← CNBC's "Fast Money"
CNBC's "Fast Money"
Different Reads On The Consumer… And Pharma’s Obesity Drug Price Negotiations 11/5/25
00:43:47
Earnings are filtering in, and companies are seeing a tale of two very different consumers. The group raising concerns about their customer base, and the names not seeing any slowdown. Plus Novo and Eli Lilly nearing a deal with the White house to lower obesity drug prices. What it means for the space, and how it could change medicare coverage of the weight loss drugs. Fast Money Disclaimer
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- [00:00]
Melissa Lee
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- [00:59]
Melissa Lee
That's Gold Valley.com promo code GIFT. Live from the NASDAQ marketsite in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight, A Tale of Two Consumers. What results from McDonald's and a slew of other companies. Tell us about where people are spending and where they're not. And nearing a deal. The White House set to announce lower prices on the most popular weight loss drugs. What it'll mean for the makers as the divergence between Lilly and Novo grows wider and wider. Plus, from Qualcomm to Snap to Elf Beauty and more, we are dissecting another big night of earnings. Terrorists take center stage at the Supreme Court. And is it time to buy Roku? The Chartmasters here who lay out the case for the streamer. I'm Melissa Lee, come to you lock from studio via the nasdaq. On the desk tonight, Steve Grasso, Carter Worth, Dan Nathan and Diademi. We start off with the latest signs. A K shaped consumer economy is forming. McDonald's rising despite missing Wall street earnings estimates before the bell. The fast food giant did see an increase in same store sales. But commentary on the call was very cautious. CEO Chris Kaminsinski saying low end consumer traffic declined by double digits in the quarter, adding that he expects pressure to continue next year. That sentiment echoed by Chipotle in its report last week and Kava just yesterday, both saying their core consumer base, which skews younger and more cash strapped, just isn't showing up outside of restaurants after hours. Moves in DoorDash and elf beauty suggest similar pressure on those companies. Client base but commentary from Uber and Shopify paints a very different picture. Shopify saying their consumer can't get enough, while Uber seems to see blue skies ahead for business firing on all cylinders. We'll get more reads on the consumer in coming weeks. Ralph Lauren, Tapestry, Target and Wal Mart, all still to come this month. So what is the real read on the consumer guy? What's your take exactly?
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Guy Adami
That that there's two different economies right now. The people that are doing well, that are trading down but are still a bit have the ability to spend and then on the lower end people are strapped. And I think that's been going on for quite some time and we see it in the performances of these stocks. I mean, Wal Mart I think tells the story. I think McDonald's to a certain extent tells the story. They need to get that one above 325. On the other end of the coin, if you're in the dollar stores, that's been a rough slog over the last couple of years. And if you're in the middle, you are absolutely nowhere. So this to me just reinforces everything I've thought for a while.
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Melissa Lee
30% of US transactions at McDonald's were the extra value meals, which is interesting. And they're also saying that the uncertainty surrounding SNAP benefits are going to put further pressure on those consumers who are already struggling.
- [03:28]
Dan Nathan
Yeah, that's a difficult situation. So hopefully that resolves itself. New York Times, the Daily had a podcast yesterday going into a rural county in West Virginia talking to folks and go check that out is really sad. Hopefully they get that sorted out. But you know, one thing again to the case shape on the higher end, there's not, it's not all roses. Look at Live Nation today, which obviously owns TicketMaster, was down 10% after their results. They missed on earnings, the revenues came in line. That Stock is down 25% from an all time high just a few weeks ago. And you know, so it really is, you know, some of this stuff experiences that was the big story after we got done with all the goods during the pandemic. And it seems like some of that is coming unwound a little bit. So again, you know, you tell me what inflation is going to do, you tell me what the course of the Fed's going to do. We've talked to plenty of folks over the last few weeks or so that they don't see 30 year mortgage rates going below 6%. So the housing market is still pretty well locked. And then you extend that a bit further. You saw this company, trucks that makes Decks, you know, and that thing was down, I don't know, 25% or something like that today. Home Depot was down in sympathy. So I think you got to start broadening it out a little bit. You're going to continue to see heavy discounting into the holiday season. If you look at some of those, whether it's Guys Dick's or Best Buy or one of those sorts of names that are obviously right there for holiday season. But you're also going to see, I think some pressure on margins because of that, you know, promotional environment.
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Steve Grasso
I like the existing home sales one that Dan just touched on. He talked about mortgage rates. If you're trapped in your home, you can't get the money out of your home. That's a huge thing. And if, if mortgage rates do not come down, people wind up being house rich, cash poor. But to Guy's point, Delta is for the first time ever selling more first or should be on the precipice of selling more first class tickets than Coach. First time ever. That was a staggering stat that, that jumped out at me. Coke selling more premium than there. So it's fair life, Smart waters, Apple selling more phones, Wal Mart and Target, you have that, that trade down element. Costco, Affluent are bundling up, buying in bulk and others are just stretching it out, making their groceries last. So we're trading down or eating at home. No one's, no one's eating out. So it all makes total sense. It's a bifurcated market and it probably continues until further notice.
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Carter Worth
That's the word, right? So K shaped, I mean that's kitsch. K shaped, I mean, what does that mean?
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Melissa Lee
Right?
