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3 Food Stocks to Buy Instead of Beyond Meat (BYND)

For the stock of Beyond Meat, Inc. (BYND), seemingly on a one-way descent, its high of $186.83 on January 26, 2021, seems like a distant memory. The precipitous decline in the company’s stock price has reflected the alarming decline in its top line, which is more than the category average due to the inflation-led slowdown.
Founded in 2009 by its CEO Ethan Brown, BYND targeted meat eaters with plant-based products that replicate animal meat in look, feel, and taste. The company partnered with grocery and restaurant chains to increase the reach and visibility of its products.
In the interest of sustainability, which of the following options would you prefer?

Consuming regular quantities of plant-based meat
Consuming animal protein in moderation and on occasions

The hype surrounding the brand, further accentuated by big-name celebrity endorsements, helped the company’s stock make a strong market debut in 2019.
However, the company’s single-minded pursuit of growth and expansion through innovative offerings came in lieu of mounting debt and cost overruns.
Moreover, the company’s tendency to overpromise and underdeliver also didn’t help. As a result, the company had to switch its priority from growth at any cost to sustainable growth with healthy cash flows.
However, this attempt to scale down while moving forward has resulted in revenue decline, loss of market share to competitors, and a consequent slump in share price.
While BYND deals with its struggles and charts an arduous path to profitability, here are some alternative food stocks to consider.
Nestlé S.A. (NSRGY) is a global nutrition, health, and wellness company. The company’s segments include Europe, the Middle East, and North Africa (EMENA); Americas (AMS); Asia, Oceania, and sub-Saharan Africa (AOA); Nestle Waters; Nestle Nutrition; and Other Businesses.
NSRGY’s offerings include powdered and liquid beverages; water; milk products, and ice cream; nutrition and health science; prepared dishes and cooking aids; confectionery; and PetCare.
In 2017 NSRGY acquired Sweet Earth, a Calif.-based vegan foods manufacturer. In 2019, Sweet Earth announced the launch of its new vegan burger product, Awesome Burger, and its ground beef component, Awesome Grounds. Both products are currently distributed to supermarkets, restaurants, and universities.
For the fiscal year 2022, NSRGY’s total reported sales increased by 8.4% to CHF 94.4 billion ($104.66 billion), with organic growth coming in at 8.3% year-over-year. The company’s underlying EPS increased by 8.4% to CHF 3.42 during the same period.
For the first three months of 2023, NSRGY’s total reported sales increased by 5.6% year-over-year to CHF 23.5 billion ($26.05 billion). Organic growth came in at 9.3%, while acquisitions had a net positive impact of 0.3%.
Hormel Foods Corporation (HRL)develops, processes, and distributes a range of branded food products globally. The company operates through three segments: Retail, Foodservice, and International.
Back in 2019, HRL forayed into products that reduced meat consumption with its “Fuse Burger,” made from ground turkey and rice.
Despite a challenging start to the fiscal year 2023, persistent impact from inflationary pressures, supply chain inefficiencies, and lower-than-expected sales volumes, HRL’s sales and operating income for the first quarter came in at $3 billion and $289 million, respectively. The company’s diluted EPS came in at $0.40.
Tyson Foods, Inc. (TSN) is a protein-focused food company whose segments include: Beef; Pork; Chicken; and Prepared Foods.
In 2019, the company launched its line of meat-free and blended protein products called Raised & Rooted. After starting with nuggets made from a blend of pea protein powder and other plant ingredients, the brand diversified into blended burgers made with a combination of plant-based ingredients and Angus beef.
For the second quarter of fiscal year 2023, TSN’s sales demonstrated a marginal increase to $13.13 billion. On May 11, the company declared a quarterly dividend of $0.48 and $0.432 per share on its Class A and Class B common stock, respectively. The dividends would be paid out on September 15, 2023, to shareholders of record at the close of business on September 1, 2023.

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3 Tech Stocks Turning Negative Sentiment Into Positive Returns

With the U.S. Treasury set to exhaust its workarounds and run out of options to manage the national debt until the self-imposed debt ceiling is raised or suspended, the world’s richest economy, which also issues the global reserve currency, is projected to run out of cash and fail to meet its obligations as early as June 1.
While Treasury Secretary Janet Yellen has deemed it ‘unthinkable’ to let the U.S. default on its debt and has urged lawmakers to set their differences aside to ensure that “America should never default.”
However, with Republicans such as Donald Trump playing hardball and endorsing the notion of letting the nation default if Democrats don’t agree to spending cuts, it’s probably fair to say that Ms. Yellen’s words are going largely unheeded.

