U.S. governors pushing to reopen their states after COVID-19-driven lockdowns may want to look to Germany on Tuesday, where an early attempt to lift restrictions on movement has led to an increase in the coronavirus infection rate.
The head of Germany’s Robert Koch Institute for infectious diseases, Lothar Wieler, said the virus reproduction rate had climbed back to 1.0, meaning that each infected person is infecting at least one other, on average. The reproduction rate had fallen to 0.7 at the peak of lockdowns and stay-at-home orders.
Germany is one of the countries attempting to gradually reopen after its widespread testing and contact tracing helped it achieve one of the lowest fatality rates from the virus in the world, and a death tally that is way below other European countries.
“Let’s, insofar as is possible, stay at home, let’s stick to the reduced contact,” Wieler told reporters at a news conference, Reuters reported.
The news comes as President Donald Trump urges states to “seriously consider” reopening public schools before the end of the academic year, the Associated Press reported, even though many have already determined it would be unsafe to do so. Trump made the comments on a Monday call with governors to discuss the steps needed to reopen economies. None of the governors on the call responded to the suggestion, according to the AP.
Some states are announcing plans to reopen with Georgia saying it will allow movie theaters to reopen as of Monday, and restaurants to have limited dine-in service, after hair salons, gyms, bowling alleys and tattoo parlors were allowed to reopen on Friday. Oklahoma also allowed hair and nail salons, pet groomers and spas to reopen as of Friday. Texas Gov. Greg Abbott said the stay-at-home executive order that expires this week “has done its job.” Some other states are loosening up shutdown orders to allow certain business to reopen this week.
Latest case tallies
There are now 3.06 million cases of COVID-19 worldwide and at least 212,221 people have died, according to data aggregated by Johns Hopkins University. At least 906,358 people have recovered.
The U.S. has the highest case toll at 988,490 and the highest death toll at 56,256. New York remains the U.S. epicenter with almost 300,000 confirmed cases and almost 25,000 deaths, the Johns Hopkins data show.
Spain has the highest number of cases in Europe at 232,128 and 23,822 deaths. Italy has 199,414 cases and 26,977 deaths, the highest number of fatalities in Europe.
France has 166,036 cases and 23,327 deaths, while Germany has 158,758 cases and just 6,136 deaths.
The U.K. has 158,353 cases and 21,158 deaths. Turkey has 112,261 cases and 2,900 deaths, while Russia has moved past Iran in case number. Russia has 93,558 cases and 867 deaths, while Iran has 92,584 cases and 5,877 deaths. China, where the disease was first reported late last year, has 83,938 cases and 4,637 deaths.
What are the latest medical developments?
A disappointing set of data from a Regeneron Pharmaceuticals Inc. REGN, -2.10% and Sanofi SAN, -1.29% mid-stage clinical trial testing rheumatoid arthritis drug Kevzara as a COVID-19 treatment underscores the traditional ups and downs of drug development that have now been heightened by the global pandemic, as MarketWatch’s Jaimy Lee reported.
The drug was first proposed as a potential treatment after researchers in China published data from a single-arm trial with 21 patients that found Roche Holding AG’s ROG, +0.93% Actemra, also a IL-6 inhibitor, reduced fevers and the need for supplemental oxygen in COVID-19 patients. Regeneron and Sanofi are moving ahead with a more limited Phase 3 trial that will only include patients deemed critical and will involve a higher dose of the drug.
Analysts called the data disappointing but also noted the limitations of the commercial opportunity that would arise if the drug is successful in trials. The data isn’t “relevant for REGN valuation since [it is a] small commercial opportunity,” Evercore ISI’s Josh Schimmer wrote Monday.
Quest Diagnostics Inc. DGX, -1.75% said it has developed a COVID-19 antibody testing program for consumers when the request for a test is approved by a doctor. People can request the test online, a physician will review the order, and they can visit a patient service center to have their blood drawn.