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Carter Worth
Somebody made that up because it felt good. They put in a big research report and everyone bid on it. Bifurcation is a word that's in the English language for a long time. We have a bifurcated market as is the case. So it's not just the affluent. Think about a Capri. They have Versace and Jimmy Choo and Michael Kors. That stock is at a 10 year low versus William Sonoma. Very expensive bachelors. That's up at the high. Ralph Lauren up at the high. But it's not Hermes and LVMH struggling. Estee Lauder strikes. So it's not so much what type of consumer, it really is idiosyncratic. There are generally speaking problems with the consumer. We know that restaurants almost universally are under trouble, housing stocks not doing great. Autos really mixed. And it goes on and on.
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Melissa Lee
Yeah. And the issue in terms of the higher end consumer households above $100,000 is that we're now starting to hear about the layoffs that are existing in the corporate office. So, so not just the frontline workers, but those sitting in the offices, middle management, etc. And who are those people? Those people are. Have been the ones who are spending and now there is a threat of their jobs. So what does the economy look like then?
- [06:59]
Guy Adami
Well, that's exactly right. And listen, Walmart was way ahead of this a couple of years ago when we started hearing 65% of their customer base earned more than $100,000. That number has gone up. Now people will say, well you know what, guy, $100,000 isn't what it was five, six years ago. I understand that. But the point is there's been a trade down at the higher end, without question, and that's going to continue. Who set up best to take advantage of that? Steve just mentioned Costco. Absolutely. Wal mart. Yes. Even McDonald's to a certain extent, I believe is set up to take advantage of that.
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Dan Nathan
Yeah. You know, on the kitschy K shape sort of thing, Torsten Slack from Apollo had a note out this morning. He was talking about actually it's a case shape for corporations too. He was looking at the S&P 500. We know the story. You know, if you look at the MAG7 earnings have been going up all year for them. For the, the 493, they've been going down. Right. And it really speaks to all these names. We didn't mention a Mag7 name. We're talking about the others here. So if their consumers are having a hard time, you likely think that the companies are having a hard time because they're also trying to process all these tariffs, you know, go back six, seven months. Whatever it was, it was a doomsday scenario because these tariffs are attacks on consumers or the companies have to eat it. Well, we've done okay in that regard maybe until now. You know, maybe it is a cumulative sort of effect one way or another. So I just think it's interesting that we're also seeing a case shape for S and P earnings too.
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Melissa Lee
Right. In terms of the ones that you buy though, I mean, if you take a look at Wal Mart, do you buy Wal Mart at a forward P, E that is higher than Alphabet?
- [08:23]
Guy Adami
I think so. Well, yeah, and we've said that for. Listen, I believe I understand why people would say absolutely not valuation doesn't make sense. By the way, as Tim said last night about a stock that's been true for quite some time. So I think you sort of throw valuation to the side especially given the fact that I believe Wal Mart is winning in, in terms of utilizing AI and improving their margins. So Wal Mart specifically. Yes, I think you can pay up for the stock.
- [08:46]
Steve Grasso
Yeah. And I think you go to Costco as well. So we would round tripping this one same type of. It's underperformed Wal mart by about 10 percentage points year to date. But the, the membership is sticky. So people continue it's above 90% renewal rate and people buy in bulk and you avoid that, that tariff by buying in bulk and you avoid that inflation because you spread it out a little bit thicker.
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Melissa Lee
Well they have been able to buy avoid tariffs because of their product mix. They can always change their product mix sort of work around the tariff situation which has been an advantage of Costco. In terms of the charts Carter, do these charts look strong?
- [09:23]
Carter Worth
Well, Wal Mart and Costco have, have also diverged but a bifurcation there. Walmart's the better of the two. But just in terms of. Let's just talk about those sector. Overall since Labor Day The S&P 500 consumer discretionary sector is up some 7%. The equal weighted sector is down 7. And that is simply a function of two big stocks, Amazon and Tesla, representing 45% of the weight of the sector. So the equal weighted consumer discretionary sector itself is the true message of that area of the market.
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Melissa Lee
For more on the state of the consumer, Tanger CEO and president Stephen Yalof is with us here on set. Tanger reported earnings yesterday. Stephen, great to have you with us.
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Stephen Yalof
Thanks for having me back.
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Melissa Lee
Record leasing volume. So you're seeing just brisk demand for retail space or sort of challenges. What we're talking about in terms of a bifurcated economy and some pockets of the consumer facing problems right now.
- [10:15]
Stephen Yalof
Well, you know, it's interesting to sit and listen to what you were just talking about in the state of the consumer and where they're trading up and where they're sort of avoiding and you know, a lot of the brands that we're doing business with are many of the brands that you're talking about. What's interesting is they haven't taken their foot off the gas pedal with regard to growing their business and finding new locations. I think we're seeing some of the.
- [10:35]
Melissa Lee
Benefits of that when, when a tenant finds space. What sort of time frame are they looking at in the future? I mean they're saying the next year we're going to expect all the traffic to be here. Or is it more like a five year play?
- [10:46]
Stephen Yalof
Yeah, no, it's, it's. I think the retailers are really about it. They're about a year out. So right now we already have all of the rest of our 25s, obviously are baked, 26 is, we're probably about three quarters of the way done and now we're doing deals for late 26 and 27.
- [11:00]
Guy Adami
Stephen, you're winning on the experiential side. You talked about that last time. But what you're also winning to is value has become more important than tariffs. And you guys, you and your occupants went to that in terms of the customer base that you serve.
- [11:14]
Stephen Yalof
Well, I think particularly in the outlet channel, I think that value conversation is really important. And I heard a lot of you talk about that today, whether it's the restaurants that you choose to eat at or the stores that you choose to shop. And for us, you know, being on sale every day is a really powerful message to the consumer, especially now.
- [11:30]
Melissa Lee
What has your demographics changed at all in terms of who you're seeing show up?