Given that the alternatives to raising or suspending the debt ceiling, like the U.S. has done almost 80 times since the 1960s, seem either unviable or unattractive, the extent to which the U.S. and global economy could be undermined if the default comes to pass would, in the words of Yellen, be an “economic catastrophe.”
With business leaders such as Jamie Dimon convening a ‘war room’ over the debt ceiling standoff, even the markets have begun pricing in the worst. The S&P 500’s net loss since the beginning of the month could only worsen further the longer the crisis drags on.
Do you see the U.S. defaulting on its debt this time?

Can’t Say

However, the sliver of silver lining that could encourage investors alarmed by the looming cloud of fat tails is that if the worst comes to pass, it would also mean a potential devaluation of the U.S. dollar.
This could be a significant tailwind for the export prospects of technology stocks, which have been under pressure due to 10 interest-rate hikes over the past year and are witnessing a watershed due to the advent of generative artificial intelligence.

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The Role of China in the Global Stock Market and Its Impact on Investors

Towards the end of last year, China surprised the world with an abrupt pivot away from the strict restrictions of its long-espoused “Zero-Covid” policy., including quarantine requirements for inbound visitors. Despite an initial surge in infections, global businesses rushed in, hoping to cash in on the economic recovery.
Sentiments were further boosted by steps to stimulate economic growth and domestic consumption, mapped during and around the annual Central Economic Work Conference. These steps also helped ailing Chinese developers ease their liquidity strains and revive home purchases.
These measures seem to be working. According to the data released by China’s National Bureau of Statistics on April 18, the country’s GDP grew by 4.5% in the first quarter of the fiscal year. This was better than the forecast of 4% and the highest growth since the first quarter of last year.

Six months on, while the country is still open for business, the momentum has visibly slowed. While China’s exports in April grew by 8.5%, the country’s imports declined by 7.9% year-over-year as growth in the service sector softened, and manufacturing contracted again in three months.
With the 50-mark separating growth and contraction, the Caixin/S&P Global services purchasing managers’ index fell to 56.4 in April from 57.8 in the previous month, and the Caixin China general manufacturing purchasing managers’ index fell to 49.5 in April.
China’s top leaders have also taken note. A translated state media readout of the Plitburo meeting said, “At present the positive turn in China’s economy is primarily one of a recovery. Internal drivers still aren’t strong, and demand is still insufficient.”
As a result of this patchy growth, analysts at Morgan Stanley foresee a significant dip in demand and output of Chinese steel that could result in a 28% decline in iron ore prices by the end of 2023.
With markets mirroring this moderation, Citi has pushed back its stock rebound forecasts, and its analysts expect Hang Seng to take until the end of September to reach 24,000.
Moreover, more significant concerns are looming on the horizon. With China’s National Bureau of Statistics reporting that the population dipped to 1.412 billion last year from 1.413 billion in 2021, the country’s demographic dividend for the past two decades threatens to turn into a demographic decline.
Despite abolishing its one-child policy in 2016 and scrapping childbirth limits in 2021, China still struggles to boost its declining birth rate.
Would China be able to dethrone the U.S. as the largest economy before its population ages significantly?

Can’t Say

Additionally, economic cooperation has taken a backseat, with competition between U.S. and China degenerating into conflict. According to an IMF forecast, escalating tensions between the two superpowers could cost the global economy 2% of its output.
This has impacted the stocks of American businesses as well.
NIKE, Inc. (NKE) and other apparel manufacturers are currently stuck between a rock and a hard place. A House committee examining the U.S. government’s economic relationship with China has asked the company and its peers, such as ADIDAS AG (ADDF), Temu, and Shien, to furnish information by May 16 regarding the use of forced labor during production.
If the use of materials and labor sourced from the Xinjiang Uyghur Autonomous Region of China could be proven, it would violate U.S. trade law under the 2021 Uyghur Forced Labor Prevention Act.
Back in China, consumers’ backlash over foreign brands’ stance on Xinjiang cotton and Covid-19 has had them scrambling to limit the damage by touting hyper-local and patriotic strategies in a bid to prevent local competitors from making further gains.
Starbucks Corporation (SBUX) surpassed profit estimates due to the Chinese recovery. However, the company’s guidance has ended up fanning investors’ anxieties. The company reported that after a “faster than expected” recovery in the first three months of 2023, average weekly sales in China have started to moderate.
Although revenge spending after years of strict restrictions mellowing down into a moderate growth rate is nothing out of the ordinary, the management commentary was enough to sink the stock by about 6% following the earnings call.

