Markets have edged upwards this morning as investors wait for the minutes from the latest Fed Reserve meeting to be published this afternoon. Any sign that rate rises could be more or less aggressive than currently expected could trigger significant market moves. Right now, the S&P 500 is up 0.27% at 3,598 and the Nasdaq is up 0.2% at 10,477.
In today’s update we look at some strong numbers from PepsiCo and why shares in Moderna are up over 10% today. Read on for all of Wednesday morning's main market movers.
Moderna (MRNA) is the biggest riser so far today. The vaccine company’s stock price has jumped 11% to $134.29. This is on news that Merck (MRK) has exercised an option to develop a cancer vaccine with Moderna. The vaccine is a personalized cancer vaccine (PCV) and is in mid-stage Phase 2 trials. Roughly speaking, that means it has a 40 to 50% chance of getting approval from the FDA in future. Merck is paying Moderna $250 million at this point and the two companies will jointly develop the vaccine.
Merck’s move helps Moderna push the story that the company isn’t solely focused on Covid vaccines. Alongside this cancer vaccine, Moderna also has vaccines for flu and Respiratory Synctial Virus (RSV) in late-stage Phase 3 trials.
PepsiCo (PEP) announced strong third quarter numbers and the shares are up 4.5% to $169.92 as a result.
The food and beverages giant said that organic revenues would rise 12% this year, ahead of the previous 10% forecast. Adjusted earnings per share for the quarter came in at $1.97, again ahead of forecasts.
PepsiCo has been able to pass on increased costs to consumers via higher prices and hasn’t lost much business as a result. That highlights the strength of Pepsi’s brands and also shows that consumers don’t want to give up their little treats of a can of Pepsi or some Doritos chips.
PepsiCo has also masked some of its price rises by reducing product sizes instead of raising prices – this is known as ‘shrinkflation.’ In two divisions of the business PepsiCo reported double-digit revenue increases despite a small decline in product volumes.
Today’s good news also boosted the Coca-Cola (KO) stock price, up 2% at $55.59. Coca-Cola should report its latest numbers in two weeks.
Norwegian Cruise Line Holdings (NCLH) is a big riser this morning, jumping 7.5% to $12.52. An analyst at UBS upgraded the global cruise company from ‘Neutral’ to ‘Buy,’ citing significant improvements in bookings. Other cruise stocks also rose this morning including Royal Caribbean (RCL), up 6.5% to $43.34, and Carnival (CCL), up 5.5% to $7.02.
Zoom Video Communications (ZM) has had a disappointing 2022 and the shares are down 71% over the last 12 months. However investors probably shouldn’t give up on Zoom just yet. The company is profitable and it’s trying to broaden out from video calls to other business services such as chat and phone calls. And investors are noticing that today with a 3% rise in the share price to $75.75.
Shares in T Rowe Price Group (TROW) are down 6.6% to $98.27 after the investment management firm said that assets under management fell to $1.23 trillion at the end of September, down from $1.69 trillion at the end of 2021. Deutsche Bank has cut its price target for the stock from $138 to $101, although it has maintained its ‘hold’ rating.
T Rowe Price is clearly being hit by falling markets. The value of investments in mutual funds is falling, and some investors are withdrawing cash as they worry that stock prices will fall further. The company also has a longer-term structural problem. T Rowe Price is an ‘active’ manager, where expensive Wall Street managers pick stocks for a fund. But money is flowing away from active funds to ‘passive’ funds which invest in all the stocks in an index such as the S&P 500. This trend shows no sign of reversing, so the growth prospects for T Rowe Price don’t look good.
Lithium is a crucial component of electric vehicle batteries and Albermarle (ALB) seems an attractive way to play the theme. Particularly given 60% of its revenues come from Lithium and the company owns both mines and processing plants for the metal. Yet the shares are up only 5% this year and have crashed almost 7% today to $253.90. Shares in several electric vehicle firms – Tesla (TSLA), Lucid (LRCD), and Rivian (RIVN) – are down this week, so Albermarle may have been caught up in the carnage.
Atlassian (TEAM) specializes in workflow management software. It helps businesses plan and collaborate on projects. The company’s fourth-quarter results in August were better than expected but the share price has continued to fall since then. The stock price is down by more than a quarter in the last two months, and today it’s fallen a further 3% to $202.01. Atlassian is expected to move into profit next year but that’s clearly not enough to reassure investors about the merits of this highly-priced growth stock.
Shares in SBA Communications (SBAC) are down 4% today to $244.41. That presents an opportunity for investors looking for a reliable income stream. SBA owns and operates wireless cell towers across North and South America and currently pays a yield of 1.3%. Admittedly, the stock trades on a multiple of over 50 times earnings, but wireless cell towers should be able to generate recurring revenues for years to come.