Crude Oil Higher on Mixed Data

This week’s draw is the seventh week of draws in the last 10 weeks, with a total draw of almost 27 million over the last ten weeks

For the 2017 summer driving season (April–September), U.S. regular gasoline retail prices are forecast to average $2.46/gallon (gal), compared with $2.23/gal last summer

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Crude oil is higher following release of #API weekly inventory data. The American Petroleum Institute (API) reported a draw of 4.62 million barrels in United States crude oil inventories, compared to analyst expectations of a draw of 3.5 million barrels for the week ending June 2.

This week’s draw is the seventh week of draws in the last 10 weeks, with a total draw of almost 27 million over the last ten weeks.

Gasoline inventories rose 4.08 million barrels last week, according to the API report. Distillate inventories also rose by 1.75 million barrels, while inventories at the Cushing, Oklahoma, site fell by 1.56 million barrels.

The U.S. Energy Information Administration report on oil inventories is due on Wednesday at 10:30 a.m. EDT. Please check Stockwinners Market Radar for the data.

EIA Lowers Brent Forecast

Energy Department’s the Energy Information Administration (EIA) released its latest forecast for oil prices:

Reports Highlights
  • North Sea Brent crude oil spot prices averaged $50 per barrel in May, $2/b lower than the April average. EIA forecasts Brent spot prices to average $53/b in 2017 and $56/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018. NYMEX contract values for September 2017 delivery that traded during the five-day period ending June 1 suggest that a range of $39/b to $64/b encompasses the market expectation for WTI prices in September 2017 at the 95% confidence level.
  • The Organization of the Petroleum Exporting Countries (OPEC) met on May 25 and announced an extension to voluntary production cuts through March 2018 that were originally set to end in June 2017. EIA forecasts OPEC crude oil production will average 32.3 million barrels per day (b/d) in 2017 and 32.8 million b/d in 2018.
  • U.S. crude oil production averaged an estimated 8.9 million b/d in 2016. U.S. crude oil production is forecast to average 9.3 million b/d in 2017 and 10.0 million b/d in 2018. The 2018 forecast exceeds the previous record level of 9.6 million b/d set in 1970.
  • For the 2017 summer driving season (April–September), U.S. regular gasoline retail prices are forecast to average $2.46/gallon (gal), compared with $2.23/gal last summer. The higher forecast gasoline price is primarily the result of a higher forecast crude oil price. The forecast annual average price for regular gasoline in 2017 is $2.38/gal.
  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas to fall from an average of 34% in 2016 to less than 32% in both 2017 and 2018 as a result of higher expected natural gas prices. Coal’s forecast generation share rises from 30% in 2016 to 31% in 2017 and 2018. Non-hydropower renewables are forecast to provide 9% of electricity generation in 2017 and nearly 10% in 2018. The generation share of hydropower is forecast to be nearly 8% in 2017 and 7% in 2018. The nuclear share of generation remains just under 20% in both 2017 and 2018.
  • Coal exports for the first quarter of 2017 were 58% higher than in the same quarter last year, with steam coal exports increasing by 6 million short tons (MMst). Coal producers that have completed bankruptcy reorganizations and companies that purchased bankrupt assets have increased both exports and production in 2017. EIA expects growth in coal exports to slow in the coming months, with exports for all of 2017 forecast at 72 MMst, 11 MMst (19%) above the 2016 level. The increase in coal exports contributes to an expected 8% increase in coal production in 2017.

WTI is up 60 cents to $48 per barrel, Brent is up 50 cents to $49.97 per barrel.

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Browsers Ad Blocking Moves Stocks

The ad-blocking feature, which could be switched on by default within Chrome, would filter out certain online ad types deemed to provide bad experiences for users as they move around the web

Large social media websites, including Facebook and Twitter, should benefit from new efforts by Apple and Google to prevent advertisers and publishers from tracking Internet users’ activities

 

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#Alphabet Inc.’s #Google is introducing an ad-blocking feature in the mobile and desktop versions of its popular Chrome web browser. The ad-blocking feature, which could be switched on by default within Chrome, would filter out certain online ad types deemed to provide bad experiences for users as they move around the web. Apple’s #Safari has announced a similar move.

Large social media websites, including Facebook (FB) and Twitter (TWTR), should benefit from new efforts by Apple (AAPL) and Google (GOOG, GOOGL) to prevent advertisers and publishers from tracking Internet users’ activities on their browsers, according to #MorganStanley. Amazon (AMZN) and digital game makers could also be boosted by the changes being made by Apple and Google, according to the firm’s analyst.