An antibody test is believed to show whether someone has been previously infected with COVID-19, even if they were asymptomatic at the time of infection; however, it’s unclear whether antibodies promise immunity to future COVID-19 infections or if they do, how long that immunity lasts.
What are companies saying?
The earnings season pushed ahead Tuesday with numbers from Dow Jones Industrial Average components Pfizer Inc. PFE, -1.30%, Merck & Co. Inc. MRK, -3.59%, Caterpillar Inc. CAT, -0.10% and Post-it maker 3M Co. MMM, +1.76%, among others. Pfizer beat estimates thanks to global sales of hospital products, some of which are used to intubate and support patients on mechanical ventilators. It was also helped by a 29% jump in sales of its blood-thinner Eliquis, which was driven by COVID-19-related wholesaler purchases.
Rival Merck also topped estimates and the said the pandemic had an immaterial impact on earnings for the first quarter, although it expects to take a full-year revenue hit of $2.1 billion. Merck cuts its 2020 outlook for adjusted EPS to $5.17 to $5.37 — the FactSet consensus was $5.59 — and for revenue to $46.1 billion to $48.1 billion, below expectations of $48.8 billion.
Caterpillar had higher-than-expected profit as many of its facilities around the world were deemed to be essential during the crisis. although some facilities were temporarily closed due to supply chain issues, weak customer demand and government regulations. As of mid-April, about 75% of its production facilities continue to operate and some that were closed have reopened.
3M, meanwhile, got a boost from demand for personal protective equipment.
IBM, +0.19% IBM raised its quarterly dividend by a penny, and said it won’t allow the crisis to end a 25-year streak of dividend hikes.
Here’s the latest on what companies are saying about COVID-19:
• 3M reported first-quarter profit and revenue that beat expectations, but said it was withdrawing its full-year outlook due to uncertainties caused by the pandemic. “In the first quarter we saw strong growth in personal safety, as well as in other areas of our portfolio experiencing high demand due to the pandemic,” said Chief Executive Mike Roman. “At the same time, we experienced weak demand in several end markets that were more severely impacted by actions taken around the world to slow the pandemic.”
• Caterpillar has taken actions to reduce costs, cutting discretionary expenses and suspending 2020 base salary increases and short-term incentive compensation plans for many employees and all senior executives. Caterpillar’s first-quarter operations were deemed essential by many governments during the pandemic although some facilities were temporarily closed due to supply chain issues, weak customer demand and government regulations. As of mid-April, about 75% of its production facilities continue to operate and some that were closed have reopened. The company is not offering guidance for 2020. It posted better-than-expected profit for its latest quarter but revenue fell short of estimates.
• Chico’s FAS Inc. CHS, +22.22% announced plans to begin reopening stores on May 4. Chico’s portfolio includes the namesake chain, White House Black Market and Soma. The reopening will happen in three phases: first the company will use its stores to fulfill online orders, then buy-online-pickup-in-stores using contactless curbside pickup and, finally, shop by appointment for all of its brands. “We believe we will have some significant advantages in the next several months as the majority of our stores are under 3,500 square feet and are located in easily accessible shopping plazas,” said Chief Executive Bonnie Brooks. Chico’s has experienced double-digit digital growth over the past six weeks, driven by certain categories, including active and sleep. As of April 27, Chico’s had about $103 million in cash and equivalents on hand. Borrowings on an asset-based credit facility and by leveraging its own real estate could yield an additional $100 million in liquidity. The company also has a one-time liquidity benefit of $95 million under the CARES Act.
• Ecolab Inc. ECL, +3.76% beat earnings estimates for the first quarter, as growth in the company’s health care and life sciences segments offset weakness in upstream energy. “We have businesses with increased demand (including Food & Beverage, Healthcare, Food Retail, Life Sciences) and those with much less demand near term (including the Institutional business and Pest Elimination),” Chief Executive Douglas Baker said in a statement. “We expect the major COVID-19 impacts will be felt over the next few quarters and will be net unfavorable on both our top and bottom lines for the year.” The company’s institutional business saw strong demand for cleaning and sanitizing product sales, offset by slow restaurant, lodging and entertainment facility customer demand due to the pandemic. The company is not offering guidance for the second quarter or full year.