- [11:34]
Stephen Yalof
Well, yeah, you know, that younger consumer, you know, I listened to the, the Kava report and the Chipotle report and one of the things that I thought was really interesting, particularly CEO of Cava said this morning is that the products are priced below inflation, which they think is doing a great job of getting them a younger consumer to come and convert with them when they choose to go to that store. You know, interesting in the outlet space, I think we find that our brands are almost deflationary in that the, the brand pricing is actually with the markdown. You also find it probably below that cost of inflation.
- [12:06]
Melissa Lee
How are you forecasting the retail, the holiday season for, for retailers? And what sorts of metrics are you looking at? What's on your dashboard in terms of indicating to you that the consumer will continue to spend through December?
- [12:17]
Stephen Yalof
Well, the things that we're looking at from a retailer's perspective is stock and staff. You know, if you see the retailers are thinking that they're not going to have as much staff in the store, that's a, that's a problem. And the same thing with inventory. If there's no inventory in the store, that's a bigger problem because you can't sell what's not in the store. But we're seeing the stores are stocked, the stores are well staffed. We're really optimistic. In fact, you know, with government shut down the month of October, we saw our traffic build in the month of October. So as counterintuitive as that might sound. I think people are looking to come to our centers. They're looking to shop value, they know they've got to buy holiday gift giving. I think the National Retail Federation is still saying that there's going to be an increase in spending this year versus last year. And we haven't seen any signs of slowdown yet.
- [13:02]
Steve Grasso
So Stephen, you have a higher occupancy rate than your competition. Are you using analytics or using AI? Like how are you deciding on who's going into those stores? How has it changed in the last five years?
- [13:12]
Stephen Yalof
Years, yeah. You know, over the last five years. I think we're letting the customer, speaking to the customer a little bit more. We're listening to where the brands that they want to shop. Look, there's brands bringing brands into a shop. So when you want a shopping center, you have to merchandise that center. You're like the general merchandise manager of an old department store that's looking for great brands that are going to bring the traffic in but also bring the other brands in. So we're making merchandising decisions. Let's take Lululemon or Sephora, really important brands from consumer traffic generation point of view. But equally important, when we're talking to other brands and saying this is a property that you want to be in, they're going to ask who those retail, who the other retailers. And when you mentioned some of those higher end names and brands that are really hot right now, that's who, that's who the consumer is looking for. That's, that's who the other retailer is looking for.
- [13:58]
Carter Worth
Question on Nike, obviously that's a very big tenant, if not one of your biggest. Any thoughts? Because the whole shoe space is struggling. Do you see any change in trend there from some of the smaller operators, but also you see the struggle in Adidas, but Nike in particular is the big one.
- [14:13]
Stephen Yalof
Yeah, you know, I think full price Nike, because they're so distributed, I think we're going to see a lot of problems, you know, in some, in some sectors, but not necessarily in other sectors. And all sales might be off in, you know, in our portfolio. We're still finding that that consumer is looking for again brands that they want. You know, our, our consumer is not coming in looking for commodity. They're not looking for a pair of sneakers at the best possible price. They want Nikes and they want Nikes at the best price. And as we talk about trading down or the top of the K, you know, we see an aspirational customer that wants to buy into brand we're also seeing a higher end customer is like, why pay the most for a pair of sneakers? If I want Nikes, I'm going to go shop them in the most value offer that I can find.
- [14:57]
Guy Adami
Unrivaled sports partnership deal that I think it was just announced. Speak to that because it's fascinating.
- [15:03]
Stephen Yalof
Yeah. You know, so as, as an, as an owner and operator of outlet shopping centers, I think what's really important and what folks might not know is it's really incumbent on us as the operator to drive traffic into our shopping centers. A lot of the brands in an outlet center are not using their marketing capital to say hey, go shop my off price channel. They're using their money to say, hey, go shop my full price channel. So it's really, as it becomes more important for us to drive traffic, we're looking for new and organic ways to bring people into our centers. Unrivaled sports is the biggest name in, in youth athletics and experiences and essentially what it is. I'm sure all you guys have attended one of these venues where your kids have, you know, a game or a tournament that's, you know, on the travel team that they're in. Well, these, they host these travel team events and because they're so proximate to our shopping centers, our partnership with them allows us to share their experiences and also be on the itinerary of every youth athlete and their families that comes to one of those, one of those venues.
- [16:04]
Melissa Lee
A lot of people. Stephen, great to see you. Thanks for stopping by. Thanks for having me back, Stephen. Yellow Tanger. Do you see this as an outlier in terms of record leasing volume and the traffic? That. That's not the real tell on that, on the overall economy.
- [16:20]
Dan Nathan
This guy's a good as it gets, by the way.
- [16:22]
Melissa Lee
And that's not.
- [16:23]
Dan Nathan
But, but it's, but it's an interesting read. Right? We can sit here and go back and forth. For every one of this, there's another one of that. Like we were talking about Instacart, that's your maple bear. You know, that thing has traded so poorly for the last couple of months and now all of a sudden doordash is catching up to it. DoorDash is down 30%. Right. So that's the hard part. That's why we kind of diagnose these names and look at these situations every day. But like it's really hard to look at it as a mosaic right now and, and say like this is what the consumer is doing because that's pretty strong. TJ Maxx, we always say pretty strong, you know, that sort of thing. And you know, we're even starting to see some of these. You know, you mentioned Macy's early today. That thing is starting to pick its head up a little bit. So I don't know, it's about as clear as mud. Mel.
