With unemployment rising to 15%, and the grim corporate earnings seasons wrapping up, investors may struggle to keep up the relatively buoyant mood that has boosted markets in recent weeks. They may find some support from the Federal Reserve, where Chairman Jerome Powell this week urged Congress and the White House to agree on additional stimulus packages. The Fed has already cut rates down to 0 to 25 basis points; they have no further ammunition, so if more help is to come, it will need to come on the spending side. Urging action, Powell said that an economic recovery “could come more slowly than they would like.”Viewing the situation for investment bank JPMorgan, quant strategist Dubravko Lakos-Bujas sees further aid as inevitable: “[This] crisis is a consequence of an exogenous shock, and is unique given the absence of ‘bad actors.’ This makes policy response much less contentious, more proactive and essentially unconstrained.” In his view, there is no ceiling on any action Congress or the Federal Reserve may take – and that may be the bottom line, as far as investors are concerned.Turning to a micro-level view, the stock analysts at JPM are making some concrete recommendations – and they are targeting the dividend stocks. We’ve pulled three of JPM's bullish calls, and ran them through TipRanks database to see what other Wall Street's analysts have to say about them.Annaly Capital Management, Inc. (NLY)First up is a real estate investment trust, a niche well-known for its high dividends due to corporate tax code requirements. Annaly focuses its efforts on mortgage-backed securities, the lending side of the REIT sector, and holds an asset portfolio worth $133 billion.Like most companies, Annaly saw a sharp earnings drop in the first quarter. EPS, at 21 cents, was down 19% sequentially, although it did come in just over the 20-cent forecast. The true rough spot was that earnings did not fully cover the company’s Q1 dividend. At 25 cents quarterly, the dividend payment annualizes to $1 even and gives a fantastic yield of 16.9%. Annaly has a long history of maintaining reliable dividend payments, including adjusting the payout if needed to keep it viable. That the company did not make such an adjustment in Q1, despite a payout ratio of 119%, suggests that the company expects earnings to turn upwards in the near term.NLY shares have underperformed in the current bear cycle, losing as much as 59% from peak to trough. Since bottoming out, the stock has regained 40% from its low point – but share prices remain mired in penny-stock territory.Writing for JPM, 5-star analyst Richard Shane sees the low share price here as an opportunity. He writes, “We reiterate our preference for NLY’s large agency MBS portfolio, which consists predominately of specified collateral that performed well in the lower rate environment leading up to the pandemic. We continue to see upside to shares at current levels…”Backing his optimistic stance on NLY, Shane gives the stock a Buy rating. His $8.50 price target implies a strong upside of 45% in the next 12 months. (To watch Shane’s track record, click here)Overall, Wall Street is in cautious agreement with Shane on Annaly. Of 9 recently published stock reviews, the Buys outweigh the Holds 6 to 3. The stock’s current share price is low, at $5.86 even after gains in today’s session, and the average price target of $7.33 suggests room for 25% growth this year. (See Annaly stock analysis on TipRanks)Blackstone Mortgage Trust (BXMT)Sticking with REITs, we turn to Blackstone. This company invests mainly in original senior loans, backed by collateral, in the North American, European, and Australian markets. Blackstone’s real estate portfolio holds $161 billion in assets under management.Like NLY above, Blackstone shares felt a hard hit when the market turned sour in Q1. From peak to trough, BXMT lost an eye-opening 68% of its share value. Even after gains in recent weeks, the stock is still down 46% from its high point in February – this is serious underperformance, as the S&P 500 is only down 15% from its peak.Blackstone’s underperformance comes even as the company beat the earnings forecast in Q1. While EPS was down year-over-year, it did beat quarterly expectations by 5.4%, coming in at 58 cents. Revenues missed the forecast, but still came in at a solid $100.6 million.For income investors BXMT offers a solid dividend payment that has been held steady – regardless of quarterly earnings – for the past three years. The 62-cent quarterly payment gives an annualized value of $2.48 and a yield of 11.7%. This is nearly 6x the average dividend yield among S&P listed companies, and an impressive return by any standard.Richard Shane covers BXMT, too, and he is satisfied that the company can weather the coronavirus storm. Shane says of Blackstone, “BXMT remains a market leader best positioned to negotiate optimal terms with both financing counterparties and well-capitalized institutional borrowers… the overall impact of COVID-19 to quarterly earnings was minimal as all loans have paid interest through April… BXMT noted approximately $821M in liquidity…”In his note on the stock, Shane reiterates his Buy rating, along with a $25.50 price target that suggests an upside potential of 22%. (To watch Shane’s track record, click here)What do other analysts say about Blackstone? It’s almost split. TipRanks analytics shows out of 5 analyst, 3 are bullish on the stock, while 2 remain sidelined. The consensus price target of $24.50 shows a potential upside of 17.22%. (See Blackstone stock analysis on TipRanks)Enbridge, Inc. (ENB)Last up is Enbridge, a major player in the North American energy industry. While oil prices collapsed during Q1 as economies were shut down, that did not negate the need for oil and other hydrocarbons. Even limited economic activity, along with such essentials as home heating and power generation, maintained some demand. Enbridge, which is Canada’s largest natural gas distributor and the owner of the longest crude oil transport network in North America, was well positioned to remain profitable.And it did. The company’s Q1 earnings came in at 62 cents per share, beating the forecast by 21.5% and showing impressive 