The U.S. maker of heavy equipment for the mining, construction, and energy industries Caterpillar Inc. (CAT), posted a lower-than-expected profit for the first time since the beginning of the pandemic owning to increased raw material costs.
More importantly, CAT’s warning about weaker demand for its machines in China, which accounts for 5 to 10% of the company’s sales, spoiled the mood on the street has sent its shares tumbling.
Although U.S. and Chinese businesses have benefited from pent-up demand unleashed during the first quarter of the year following the opening up of its economy, investors would be wise to treat it like an exceptional windfall rather than a lasting tailwind. That would help them adjust their expectations in favor of modest growth and perhaps even an occasional contraction during the latter half of this year.

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Cathie Woods: Bold Prediction for Tesla

Recently the renowned stock picker and Tesla (TSLA) bull made a new price prediction on the automaker, which sounds just as crazy as the last time she made a wild prediction, but the first prediction has come true, and then some.
Cathie Woods is the Founder and lead stock picker for the Ark Invest family of exchange-traded funds. Woods initially started Ark Invest in 2014 and made heavy bets on technology companies.
She became a household name when her original $2,000 price target on Tesla, when the stock was trading for around $300 per share, came true on a split-adjusted basis.
When Cathie initially made her case for Tesla at $2,000, people thought she had lost her mind. They couldn’t understand how she arrived at that valuation and why she was so confident in that prediction.
Which, by the way, she was, considering she invested millions in Tesla before it went on its run higher.
Those investments in several different Ark Invest ETFs helped propel several Ark ETFs into the top ten best-performing ETFs for several years in a row.

Cathie is at it again, possibly giving investors a second chance to catch lightning in a bottle.
Cathie Woods Ark Invest owns a little more than $850 million worth of Tesla stock (stock price is currently around $170 per share). She believes the stock price can go to at least $1,400 per share by 2027.
That price is her bear case scenario, with a bull case scenario of $2,500 and a base case price of $2,000 per share. Those figures would represent an eight, eleven, and fourteen-fold return from today’s price.
Furthermore, the base-case price of $2,000 per share would give Tesla a market capitalization of $6.3 trillion. For context, two of the largest companies in the world Apple (AAPL) and Microsoft (MSFT), have market caps of $2.7 trillion and $2.2 billion. At $6.3 trillion, Tesla would be worth more than both of them combined.
Luckily, Cathie gave us a few reasons why she thinks Tesla can get to that price, with the main reason being a robotaxi business. Tesla wants to use its self-driving technology to operate a fully autonomous taxi business in the future. The idea is Uber (UBER), without the drivers.
Woods believes the bearish case for this business would make it worth $200 billion in 2027. Her bullish case for the robotaxi business is it will be worth $6143 billion by 2027.
While these figures seem insane since the division Woods is predicting will spur Tesla’s growth brings in nothing in revenue today, she has been right about Tesla and other technology companies in the past.
If you want to tag along on the Cathie Woods ride, the ARK Innovation ETF (ARKK) is her flagship ETF and has a sizable position in Tesla. The car company represents over 9.6% of the fund and is its top holding.
Tesla is also the number one holding, representing 12.7% of assets under management in Cathie Wood’s ARK Autonomous Technology & Robotics ETF (ARKQ). ARKQ has an expense ratio of 0.75%, the same as ARKK.
Another option is the ARK Next Generation Internet ETF (ARKW). ARKW has Tesla as its 6th largest holding, giving investors slightly less risk to the carmaker. ARKW has an expense ratio of 0.88%, making it a little more expensive than the other two, but still a good option for investors wanting exposure to Tesla and Cathie Wood’s investments.
All three funds are up year-to-date by a solid amount, 24.1%, 14.0%, and 29.7%, respectively. However, all three are also negative over the last year.
Cathie Wood’s has made big bets that have paid off and failed. Investors need to understand that her ETFs are not for everyone and carry a much higher risk/reward ratio than other options available.
However, if she is correct about Tesla’s longer-term future, anyone investing with her today will likely be pleased in the future.
Matt ThalmanINO.com ContributorFollow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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Natural Gas: Opportunity of the Year?

It’s difficult to imagine that this energy commodity could offer a promising opportunity for profit when you observe its performance across different timeframes, including yearly, half-yearly, and even year-to-date. Below is a chart displaying its performance over the course of one year.
Source: finviz.com
Natural gas futures have performed the worst among all commodities on the mentioned timeframes, losing 73% of their price in one year. They are almost double the percentage loss of the next worst-performing commodity, oats futures.