- [17:04]
Melissa Lee
Yeah, I mean Carter mentioned Tapestry vs Williams Sonoma. Very different stories. Sort of the same kind of demographic, 100%.
- [17:11]
Guy Adami
But to go back, I mean they're just a great operator if you look at the quarter. I mean they're really operating at a high level and they're trying to figure out how do you drive traffic. Stephen just spoke to that. So stocks had a decent little run since April, like many stocks have. I still think there's room to the upside.
- [17:25]
Steve Grasso
You have back to school, you have Halloween, then you have pre holiday sales. They're always discounted sales. When you look at a Tanger, sometimes as much as 50 or 60% off. It's experiential when you go to these outlet centers. I like them into the holiday season.
- [17:40]
Carter Worth
You know, speaking of great operator, in the financial crisis, the REIT space, the sector went down about 78%. Tanger went down only 40. They've always exhibited a relative period of strength when things are really bad.
- [17:53]
Melissa Lee
An earnings alert here on Snapshare, the social media company jumping after topping revenue estimates. Julia Borson got all the details. Hey Julia. Hey, Melissa. Snapshare is Soaring now about 26% on a revenue beat. Stronger daily active user growth than expected. Plus guidance to fourth quarter earnings well ahead of estimates. The company announced a $500 million stock repurchase program and a partnership with Perplexity to bring its AI chat bot into Snapchat. Perplexity is paying $400 million over the course of a year. Snap said, quote, our investments in AI and machine learning are delivering measurable gains for advertisers. Going on to say purchase related ad revenue grew over 30% year over year reflecting higher attribution accuracy and better campaign performance performance. The company did warn that engagement could decline as they roll out new products. And daily active users may decline in the fourth quarter as new age verification and age limit laws go into effect. But they say they're working to improve average revenue per user as well as to improve financial efficiency. Melissa, Julia, thanks. Julia Warston, Want to go to Dan? I feel like you've traded this in the past.
- [19:03]
Dan Nathan
This is one I kind of thought about. Man, it's just so washed out and there's just nothing really going on. I know, Evan Spiegel has been telling a story about, you know, AR VR, they have some new devices they're about to launch here. But the stock honestly has not been able to get out of its own way while the stock market's been soaring. This is the sort of deal though for a company like this that will give you a bit of hope. It looks like, you know, Google paying Apple sort of thing. It's also a scenario where, you know, they have not been spending. Whatever the number is is a six and a half billion dollar mark, you know, revenue company. So for hundred million in a year, that's not insignificant by any means. But they haven't spent billions of dollars building out their own lm, that sort of thing. And I think that's going to be a story going forward. I think you're going to see this stuff a bit commoditized and these companies with the models are going to start paying people to use their service.
- [19:50]
Guy Adami
$500 million stock buyback is not insignificant. A company this size and their free cash flow almost double what the street was looking for. It's hard to chase the stock up or down. But this is actually one of the better quarters we see seen in a while.
- [20:01]
Melissa Lee
This is obviously a massive gap. Higher Carter. So yeah, what do you do?
- [20:05]
Carter Worth
You know, you referred to how bad this has been. It was IPO, was back in 17. I think it's below its IPO price. I mean, okay, maybe for a trade, but I'm with this. No chasing.
- [20:15]
Steve Grasso
You know, when you look at price targets, it's right at price targets right now. So I would not chase it. Give it a three day rule, see where it sells.
- [20:21]
Melissa Lee
Coming up, more after hours action to bring you with Qualcomm Live, Robinhood and more. All reporting results in just the last hour. The details and the numbers and the quarters next. Plus shares of Novo Nordisk lower on its own results. What's spooking investors and where Novo and Eli Lilly stand on drug price negotiations. Do not go anywhere. Fast Money's back in two.
- [20:43]
Dan Nathan
This is Fast Money with Melissa Lee right here on cnbc.
- [20:53]
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- [22:12]
Melissa Lee
Welcome back to Fast Money. The Supreme Court today hearing oral arguments on the legality of some of President Trump's tariffs. At issue, the president's use of an emergency law to justify the levies. Eamon Jabers has got the details on this. Eamon.
- [22:25]
Eamon Jabbers
Yeah, Melissa, this was an interesting one today. High stakes, obviously. $90 billion in already collected tariff revenue is on the line. What the administration was arguing through the person of John Sauer, he's the solicitor general, was that this law from 1977, IEEPA, does give the president the authority to impose tariffs, even though the law itself doesn't say the word tariffs anywhere in it. Here's what he said.
- [22:51]
Guy Adami
Congress, as a practical matter, can't get this power back once it's handed it over.
- [22:55]
Dan Nathan
The president's a one way ratchet toward.
- [22:58]
Guy Adami
The gradual but continual accretion of power in the executive branch and away from the people's elected representatives.
- [23:07]
Eamon Jabbers
Sorry, that was actually Neil Gorsuch, the Supreme Court justice. And what you heard from him just there, Melissa, is important because that's what raised everybody's eyebrows today, was that you had some of the justices who, who would be expected to maybe politically, ideologically, and for all the other reasons, side with the Trump administration. But even those justices were expressing some real skepticism here about the Trump administration's case because that law does not mention tariffs, because the tariff power and taxation power is inherent to Congress in the Constitution and because they're worried about this idea of Congress just ceding huge amounts of authority to the executive branch. All of that sort of ends up with this package where you get some conservatives who are very skeptical. So what's going to happen now? The justices are going to take all this back into their chambers. They're going to give it a think and then at some point, and we don't know when we are going to get a ruling from the Supreme Court. And the pressure is on because of that $90 billion figure I told you about at the top. That's the amount of money that the treasury would have to pay back to companies if the ruling goes against the administration. There are other ways for this administration to impose tariffs in the future, but that revenue was collected under the old author party. They'd have to write a check. And one of the big questions I think now is who would get the largest check? Who are the largest tariff payers in America right now? How many of them are publicly traded and for which of them would that check be big enough to be material to their stock price?
