Research Market strategy
By Swissquote Analysts
Published on 15.03.2021
Morning news

Roche Signs Merger Agreement to Acquire GenMark Diagnostics

Topic of the day

Roche Holding AG said Monday that it signed a definitive merger agreement with GenMark Diagnostics Inc. in a deal valued at approximately $1.8 billion on a fully diluted basis. The Swiss pharmaceutical major said it will commence a tender offer to acquire all outstanding shares of the diagnostic solutions provider at a price of $24.05 a share in an all-cash transaction. The deal, which has been approved by Roche and GenMark's boards of directors, is expected to close in the second quarter of the year. "Acquiring GenMark Diagnostics will broaden our molecular diagnostics portfolio to include solutions that can provide life-saving information quickly to patients and their healthcare providers in the fight against infectious diseases," Thomas Schinecker, chief executive officer of Roche Diagnostics, said. The transaction value of $1.8 billion represents a premium of around 43% to GenMark's closing share price on Feb. 10--the last trading day before speculation emerged about a potential sale.

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Swiss stocks

The SMI closed down 0.4 percent on 10,840 points Friday as cautious investors pocketed profits. A resurgence in bond yields partly damped sentiment, especially for tech stocks, given the sector’s high capital gearing, but boosted financial stocks that were spurned Thursday. UBS gained 0.9 percent and Julius Baer 0.5 percent, but CS Group slid 2.5 percent on an analyst downgrade to “neutral” from “buy”. Swiss Life, Swiss Re and Zurich rose by between 0.2 percent and 0.9 percent. Cyclical stocks Geberit rose 0.5 percent and Lafargeholcim 0.6 percent on signs of an emerging economic recovery. Luxury goods stocks profited from looser travel and contact restrictions. Richemont rose 2.1 percent and Swatch 0.4 percent. Private equity firm Partners Group slid 0.2 percent on the news it has acquired a Baltic district heating platform from Finnish Fortum Corporation. Tech stocks AMS fell 2.9 percent and Logitech 2.1 percent as US tech stocks saw profit-taking Friday after strong gains Thursday.

International markets

Europe

European stocks trade mixed amid investor caution over a renewed rise in US Treasury yields. The Stoxx Europe 600 falls 0.3%, the DAX drops 0.5%, the CAC-40 rises 0.2% and the FTSE 100 gains 0.4%. "It appears equities have survived Friday's bond yield drama," Spreadex analyst Connor Campbell says. "Next week may put further spotlight on the issue, however, thanks to meetings for the Federal Reserve...and the Bank of England, both of whom have struck differing notes on the threat of rising inflation." Tech stocks are among the biggest fallers and banks are top performers. Housebuilder Berkeley Group drops 5.8%. Luxury car maker Daimler AG is recalling over 2.6 million Mercedes-Benz vehicles in China due to a software design problem, the country's top market regulator said Friday. Burberry Group's surprise update implies an uplift to consensus estimates for fiscal 2021 which, together with Prada's positive comments earlier this week, is likely to be read positively for the wider sector, RBC Capital Markets analyst Piral Dadhania says. The British luxury-goods company said it has continued to see a strong rebound since December, which will result in revenue and adjusted operating profit for the full year beating consensus expectations. Burberry shares jump 7%, topping the FTSE 100 risers.

United States

The Dow Jones Industrial Average rose for the sixth consecutive session on Friday and set a record, boosted by signs that the domestic economy is revving up. The blue-chip gauge added 293.05 points, or 0.9%, to 32778.64, finishing its best week since November. The S&P 500 edged lower for much of the session before turning higher and gaining 4 points, or 0.1%, to 3943.34, also a fresh high. The Nasdaq Composite lost 78.81 points, or 0.6%, to 13319.86. The Dow and S&P 500 gained 4.1% and 2.6%, respectively, for the week. The Nasdaq added 3.1% for the week, snapping a three-week streak of losses. It is still off 5.5% from Feb. 12's record. Novavax Inc. (+5,1%) released final results from clinical studies indicating its Covid-19 vaccine was effective against the coronavirus and a variant that emerged in the U.K., but less so against another variant in South Africa. The final data, reported Thursday by the Gaithersburg, Md., company, was generally consistent with interim results the company released from the same studies in late January. The findings bode well for the company's efforts to obtain clearance from regulators to distribute the two-dose vaccine. Authorizations of the vaccine would add another source of doses to countries racing to inoculate residents but confronting limited supplies and emerging strains. Boeing got a new customer for its 737 MAX jets, and the new order is driving the commercial aerospace giant's shares higher. Friday's gain caps off what has been an incredible week for Boeing stock. Boeing shares rose 6.8% Friday.

Asia

Most Asian benchmarks were little changed on Monday despite data that showed China's economic activity surged in January-February from a year earlier. China's industrial output, investment and consumption in the first two months of the year were all higher compared with the same period in 2019, before the world's second largest economy was hit by Covid-19.

Bonds

Treasury yields remained elevated in Asia after selling in U.S. government bonds picked up steam again on Friday. The yield on the benchmark 10-year Treasury note was recently at 1.635% after it settled at 1.634% on Friday, its highest level since February of last year.

Analysis

Barclays lowers BMW to Equalweight (Overweight)
UBS lowers Fuchs Petrolub target to 40 (45) EUR – Sell
IR lowers the Lanxess target to 64 (65) EUR – Hold

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