Conversely, the firm believes that retailers, small e-commerce companies, and online travel agencies could be hurt by the changes. The news is “not positive” for Criteo (CRTO), which tracks and analyzes users’ browsing behavior, Morgan Stanley added.

Other analysts, however, were more quicker to defend Criteo, with #JPMorgan, #Cowen, and Jefferies saying the stock’s decline yesterday in the wake of Apple’s announcement was overdone.

WINNERS:

The anti-tracking initiatives will make online platforms less attractive to advertisers in the shorter term, contended Morgan Stanley analyst Brian Nowak. Over the longer term, however, the changes will make user data more valuable, boosting Facebook, Twitter and #Snap (SNAP), the analyst stated. Additionally, more advertisers could turn to #Amazon in an effort to connect with its user base, while digital game makers #Zynga (ZNGA) and #Activision (ATVI) could benefit from similar trends, according to Nowak.

POTENTIAL LOSERS:

Based on the browser changes, small e-commerce companies such as eBay (EBAY) and Etsy (ETSY) could find it harder to compete against Amazon, while online travel companies may have to pay more to acquire customers, Nowak stated. The two major online travel companies are Priceline (PCLN) and Expedia (EXPE).

CRITEO OUTLOOK:

The changes announced by Apple and Google are “not positive” for #Criteo, Nowak warned. “It will be important to monitor” the company’s efforts to work around the changes and to increase its focus on advertising within apps, he wrote.

More upbeat on Criteo was #Jefferies analyst Brian Fitzgerald. Apple’s browser probably only accounts for less than 1.5% of Criteo’s revenue, and that percentage is “rapidly shrinking,” he stated. Noting that desktop ads only accounted for 37% of Criteo’s revenue in the last quarter of 2016, down from 53% in December 2015, the analyst says that Criteo “is already quickly mix-shifting away from desktop browsers and away from Safari specifically.” He recommended buying Criteo’s stock on weakness. Similarly, JPMorgan analyst Doug Anmuth does not expect Criteo’s results to be affected much by the changes being made by Apple and Google. He thinks that the decline in Criteo’s stock yesterday was overdone and kept an Overweight rating on the name.

Finally, Cowen analyst Thomas Champion says that Criteo’s exposure to Apple’s browser “seems limited,” so he believes that the risk to Criteo’s revenue should be “mitigated.”

Champion thinks that the decline in Criteo’s stock yesterday appeared to be overdone, and he reiterated an Outperform rating on the name.

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Amazon, the next Threat to Drug Prices

Wells Fargo said Amazon may be the next threat to drug pricing as the company’s move into the prescription pharmacy space could result in increased competition and increased pricing transparency

Although brand-name drugs comprise only 10% of all dispensed prescriptions in the United States, they account for 72% of drug spendingHttps://stockwinners.com/

Last month, #CNBC reported that #Amazon ( $AMZN ) is considering going into the prescription pharmacy business in the U.S. Now Wall Street analysts are questioning if the e-commerce giant has larger plans for the healthcare market.

One of the reasons drug prices are much higher in the United States compared to other industrialized countries is that the U.S. lacks a national healthcare system that directly negotiate with the pharmaceutical industry. Rather, most of the negotiations occur between the pharmaceutical companies and private insurers or vendors. The primary reason for increasing drug spending is the high price of branded products protected by market exclusivity provisions granted by the US Patent and Trademark Office and the Food and Drug Administration (FDA) (rather than a national healthcare system.)

Although brand-name drugs comprise only 10% of all dispensed prescriptions in the United States, they account for 72% of drug spending. Between 2008 and 2015, prices for the most commonly used brand-name drugs increased 164%, far in excess of the consumer price index.

Although brand-name drugs account for the greatest increase in prescription drug expenditures, another area that has captured the attention of the public and of policy makers has been the sharp increase in the costs of some older generic drugs. In 2015, Turing Pharmaceuticals raised the price of pyrimethamine (Daraprim), a 63-year-old treatment for toxoplasmosis, by 5500%, from $13.50 to $750 a pill.22 The company was able to set the high price despite the absence of any patent protection because no other competing manufacturer was licensed to market the drug in the United States.  Significant increases in the prices of other older drugs include isoproterenol (2500%), nitroprusside (1700%), and digoxin (637%). Even though the prices of most generic drug products have remained stable between 2008 and 2015, those of almost 400
increased by more than 1000%.