- [24:36]
Melissa Lee
Right. Eamon. Thank you. Eamon Jabbers. What we did see in today's session though was a reaction amongst a lot of the retailers which had been hardest hit when the tariffs first went into effect. So we saw names like a Macy's, for instance, up a lot, Target up a lot. And so you have to connect the dots here in terms of, you know, if it was a negative for these guys when they were slapped on, because you always slap tariffs, George Cornyn says slap the tariffs on them, then it should be a positive in theory.
- [25:04]
Guy Adami
In theory, absolutely. But there's a lot, there's a lot, a lot of chapters left in this. But if you want to try to game this out, I mean, mean, if you want to play the continued bounce in some of these names on the back of that, as Dan would say, have at it, I think that's a very different, different difficult game to play. I'll say this target, any bounce in target to me is a selling opportunity. I think they still are under considerable pressure.
- [25:26]
Eamon Jabbers
Yeah.
- [25:26]
Dan Nathan
But on a macro level, if you think about this, if those revenues are leaving the government and they're going back and we're in this inflationary environment and we have a government shutdown, all of that doesn't make for a great backdrop for the economy right here and right now we just spent 10 minutes talking about a consumer that's kind of strapped. We talked about 493 stocks in the S&P 500 where earnings are not growing. So, you know, you would think that this would give a bit more clarity for a lot of companies, and it certainly will. But a lot of these companies have actually learned to live with these parameters. So again, I think for the macro, it's not particularly an easy situation.
- [26:00]
Carter Worth
Either.
- [26:01]
Melissa Lee
The flip side, in terms of the impact on the US government, they've got to write the checks. So that's $90 billion going out of treasury to someplace else whole.
- [26:09]
Steve Grasso
If this we, if this winds up weakening the economy, which I would think that it would, everyone would agree that then I fast forward to cuts. I think Powell's got to cut then, right. So it's more likely that he cuts and gets back on to more systemic.
- [26:24]
Melissa Lee
Cuts versus weakens the economy because treasury is writing the check.
- [26:27]
Evan David Segerman
I think we can see it could.
- [26:28]
Melissa Lee
Help the private sector because the tariffs are lifted.
- [26:33]
Steve Grasso
It could, but I don't know where that money goes back to. So does it go back to the retailers or does the consumer get the check?
- [26:38]
Melissa Lee
So I don't think the consumer is getting any.
- [26:40]
Steve Grasso
So don't you, don't you think that. I don't know if it has to go back, quite honestly, the Supreme Court could rule against which I think they will. I think they'll rule against it. And then that money, they could say whatever you've collected thus far, you keep and now going forward, forward you don't because it's, it's, it's a little messy, convoluted.
- [26:58]
Carter Worth
Going back, yeah, you'd say, okay, that was bad.
- [27:02]
Melissa Lee
But forward, like putting the toothpaste back in the tube or some such metaphor. Coming up, more after hours action. Qualcomm, Lyft, Robinhood among the names reporting results in the last hour. The details and numbers in the quarters next. You're watching Fast Money Live, the NASDAQ markets at in Times Square back right after this.
- [27:28]
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- [27:44]
Dan Nathan
The Record, your front row seat to sports and business. From commissioners and owners to media executives.
- [27:50]
Carter Worth
And top athletes, these are Rembrandts. I'm telling you of these franchise on.
- [27:54]
Steve Grasso
The Record all new Saturdays, three Eastern.
- [28:01]
Melissa Lee
Welcome back to Fast Money and Earnings alert on Qualcomm. Shares dropping in extended trading despite the company beating revenue and earnings expectations and giving strong guidance. Last week Qualcomm said it was entering the race with the new accelerator chip competing with the likes of Nvidia and AMD. Shares rose 11% on that news. It's it is now down 3% plus in the after hour session. Guy, what do you make of this.
- [28:23]
Guy Adami
I mean, I think it's funny. I thought the quarter's fine and the guide was fine. So it's hard to figure out because if you just look at this on valuation alone, I mean, this is fine. So basically, the stock in the after hours has given up what it got during the day, which it zeros out. But forget about all the deals we just heard. If you want to put in a value in this space, I think Qualcomm still makes sense.
- [28:43]
Melissa Lee
Yeah. Good day for semiconductors, though, during the regular session.
- [28:45]
Dan Nathan
Well, until the last. I don't know what you want to call it. Half an hour for Nvidia. It sold off of few percent. It was interesting because the FTSE kind of. But, you know, that's that newspaper, that's financial science. Salmon. Is that what you call it? The salmon newspaper?
- [28:58]
Guy Adami
Salmon.
- [28:58]
Dan Nathan
Salmon. They kind of bookended the day with some Nvidia stuff or just really some AI stuff that started out this morning that an article talking about Chinese subsidies for energy and really trying to encourage their companies to kind of continue to move. And I really thought about it as these are all, you know, incentives to kind of move away from Nvidia and Cuda and really kind of kind of innovate on their own. And then in the last, what, half an hour of the day, there was an article that came out from the FTSE where Jensen Huang is at a conference and he said the Chinese are going to win and we are being cynical and they are being optimistic. And again, he's speaking to an audience of one in that regard. But it was just kind of interesting that that took the stock down at the end of the day.