The chart below sheds light on the poor performance of natural gas futures.
Source: U.S. Energy Information Administration
Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2018 through 2022. The dashed vertical lines indicate current and year-ago weekly periods.
The blue line on the chart represents the current level of working gas in storage for natural gas futures, which stands at 2,063 billion cubic feet (Bcf). This is close to a 5-year high and well above both the 5-year average (gray line, 1,722 Bcf) and last year’s reading of 1,556 Bcf.
This outcome is the result of misbalance in the market.
Source: U.S. Energy Information Administration
The volume of U.S. Natural Gas Marketed Production in February was 3,084,913 million cubic feet compared to 2,959,454 million cubic feet of U.S. Natural Gas Total Consumption. This excess in the market is bearish for natural gas.
Let us jump to a technical chart where I spotted a pattern that promises an opportunity.
Source: TradingView
The idea behind this opportunity is straightforward. The quarterly chart above shows a significant range established at the start of this century, with the top of 2000 at $10 and the bottom of 2002 at $1.9.
Over the past 22 years, the price has reached or even exceeded the ceiling four times, with the last being last year at precisely $10. The bottom for the same period has been touched four times as well, with the last one being this quarter exactly at $1.9.
This could signal a significant profit potential, as the target at the peak of the range at $10 is 4.5 times the current price of $2.2.
The market price remains low due to bearish fundamentals, but there is a bullish alert to consider. The winter heating season data shows consumption for electric power generation, as depicted in the chart below.
Source: U.S. Energy Information Administration
According to U.S. Energy Information Administration, “Natural gas consumed for electric power generation in the United States during the 2022–2023 winter heating season (November 1–March 31) averaged 30.6 billion cubic feet per day (Bcf/d), the highest winter heating season average on record, based on data from S&P Global Commodity Insights. Natural gas consumed for electric power generation has increased most winter heating seasons since 2016–2017 with the continued reductions in coal-fired electricity generation and the overall growth in electricity demand.”
Although natural gas is a fossil fuel, it is considered a cleaner energy source compared to coal, which makes it a preferred choice for many countries. This is a bullish factor for natural gas.
Additionally, abnormal cold weather during recent winter seasons has led to increased demand for heating, which could prompt buyers to stockpile natural gas at relatively cheap prices ahead of the new heating season.
Another factor contributing to the volatility of natural gas prices is recent geopolitical events, which have forced Europe to search for alternative supply sources of energy to replace Russian gas, with some turning to American liquefied natural gas (LNG) as an option. This process is still ongoing and could lead to further volatility in the price of natural gas this year.

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Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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Market Anticipation Builds as 3 Key Companies Prepare to Announce Earnings

Corporate America was bracing itself to report the biggest drop in earnings since the pandemic began three years ago, with profits for S&P 500 companies expected to fall by as much as 8% due to inflation, increased borrowing costs, and other headwinds.
However, businesses appear to be blowing past these low expectations, with 77% of reports beating analysts’ estimates, with reported earnings being 7.2% above expectations.
A relatively weak dollar due to the trend of de-dollarization gaining momentum and the looming crisis over raising the debt ceiling due to political differences regarding government expenditure on both sides of the aisle might also have been unwitting tailwinds that have helped the likes of Apple Inc. (AAPL) keep the mood buoyant on the Street
After reporting stronger-than-expected results, the tech giant’s shares surged by 4.8% on May 5.
However, the first quarter still would mark a second straight quarterly fall for U.S. corporate earnings after COVID-19 hit corporate results in 2020.Given this backdrop, let’s look at the prospects of three stocks ahead of their earnings release this week.

The Walt Disney Company (DIS)
DIS has recently been in the news for being on a legal collision course with Florida Governor Ron DeSanctis. Differences between the company and the governor began with DIS’ opposition to the Parental Rights in Education Act, which prohibits lessons on sexual orientation and gender identity in public schools through the third grade.
In an alleged retaliation, the Florida Senate approved the Disney Special Tax-District Bill, which would seek to move the control of the Reedy Creek district from the company back to the state. DIS has expanded the lawsuit contesting this move to include new regulations passed by the state’s legislature that allow officials to nullify development agreements brokered by the company.
Outside the political and legal arena, DIS is going through a significant transition under the leadership of its returned CEO, Robert A. Iger, to give the company’s content executives more power and emphasize sports media more.
Ahead of its earnings release for the second quarter of fiscal year 2023, analysts expect the global entertainment giant’s revenue to increase by 13.2% year-over-year to $21.80 billion. However, its quarterly EPS is expected to come in at $0.94, down 13% year-over-year.
STE provides infection prevention and other procedural products and services through four segments: Healthcare; Applied Sterilization Technologies; Life Sciences; and Dental.
On May 3, STE announced a $500 million share repurchase authorization and a quarterly interim dividend of $0.47 per share, payable on June 28, 2023, to shareholders of record at the close of business on June 14, 2023. While demonstrating the management’s confidence in the company’s prospects, share repurchases would also positively impact EPS in the upcoming quarters.
Ahead of its fourth-quarter earnings release on May 11, analysts expect STE’s revenue and EPS for the period to increase by 5% and 5.4% year-over-year to $1.27 billion and $2.15, respectively.