Having made the above statements, it should be noted that there are a number of middle men before a patient’s prescription is received by the consumer. It is estimated that a 28% – 48% cost increase for a typical prescription, and that is where Amazon could come in.

PRICING THREAT:

Wells Fargo analyst David #Maris said Amazon may be the next threat to drug pricing as the company’s move into the prescription pharmacy space could result in increased competition and increased pricing transparency.

He added that a Wells Fargo survey of nearly 2,900 U.S. adults found that 54% of those polled said they would use or would probably use “Amazon Pharmacy,” indicating patients’ willingness to shift from local pharmacies. While the e-commerce giant has not confirmed its U.S. pharmacy interest, if it did enter the market Maris believes it could see fast adoption and “usher in a new age of price transparency.” He also wonders if pharmacy “may be just the beginning” and if Amazon eyes the “even larger prize” of fully integrated digital healthcare as telemedicine becomes more widely accepted. Maris said while little is known about Amazon’s plans, investors and companies should question the impacts of such a move now.

SIMPLY AMAZON‘: In addition, #Maxim analyst Tom Forte said that as consumers increasingly interact with Amazon in physical locations, “Amazon.com will become simply Amazon.” He analyzed 18 market opportunities, including 14 that Amazon is already pursuing and four – credit, gas stations, pharmacy, and travel – that are new. Among them, he identified ten categories where the global total addressable market exceeds $1T, which included the pharmacy space. Forte said he believes Amazon’s potential expansion into the pharmacy market could serve as a driver of sustained revenue growth and its delivery initiatives, such as Prime Now, make it well-positioned for entry. Given Amazon’s opportunity to drive incremental sales growth and “further disrupt the retail sector,” Forte raised his price target on AMZN to $1,300 from $1,075 and keeps a Buy rating on the name.

WHAT TO WATCH:

Publicly traded large-cap pharmaceuticals companies include AstraZeneca (AZN), Bristol-Myers (BMY), Eli Lilly (LLY), GlaxoSmithKline (GSK), Johnson & Johnson (JNJ), Merck (MRK), Novartis (NVS), Pfizer (PFE), Roche (RHHBY) and Sanofi (SNY). Publicly traded retail pharmacy operators include CVS Health (CVS), Walgreens (WBA), Fred’s (FRED) and Rite Aid (RAD).

PRICE ACTION: Amazon rose 0.1% to $1,012.35 in Tuesday trading. The stock is just dollars away from its recently-reached all-time high of $1,016.50.

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Shares of bluebird bio Jump on ASCO Presentation

bluebird bio, and Celgene presented data on bb2121, their investigational anti-BCMA CAR T cell therapy for multiple myeloma

Leerink says bluebird bio’s bb2121 dose-escalation data in multiple myeloma is among the most impressive early data sets he’s seen

 

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American Society of Clinical Oncology’s #ASCO Annual Meeting is taking place June 2 to June 6 in Chicago. Several pharmaceutical firms and biotechnology companies are presenting their new drugs and/or present progress on the status of their drugs under development. bluebird bio $BLUE is one of the presenters.

#bluebird bio (BLUE) is a clinical-stage company developing potentially transformative gene therapies for severe genetic diseases and T cell-based immunotherapies. The company’s objective is to develop and bring to market the most advanced products based on the transformative potential of gene therapy to provide patients hope for a better life in the face of limited or no long-term safe and effective treatment options.

bluebird bio, and Celgene Corporation (CELG) announced that updated results from the ongoing CRB-401 Phase 1 clinical study of bb2121, an investigational anti-BCMA CAR T cell therapy, in 18 patients with relapsed/refractory multiple myeloma were presented at the American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago, Illinois.

The objective of this Phase 1 dose-escalation study is to evaluate safety and efficacy of bb2121 and determine a recommended Phase 2 dose. bluebird bio and Celgene are jointly developing bb2121.

As of the May 4, 2017, 21 patients had been enrolled and dosed in four dose cohorts. All 21 dosed patients were evaluable for safety, and 18 patients have undergone their first multiple myeloma tumor restaging and were evaluable for efficacy. This study has enrolled patients at seven sites in the U.S., with an anticipated total enrollment of up to 50 patients.

