RXDX - Wall Street Breakfast Podcast: Merck Agrees To Acquire Prometheus

2023-04-17 07:08:24 ET

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify Merck ( MRK ) inks ~$11B all-cash deal to acquire Prometheus (RXDX). Fox News ( FOX ) defamation trial delayed amid reports of settlement push. Panasonic ( PCRFF ) to build its third EV battery plant in the US, Oklahoma this time. Learn more about these stocks with Seeking Alpha Premium .

This is an abridged transcript of the podcast.

• Merck has agreed to acquire Prometheus. The pricetag is nearly $11B.

• Panasonic is looking at building another EV battery plant in the U.S. If it happens, it would be the company's third plant in the United States.

• The trial between Fox News and Dominion Voting Systems has been delayed. The trial was set to start today.

OUR TOP STORY

Merck (NYSE: MRK ) has agreed to acquire Prometheus Biosciences (NASDAQ: RXDX ). Prometheus is a clinical-stage biotech focused on immunology.

The companies made the announcement on Sunday. The agreement is for $200.00 per share in cash, indicating a total equity value of nearly $10.8B,

Prometheus ( RXDX ) advances late-stage studies for ulcerative colitis, Crohn’s disease, and other autoimmune conditions.

Premarket, Prometheus ticker symbol RXDX, is up nearly 70 percent. In the ratings summary on Seeking Alpha, I’m seeing green. SA Analysts say it’s a buy and there’s a consensus between Wall Street and quant rating, both say it’s a strong buy.

As for Merck, premarket the stock is down 1.5%. The latest article published on Seeking Alpha about Merck is by Harold Goldmeier. The article is entitled, “Merck is getting healthier.”

In the article he rates the stock a strong buy. They say, “One of management's greatest strengths is transparency, leaving it open to partnering with others and deal-making from a position of market power.”

I’ll leave a link in show notes.

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The landmark trial between Fox News (NASDAQ: FOX ) (NASDAQ: FOXA ) and Dominion Voting Systems has been delayed.

The voting-machine company is suing the network for $1.6B in damages for defamation.

The trial was set for a high-profile start today -- but at the eleventh hour it was delayed to Tuesday amid reports that Fox is making a late push to settle the case.

According to media reports, the parties are meeting today to discuss it.

Dominion has accused Fox News of issuing false claims that the voting-machine company worked to rig the 2020 election in favor of President Biden. Its officials have said they won't settle without a broad apology and admission from Fox that it aired false information about the company.

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Today is catalyst watch Monday.

Seeking Alpha Associate News Editor Kevin Curran gives us a look at the big picture for the week.

*audio from Kevin*

And Kevin says the earnings calendar is even busier.

*audio from Kevin*

Every week Seeking Alpha publishes a catalyst watch article. It’s published around 3 pm every Friday with a focus on the week ahead. I’ll leave a link to the latest article in show notes.

NOW MORE ON THE MARKET

U.S. stocks on Friday ended lower, suffering somewhat of a correction after posting solid gains in the previous session.

For the week however, all three major averages put in a positive performance.

The Nasdaq ( COMP.IND ) ended 0.35% lower. The S&P 500 ( SP500 ) slipped by 0.21%, while the Dow ( DJI ) retreated 0.42%.

For the week, the Nasdaq ended 0.29% higher, while the S&P 500 added 0.79%. The Dow rose by 1.20%.

Of the 11 S&P sectors, seven ended the session in the red, led by Real Estate and Utilities.

Financials gained more than 1%, buoyed by a more than 7% jump in shares of JPMorgan ( JPM ). The megabank raised its net interest income outlook for the year and easily topped Wall Street's earnings and revenue expectations. Citigroup ( C ) and Wells Fargo ( WFC ) also reported strong results.

Economic data on Friday showed retail sales and core retail sales both fell more than expected in March, pointing to further signs of cooling in the economy.

Atlanta Fed President Raphael Bostic on Friday told Reuters in an interview that the Fed could potentially end its policy tightening after one more 25 bp hike. On the other hand, Fed Governor Christopher Waller in a prepared speech said that further tightening would be needed given little progress on inflation.

MORE OF OUR TOP STORIES

Teck Resources (NYSE: TECK ) has been approached by Vale ( VALE ), Anglo American ( OTCQX:AAUKF ) ( OTCQX:NGLOY ) and Freeport McMoRan ( FCX ) on potential deals for its base metals business, if the company splits in two as planned,

This is according to a report from The Globe and Mail on Sunday.

The approaches from the three mining giants are among expressions of interest from at least a half dozen major miners inquiring about deals with Teck ( TECK ) following the split.

The inquiries come as Teck ( TECK ) tries to fend off unsolicited takeover bids from Glencore ( OTCPK:GLCNF ) ( OTCPK:GLNCY ), which modified its $22.5B all-stock offer to include up to $8.2B in cash.

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Chinese electric vehicle maker XPeng (NYSE: XPEV ) unveiled Sunday its new platform architecture for making vehicles.

The company says this sets the foundation for future production models and reduces the cost of development and manufacturing.

The Smart Electric Platform Architecture ( SEPA ) 2.0 is expected to shorten the R&D cycle for future models by 20%.

It’ll also cut costs on adaptations for advanced driver assistance systems (ADAS) and smart infotainment systems by 70% and 85%, respectively.

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The median asking rent in the U.S. fell 0.4% to $1,937 in March from a year earlier. It was the first annual drop since the Covid-19 pandemic hit in March 2020.

According to Dan Close, a Chicago-based Redfin real estate agent, “Rents are falling.” But he says, “it feels more like they’re just returning to normal, which is healthy to some degree.”

The overall slump in U.S. rents largely stemmed from a supply glut resulting from the pandemic homebuilding boom. And with rental vacancies on the rise, landlords have been reducing rent and offering concessions.

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Sega Sammy ( OTCPK:SGAMY ) is reportedly closing in on a deal to buy Rovio Entertainment ( OTC:ROVVF ).

Rovio is the name behind the game Angry Birds.

According to CNBC, Sega announced the $776 million offer for the company on Monday.

The Wall Street Journal had previously announced that deal may come as soon as early this week and at a valuation of about $1B.

Japan's Sega Sammy -- the result of the 2004 combination of iconic game-system maker Sega and slot-machine company Sammy.

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Crypto blockchain developer Chia Network announced Friday that it has confidentially filed with the SEC for an initial public offering.

The company said it hasn't yet determined the size or price range of the offering, but plans to move forward with the deal once it completes the SEC review process .

Based in South San Francisco, Chia has created a blockchain that it believes is more environmentally friendly because it allows for data to be stored on hard drives, which is less energy intensive.

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Best Buy (NYSE: BBY ) is the latest company to join major layoffs in 2023.

Numerous in-store consultants have been notified that their positions would be eliminated.

According to reports, the company would not say how many positions will be cut.

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Panasonic ( OTCPK:PCRFY ) ( OTCPK:PCRFF ) said on Sunday that it is considering building a battery plant in Oklahoma.

This would be its third in the US.

According to state officials, The investment could go up to $4B and will create up to 4,000 jobs.

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Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are mixed. The Dow is up 0.1%. The S&P 500 is also up 0.1% and the Nasdaq is down a tiny fraction. Crude oil is down 0.1% at more than $82 a barrel. Bitcoin is up 1.5% at $29,861.

In the world markets, the FTSE 100 is up 0.5% and the Dax is up 0.3%.

On today’s economic calendar, at 10 am the NAHB Housing Index and at 12 pm the Fed’s Thomas Barkin will speak before the Richmond Association for Business Economics.

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