34.7% sequential growth. Quarterly revenues, of $8.96 billion, beat the estimates by 5.2%.Enbridge has an interesting dividend history. The company has kept up its quarterly payments reliably for the past three years, in part by adjusting the payout to match earnings. The current dividend, which was declared earlier this week, is 57.75 cents per share. The annualized payment of $2.31 puts the yield at 7.5%, not as high as the REITs above but still far better than average – and enormously higher than the badly depressed Treasury bond market.JPM’s Jeremy Tonet believes Enbridge holds a strong business position. He writes of the company, “In addition to the strong results, we view reiterating guidance as a significant positive for ENB, especially considering Mainline concerns. Furthermore, ENB continues to progress several key initiatives, including Mainline recontracting…”In line with this view, Tonet sets a price target of $56 Canadian ($39.86 US at current rates), implying a 29% upside potential for the coming year. Tonet’s bullish upside backs his Buy rating. (To watch Tonet’s track record, click here)The analyst consensus view here is another Moderate Buy, based on 16 ratings that include 12 Buys, 3 Holds, and a single Sell. ENB shares are currently priced at US$30.98, and the average price target of $38.02 indicates a 23% upside potential. (See Enbridge stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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(Bloomberg) — Pfizer Inc.’s experimental gene therapy for Duchenne muscular dystrophy helped boys with the deadly disease, but failed to match benefits previously shown by competitor Sarepta Therapeutics Inc.All nine of the boys, ages 6 to 12, in the early-stage trial started to produce a key protein called dystrophin after receiving the one-time treatment. While patients with DMD don’t normally make any of the protein needed for muscles to work properly, three boys on a higher dose of the gene therapy produced about 52% of normal levels a year after treatment, Pfizer said in a statement.One boy on the higher dose needed platelet transfusion and treatment with Alexion Inc.’s Soliris to boost the number of platelets in his blood after his immune system reacted to the gene therapy. While he fully recovered, the reaction marks the third serious adverse event tied to the treatment after two other patients were hospitalized shortly after infusion. In response to the previous safety concerns, Pfizer adjusted its study to increase monitoring and management, which the company says helped mitigate the most recent reaction.The positive results for Pfizer’s therapy would be “a home run for DMD patients, in a vacuum,” wrote Baird analyst Brian Skorney. He said the update “just looks like a pale comparator to Sarepta’s SRP-9001” as the benefits appear lower than those seen with Sarepta’s therapy, and safety issues raise red flags.Sarepta shares jumped as much as 8.6% Friday, the biggest intraday gain for shares since late March, while Pfizer stock was little changed. Shares of the Cambridge, Massachusetts-based biotech are up 15% in the past year.While analysts had been looking forward to an update on the competitive landscape for DMD gene therapies, comparison remains difficult. While Sarepta has relied on a standard analysis called Western Blot that measures the level of dystrophin expression, Pfizer has opted for different technology. Measured by Pfizer’s test, the average expression of patients on the higher dose was significant compared to a baseline measure, with five of the six boys showing an increase in mini-dystrophin concentration between two and 12 months.The gene therapy’s benefit was also measured through a standard test of movement ability, including things like walking and climbing. While boys in the 7- to 9-year-old range typically start to plateau or lose motor abilities, six patients on Pfizer’s therapy for at least a year posted 3.5-point gains.A low-single-digit improvement in that score would be “somewhat encouraging” for the field, Bernstein analysts said on Thursday, as it would suggest dystrophin production translates to a functional benefit. At a conference in June, Pfizer said two boys in its trial posted a 4.5-point gain one year after treatment.DMD is a genetic disease characterized by progressive muscle degeneration and weakness. It’s the most common form of muscular dystrophy worldwide and affects about 250,000 people in the U.S., mostly boys. Pfizer’s data are being presented at a virtual meeting of the American Society of Gene & Cell Therapy.In the Pfizer study, another exploratory analysis used MRI to show a reduction in fat in the thighs of boys treated at the higher dose after a year of follow-up. That suggests the gene therapy may have improved muscle fiber health and quality, Pfizer said, noting that DMD patients typically lose muscle and gain fatty tissue as the disease progresses. No reduction in fat was seen in patients receiving the lower dose.The New York-based drugmaker plans to start treating patients in a late-stage study in the second half of the year after it gets clearance from the U.S. Food and Drug Administration. The company is neck-and-neck with Cambridge, Massachusetts-based Sarepta, which expects to start a multicountry study later this year after delays. SVB Leerink analyst Joseph Schwartz wrote earlier this month that “investors will likely reward the first company out of the Phase 3 gates.”(Updates with analyst commentary in fourth paragraph, share movement in fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
In a race to position itself in the latest trade battle between the United States and China, Taiwan Semiconductor Manufacturing Co Ltd made it just under the wire. The world’s biggest contract chipmaker unveiled plans for a $12 billion plant in Arizona on Friday just hours before Washington outlined a proposal to amend tech export rules that could restrict TSMC’s sales to China’s Huawei. A U.S. Commerce Department official said TSMC’s decision to locate the plant in the United States generated “good will” at the department, the drafter of the law that would require TSMC and others to get U.S. licences to sell chips to Huawei.