Constellation acquisition not without risks for Morphosys
Topic of the day
German pharmaceutical company MorphoSys slumps 12.9% after announcing the acquisition of U.S. cancer specialist Constellation Pharmaceuticals. The acquisition, at $1.7 billion, is very large, said one trader, but will be largely borne by Royalty Pharma as part of a financing partnership. In return, Royalty is entitled to certain royalties from Morphosys products. Morphosys shareholders are likely to be disturbed by Royalty's planned stake in Morphosys and the associated dilutive effect, they said. Royalty Pharma is expected to invest $100 million in a cash capital increase of Morphosys, excluding existing shareholders' subscription rights. In addition, Constellation is betting on a fairly new technology, which comes with risks for Morphosys.
After the recent record chase, the Swiss stock market rose slightly again on Wednesday. Up to 6 points, the SMI came in the course of its old record high. The friendly mood was carried by the good vaccination progress in Switzerland and many other countries, in which increasingly closed areas are accessible again. However, this was accompanied by fears over inflation, which is already rampant but whose sustainability is disputed. The ambiguity was reflected in a forecast by UBS, which expects GDP in Switzerland to be slightly higher than before, but at the same time prices to rise. Many participants wonder whether central banks will find a timely and appropriate response to inflation. The SMI gained 0.3 percent to 11,470 points. Among the 20 SMI stocks, there were eleven price losers and eight winners, and one share closed unchanged. 27.67 (previously: 33.97) million shares were traded. Premiums in Novartis (+1%) and Nestle (+0.7%) kept the SMI in the plus. Novartis had presented new positive data from a Phase III study of the cancer drug Kisqali. Richemont (+1.7%) was even more sought after, extending its strong gains of the previous day. Deutsche Bank confirmed its buy recommendation and raised its price target. It speaks of structural growth drivers, which gave the jewelry market encouraging prospects. Lonza gained 0.2 percent. The pharmaceutical supplier produces additional Covid-19 vaccine from Moderna in Geelen, Netherlands. ABB extended strong Tuesday gains by another 0.8 percent.
European stocks struggled for gains on Wednesday, with energy companies getting a lift as oil prices hovered at two-year highs. The Stoxx Europe 600 inched up 0.1%, while the French CAC 40 was flat along with the German DAX. The FTSE 100 index rose 0.4%.
Shares of heavily weighted energy companies were among the gainers. Stock in TotalEnergy, formerly known as Total, was up 1.6%. In London, shares of Royal Dutch Shell climbed 1.9% and BP rose 0.7%. Those gains came as U.S. and global benchmark prices settled at the highest levels in more than two years on Tuesday, after the Organization of the Petroleum Exporting Countries and its allies agreed to keep a plan to gradually lift oil production through July in place. Worries about inflation and how the Federal Reserve may manage it are simmering in the background ahead of an expected strong rise in U.S. hiring for May. Among stocks on the move, shares of Interpump Group IP, topped the Stoxx 600's gainers list, rising 7% after the Italian maker of high-pressure water pumps announced the signing of a binding agreement for the purchase of the White Drive Motors & Steering business unit from Denmark-based engineering company Danfoss Group. Wizz Air shares fell 2%, after the Central and Eastern European low-cost airline swung to a pretax loss for fiscal 2021, as revenue fell due to the COVID-19 pandemic's effect on air travel. The company warned that it could see a net loss for fiscal 2022 unless restrictions are removed quickly and permanently.
Major U.S. stock indexes edged higher Wednesday as concerns around the consequences of a strong economic recovery, marked by inflation, continued to buffet the market. Stocks remained volatile as stocks have struggled to gain traction in recent days. The S&P 500 ended up 6.08 points, or 0.1%, to 4208.12 after waffling above and below the flatline throughout the session. Wednesday’s real action appeared to happen outside the major indexes. The market’s more seismic moves were concentrated around a handful of stocks popular with individual investors, including AMC Entertainment and BlackBerry. Both of those so-called meme stocks are on a tear again after surging earlier this year.
Analysts credited the run-up to a mob of individual traders who have proved to be a powerful force on Wall Street ever since GameStop’s jaw-dropping ascent in January. Many investors appeared to surge into the stock Wednesday on news that a hedge fund had bought and quickly sold for a profit $230.5 million worth of AMC stock. AMC shares skyrocketed $30.51, or 95%, to $62.55. BlackBerry shares got in on the rally, rising $3.69, or 32%, to $15.25, as did GameStop, which added $33.22, or 13%, to $282.24. Energy stocks led the S&P 500 higher, with oil-field services Schlumberger rising $2.53, or 7.7%, to $35.46 and Halliburton adding $1.01, or 4.3%, to $24.35. Reopening stocks like American Airlines gained $1.15, or 4.7%, to $25.82, while Carnival rose $1.16, or 3.8%, to $31.31. Microchip stocks also helped boost the market, with Nvidia and Advanced Micro Devices both notching gains. Meanwhile, the S&P 500’s consumer discretionary sector fell 0.7%, coinciding with a $18.78, or 3%, slide in Tesla stock to $605 following a Wall Street Journal report that the electric car maker failed to oversee Chief Executive Elon Musk’s tweets.
Most of the Asian stock markets are trading up on Thursday. Thus, the Shanghai Composite rises after slight initial losses by 0.4 percent. In contrast, the Hang Seng Index in Hong Kong slips after slight gains at the opening into the red and loses 0.4 percent. The most significant gain in the region is the Kospi in Seoul, which rises by 1.0 percent. Here support increases in energy stocks. In Tokyo, where the Nikkei-225 climbs by 0.4 percent, it is again the values from the transport and automotive sector that support the market.
Long-dated U.S. government debt yields slipped on Wednesday, after an anecdotal gauge of the health of the U.S. economy from the Federal Reserve, the Beige Book, showed business conditions improving only slowly while inflation pressures build. The 10-year Treasury note was yielding 1.591%, down 2.2 basis points at 3 p.m. Eastern Wednesday.
Dt. Bank lifts Richemont target to CHF 127 (112) - Buy
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Berenberg raises Beiersdorf to Buy (Hold) - Target EUR 114 (92)
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