AstraZeneca weighs bid for Mereo, Carnival Cruises partners with MGM, Devon Energy stock plunges

Yahoo Finance Live takes a look at several of today's trending stocks tied to leading industry stories, including the demand destruction seen in energy markets as rising gas prices have more people opting to work from home than commuting.

Video Transcript

RACHELLE AKUFFO: Welcome back, everyone. It is time for our triple play. And I'm kicking us off with my pick, which is Mereo Biopharma. Now the stock was actually popping today on an article in "The Times" that says AstraZeneca is putting in a bid for the company. As you can see there, the stock up 73% there. And AstraZeneca also getting a slight boost as well.

Now Mereo is a London-based US-listed company that specializes in therapies tied to cancer and orphan diseases. Now these are the diseases designated by the FDA as deadly, but so rare that they struggle commercially, so they receive special financial benefits for developing safe and effective drugs. Mereo's stock, though, down more than 70% over the past year.

SEANA SMITH: Yeah, Rachelle, we've been seeing AstraZeneca trying to expand its business. Mereo might be the right fit for the company. We know that they already have a partnership with Mereo, so they're very familiar with the brand. They aren't the only possible bidder here. In that report, it did mention that there might be some interest from other big players. Notably, Novartis is on that list. So it's far from a done deal. We'll have to see how that all shakes out.

Let's take a look at the travel industry because my play is Carnival. Now that is because of its partnership with BetMGM and its move into sports betting. It will now offer mobile wagering on more than 50 ships. Now those ships included in this are Holland America, Princess, and Carnival lines. Travelers will be able to bet on sports and online games from their phone or laptop. Now BetMGM will also offer betting and kiosks on just some of those ships.

Dave, it's going to be interesting whether or not this will actually entice some travelers, some cruise goers, back onto the ships, because the sector has really been struggling. The cruise lines aren't exactly seeing the interest that they were hoping to see because people simply are scared to get on them because of COVID.

DAVE BRIGGS: Yeah, I think it's a great move. Will it get people back to pre '19, pre-COVID levels? I just can't imagine. All three big North American cruise stocks are down 50% plus on the year. And people just tell you anecdotally, demand is still down because people have that fear built in on COVID and quarantines and ships being stuck. It's going to be-- take a lot longer than the airlines to rebound. Hopefully, this helps.

All right, my play is Devon Energy. Needless to say, the sector has been among the biggest winners this year, given the soaring global oil and gas prices. However, four of the five biggest losers on the S&P today, all oil and gas companies. And Devon leads the way in that.

The energy sector only makes up about 5% of the overall S&P. But as of this morning, those stocks, they're up 39% in 2022. That's easily the best performing sector. But today, again, nobody down more than Devon Energy at the moment, down just below 8%. But it is all relative for them, still up 27% year to date.

Will we see some demand destruction at these gas prices? We have seen 5 bucks stay static for about the last five days. Will the president and the Energy Secretary have any success, Rachelle, in increasing supply? That is clearly what they're trying to do here, is get the refining capacity up. That is a tall task.

RACHELLE AKUFFO: I mean, it's tough. I mean, you're hearing from oil producers that they just don't have enough supply to meet demand. We saw the International Energy Agency predicting the oil supply will still be struggling to meet demand in 2023, and that global demand will actually surge to 101.6 million barrels a day. And that's even if prices stay elevated. And of course, you have the world's biggest crude importer, China, coming back online. And if their demand picks up, that means oil is going to be under even more pressure.

SEANA SMITH: Yeah, there aren't any signs of demand destruction just yet. But Dave, you bring up a good question as to, when will we possibly see that? There's been calls that oil will likely go-- or gas, I should say. Gas prices should go above $6 or could go above $6 a gallon. You have to start thinking at that point, we could see some demand destruction.

But energy has by far been the winner this year. We've asked guest upon guest upon guest whether or not they still see further gains for the energy sector. And most of them say yes. It's not a sector that you want to bet against at this point. So there certainly is a lot of questions out there, just in terms of supply, but prices. It's going to be so, so crucial to watch.

DAVE BRIGGS: I think we're awfully close to demand destruction. I'm curious, the two of you, if you've seen it. I've heard a lot of people tell me they are making a conscious effort to drive less. I'm hearing people, when they talk about new jobs, push for at least a hybrid model, because they are factoring in $115 to fill their SUVs right now. And that's most of the cars that I see on the roads right now. Look, I think we are at that point. And why has 5 bucks stuck for the last five days? It feels like we're awfully close to that point.

RACHELLE AKUFFO: I mean, you'd think so. But at the end of the day, not everyone has the luxury of being able to work from home. Sometimes it's a must. It's not a luxury. You still have to drive. So it'll be interesting to see how much demand destruction will kick in because only certain people can really afford to stay home, or perhaps even ask to perhaps work from home. It's not the case for everybody. So people are really still in a tough position.

SEANA SMITH: And especially right now, we're in the summer months. We know that's a very heavy travel season. A lot of people are taking road trips, especially at a time when airfare has soared like it has over the past couple of months. So maybe people will start adjusting their plans. Maybe they'll go 30 minutes to an hour away, instead of making that three to four-hour trip. But it certainly is something to watch and affecting all of our users-- or all of our viewers, right.

DAVE BRIGGS: To your point, I think a lot of people are saying, hey, I'm still going to take that road trip because compared to airfares, a couple tanks of gas feels more tolerable right now, given the price--