tech-heavy index notching its fifth consecutive winning week.
Cramer also reviewed next week’s slate of earnings. All estimates for earnings, revenue and economic data are courtesy of FactSet.
A woman shops in the pharmacy area of a Walmart store in Mount Prospect, Illinois.
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Walmart Inc said on Friday it would adjust working hours for its U.S. pharmacy team and implement it nationwide in 4,600 locations, with drugstore operator CVS Health Corp doing the same for about two-thirds of its retail pharmacies, amid a tight labor market.
The United States has been experiencing a nationwide labor shortage since the Covid-19 pandemic which has forced retailers to offer attractive incentives and pay increases.
Walgreens Boots Alliance and CVS each raised their minimum wage to $15 per hour in 2021 while Walmart said last year it would increase the average pay of pharmacy workers to more than $20 per hour.
Earlier on Friday, the Wall Street Journal first reported CVS Health Corp and Walmart were cutting pharmacy hours.
Walmart’s pharmacies will be open from 9 a.m. to 7 p.m., Monday through Friday from March, while the weekend hours would not change, a spokesperson for the company said. Currently, they are open from 9 a.m. to 9 p.m.
CVS said the new hours of operation, which begin in March, at impacted pharmacies will vary, adding it periodically reviews operating hours to make sure peak customer demand was being met.
The company had 9,900 retail locations including pharmacies, according to a regulatory filing in February 2022.
Walgreens said in a statement that at times it had to adjust store or pharmacy hours at some places after staffing challenges impacted retailers and healthcare entities, among others, over the last 12 months.
The Spotify logo hangs on the facade of the New York Stock Exchange with U.S. and a Swiss flag as the company lists its stock with a direct listing in New York, April 3, 2018.
Lucas Jackson | Reuters
Coming off a week that was packed with corporate earnings and economic updates, it is still difficult to determine whether a recession can be avoided this year.
Investing in such a stressful environment can be tricky. To help with the process, here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performances.
Ahead of Apple’s (AAPL) December quarter results, due out on Feb. 2, investors are fairly aware of the challenges that the company faced during the period. From production disruptions in the iPhone manufacturing facility at Zhengzhou in China to higher costs, Apple’s first quarter of fiscal 2023 has endured all. Needless to say, the company expects a quarter-over-quarter growth deceleration.
Nonetheless, Monness Crespi Hardt analyst Brian White expects the results to be in line with, or marginally above, Street expectations. The analyst believes gains in Services, iPad and Wearables, Home & Accessories revenue could be a saving grace.
Looking ahead, White sees pent-up demand for iPhones come into play in the forthcoming quarters, once Apple overcomes the production snags. (See Apple Stock Investors’ sentiments on TipRanks)
The analyst feels that the expensive valuation of approximately 27 times his calendar 2023 earnings estimate for Apple is justified.
“This P/E target is above Apple’s historical average in recent years; however, we believe the successful creation of a strong services business has provided the market with more confidence in the company’s long-term business model,” said White, reiterating a buy rating and $174 price target.
White holds the 67th position among almost 8,300 analysts followed on TipRanks. His ratings have been profitable 63% of the time and each rating has generated a 17.7% average return.
Audio streaming subscription service Spotify (SPOT) is also among the recent favorites of Brian White.
“Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, and expanding its audio offerings,” said White, reiterating a buy rating and $115 price target.
The analyst does acknowledge some challenges that await Spotify this year but remains optimistic about its margin improvement plans and several favorable industry developments. While it may be tough to attract new premium subscribers, while facing continued pressure from a lower digital ad spending environment, Spotify should benefit from ad-supported monthly active users (MAUs) this year. (See Spotify Stock Chart on TipRanks)
White is particularly upbeat about the waning mobile app store monopolies, after the European Union passed the Digital Markets Act last year. The act will be imposed from May 2023. One of the benefits for Spotify will be the ability to promote its cheaper subscription offers. Now, it can make the offers available outside Apple’s iPhone app. (This had been a challenge, as Apple previously would allow it to only promote its subscriptions through iPhone app.)