- [29:36]
Melissa Lee
Yeah.
- [29:36]
Steve Grasso
You know, when you, when you look at them against Nvidia, they pale drastically in comparison. But would you look at what they do have? 12,600 patents. They get royalties from a thousand different device models. They have 8 billion in free cash flow. They're. They're the leader in 5G. I see you buy weakness in the stock.
- [29:54]
Melissa Lee
All right, what do you say? What does charts say to start?
- [29:58]
Carter Worth
I was more stuck on is it salmon or is it coral?
- [30:02]
Melissa Lee
Coral stronger. I think salmon.
- [30:05]
Carter Worth
It's the only one that's got a color.
- [30:06]
Melissa Lee
That's true.
- [30:07]
Dan Nathan
Yeah, it's true.
- [30:07]
Melissa Lee
The only one coming up, the next move in the weight loss drug space is Novo Nordisk going to Eli Lilly near deal to cut prices. The latest on those negotiations when fast money returns.
- [30:25]
Dan Nathan
Missed a moment of fast. Catch us anytime on the go Follow.
- [30:28]
Steve Grasso
The Fast Money podcast.
- [30:30]
Dan Nathan
We're back right after this.
- [30:41]
Melissa Lee
Welcome back to Fast Money. Stocks bouncing back from yesterday's losses. The Dow jumping 225 points. The S&P up about 4.10of a percent. The Nasdaq climbing nearly 7.10of a percent. Shares of decking company Trex dropping more than 30% after missing earnings expectations last night. Giving disappointing guidance for the rest of the year. The company seeing weakness in the repair and remodel sector and reduced home improvement spending. And more after hours action here. Robinhood topping expectations on the top and bottom line. ARM holdings doing the same and hiking Q3 guidance. And Lyft posting a slight miss on revenue estimates. Doordash meantime dropping after missing EPS expectations. And ELF Beauty also falling as revenues come in lighter than expected. Well, the battle for Medcera is heating up even further. The Wall Street Journal reporting just in the last hour that Pfizer is preparing to make yet another bid for the obesity biotech, coming on the heels of a fresh offer by Novo Nordisk valued at roughly $10 billion. Midtera moving higher in extended trading. Novo had been down as much as 4% in the regular session after disappointing third quarter results and a cut to its full year guidance for the fourth time this year. For more on all of this, let's bring in BMO head of Health care research, Evan David Segerman. Evan, great to have you with us.
- [31:51]
Evan David Segerman
Thank you for having me.
- [31:53]
Melissa Lee
This is really becoming a battle over Medcera. Is medsera worth this much and who is it worth more to, Novo or Pfizer?
- [32:00]
Evan David Segerman
Well, I think Metcera is definitely worth as much as, you know, the obesity market is likely to be in our estimates, upwards of $130 billion when you lump in diabetes. So there is a big opportunity here and right now it's only Lillian Novo. So in terms of who it's worth more to, I think Pfizer can make a big splash. They could hear a significant third player, but from the Novo perspective, they need to make up ground. We've seen Novo shares get slashed more than in half at this point because of cutting guidance, as you have said, issues with board, issues with drugs. So they really need something to help them kind of, you know, support their next leg of growth. So it's probably worth, most, probably worth a lot to both Pfizer and Novo Nordisk, depending on how you look at it.
- [32:43]
Melissa Lee
For Pfizer, really it gets them into the obesity space and for Novo it sort of plugs their portfolio. But we are in a, in a period, Evan, where next year, at the beginning of next year, they're going to be ready to launch the oral Wegovy pill pending FDA approval. The company said on the conference call they've got plenty of supply. They, they are ready to meet any demand that there is compared to the launch of the shot where they had, you know, too much demand and not enough shots. And so how should we think about the medsara deal? And how should we think about how Medcera complements their portfolio and gets them deeper into it, rounds it out and makes them more competitive against Lilly specifically?
- [33:20]
Evan David Segerman
Well, so you have Lilly's Orpha Gliparon launching next year, which I think is going to be a very competitive product, which we've talked a lot about. So in terms of what Novo needs, Metcera gives them a longer acting GLP1 which they don't have. So instead of once a week, you have it once a month you have another option for Amlin. So when I spoke to the company today following results, they indicated that they want multiple shots on goal with amylin, with either cagry, cagrillotide, Amacretin and potentially the Metsera asset. And of course the Metsera Oral is a peptide that does not have the food effect. We've talked a lot about this. Where will go in a pill you have to not eat for a half.
- [33:57]
Steve Grasso
Hour after you take it?
- [33:58]
Guy Adami
EDS not to make you play the role of risk arbitrage or. But it seems as though Sarah, given what we're seeing from both these participants is still relatively undervalued. Understanding there's risk. ARB risk. ARB risk by definition out there. What are your senses about the stock at these levels?
- [34:18]
Evan David Segerman
I mean, listen, I think that a de risked obesity asset is hot and it's pretty clear that this is something that both Pfizer and Novo and a third party that was in the proxy filing wanted. So I think that there is definitely value that could be unlocked. And I expect the Pfizer bid to potentially best Novo Nordisk. The thing with the Pfizer bid is that if it's accepted, they've already received FTC clearance, so it could close within a number of weeks.
- [34:47]
Melissa Lee
I want to switch gears a little bit, Evan, and talk about drug pricing in the administration. There's a deal that's expected to be announced as early as tomorrow that the lowest dose of the weight loss drugs would be sold on Trump Rx for $149 in exchange basically for Medicaid and Medicare coverage of the drugs for the treatment of obesity as opposed to type 2 diabetes, which it's currently covered for. How Meaningful is that to these stocks?