For the fiscal year 2023, revenue and EPS are expected to increase 5.7% and 1.6% year-over-year to $4.85 and $8.05, respectively.
Revvity, Inc. (PKI)
PKI’s offerings cater to diagnostics, life sciences, and applied markets through two segments: Discovery & Analytical Solutions and Diagnostics.May 9 marked the official launch of PKI as a science-based solutions company aimed at revolutionizing next-generation scientific breakthroughs that solve the world’s greatest health challenges. The company would begin trading as RVTY from May 16 onwards.
Ahead of its earnings release on May 11, analysts expect PKI’s revenue and EPS to decline by 46.1% and 57.7% year-over-year to $678.61 million and $1.02, respectively.

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Silver Update: Roller Coaster Ride

The previous post “Golden Pattern For Silver, Not Gold” from December highlighted a bullish pattern called the ‘Golden Cross’ that appeared on the daily chart of silver futures. This occurred when the 50-day moving average crossed over the 200-day moving average.
While the majority of readers considered this signal to be reliable, they did not expect the price of the metal to rise above $30.
The following daily chart will show how the pattern has played out since then.
Source: TradingView
When the ‘Golden Cross’ signal was posted, the price of silver futures was at $23.9 (marked by the orange vertical line), and it went up almost $1 to reach $24.8 before stalling for over a month.

The price was unable to break above this new high and subsequently collapsed, dropping below the blue 50-day MA and testing the red line of the 200-day MA, briefly breaking through to reach the ‘golden cut’ Fibonacci retracement level of 61.8% at around $20.
Fortunately, the price rebounded strongly from this support level and crossed back over both moving averages to establish a new high of $26.4 last Friday.
If you had read the complete post, you would have been more prepared for the market movements described above. I spotted a Bearish Divergence on the RSI sub-chart and alerted about the possibility of a retest of both moving averages. As it turned out, this warning was spot on.
Ultimately, the price of silver saw a $2.5 or 10% increase from the time of the ‘Golden Cross’ signal to its most recent top, validating the reliability of the signal.
Nevertheless, the subsequent rise of only $0.9 (+3.8%) followed by a significant drop of $4 (-16.7%) to $19.9 could have been quite unnerving for even the most experienced traders. Therefore, I believe that this traditional signal should be viewed as a medium-term directional indicator rather than a prompt for immediate entry into the market.
The way the price moves in relation to the moving averages is particularly interesting. Specifically, when the price crosses above the blue 50-day MA, it can be considered a good tactical trigger for a bullish entry (or bearish stop), and vice versa. On the other hand, the slower red 200-day MA tends to act as a strong support or resistance level.

RSI divergence is a highly effective tool that I often use to warn readers in my posts, and it has a strong track record of accuracy. It proved successful once again in the recent price movement, as it allowed careful traders to protect 10% of their investment and avoid unnecessary stress.

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Once again, a Bearish Divergence has appeared unexpectedly, indicating that the lower readings on the RSI sub-chart do not confirm the higher peak on the price chart. As a result, traders should brace themselves for a potential roller coaster ride.
It is difficult to predict how far the RSI divergence may push the price down, but the first support level is at the blue 50-day MA, which is currently around $23.5 (-9.7%). Additionally, in previous price action, the red 200-day MA was retested and is now located at $21.7 (-16.2%).

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Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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Navigating A Major Lawsuit: Will Pharma Stock ABBV Hold Strong Under Scrutiny?