CVS Health (CVS), which operates a large retail pharmacy chain, has been on Tigress Financial Partners analyst Ivan Feinseth‘s list in recent weeks. The analyst reiterated a buy rating and a $130 price target on the stock.
The company’s “consumer-centric integrated model” as well as its increasing focus on primary care should help make health care more affordable and accessible for customers, according to Feinseth. CVS bought primary health-care provider Caravan Health as part of this focus. Moreover, the impending acquisition of Signify Health “adds to its home health services and provider enablement capabilities.”
The analyst also believes that the ongoing expansion of CVS’s new store format, MinuteClinics and HealthHUBs, will increase customer engagement and thus, continue to be a key growth catalyst. (See CVS Health Blogger Opinions & Sentiment on TipRanks)
Feinseth is also confident that CVS’s merger with managed healthcare company Aetna back in 2018 created a health-care mammoth. Now, it is well positioned to capitalize on the changing dynamics of the health-care market, as consumers gain more control over their health-care service expenditures.
Feinseth’s convictions can be trusted, given his 208th position among nearly 8,300 analysts in the TipRanks database. Apart from this, his track record of 62% profitable ratings, with each rating delivering 11.8% average returns, is also worth considering.
Fast food hamburger chain operator Shake Shack (SHAK) has been doing well both domestically and overseas on the back of its fast-casual business concept. BTIG analyst Peter Saleh has a unique take on the company.
“Shake Shack is the preeminent concept within the better burger category and the rare restaurant chain whose awareness and brand recognition exceed its actual size and sales base,” said Saleh, who reiterated a buy rating on the stock with a $60 price target. (See Shake Shack Hedge Fund Trading Activity on TipRanks)
On the downside, the analyst points out that the expansion of services outside New York has weakened Shake Shack’s margin profile by generating low returns per unit and exposing the company to greater sales volatility. However, margins seem to have bottomed, and the analyst expects profitability to gain momentum over the next 12-18 months. A combination of higher menu prices and deflation of commodity costs are expected to push restaurant margins up to mid-teen levels.
In its preliminary fourth-quarter results, management at Shake Shack mentioned that it plans to tighten its hands with general and administrative expenses this year, considering the macroeconomic uncertainty. This “should prove reassuring for investors given the heightened G&A growth (over 30%) of the past two years.”
Saleh has a success rate of 64% and each of his ratings has returned 11.7% on average. The analyst is also placed 431st among more than 8,000 analysts on TipRanks.
Despite last year’s challenges, IT distributor and solutions aggregator TD Synnex (SNX) has benefited from a steady IT spending environment amid the consistently high digital transformation across industries. The company recently posted its fiscal fourth-quarter results last week, where earnings beat consensus estimates and the dividend was hiked.
Following the results, Barrington Research analyst Vincent Colicchio dug into the results and noted that rapid growth in advanced solutions and high-growth technologies were major positives. Even though the analyst reduced his fiscal 2023 earnings forecast due to an expected rise in interest expense, he remained bullish on SNX’s efforts to achieve cost synergies by the end of the current fiscal year. (See TD Synnex Dividend Date & History on TipRanks)
Looking forward, the analyst sees a largely upward trend in growth, albeit a few hiccups. “The key growth driver in the first half of fiscal 2023 should be advanced solutions and high-growth technologies and in the second half should be PCs and peripherals and high-growth technologies. We expect Hyve Solutions revenue growth to slow in fiscal 2023 and slightly rebound in fiscal 2024 versus fiscal 2022 growth,” observed Colicchio, reiterating a buy rating and raising the price target to $130 from $98 for the next 12 months.
Importantly, Colicchio ranks 297th among almost 8,300 analysts on TipRanks, with a success rate of 61%. Each of his ratings has delivered 13% returns on average.
