🧑‍⚕️Weight-Loss Wars: Novo Nordisk vs. Eli Lilly

Good afternoon! When it comes to financial disclosures, Minnesota Governor Tim Walz is in a league of his own. The newly minted running mate for Kamala Harris doesn’t own a single stock—not a penny in mutual funds, bonds, or even crypto. In fact, Walz’s financial portfolio is so bare-bones that it’s practically a unicorn in the political world. No real estate, no book deals, and no speaking fees either. The most exciting line items? A couple of teacher pensions.

Compare that to the GOP’s Donald Trump, who’s sitting pretty with a $5.7 billion fortune, and his running mate, JD Vance, who’s worth up to $10.7 million. Even VP Harris has more in the bank. If Walz lands the VP gig, though, he’ll get a nice pay bump—from $127,629 as governor to $284,600 as vice president.

MARKETS

• Initial jobless claims dropped more than anticipated today, helping to calm investor concerns about a looming recession. This positive news sparked a broad market rally, with stocks making a strong recovery.

• Treasury yields surged to 4%, bouncing back from the 3.78% seen earlier in the week, as investors turned their attention away from safer bonds and toward higher-risk equities.

• Meanwhile, oil prices continued their upward trend, driven by uncertainty over whether Iran will carry out its threats to attack Israel.

STOCKS
Winners & Losers

What’s up 📈

• Klaviyo ($KLAV) skyrocketed 33.36% after an outstanding earnings report, with the company raising its future guidance.

• Zillow ($ZG) soared 18.27%, outpacing the Austin housing market, on strong earnings and a clearer CEO succession plan.

• Hanesbrands ($HBI) leaped 18.08% despite sluggish sales, as investors appreciated the company’s leaner, more efficient operations following the sale of its Champion brand.

• Duolingo ($DUOL) climbed 10.90%, bolstered by a solid earnings report and promising future growth projections.

• Penn Entertainment ($PENN) advanced 8.46%, beating earnings expectations despite the costly acquisition of ESPN Bet.

• Occidental Petroleum ($OXY) gained 4.31% on a mixed earnings report that saw the company beat on earnings but miss on revenue, earning the approval of Warren Buffett’s portfolio.

What’s down 📉

• Bumble ($BMBL) tumbled 29.16% after management forecasted third-quarter revenue well below Wall Street’s expectations.

• JFrog ($FROG) plummeted 27.52%, as a revenue miss and dismal guidance for the upcoming quarter and fiscal year overshadowed a profit beat.

• Dutch Bros ($BROS) dropped 19.84% due to lowered expectations for same-store sales growth in the near future.

• Monster Beverages ($MNST) sank 10.93% after missing both revenue and profit estimates, with management attributing the shortfall to changing consumer preferences.

• SolarEdge Technologies ($SEDG) dipped 3.05%, despite exceeding revenue forecasts, as its weaker-than-expected bottom line disappointed investors.

PHARMA
Weight-Loss Wars: Novo Nordisk vs. Eli Lilly

Novo’s Pricey Problem

Novo Nordisk ($NVO), the Danish pharma titan behind the blockbuster weight-loss drug Wegovy (prescribed for weight loss) and Ozempic (prescribed for type 2 diabetes), just had a rare misstep. Despite soaring demand, Wegovy’s sales in the latest quarter came in at a disappointing $1.7 billion—falling short of the $2 billion that analysts had penciled in. The culprit? Higher-than-expected price concessions to US pharmacy benefit managers (PBMs) who hold the keys to market access. This squeeze has left investors uneasy, especially as rival Eli Lilly ($LLY) muscles in with its competing drug, Zepbound.

Novo’s CFO, Karsten Knudsen, tried to calm the waters, saying the rebates were a one-time issue. But the shortfall was enough to knock Novo’s stock down by as much as 7.7% in Copenhagen, before it clawed back some of those losses. And it wasn’t just Wegovy that took a hit—Novo’s diabetes blockbuster, Ozempic, also missed expectations.

Lilly’s Winning Streak

Meanwhile, over at Eli Lilly, the mood couldn’t be more different. The Indianapolis-based pharma giant reported a knockout quarter, with Zepbound raking in over $1 billion for the first time since its late 2023 launch. Alongside Mounjaro, Lilly’s other GLP-1 drug, the two brought in a combined $4.3 billion in revenue, smashing analyst forecasts and sending Lilly’s stock soaring by up to 14%.

Lilly’s secret sauce? A combination of beefed-up manufacturing and smart supply chain moves. The company has been investing billions in new production facilities, ensuring that its drugs are widely available—something that’s still tripping up Novo. Lilly’s Chief Scientific Officer, Daniel Skovronsky, noted that they’re not even pushing Zepbound hard, yet the demand is “unbelievable.”