- [35:13]
Evan David Segerman
I think that is very meaningful. That's been kind of the missing piece when it comes to the obesity market getting real Medicare coverage. You kind of have a backdoor via, you know, sleep apnea for some of the indications of Zepbound, for example. So this is definitely meaningful. And you know, I think the 299 price for Zepbound actually is a pretty good deal. It's 50 bucks lower than the lowest dose cash pay with Lilly Direct. So it's not that much of a concession. And I expect the prices for the higher doses to be higher. So net net it's a win for Lillianovo because they get access to this very large market.
- [35:44]
Melissa Lee
You just trimmed your price target for Novo Nordisk. You raise your price target for Eli Lilly. So. So in your view that discrepancy in terms of performance that will just widen if the Mets are deal gets done in Novos favor. Evan, does that change anything?
- [35:59]
Evan David Segerman
Well, I think it's going to take if the Med Sarah deal is the deal that's chosen for, that's if Novo is chosen as the winner for Matsera, probably going to take two years for FTC to clear that. So it's kind of a state of limbo, allowing Lilly to only move ahead further. You know, I think you've been pretty clear kind of over the past year. Lilly's crushing it fundamentally.
- [36:20]
Steve Grasso
Right.
- [36:20]
Evan David Segerman
They raised guidance, they beat numbers, they have Orpha Glipron coming and I feel like they have real focus when it comes to this space where Novo has just been lost.
- [36:29]
Melissa Lee
Yeah. And Metzara goes off the board, whether it be Pfizer or Novo. What's the next target in your view?
- [36:36]
Evan David Segerman
Ooh, that's a tough one. I think outside of the obesity space, a lot of focus on inflammation, inflammatory disease and of course in obesity, you know, I cover structured therapeutics. They phase two big data coming later this year. We've talked a lot about that on the show and people do ask me about Viking. I don't cover them, but it could be an interesting move for the right price.
- [36:56]
Melissa Lee
Evan, great to see you. Thank you, Evan.
- [36:58]
Evan David Segerman
David, thank you so much.
- [37:00]
Melissa Lee
EDS of bmo. How do these stocks look, Carter, particularly Novo, which has been so.
- [37:06]
Carter Worth
Yes, that's the one. It's just the definition of an uninterrupted downtrend and it's, it's a testament to momentum. Right. Momentum is not just up, it's down. And so it has to be respected. And as tempting as it might be to try to play for a bottom Bottoms have a look and feel. It takes time and duration. This is just an established downtrend stay.
- [37:25]
Steve Grasso
Away from When I look at it I tried. I do try to look for a bottom and I go back to we're at the 2022 levels right now. So could I be wrong? Of course I could. But this would be a great spot to take a flyer out on it. If you want a more balanced risk.
- [37:39]
Guy Adami
Buy Pfizer structured gpcr. We've talked about Vikings. Another one. Listen. Pretty binary but also given everything that's going on. Absolutely. I think in play on the M and A front you know what you.
- [37:52]
Dan Nathan
Get when you try to pick a bottom. All this old market saying and the people just joke stinky fingers.
- [37:58]
Melissa Lee
So don't.
- [37:59]
Dan Nathan
So don't try to pick.
- [38:00]
Melissa Lee
Okay, all right. I don't understand boil it down. Just don't chase after they'll show you. That's what he's saying anyway. Coming up, buying a cell. Caterpillar and Roku both up solidly this year. But the chartmaster says they are about to go in different directions. The one he is betting on and the one that's up. Pair of Fast money's back into. Welcome back to fast Money. The chartmaster has opposing takes on two stocks that have had solid years so far. Shares of Roku. They've quietly doubled off their lows of the year up more than 40%. And take a look at Cat just off a record high hit last week up more than 50%. So what are you seeing in these two?
- [38:46]
Carter Worth
Carter, let's get to work. So chart number one. Let's start with Roku. Roku is a boom bust kind of thing. Now you don't see that here in this first chart but look at the importance of the 110 level. Let's pull this back a little further and look at the second of three iterations. That 110 level is in play. Let's look at the third and final chart which picks up what a boom bust this thing has been. This drop from 600 to 35 losing about 90% of its value and has been basing ever since. And this action to my eyes suggests higher prices. But Caterpillar a darling of course 2 charts it is trading at this very moment basically farther above trend farther above the 150 day moving average than you will typically see at any point in history. This is one duration I look at a longer term duration over the past 10 years. And so again just noting where the stock is in relation to where it's been and Its average trailing price over 150 days. But I would also point out that since 1980 Caterpillar has almost four times the performance of the industrial sector and almost three times that of the S.
- [40:01]
Melissa Lee
And P. So I'm curious Carter. I mean there's talk that Caterpillar needs to be re rated that there's a different perspective on Caterpillar because of its AI exposure, because of its exposure to alternative energy, particularly solar. And I'm just wondering, you know, in terms of the chart, I guess it doesn't enter anywhere in that.
- [40:19]
Carter Worth
Well, it does. Remember the chart is the collective judgment of all owners and those who sold today and those who bought more as well as think about all the bright men and women on Wall street who are paid as securities analysts to try to get this right. They are highly designated cfa, cpa, mba and they're spending time studying tractors and Komatsu, I guess is there a John Deere? And guess collectively do you know what the 45 analysts who cover this believe in one year the stock is worth? Their price target is $571 and it closed today at 569. So I guess all those smart people don't think much of of it.