Investors are preparing for a gloomy 2023 by doubling down on cash-rich companies . “We prefer companies generating cash rather than those that need capital to grow. Not only are rates likely to remain higher than they have been in recent past, but we are likely exiting an era of hyper-accommodative monetary policy,” Bank of America said in a Jan. 16 note. The higher the free cash flow yield, the better a company’s position to meet its debt obligations. A company with a high free cash flow is also able to access cash more quickly in the event of an emergency or opportunity. “Companies that pay dividends, companies with great cash flow, quality balance sheets, international stocks — international value in particular — this is where the puck has been headed already, and I think it will continue,” Josh Brown, CEO of Ritholtz Wealth Management, told CNBC last week. Using FactSet data, CNBC Pro screened for stocks that boast lots of cash and could be well positioned for a rocky year. These were the criteria used: Stocks with high free cash flow yield of more than 10% Low volatility (beta of less than 1) Potential upside to price target Buy rating of at least 40% Stocks that appeared on the screen below include those in the telecom, health care, and consumer sectors, which are generally regarded as safe havens in a downturn. U.S.-listed Chesapeake Energy Corporation was the only energy stock to appear on the screen, with its free cash flow yield at nearly 14%. Analysts gave it a 53.7% upside, and the majority (76.5%) gave it a “buy” rating. The stock, like most energy firms, did well in the past year — already climbing around 40%. Last week the firm announced that it had agreed to sell part of its operations in south Texas for $1.43 billion in cash. Firms in the health care or pharmaceutical industries also made the cut, such as U.S. companies Bristol-Myers Squibb and CVS Health . Financial services firm Cantor Fitzgerald said in a Jan. 17 note that 2023 could be Bristol-Myers Squibb’s “breakout year,” and gave the stock an overweight rating. “BMY has one of the best 2023E growth profiles of the US Pharma group … which stands out in a recession year,” Cantor wrote. Canadian financial firm Fairfax stood out for having the highest FCF yield in the list — at 30.4%, while Hong Kong-listed WH Group — the largest pork producer in the world — received the highest buy rating at 94%. Two telecommunication firms — Britain’s Vodafone Group and Germany-based Deutsche Telekom — had among the highest FCF yields at 27% and 23.7% respectively. Argus Research in a Jan. 20 report noted that Vodafone shares outperformed the benchmark over the past three months. It added that its current valuation is reasonable, given the slow growth outlook. — CNBC’s Michael Bloom and Fred Imbert contributed to this report.
China’s closely watched reopening is now causing concern as the number of new COVID-19 cases grows and the country reports the first deaths in several weeks.
Much of the news out of China this week is in stark contrast to zero COVID, the strict policy that was in place up until a month ago. In response to widespread protests, authorities have lifted many of the restrictions that limited how people in China were able to move, work and treat their illnesses.
•In the U.S., it’s still hard to find children’s cold medications. CVS Health CVS, -0.31%
and Walgreens Boots Alliance WBA, +0.95%
this week put limits on purchases of children’s cold and flu medicines in response to high demand amid a surge in cases of pediatric COVID, influenza and respiratory syncytial virus, or RSV, according to the Wall Street Journal. This includes medications like acetaminophen and ibuprofen.
• Testing positive a second or third time may worsen long-COVID symptoms, according to a study published in Nature in November. However, it can be hard to predict how each new infection will affect an individual patient. “It makes sense that repeat infections would not be beneficial to a person’s health,” one doctor told WebMD. “But I think it’s really hard to know what the additional risk of each subsequent infection would be because there are all sorts of other things in the mix.”
• COVID hospitalizations are rising in the U.S. There are about 40,000 people hospitalized with COVID right now, a figure that is 11% higher than it was two weeks ago, according to the most recent update of a New York Times tracker. The numbers of new infections and COVID-related deaths are also rising this month. The seven-day daily average of new cases is about 66,000, while about 413 people are dying each day.
