Eli Lilly and J&J bounce on new data, as software gives up gains
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks are lower to start the week. On one hand, AI component trade is surging, with memory chip stocks like Micron and Sandisk extending last week’s gains and optical names including Corning , Marvell Technology , and Coherent also rallying. The flip side of that action is pressure on hyperscalers, also known as the “spenders,” who are footing the bill for the tech hardware. Software stocks also sold off as investors grew antsy about the prospects of private equity firm Silver Lake buying enterprise software provider Workday . It was reported last Thursday that the two sides had discussed a potential takeover, sending Workday shares to their best day since 2016. Other software stocks, including Salesforce , quickly rose on the report as shorts scrambled to cover their positions. But with no new developments on a potential deal, some of that enthusiasm is fading, and the group is giving back last week’s gains. Software pressure over the past two sessions has brought down the shares of CrowdStrike and Palo Alto Networks , even as management commentary on past earnings calls has shown that advancements in AI are accelerating, not disrupting, their businesses. In the background, interest rates continued to creep higher , with the 10-year yield crossing 4.7%. The move in rates comes ahead of Wednesday’s release of the minutes from the Fed’s July FOMC meeting, which may provide clues about how the committee views monetary policy ahead of next week’s Jackson Hole Economic Policy Symposium, where many of the world’s top central bankers, economists, and policymakers meet to discuss economic issues. Our two pharma stocks are trading higher on Monday , and we want to circle back to a note from analysts at Leerink. For background, every week Leerink tracks U.S. drug market demand and reports weekly prescription trends on Friday, using data from the healthcare data and analytics provider IQVIA. According to the latest report, Eli Lilly’s oral GLP-1 drug Foundayo is starting to gain ground on Novo Nordisk’s oral Wegovy. While the Wegovy pill had more prescriptions during the week ending Aug. 7 at about 163,000, the total fell 5% week over week. Foundayo, in contrast, saw its total prescriptions increase 14% to about 38,900. The timing of Lilly’s market share gains aligns perfectly with the timeline management shared on its August earnings call , where the team explained that marketing has just begun to ramp up and consumer awareness is growing. While it’s true that the Wegovy pill got off to a fast start and provides slightly greater weight loss, we always thought Foundayo would be the better option for patients seeking weight-loss maintenance because it has no time-of-day or food-and-water restrictions. We’ll keep tracking the data and monitoring for future shifts in share, but we’re pleased to see Foundayo finally turn a corner. A bonus part of the Leerink note was on Johnson & Johnson’s Icotyde, the company’s oral IL-23 inhibitor approved to treat moderate-to-severe plaque psoriasis. Like the oral obesity meds, Icotyde is poised to gain share among injectable alternatives. Leerink notes that Icotyde prescriptions have begun to accelerate as payers expand coverage of the medication. Of J & J’s recent launches, Icotyde is the one we’re most bullish on as a potential blockbuster. There are no major earnings after the close on Monday. Before the opening bell Tuesday, we’ll see earnings from Home Depot , Baidu , and Klarna . Home Depot is the first of several major retail reports scheduled for this week, and we don’t expect much growth from this home improvement company due to stubbornly high interest rates, which have limited housing turnover. Still, we will be listening to see how the Pro customer is doing and how management is integrating the specialty building-products GMS acquisition into its larger subsidiary, SRS Distribution. TJ Maxx-parent TJX Companies reports Wednesday before the opening bell alongside Target and Lowe’s , and Walmart reports Thursday. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
