📈 Pfizer's $1B Booster Shot

Good morning.

⚡ The Fast Five → BP pivots to boost oil, Mortgage rates jump, Arcadium gets an offer, Oil prices keep rising, Starboard sets sights on Pfizer

And now…

⏱️ Your 5-minute briefing for Monday, October 7, 2024:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Trends

• Wall St Week Ahead Investors look to earnings to support record-high stock prices

• Fed seen slowing rate cut pace after strong US jobs data

• US Futures Steady to Start the Week

WHAT WE’RE WATCHING
Events

• Wed. Oct 9: Federal Reserve - Federal Open Market Committee, 2:00PM

• Why You Should Care: It's a detailed record of the FOMC's most recent meeting, providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.

Earnings Reports

• Today: Duckhorn

• Tomorrow: PepsiCo, IDT, Accolade

MARKET BRIEF
Leading News

Activist Starboard Value Injects $1B Booster into Pharma Giant Pfizer

Why it matters: Starboard Value just dropped a $1 billion stake in Pfizer (PFE), aiming to shake up the pharma giant’s post-pandemic struggles. Activists don't make moves like this without seeing serious upside potential.

The big picture: Pfizer soared during the pandemic thanks to its COVID-19 vaccine and treatments, with revenues more than doubling to $100 billion in 2022. But as the pandemic receded, demand for its COVID products plummeted, sending the stock down by more than 50% from its 2021 highs. Wall Street remains skeptical that Pfizer can replace the massive income it generated during the pandemic boom.

Now, Starboard sees opportunity where others see disappointment. They're already in talks with former Pfizer executives Ian Read and Frank D’Amelio to help lead a turnaround, indicating that a shake-up in leadership or strategy could be on the horizon.

Key insights:

• Pfizer’s stock slump: Despite the broader market being up 21% this year, Pfizer’s stock has struggled to break into positive territory, making it a prime target for activist intervention.

• Costly acquisitions: Starboard is likely focusing on Pfizer’s recent string of costly acquisitions—like its $43 billion purchase of Seagen and the $5.4 billion buyout of Global Blood Therapeutics—that haven’t yet paid off.

• Cancer and other pipelines: Pfizer has set its sights on expanding its cancer drug portfolio, but some projects, like its gene therapy for Duchenne muscular dystrophy, have faced setbacks.

What they're saying: “It’s not overly surprising to see a firm like Starboard attempt to change Pfizer’s trajectory,” said Mizuho’s healthcare specialist Jared Holz. However, "solving Pfizer’s many woes will likely take time," according to BMO Capital Markets analyst Evan Seigerman.

The bottom line: Starboard’s stake in Pfizer represents a bullish bet that the company can turn its fortunes around—eventually. For investors, it’s a potential long-term play. If Starboard’s involvement drives operational improvements or strategic pivots, Pfizer could be primed for a comeback.

BP Shifts Gears

Why it matters: BP's (BP) latest pivot toward boosting oil production may seem like a step backward, but it's actually a smart hedge in the energy transition that could pay off big for investors.

The big picture: BP is walking a tightrope between its green commitments and maximizing near-term profits. The energy giant just revised its oil production targets upward, a move that could generate more cash flow for funding renewable ventures.

• This recalibration follows pressure from shareholders looking for higher returns and stronger short-term performance amid a volatile energy market.

• While BP has spent years touting its transition to cleaner energy, the company’s leadership now recognizes the need to remain flexible as oil demand stays resilient.

Key details:

• BP had originally pledged to cut oil output by 40% by 2030 but now plans to scale back those reductions.

• Analysts see this as a win for BP’s bottom line, especially with oil prices hovering above $90 per barrel (WTI), making exploration and production more profitable.

• A dual strategy—reinvesting oil profits into renewables—could set BP up for long-term success.

Go deeper:

• Hedge against volatility: BP's increased oil output provides stability in the face of near-term energy demand while they continue to grow their renewable portfolio.

• Market demand: With oil demand strong globally, BP is capitalizing on higher prices to boost its cash reserves.

• Renewables upside: BP’s long-term shift into clean energy remains intact, fueled by near-term oil profits.

What they're saying: "BP is recalibrating to deliver stronger returns today, while positioning for tomorrow’s energy transition," one industry expert noted.

The bottom line: For investors, BP's strategic pivot could deliver solid gains from oil in the short term while still setting the stage for future growth in renewables.

Headlines

• How a rates rethink after strong US jobs data could shake up markets (link)

• Mortgage Rates Undergo One Of The Biggest Single-Day Jumps (link)

• Rio Tinto Makes Approach for $3.3 Billion Arcadium Lithium (link)

• Oil Prices Rise as Middle East Tensions Simmer (link)

• Goldman Upgrades China Equities to Overweight, Sees Further Upside (link)

• Saudi Arabia sets sights on acquiring a bigger stake in Nintendo (link)

• Klarna is about to oust another board member (link)

CRYPTO
Fear & Greed

Headlines

• Bitcoin Market Realized Price Hints at Long-Term Holders Taking Profits (link)

• Institutions could be Solana’s edge against Ethereum (link)

• UAE Exempts Crypto Transactions From Value Added Tax (link)

DAILY SHARE
On the Socials