Humira has not just been a wonder drug for treating moderate to severe rheumatoid arthritis and other debilitating auto-immune conditions for millions of people; it has been a cash cow for its manufacturer, AbbVie Inc. (ABBV). Excluding the COVID vaccine that was developed in response to the pandemic, Humira has been the world’s best-selling drug.
In return, the company has defended its fortress from potential competition from cheaper substitutes for over two decades with the help of the American patent system, which has enabled ABBV to file more than 100 patents to extend Humira’s patent protection beyond the 12 years that’s standard for other biotech drugs.
Biotech drugs like Humira are more complicated to design, develop, manufacture, and administer than pills or tablets. Consequently, their interests are protected by relatively more patents and intellectual property (IP) rights around them.
However, even by those standards, ABBV’s strategy was more aggressive, according to some experts, considering that some of Humira’s patents covered things such as the drug’s formulation and manufacturing methods.
But ABBV’s approach of taking no prisoners may be coming back to bite it this time around. In this article, we will look into the specifics and potential consequences of its alleged transgressions.
Under The (Double-Barreled) Gun
On April 25, ABBV was sued by a nationwide class of consumers who have accused the drug maker of fraudulently and illegally inflating the cost of Humira by as much as 470% over the past two decades.
The class action lawsuit filed in the U.S. District Court for the Northern District of Illinois alleges that the drug maker had repeatedly raised the publicly-listed price paid by consumers while offering pharmacy benefit managers (PBMs) lower and undisclosed net prices for its blockbuster drug.
ABBV has allegedly exploited this covert arrangement to charge its consumers exorbitantly while helping PBMs to profit excessively by pocketing a portion of the larger spread between the publicly listed price and the private net price they paid for the drug.
In exchange, PBMs conferred Humira with formulary status, which makes insurance companies more likely to pay full price for a drug. The lawsuit alleges that this gaming of the system allowed ABBV to make outsized profits.
An investigation into Humira by the U.S. House Committee on Oversight and Reform, which the lawsuit has also cited, found that ABBV charges approximately $77,000 for a year’s supply of Humira. Moreover, it has increased prices 27 times since the drug’s introduction, with total price increases amounting to a 470% hike since 2003.
The pharma giant’s CEO Richard Gonzalez had been grilled by a Senate panel back in February 2019 over concerns regarding executive bonuses linked to the sales of Humira. Validating those concerns, Humira generated $16 billion in U.S. net revenue in 2020 alone, with ABBV’s executives making over $340 million in the previous five years, according to the lawsuit.
Although the company has reduced the prices of Humira internationally, troubles are still brewing offshore. On February 22, Financial Times broke the news that ABBV is being sued by the Pharmaceutical Accountability Foundation (PAF), a public interest group in the Netherlands, for overcharging Dutch citizens for Humira during its monopoly from 2004 to 2018.
PAF has claimed that, after subtracting all research and development costs, production and distribution costs, and a “fair” 25% profit margin from the drug’s turnover, it found that ABBV overcharged Dutch citizens by as much as €1.2 billion.
Unlike other pharmaceutical litigations, PAF’s lawsuit considers the overall effects of high prices on healthcare and society.

In its quarterly earnings release on April 27, ABBV said that its worldwide net revenues decreased by 9.7% year-over-year to $12.23 billion. During the same period, the company’s adjusted EPS decreased by 22.2% to $2.46 due to an unfavorable impact of $0.08 per share related to Acquired IPR&D and Milestones Expenses.
With negative sentiments due to the litigation adding to its woes, the stock declined 9.5% between April 25 and May 4, compared to the S&P 500’s 0.47% gain during the same period.
Losing a Battle to Win the War?
Political and commercial developments have rendered ABBV’s current litigations more inopportune.
Big pharma, represented by PhRMA, had been losing political influence before the pandemic. Since the Trump administration was in charge, drug makers have come under increased scrutiny from both sides of the aisle for exploiting restrictions on the government that prevent it from negotiating directly with drug companies to lower prices.
However, since President Joe Biden set the tone for rationalization in the prices of insulin and other prescription drugs in his State of The Union address in February, pharma companies have come under increased political pressure to fall in line.
Doubling down on his commitment to “change the way drugs are priced,” on March 15, he announced fines on drugmakers for raising prices on some drugs faster than inflation for people on Medicare. Companies would pay the fines as rebates to cover the difference in pricing.
Moreover, the Inflation Reduction Act, signed into law last year while seeking to cap the price of insulin at $35, has also provided the administration with the legislative firepower to penalize exorbitant increases in the prices of some drugs.
With Big Pharma running short of friends at the Hill, ABBV is unlikely to find support on that front.
Moreover, Humira’s patent protection ended on January 31, meaning competitors could now launch biosimilars, the biotech equivalent of generic drugs, to grab a piece of Humira’s billions of dollars in annual sales.
Since fierce litigation and patent protection was working to keep biosimilars of Humira, with a whole bunch approved as far back as 2016, off the market, the floodgates have opened now.
California-based Amgen Inc. (AMGN) did not need a second invitation. On January 31, its long-awaited Humira biosimilar, Amjevita, hit the market, signaling the end of the exclusive run of what was for years the country’s biggest-selling drug. Other Humira copycats are due to become available later this year.
ABBV is working to keep Humira on formularies with bigger discounts in a bid to keep patients on the branded therapy. According to CEO Richard Gonzalez, if the company can “concede price” and maintain formulary access, “ultimately, many physicians will choose to leave the patient on the same therapy.”Nevertheless, margins are set to shrink in what will increasingly become a red ocean. Meanwhile, the company is turning to next-generation successors while also betting on four drug approvals by the end of next year.
Moreover, ABBV is doing away with its self-imposed deal cap of $2 billion per year that was instituted to pay down debts when the company shelled out $63 billion to buy out Allergan in 2019 to create the fourth-largest drugmaker globally at the time.
Hence, after years of maximizing gains, in current circumstances, it would be wise for ABBV to play it safe and minimize losses from the ongoing litigations and keep its focus on finding new blue oceans to fish.

