August 7, 2024 4:48pm

Earnings season takes its toll

As Nasdaq gives back most of its gains

I say today what others won't, so you can do what others can't by sticking to the FACTS!

Never leave an investor uninformed!  

I follow the dictum, quoting Churchill that “short words are best, and the old words when short are best of all.”

 

Wednesday: The Dow closed DOWN -234.21 points or -0.60%, the S&P closed DOWN -40.53 points or -0.77% while the Nasdaq closed DOWN -171.05 points or -1.05%

Wednesday’s advance/decline line at the open was negative with 16 incliners, 17 declined and 2 flats; ending with a negative close of 2 incliner, 31 decliners and 2 flats

  • the IBB was down -1.80% and the XBI was down -2.20%
  • the VIX was up +0.39 point or +1.41% at 28.10

Economic Data Docket: The Mortgage Bankers Association's (MBA) index of mortgage applications jumped 6.9% for the week ended Aug. 2, according to new data published Wednesday. At the same time, the average rate on the popular 30-year loan dropped to 6.55% last week from 6.82%. It marked the lowest level for interest rates since May 2023.

 

Tuesday: The Dow closed UP +294.39 points or +0.76%, the S&P closed UP +53.70 points or +1.04% while the Nasdaq closed UP +166.77 points or +1.03%

Tuesday’s advance/decline line at the open was positive with 17 incliners, 15 declined and 3 flats; ending with a positive close of 23 incliner, 9 decliners and 3 flats

  • the IBB was up +0.45% and the XBI was up +1.08%
  • the VIX was down -10.67 point or -27.56% at 27.90

Economic Data Docket: The U.S. trade deficit declined in June but not by as much as expected, the Commerce Department reported. The goods and services shortfall fell to a seasonally adjusted $73.1 B, down $1.9 B from May but above the estimate for $72.5 B. Exports rose $3.9% while imports, which subtract from GDP, were up $2 B. At the country level, the imbalance with China fell to $22.3 B, down $1.6 B.

 

(8/5) Monday: The Dow closed DOWN -1,033.20 points or -2.60%, the S&P closed DOWN -160.23 points or -3% while the Nasdaq closed DOWN -576.08 points or -3.43%

Monday’s advance/decline line at the open was negative with 0 incliners, 31 declined and 3 flats; ending with a negative close of 1 incliner, 31 decliners and 3 flats

  • the IBB was down -2.82% and the XBI was down -3.15%
  • the VIX was up +13.93 point or +59.23% at 37.32

Economic Data Docket: The ISM services index registered a 51.4% reading for the month; up from 48.8% in June and better than the Dow estimate for 50.9%.

 

RegMed Investors’ (RMi) pre-open: “Waiting for a follow-through session … don’t get excited quite yet. The stock market rebounded Tuesday after several days of sharp losses, despite a late fade; now we waiting for a follow-through session to reduce the risk of buying-in too early for confirming uptrends.” … https://www.regmedinvestors.com/articles/13572

 

Henry’omics:

We need to more than consider the economic environment - rising rates and inflation to comprehend the micro re “our” universe of cell and gene therapy companies …

Indexes slipped into the red, losing gains from earlier in the session as the market failed to continue recouping its losses from Monday’s sell-off.

The Cboe Volatility Index, known as the “fear gauge,” was last trading at 28.3 after falling to as low as 22 earlier on Wednesday.

  • The sharp decline from near 65 on Monday indicates investors’ fears are abating, but still remain elevated from their initial levels at the start of the month.

 

Ebb and flow of MY covered sector cell and gene therapy session daily “endings”:

Q3/24

  • August: 1 positive and 4 negative closes
  • July: 1 market holiday. 1 day off, 6 negative, 1 neutral and 12 positive closes

 

Wednesday’s Closing Down (10 of 31):

  • Alnylam Pharmaceuticals (ALNY -$2.39 after Tuesday’s -$2.44 and Monday’s -$7.05),
  • CRISPR Therapeutics (CRSP -$2.06 after Tuesday’s -$0.33 and Monday’s -$1.45),
  • Blueprint Medicine (BPMC -$1.89 after Tuesday’s -$0.23 and Monday’s -$3.75),
  • Vericel (VCEL -$1.44 after Tuesday’s +$0.89 and Monday’s -$1.76).
  • Intellia Therapeutics (NTLA -$1.18),
  • Voyager therapeutics (VYGR -$1.15 after Tuesday’s +$0.22),
  • BEAM Therapeutics (BEAM -$1.06 after Tuesday’s -$0.09 after Monday’s -$1.82),
  • Ultragenyx Pharmaceuticals (RARE -$0.83 after Tuesday’s +$0.69 and Monday’s -$1.39),
  • BioLife Solutions (BLFS -$0.83 after Tuesday’s +$0.79),
  • Solid Biosciences (SLDB -$0.80 after Tuesday’s +$0.24),

Flat (2):

  • Bellicum Pharmaceuticals (BLCM)
  • Homology Medicine (FIXX)

Wednesday’s Closing Up (2 of 2):

  • Adverum Biotechnologies (ADVM +$0.05 after Tuesday’s -$0.02),
  • AxoGen (AXGN +$0.09),

 

The BOTTOM LINE: The weakness in small caps put downward pressure on the broader market Wednesday with the Russell 2000 benchmark falling 0.9%.