Patients received a conditioning regimen of cyclophosphamide and fludarabine, followed by an infusion of bb2121 anti-BCMA CAR T cells. The CAR T cells were produced from each patient’s own blood cells, which were modified using a lentiviral vector encoding the anti-BCMA CAR.

“It is impressive to see objective responses in all patients treated at dose levels of 150 x 106 CAR+ T cells or higher in such a heavily pretreated population, including those with high tumor burden. We are encouraged by the duration and depth of responses, and pleased that the safety profile remains readily manageable,” said David Davidson, M.D., chief medical officer, bluebird bio.

Analysts Reaction

#BMO Capital upgraded bluebird bio to Outperform from Market Perform. Analyst Matthew Luchini says that a trial of the company’s bb2121 drug showed that its efficacy is “compelling,” while its safety is “generally clean.” Raised his price target to $108 from $83.

#SunTrust analyst Edward Nash says that the data for the Phase I trial of bluebird’s bb2121 in relapsed/refractory multiple myeloma.was “impressive.” He says that the drug’s efficacy was “robust,” while its safety appears to be “manageable.” The analyst keeps a $108 price target and Buy rating on the stock.

#Leerink analyst Michael Schmidt says bluebird bio’s (BLUE) bb2121 dose-escalation data in multiple myeloma is among the most impressive early data sets he’s seen in the #CAR-T space to date. The data sets a high bar for the competition, which includes #Juno Therapeutics (JUNO), #Kite Pharma (KITE) and #Novartis (NVS), Schmidt tells investors in a research note. Being one year ahead of the competition provides bluebird and Celgene (CELG) with an ideal position in multiple myeloma, the analyst adds. He keeps an Outperform rating on bluebird shares with a $100 price target.

Price Action

BLUE last traded at $102.92, up 13% on the day. It has a 52-week trading range of $36.62 – $104.90.

CELG last traded at $116.83, down one percent on the day.   It has a 52-week trading range of $94.42 – $127.64.

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Signet Problems Continue

COO resigned on June 2 due to violations of company policy “unrelated to financial matters”

Signet last month reached an agreement with the EEOC to resolve claims related to pay and promotion of female retail sales workers

 

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Shares of #Signet Jewelers (SIG) are in focus  after the company said in a regulatory filing that its chief operations officer had resigned due to violations of company policy.
Signet, the owner of #Zale and Kay Jewelers, last month reported quarterly earnings below expectations and announced plans to outsource its credit portfolio.

COO RESIGNATION:

Signet Jewelers said yesterday in a regulatory filing that COO Bryan Morgan resigned on June 2 due to violations of company policy “unrelated to financial matters.” The filing did not contain further details about the circumstances of Morgan’s resignation. In January, Signet announced several senior organizational changes to drive growth, including promoting Morgan to COO from executive vice president, Supply Chain Management and Repair.

WHAT’S NOTABLE

Last month, Signet reported first quarter earnings that fell below analysts’ expectations. CEO Mark Light said the company had a “very slow start” to the year as headwinds in the overall retail environment were exacerbated by a slowdown in jewelry spending and company-specific challenges.

Light said same-store sales improved sequentially when normalized for Mother’s Day and backed fiscal 2018 EPS guidance of $7.00-$7.40 and comp sales down low-to-mid single digits.

In conjunction with its earnings report, Signet said it would sell $1B of prime only credit quality accounts receivable to Alliance Data (ADS) and form a seven-year partnership with Progressive Leasing, a subsidiary of Aaron’s, Inc. (AAN). As part of the second phase of the strategic outsourcing of the in-house credit program, Signet said it plans to fully outsource its secondary credit programs, including the sale of the remaining receivables on its balance sheet, as well as funding for new non-prime account originations.

Light said the moves are expected to unlock “significant value.”

Signet shares are down about 44% year-to-date as the jeweler deals with declining sales.

The company has said it would step up efforts to restore its reputation following allegations of sexual harassment at its Sterling Jewelers unit and diamond swapping allegations.

Signet last month said it reached an agreement with the #EEOC to resolve claims related to pay and promotion of female retail sales workers. Signet has said allegations of sexual harassment have no merit, calling them “distorted and inaccurate.”

PRICE ACTION: Signet Jewelers is down about 1% in pre-market trading. The stock has a 52-week trading range of $46.09 – $101.46. We expect shares to revisit their lows of the year.

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