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Dollar Stores Change As Inflation Rises

Editor’s Note: Our experts here at INO.com cover a lot of investing topics and great stocks every week. To help you make sense of it all, every Wednesday we’re going to pick one of those stocks and use Magnifi Personal to compare it with its peers or competitors. Here we go…

Dollar stores – the no-frills discount retailers – were known for catering to the most cash-strapped consumers. These chains expanded rapidly to meet the needs of that demographic, with more than 19,000 Dollar General stores and more than 16,000 Dollar Tree and Family Dollar outlets now in North America.
But now, dollar stores’ demographic is changing, as inflation drives more and more middle-income consumers through their doors. One primary factor behind this trend is U.S. grocery prices, which were up 8.5% from March of 2022.
This emerging trend has led the industry’s two biggest chains – Dollar General (DG) and Dollar Tree (DLTR) – to both announce plans to remodel almost twice as many stores as they will open this year. Dollar General and Dollar Tree will increase the number of refitted stores by 11.4% and 25.6% from last year, respectively.
Both are investing heavily in freezers and coolers to meet growing demand for groceries from U.S. consumers who have shifted more spending from discretionary items to essential items like food.
Dollar General will increase capital spending by 22% this year, to $1.9 billion—about 142% above what it spent in the pre-pandemic fiscal year to January 2020. Dollar Tree is increasing its capital expenditure this year by about 60% to $2 billion, nearly double what it spent in the fiscal year to February 2020.
However, profit margins are lower for groceries than other items, so dollar stores have little incentive to push too far into the terrain of the likes of Walmart (WMT). UBS notes that dollar stores’ operating margins were more than double those of grocery chains last year. So, the number of food items available at dollar stores will be limited.
With that in mind, let’s compare the largest of the dollar stores, Dollar General, against Walmart over this past volatile and inflationary year. The quick and easy way to do this to ask Magnifi Personal to run the comparison for us. It’s as simple as asking this investing AI to: “Compare DG to WMT.”
As you can see, it was a toss-up. While Walmart’s stock was less negative than Dollar General’s, its operating margin was much weaker than that for Dollar General.

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Subpoenas to Biden Agencies Over Social Media ‘Censorship’: Impact on Big Tech and Stock Market

Holocaust survivor Susan Sontag, when asked, summed up her lesson from her struggle with a simple yet profound observation that 10% of any population is cruel, no matter what, and that 10% is merciful, no matter what, and that the remaining 80% could be moved in either direction.
The above observation has not just stood the test of time; it holds true for political ideologies and economic doctrines as well, as revolutionaries and public enemies over the ages have found out to their respective triumphs and desolations.
However, in the age of information and the Internet, social media has become the new battleground for conflicting subcultures to shape narratives and influence the 80% to write a preferred version of history.
This ongoing and intensifying conflict reached another flashpoint when House Judiciary Committee, chaired by Republican Jim Jordan, subpoenaed three government agencies on Friday, April 28, as part of investigations into alleged censorship.
This has followed subpoenas sent in February to chief executives of Alphabet Inc. (GOOGL), Amazon.com, Inc. (AMZN),Apple Inc. (AAPL), Meta Platforms, Inc. (META), and Microsoft Corporation (MSFT) demanding information on how they moderate content on their online platforms.
In this article, we will get into the details of the subpoena, followed by an exploration of what regional and temporal differences in the definition of appropriateness and appropriateness in the limits of free speech mean for the business prospects of big tech companies.We conclude by contemplating how regulation and expression could coexist in an age in which almost everyone has an opinion about everything, and anyone could be offended by just about anything.
Government Versus Government
As part of the Republican-led investigation into allegations of censorship, House Judiciary Chairman Jim Jordan has sent subpoenas to the Centers for Disease Control and Prevention, the Cybersecurity and Infrastructure Security Agency, and the Global Engagement Center.

