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CAT earnings show slow in demand, 3M sees strong earnings on safety equipment sales

Yahoo Finance's Adam Shapiro and Julie Hyman break down earnings reports from Caterpillar, 3M, Pfizer, Merck, and Eli Lilly.

Video Transcript

ADAM SHAPIRO: Shares of CAT down about 2%. Here's what's going on. Obviously, the pandemic having an impact. They reported lower quarterly earnings as equipment sales fell across three of their primary segments. Revenue, $9.9 billion. That's a 23% decrease compared with $12.8 billion in the third quarter of last year. Now, this decline primarily due to lower sales volume driven by lower-end user demand for equipment and services.

According to CAT, the CEO said, we're encouraged by positive signs in certain industries and geographies. We're exceeding our strategy and are ready to respond quickly to changing market conditions. But with the pandemic having an impact, you'll want to know that the liquidity at the end of the quarter was $14 billion. Julie.

JULIE HYMAN: Well, we're also--

ADAM SHAPIRO: And 3M.

JULIE HYMAN: Yes, please.

ADAM SHAPIRO: I've got 3M shares for you as well. 3M here was also trading down 1.4%. Revenue of $8.35 billion. Sales for 3M's health care segment popped more than 25%. They were at $2.2 billion. That was driven by gains in the medical solutions, separation and purification, as well as dental or oral care equipment units. Safety and industrial division rose 6.9% on a year-over-year basis to $3 billion.

The CEO, Mike Roman, said-- and this is a quote-- though economic uncertainty and challenges due to the COVID-19 pandemic remain, we return to positive organic sales growth with sequential improvement across businesses and geographies. Still, though, shares of 3M down, just under 2%.

JULIE HYMAN: And now I'm going to take a look at some of the pharmaceutical companies that reported this morning. Pfizer shares down 1 and 1/4%. Sales there down 4% overall, but there was really a divide here. They saw an increase of 3% in sales for their biopharmaceutical products, but down 18% for Upjohn. Now, that's the off-patent and generic business that they're in the process of spinning out and then will be combined with Mylan, remember. That deal had already been announced, and that'll close in the fourth quarter.

Profit-excluding items did beat estimates for Pfizer. But again, it was that sales miss that it looks like is hurting the shares. 42,000 patients have enrolled in their final stage clinical trial of their coronavirus vaccine. Our Anjalee Khemlani, who was listening on the call, said that the CEO, Albert Bourla, said, I'm not bullish that the vaccine will work. I'm cautiously optimistic that the vaccine will work. We're going to be talking much more about the pharma earnings and Pfizer's vaccine prospects, in particular, a little bit later with a pharmaceuticals analyst.

In the meantime, we heard from Merck as well. Those shares are little changed. Revenue rose by 2%. It was driven by the immunotherapy drug Keytruda, which saw a 21% gain in sales-- also, hospital acute care products and demand for its bacterial pneumonia vaccine. Merck also raised its full-year profit forecast, but said it's going to see a bigger revenue hit than previously predicted as a result of the pandemic.

And finally, Eli Lilly-- profit there missing estimates on increased costs to develop COVID-19 therapies and, also, lower demand for some of its major drugs, like the diabetes treatment, Trulicity. The company is stopping its government-run trial for an antibody treatment for coronavirus. Other trials, however, will be continuing. But the company's 2020 COVID-19 R&D expense about $400 million. That appears to be pushing down the shares. They are down about 5 and a 1/2%.