- [40:56]
Steve Grasso
Yeah, it's. It's not in a sexy part of the of the market but it's a performer. And when you look at it though, what would you rather do? Roku or cat? So self would you rather you are. I'd rather go Roku.
- [41:09]
Melissa Lee
Yeah.
- [41:09]
Steve Grasso
Improving profitability, strong ad sales and is there going to be more cord cutting or less cord cutting going going forward more they benefit from that.
- [41:19]
Guy Adami
I think it'd be more fun to be in a CAT tractor. But I agree with Steve in terms of Roku and this is a classic bearish to bullish reversal valuation makes no sense. But the catch up trade is going to be fierce. I think Piper just upgraded it to neutral with $135 price target. And that is not unreasonable given where it's traded historically and given this bottoming formation.
- [41:40]
Melissa Lee
What are your thoughts on CAT though on the run?
- [41:43]
Guy Adami
Well, it is an AI trade now valuation wise it's still not that ridiculously expensive. So. Yes.
- [41:49]
Melissa Lee
So why did I. Carter Braxton Worth.
- [41:52]
Guy Adami
No, I like Caterpillar. I understand. I totally get it. 571 the average price target. It is trading there now. But Caterpillar is still relatively cheap and it is an AI trade.
- [42:01]
Dan Nathan
Caterpillar as a a trade sounds like very 2000 to me. I just want to be really clear on that. I mean that Sincerely like or 99 into 2000 but you want to hear a real I play and we talked about a guy had the CEO a better on the other night. Right. This AI you know mortgage platform. Look at lemonade today. This is a company Daniel Schreiber has been on the show on the show. This is a company that was billed on insurance company Stock is up 35% on a beat race so there's going to be plenty of really good stories. I just don't think it's a tractor company. That's a great.
- [42:35]
Guy Adami
Well I'm just saying I mean digging holes.
- [42:37]
Melissa Lee
Okay.
- [42:38]
Guy Adami
By the way Tim, see not that anybody cares but Tim has a John Deere track.
- [42:42]
Melissa Lee
He does and John Deere also by the way is seen as an AI play. Yes, yes.
- [42:46]
Guy Adami
Can you imagine Tim though and his John good looking guy and a deer tractor. I mean it's one thing just has.
- [42:51]
Carter Worth
Caterpillar ever said that they themselves think they're an AI play or is that.
- [42:55]
Dan Nathan
Sort of let's go to their track sort of tape? I'm going to go.
- [42:58]
Melissa Lee
I mean coming up I overhaul how Apple's reportedly getting help to update its Siri voice assistant. How much they're paying for it? More fast money to welcome back to fast money. Google parent Alphabet up 2 1/2% today Apple finalizing a deal to use the company's Gemini AI engine to power its Siri voice assistant. This according to Bloomberg. Apple would reportedly pay about 1 billion annually to Google. So now we're getting a glimpse of what that new revamped Siri is going to be which is supposed to be a big catalyst for Apple.
- [43:35]
Dan Nathan
Dan seems like a great trade. Google pays them $20 billion a year for exclusive search on Safari on iOS devices and then they're going to pay them $1 billion a year on a model that they probably spent tens, maybe hundreds of billions of dollars kind of getting ready. So I mean this is great news for Apple since the horrible rollout of Apple intelligence. I want to go back maybe to a year and a half ago. They've really been deliberate and you know, by the sales of the phone this last couple of months it doesn't seem like investors are actually investors are excited but consumers don't really care that stereo still stocks. So maybe Siri gets better.
- [44:10]
Melissa Lee
In the report it may have seemed like this is just a stopgap measure until Apple's own model will get up to par with the ones that are on the market right now. But the parameter, I mean it's a 1.2 very powerful power parameter model that Google has and Apple's model is 150 billion. I mean that just shows you scale the scale and how far behind, if you will, Apple is when it comes to these models.
- [44:34]
Guy Adami
Light years behind but they've, I mean have they ever really been ahead? If you think about it, that's a game they're playing and they're not losing to that game by the way. They actually might, in the end, Apple might win to waiting and letting everybody else sort of lead the way.
- [44:45]
Steve Grasso
Yeah, I believe that. I think that they're, they're not spending any money on Capex towards this. They've never been the great innovator, they've been the great replicator. I think that's a positive for Apple going forward.
- [44:55]
Melissa Lee
Quick on the chart. Whichever.
- [44:57]
Carter Worth
Yeah. Google, Apple, I'm sort of a trimmer. Both.
- [45:00]
Melissa Lee
Oh, okay. Up next, final trades. Time for the final trade. Stephen Delta.
- [45:14]
Steve Grasso
That's my pick. Positive momentum, positive earnings revisions.
- [45:18]
Melissa Lee
Delta, Carter, Braxton, Worth, Roku.
- [45:20]
Carter Worth
On the men making the turn.
- [45:21]
Melissa Lee
Buy it, Dan.
- [45:23]
Dan Nathan
Yeah, Apple, the story is definitely shaping up, but as Carter just said, I'd be a trimmer.
- [45:29]
Guy Adami
God, do you feel any different today in the wake of your birthday? I notice I didn't say a number.
- [45:33]
Melissa Lee
I feel a cupcake here.
- [45:36]
Stephen Yalof
I could say it.
- [45:38]
Guy Adami
Structured therapeutics.
- [45:39]
Melissa Lee
Mel, thank you for watching. Fast.
- [45:41]
Guy Adami
I could say it.
- [45:41]
Melissa Lee
See you back here tomorrow. Mad Money with Jim Cramer starts right now.
- [45:54]
Fast Money Promo Announcer
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable. But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.