Documents have been sought by May 22 from the agencies to ascertain whether the federal government “pressured and colluded” with social media companies “to censor certain viewpoints on social and other media in ways that undermine First Amendment principles.”Of late, the Biden administration has come under fire for its efforts to stave off alleged “disinformation,” especially following a series of Washington Examiner reports of the Global Engagement Center funding a group called the Global Disinformation Index that has allegedly been blacklisting conservative media outlets.
Further reports based on internal Twitter documents and communications have also claimed that the government under President Joe Biden repeatedly corresponded with employees at the company, such as ex-general counsel Vijaya Gadde, to suggest suppression of certain information.
The subpoena marks an escalation in the ongoing panel’s inquiry after House Judiciary Chairman Jim Jordan described the agencies’ responses to previous voluntary requests as “inadequate.” He also said that none of the agencies had produced any documents responding to previous requests to date.
The agencies, on their part, have deemed the move unnecessary, stating that they have responded to earlier requests for information within the said deadline, and they have assured to continue cooperating appropriately with Congressional oversight requests.
Implications for Big Tech
For more than two decades, Section 230 of the Communications Decency Act has been a sanctuary and bedrock, fostering innovation in the tech industry by protecting the internet platforms from the legal liability for their users’ posts while also allowing them to decide what stays up or comes down.
However, even before the latest Congressional inquiry into allegations of censorship and collusion, this piece of legislation has been under siege from three fronts. This year the U.S. justice system, including the Supreme Court, would take on cases that would help it determine the limits of free speech.These cases could also determine the extent to which platforms have the authority or the responsibility to promote or remove content through their algorithms. This comes amid increased pressure from legislators to diminish the protections offered by Section 230, with many Democrats wanting platforms to remove more hateful content and Republicans wanting to leave up more posts that align with their views.
A scenario in which internet platforms owned and operated by big tech companies could be held responsible for the content that’s put up or taken down while being vulnerable to political influences regarding the kind of content that could be considered “appropriate” or otherwise at a given point in space or time, could turn the Internet, especially social media, into a legal minefield or a drab, disorganized mess.
General Counsel Halimah DeLaine Prado Alphabet Inc. (GOOGL) summarized GOOGL’s position by saying, “Without Section 230, some websites would be forced to over block, filtering content that could create any potential legal risk, and might shut down some services altogether.” She further added, “That would leave consumers with less choice to engage on the internet and less opportunity to work, play, learn, shop, create, and participate in the exchange of ideas online.”Civil society groups also expressed concerns that amid increased pressure to ensure compliance in a risky legal field in a more nuanced way, the for-profit tech companies would find it more cost-effective to simply censor everything.
In addition to muffling a lot of underrepresented voices, an Internet that’s a virtual equivalent of Disneyland populated with AI-generated happy and politically correct content would become an echo chamber that would drive down user engagement and advertising revenues, thereby impacting profitability.Hence, an effort to ensure survival in an environment of increased regulation could ironically result in Internet platforms shooting themselves in the foot.

(Maybe) A Middle Path?
On November 18, 2022, while reinstating controversial Twitter users Kathy Griffin, Jordan Peterson, and the Babylon Bee, Elon Musk, a self-described “free speech absolutist,” tweeted: “New Twitter policy is freedom of speech, but not freedom of reach.”
He added that Twitter would demonetize and not promote tweets containing hate speech or otherwise “negative” content. This approach is similar to the strategy employed by YouTube, a video-sharing platform owned by GOOGL, where the site’s algorithm suppresses some provocative content but is not entirely taken down.
Hence, just like it works on the rest of the Internet, users cannot see particular content or types of content unless they explicitly search for it.
The term “negative” could still remain open to interpretation and manipulation by for-profit organizations or the political ideology representing the majority worldview, and restricted visibility or access to ideas and viewpoints could induce radicalization and extremism. However, that could still be an improvement over Internet platforms swamped with compliance issues.
As parting food for thought, the Internet and society could become more open if‘The Right To Be Offended’ is accompanied by ‘The Responsibility of Dealing With Offence Peacefully.’