The Road Ahead

Despite the hiccups, Novo’s CEO Lars Fruergaard Jorgensen remains optimistic, saying it’s still “early days” in capturing the massive US market. Novo is working to ramp up production and expand its coverage, but it’s clear that pricing pressures and supply chain challenges aren’t going away anytime soon. The company had to slightly dial back its full-year operating profit forecast to a 20%-28% increase, down from its earlier 22%-28% prediction.

On the flip side, Lilly’s got momentum on its side, having managed to get Zepbound off the FDA’s drug shortage list while Novo is still struggling with limited availability of one Wegovy dose in the US. Analysts predict that the US market will likely be split 50-50 between these two giants by year-end.

So, what’s the play here? Both Novo and Lilly remain strong contenders in the obesity drug arena, with analysts still giving them a buy rating. It’s clear that both companies are in it for the long haul, investing heavily in production capacity and new drug developments. For investors, there’s room for both to share the stage in your portfolio.

NEWS
Market Movements

• Warner Bros. Discovery ($WBD) posted a whopping $9.1 billion loss in Q2, largely due to the declining value of its linear TV networks. That’s a blockbuster bomb for the books, and investors weren't thrilled.

• Lyft’s ($LYFT) CEO is on a mission to KO surge pricing, unveiling a new feature that lets riders subscribe to lock in ride prices for specific routes at specific times.

• Palantir ($PLTR) shares are on the rise, boosted by an AI partnership with Microsoft

• FTX got slapped with an order to pay $12.7 billion to customers, according to the U.S. CFTC.

• JPMorgan ($JPM) has upped its 2024 recession odds to 35%.

• Paramount ($PARA) just posted its first-ever quarter of streaming profits but is planning a 15% layoff to keep things lean.

• Apple’s ($AAPL) rumored to be launching its smallest computer ever, a Mac mini with the new M4 chip. Tiny but mighty is the name of the game.

• Today’s jobs report brought some good news: unemployment insurance applications dropped to 233,000, beating expectations.

• Good news for those house hunting—mortgage rates fell to 6.47% this week, their lowest level in over a year. Time to lock in that dream home.

EARNINGS
Earnings Roundup

Warner Bros. Discovery’s Stock Takes a Dive

Warner Bros. Discovery ($WBD) just hit another rough patch, watching its stock nosedive 9% after missing both earnings and revenue expectations. The entertainment giant is grappling with the fast-evolving TV landscape and took a massive $9.1 billion write-down on network assets—an ominous sign for the company’s future. Adding salt to the wound, their decades-long partnership with the NBA unraveled, leaving the company in a legal quagmire that’s only deepening its troubles.

Under Armour Surprises, Despite Slumping Sales

Under Armour ($UA) defied expectations, delivering better-than-expected top and bottom lines despite declining sales. The athletic apparel brand saw its shares leap 17.75% after reporting $1.18 billion in revenue, edging past the $1.15 billion analysts predicted. The company is in the midst of a major overhaul, slashing discounts and trimming its workforce. While sales dipped 10% year over year, investors seem bullish on Under Armour’s comeback story.

CVS Health Feels the Medicare Pinch

CVS Health ($CVS) is feeling under the weather, thanks to a rough quarter for its Medicare business. The pharmacy giant had to lower its full-year earnings outlook yet again after reporting a 17% drop in earnings per share from last year. Even with a revenue bump to $91.2 billion, high medical costs and challenges in attracting seniors to its Aetna Medicare Advantage plan weighed heavily on profits. Recent changes in how private insurers are paid didn’t help matters either, making it a tough quarter for CVS.

Calendar
On The Horizon

Tomorrow

There aren't any major economic announcements on the horizon for tomorrow, and after a whirlwind of earnings reports, things are finally winding down as we head into the weekend. With no big-name, large-cap companies set to report, let's shift our focus to some of the more obscure and quirky stocks releasing their earnings.

Before Market Open:

• Canopy Growth ($CGC): Like many cannabis companies, Canopy Growth’s fate hinges on the promise of legalization. Earlier this year, the stock surged when it looked like marijuana might be reclassified under a different drug schedule. But when reality set in that this change wasn’t imminent, the stock lost steam. While it might be an intriguing long-term play, keep in mind that until marijuana is legalized nationwide, your investment could go up in smoke. Expected earnings: -$0.35 per share, with $53.84 million in revenue.

• Soho House ($SHCO): This exclusive, members-only club is all about catering to those willing to pay for a chic hangout spot. However, as a publicly traded company, it hasn’t exactly thrived. The company’s debt-laden balance sheet has investors so disillusioned that management is mulling over taking it private again. The brand may have clout, but the investment appeal is as diluted as their Picante de la Casa cocktail. Expected earnings: -$0.11 per share, with $302.97 million in revenue.

After Market Close:

• Getty Images ($GETY): Ever wondered how a company that sells stock photos stays profitable these days? Well, it turns out it doesn’t. The rise of generative AI images has sent Getty’s stock plummeting, and it’s been a rough ride since the company went public through a SPAC in July 2022. The stock's performance chart is downright depressing. Expected earnings: $0.02 per share, with $228.40 million in revenue.