Opioid Settlement, Boeing Downgrades: Markets Looking Up

Monday, October 21, 2019

We do not see any pre-market economic data this morning; in fact, this is a very light week for non-earnings-related data all the way until Thursday ahead of the bell. Futures are up somewhat in this Monday’s pre-market after a sell-off Friday. Much of the sentiment going forward will rely on Q3 results and other news items:

News item #1: In the state of Ohio, 4 major pharma carriers of opioid products have settled out of court: McKesson (NYSE:MKC) , Cardinal Health (NYSE:CAH) , Teva (NYSE:TEVA) and AmerisourceBergen (NYSE:ABC) have all reached agreement to an undisclosed total amount. The companies all felt that keeping out of a highly publicized court case was the right path for them in the near-future. Walgreens (NYSE:BA) , a fifth defendant, has yet to reach an out-of-court deal.

This agreement only has to do with the case in Ohio — not the significant number of developing suits in other states, as the opioid crisis is indeed a nationwide failure of the U.S. healthcare industry. We look forward to learning some more details of this agreement, but keeping most of it under wraps is likely precisely the point.

The Boeing Company (NYSE:BA) lost nearly 7% on Friday, its worst trading day in about 2 1/2 years. The crisis regarding its beleaguered 737 MAX — in which new text messages have surfaced from 2016 openly questioning within the company whether the MAX was safe to fly before two major fatal crashes grounded the aircraft — has triggered further downgrades in Boeing stock from covering analysts.

The question remains when the MAX may again become viable to fly, and ultimately whether it will at all. Should this plane be scrapped in its entirety, it will set Boeing back — literally — years. Currently, expectations are that the MAX will be delayed by airlines, who now publicly push back their expectations to February of next year. But anything is possible at this stage.

Boeing will deliver Q3 earnings results on Wednesday morning of this week. Currently, the world’s largest producer of airplanes carries a Zacks Rank #3 (Hold), but with a Value-Growth-Momentum grade of F. For more information on this story, check out this story: Will Lockheed Steal the Show from Bowing in Q3 Earnings?

Halliburton (NYSE:HAL) posted less-than-optimum results in its Q3 earnings report this morning, falling short of top-line estimates while coming in just in-line with expectations of 34 cents per share (down from 50 cents reported in the year-ago quarter). Revenues of $5.55 billion missed the Zacks consensus by roughly 5% this morning.

Shares have dropped another 1.6% in today’s pre-market at this hour. The company is already working on new lows not seen at Halliburton for 15 years. For more on HAL’s earnings, click here.

Mark Vickery

Senior Editor

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