• Harley-Davidson Inc. HOG, +11.35% missed earnings expectations for the first quarter but announced “aggressive cost management efforts” amid the pandemic. U.S. retail sales of motorcycles were up 6.6% “until the pandemic took hold in the U.S. in mid-March” and finished down 15.5% for the full quarter. International retail sales dropped 20.7%. The board approved a dividend of 2 cents a share for the second quarter, down from 38 cents in the first quarter. The company is undergoing “aggressive cost management efforts” including retiming product launches and temporarily reducing salaries as it deals with the crisis.
• Hawaiian Airlines parent Hawaiian Holdings Inc. HA, +10.85% received the first installment of the Payroll Support Program under the CARES Act of $146 million. That is half the expected total of $292.5 million. Under the terms of the PSP, Hawaiian agreed not to conduct involuntary furloughs or cut employees pay or benefits through Sept. 30, to limit executive compensation through March 24, 2022 and to suspend dividend payments and stock repurchases through Sept. 30, 2021. Hawaiian also agreed to issue to the U.S. government warrants to buy a total of 488,477 shares of common stock, or about 1.1% of the current shares outstanding, at an exercise price of $11.82 a share.
• Merck reported first-quarter profit and sales that beat expectations, but provided a downbeat full-year outlook. The impact of the COVID-19 pandemic on results was “immaterial,” but full-year revenue is expected to be reduced by $2.1 billion, including a $1.7 billion negative impact in the pharmaceuticals business and a $400 million impact in animal health. Merck cuts its 2020 outlook for adjusted EPS to $5.17 to $5.37–the FactSet consensus is $5.59–and for revenue to $46.1 billion to $48.1 billion, below expectations of $48.8 billion
• Southwest Airlines Co. LUV, -0.80% announced a public offering of 55 million shares and $1 billion worth of convertible debt. The share offering represented 10.8% of the shares outstanding as of April 24. Based on Monday’s stock closing price of $29.11, the stock offering would be valued at about $1.6 billion. The company said it plans to use to proceeds from the offering of stock and debt for general corporate purposes. Earlier, Southwest posted first-quarter earnings showing a narrower-than-expected loss but a revenue miss.
•Tesla Inc.’s TSLA, -3.32% Fremont, Calif. factory will not reopen soon after San Francisco Bay Area authorities extended the regional shelter-in-place orders through the end of May. The news came after Tesla stock ended the regular Monday session up 10% on a report that the factory, Tesla’s only U.S. car-making plant, was readying a resumption of operations as the Bay Area’s shutdown orders were due to expire next week. Tesla and local authorities have sparred over the factory, which was not considered essential and shut down in late March.
• Universal Health Services Inc. UHS, +2.56% missed profit and sales expectations for the first quarter as its hospitals and other facilities saw fewer patients amid the pandemic. “The impact of the COVID-19 pandemic has had a material unfavorable effect on our operations and financial results,” the company said. “Patient volumes at our acute-care hospitals and our behavioral health care facilities were significantly reduced during the second half of March as various COVID-19 policies were implemented by our facilities and federal and state governments,” it said. Due to the uncertainty regarding the epidemic, the company withdrew its guidance.
• United Parcel Service Inc. UPS, -5.04% reported first-quarter profit that fell below expectations although revenue beat, and said it is unable to provide financial guidance given uncertainties over the impact of the pandemic. UPS said it experienced “significant headwinds” from the pandemic on its customers, coupled with higher self-insurance accruals. UPS expects 2010 capital expenditures to be $1 billion less than previous estimates, and is suspending stock repurchases for the year.
• VF Corp. VFC, +2.77% will increase pay for distribution center workers across the U.S. and Canada through July. The company is also extending pay and benefits to retail workers at shuttered stores across North America and Mexico through May 30. VF Corp.’s portfolio of brands includes Vans and The North Face.