  • Small cap companies are more sensitive to economic fluctuations and they bore the brunt of this week’s sell-off. Week to date, the benchmark is down 3.1%, and it has shed 9.4% in August alone.

 

As I stated yesterday, … “let the dust settle’ before entering the sector as markets rebound … August is historically a rocky month for the stock market due to lighter trader volumes.

  • From Tuesday, “While the broader stock market is on the brink of entering correction territory, it’s typically wise to let a bit of dust settle before putting new money to work as there is risk of catching a falling knife during a correction. We would characterize the recent market pullback as a textbook correction, after months of low volatility so far in 2024,” <BMO Family Office chief investment officer Carol Schleif.>

 

As Q2 earnings numbers sweep … hold tight more earnings numbers on the way, we can NOT battle the downslide!

 

Cell and gene therapy sector share pricing dropped on Wednesday following Tuesday’s pop after Monday’s decline in a new week,

  • After Friday’s positive close following Thursday’s upswing after diving on Wednesday following Tuesday and Monday’s bubble-up positive closes …
  • Last Friday and Thursday after inclining on the previous Wednesday following Tuesday’s decline and Monday

Without “uncle algo and his electronic dwarfs” hindered to the downside, helped to the up after the cell and gene therapy sector dived into the toilet!

 

Earnings “whispers” (Zacks): Expectation …

Caribou Biosciences, Inc. (CRBU) is expected to post quarterly loss of $0.45 per share in its upcoming report.

  • Revenues are expected to be $3.31 million, down 12% from the year-ago quarter.

Prime Medicines (PRME) Consensus Estimate for loss per share in Q2 is pinned at -$0.40.

  • R&D expenses have likely seen an increase inQ2, driven by expenses related to the advancement of its pipeline and platform. G&A expenses will increase due to expansion of clinical activities.

AxoGen (AXGN) is expected to deliver a year-over-year decline in earnings on higher revenues when it reports results for Q2/2024.

  • is expected to post quarterly loss of $0.05 per share in its upcoming report, which represents a year-over-year change of -66.7%.

Precigen, Inc. (PGEN), another stock in the same industry, has yet to report results for the quarter ended June 2024.

  • Expected to post quarterly loss of $0.09 per share in its upcoming report, which represents a year-over-year change of -12.5%. The consensus EPS estimate for the quarter has been revised 12.5% lower over the last 30 days to the current level.
  • Revenues are expected to be $1.28 million, down 27.7% from the year-ago quarter.

 

Reiterating, “There’s more room for “tactical downside in the weeks to come as we enter the gauntlet of the weakest two months and only consecutive losing months for equities, with markets at all-time highs.”

 

Q3 and August to date:

  • Wednesday ended with a negative close of 2 incliner, 31 decliners and 2 flats
  • Tuesday ended with a positive close of 23 incliner, 9 decliners and 3 flats
  • Monday ended with a negative close of 1 incliner, 31 decliners and 3 flats
  • Friday ended with a negative close of 5 incliners, 28 decliners and 2 flats
  • Thursday ended with a negative close of 4 incliners, 29 decliners and 2 flats

 

Electronic trading pops and flops the cell and gene therapy sector

  • There is past evidence of a slowdown coming (it’s the contrarian in me) and it's going to become even more thin as we go forward into Q2 earnings season

 

Due “dates” for Q2 LPS (loss per-share) earnings releases:

  • Generation Bio (GBIO) Wednesday, 8/7
  • Editas Medicine (EDIT) Wednesday, 8/7
  • AxoGen (AXGN) on Thursday, 8/8
  • BioLife Solutions (BLFS) on Thursday, 8/8
  • Intellia therapeutics (NTLA) on Thursday, 8/8
  • Lenz Therapeutics (LENZ) Wednesday, 8/14

 

The top three (3) performing in the session:  two

  • Wednesday: Adverum Biotechnologies (ADVM) and AxoGen (AXGN) (IONS)
  • Tuesday: Lenz Therapeutics (LENZ), Vericel (VCEL) and BioLife solutions (BLFS)
  • Monday: uniQure NV (QURE)

The worst three (3) in the session: 

  • Wednesday: Alnylam Pharmaceuticals (ALNY), CRISPR Therapeutics (CRSP) and Blueprint Medicine (BPMC)
  • Tuesday: Alnylam Pharmaceuticals (ALNY), Sage Therapeutics (SAGE) and CRISPR Therapeutics (CRSP)
  • Monday: Alnylam Pharmaceuticals (ALNY), Blueprint Medicine (BPMC) and Ionis Pharmaceuticals (IONS)

 

Welcome to my world of defining the “grey’ in our universe!

  • Right up front, “I also hate to be so negative or contrarian but, this is a NO spin zone and facts are its product; I can always be WRONG but … I am mostly EARLY!”

 

Opinions expressed are those of the author and are subject to change, and not intended to be a forecast of future events, a guarantee of future results, nor investment advice. Whether information or intelligence is good, bad, or somewhere in between; I put into context what is relevant and useful for investors.  All investments are subject to risks. Investors should consider investment objectives.

Henry McCusker, the editor, and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication. Regulation Analyst Certification (Reg AC): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and it’s or their securities.

I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.