Pre-Market Analysis: Viacom, Centene, Merck and Alphabet Stocks Making Big Moves

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Before the market opens today, here’s a roundup of earnings reports from companies and how they fared on Monday, February 4, 2019.

Viacom Stock Falls 1.5%

Viacom’s results for the first quarter of the 2019 fiscal year came better than expected estimates, primarily due to an extended turnaround at its movie studios. However, the company’s earnings were also affected by its stalling cable network. The company’s stock fell 1.5% in pre-market trading.

Viacom has majorly been in the news due to its potential merger with CBS, its former corporate affiliate. The two companies split back in 2006, but they both remain under the control of the Redstone-owned National Amusements.

The Redstone family famously pushed for a merger between CBS and Viacom last year, arguing that a merger could increase revenues and also help create the right the right amount of content required to survive in a world that is now dominated by streaming giants such as Netflix, Hulu, and Amazon.

Centene Beats Estimates with $1.79 Share Earnings

Centene came out with a $1.38 per share quarterly earnings, which compared somewhat favorably to the earnings of $0.97 a share that was reported a year ago. The quarterly reports represented an earnings shock of 3.76%.

The healthcare company was expected to post earnings of $1.77 per share, but it ended up posting $1.79 in share earnings, delivering a 1.13% surprise. Centene’s shares have also added about 12.7% since the turn of the year, versus the 8.7% gained by the S&P 500.

The company posted revenues of $16.56 billion for Q4 2018, as compared to the $12.81 billion made a year before. The company has continued to surpass consensus revenue estimates for the past four quarters.

The sustainability of the company’s stock based on the released numbers and future earnings depend primarily on the management’s commentary on its earnings call.

Merck & Co. is Building Momentum

Bank of America Merrill Lynch named Merck as the bank’s top pick among pharmaceutical stocks across the United States, due in large part to the company’s continued progress in the development of its cancer medication.

On Friday, Merck told its investors that Keytruda, its patented cancer treatment, was able to bring in over $2 billion in quarterly revenues for the first time, a figure which exceeded expectations of Wall Street analysts.

The higher –than-estimated numbers pushed Merck’s stock prices higher, with the company going up almost 5 percent over the past seven days. Keytruda works by blocking a protein known as the “programmed death receptor 1,” or PD-1, in the immune system’s cells. It works as a “kill switch” that prevents the body’s cells from attacking other cells in the body.

The drug’s sales pushed past 66 percent year-on-year in Q4 2018, and they made up almost a fifth of the company’s $11 billion total sales all over the world. Keytruda’s sales climbed 88% to $7.2 billion in 2018, and all indications point to more increase in sales, marking a continued dominance by Keytruda in the lung cancer treatment space.

Merck’s stock rose by 0.3 percent in premarket trading after the Merrill Lynch announcement. The bank also sees the company’s shares jumping by 9 percent over the next 12 months, moving to $84 from Monday’s close of $76.87.

Alphabet Inc. Beats Revenue Estimates, but Stock Falls 2.9%

Alphabet Inc., the parent company of Google, reported a net income of $8.95 billion for Q4 2018, at a share price of $12.77, as opposed to a $3.02 loss and $4.35 share price recorded a year before.
Alphabets overall bottom line was also bolstered by a $1.3 billion gain from the non-marketable debt securities. Outside that benefit, the company’s earnings would have been at a share price of $10.91, just above the $10.89 FactSet consensus estimate.

Alphabet began to report gains and losses in outside investments as a part of its obligations under its new accounting rules that were implemented last year.

Overall, its revenues rose to $39.28 billion, up from $32.32 billion reported the year ago, and beating analysts estimate of $38.9 billion. As expected, the bulk of Alphabet’s income came from Google and its various advertising outlets, which brought in a combined $32.64 billion for Q4 2018.

The company’s traffic acquisition costs, fees paid by Alphabet to other companies, such as Apple Inc., to keep their default search engines pegged to Google, rose to $7.44 billion for the quarter, up from $6.45 billion the year before. The traffic costs also declined to 23% of Alphabet’s total revenues.

However, despite the company’s favorable earnings, its stock fell 2.9% in after-hours trading on Monday.


Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.

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