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Q1 Earnings and Economic Data Deluge

Zacks Equity Research

It’s yet another holiday being spent in (partial) sequestration: Cinco de Mayo (Spanish for “the 5th of May”) traditionally celebrates an important military victory for Mexico in the 19th century. A popular misconception is that this is the same as Mexican Independence Day, but nevertheless in the U.S. often translates to a party (fiesta) celebrating Mexican culture. And with reopening beginning in certain states around the country, we may see levels of commercial activity reminiscent of this past St Patrick’s Day — a long 7 weeks ago.

We also see results from the March Trade Deficit this morning, with a headline of -$44.4 billion almost exactly in-line with analyst projections. This followed an unrevised -$39.9 billion from February, which was the lowest read since September of 2016, and much better than the multi-year low of -$61 billion we experienced in December of 2018.

That said, analysts are looking toward the possibility that domestic Imports and Exports may fall further out of line, toward a deepening of the trade deficit in future months, as methods for stopping the spread of coronavirus are seeing U.S. manufacturing in mothballs of late. Perhaps U.S. oil — up big this morning and much higher than we saw back when May contracts expired — can buffer our trade numbers going forward somewhat.

Regeneron REGN, the pharmaceutical company that makes remdesivir, the treatment hopeful for patients suffering from COVID-19, posted big beats in its Q1 report this morning. Earnings of $6.60 per share was well ahead of the $5.73 per share expected, and +48.3% year over year. Revenues of $1.83 billion easily surpassed the $1.69 billion, swinging to year-over-year growth.

The company also announced an expanded agreement with U.S. Health & Human Services (HHS) regarding a remdesivir-based antibody “cocktail” treatment called REGN-COV2. Regeneron also has attained a partnership with Chinese pharmaceutical company Zai Labs ZLAB with its REGN1979 treatment, a bi-specific antibody. The pricing of remdesivir-based products will be key for this stock in the medium-term, but the Zacks Rank #3 (Hold)-rated company has emerged as one of the important players in the coronavirus saga.

Zacks Rank #1 (Strong Buy)-rated Wayfair W, and recent Zacks Bull of the Day selection, has rocketed up 30% in today’s pre-market after posting a better-than-expected quarterly loss of $2.30 per share, an improvement from the -$2.55 per share expected. Sales in the quarter came in at $2.33 billion — a smidge below the Zacks consensus. Wayfair stock is now up more than 75% year to date. For more on W’s earnings, click here.

After today’s closing bell, we get fresh earnings results from Disney DIS, Electronic Arts EA, Activision Blizzard ATVI, Beyond Meat BYND and more. The heart of Q1 earnings season beats on. Have a happy and safe Cinco de Mayo!


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