CRISPR Therapeutics and Dollar General have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – December 11, 2023 – Zacks Equity Research shares CRISPR Therapeutics CRSP as the Bull of the Day and Dollar General DG as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Marathon Petroleum Corp. MPC, EOG Resources, Inc. EOG and Phillips 66 PSX.

Here is a synopsis of all five stocks:

Bull of the Day:

CRISPR Therapeutics just made history on Friday with the first FDA-approved gene-editing medicine based on the Nobel Prize-winning discovery that targets disease with the billion-year old defense mechanism bacteria use to battle viruses.

CRISPR -- which stands for clustered regularly interspaced short palindromic repeats -- was discovered and described as a potential gene modifying treatment in a paper published in 2012 by biochemist Jennifer Doudna and microbiologist Emmanuelle Charpentier.

Their research collaboration, which began in 2011 when the two scientists met at a conference, set them on the trail of an ancient mystery they were both deeply interested in: how did some bacteria defeat invading viruses with such precision and consistency?

It turns out that bacteria could learn to "edit" the DNA of viruses with a built-in "molecular scalpel" and permanently disable their ability to replicate within the host. Doudna and Charpentier found that bacteria were leaving detailed clues about this warfare technology through clustered and repeated sequences of genetic code.

In 2020, they were awarded the Nobel Prize in Chemistry for their discovery of the CRISPR/Cas9 "genetic scissors." Cas is short for "CRISPR-associated" and used to designate the different enzymes involved with a particular gene.

In a special edition of Zacks Confidential tonight I'll be doing a deeper dive on the dynamic duo of CRISPR. And I'll also be discussing at least four other stocks that are the best ways to play the CRISPR revolution. Right now, let's look at the news and the numbers that sparked an 80%+ rally in CRSP shares in November.

The FDA Approval Landmark

I have been an investor in CRISPR stocks since 2017 when I launched my Healthcare Innovators portfolio service. And to say it's been a bumpy road -- for both the R&D and the stocks -- would be putting it lightly. (That's to say nothing of the legal and patent battles over the science which are sure to come back around.)

Gene editing is scary to many people, and word of rogue experiments in China didn't help its public reputation for the approval of clinical trials. I recall holding shares of Editas Medicine for round-trips between $20 and $90 -- twice!

I tried to hang on through the ups and the downs, believing the bigger medical breakthroughs and inevitable stock breakout would come (with fingers crossed). Alas, as investors we instead entered a long "CRISPR winter."

The great news is that the dedicated R&D work of scientists and medical professionals stayed warm and fruitful during these years. And thankfully I was buying both EDIT and CRSP near their lows in 2023.

CRISPR Therapeutics Gets the First Green Light

CRSP is currently a Zacks #2 Rank Buy as EPS estimates have climbed over 30% in the past two months because over a dozen covering analysts raised the consensus loss for this year from -$4.83 to -$3.27.

I now expect estimates for next year to also rise significantly after this historic approval, and push the stock into the upper deck of the Zacks Rank.

So what made the FDA launch this landmark leap for gene-editing and bring such a controversial science to the medical marketplace?

First, on October 31, an FDA Advisory Committee panel met to discuss the risks and benefits of the investigational treatment "exa-cel" (exagamglogene autotemcel) from CRISPR and its "big brother" partner Vertex Pharmaceuticals.

Exa-cel was designed and tested in clinical trials to treat two debilitating blood disorders, Sickle Cell Disease (SCD) and transfusion-dependent beta thalassemia.

The FDA challenge: One of the unique hurdles for CRISPR technologies is the potential for "off-target" edits of other genes that could be turned off, replaced, altered or eliminated. And this was one of the primary themes of the meeting of the Cellular, Tissue, and Gene Therapies AdCom.

The FDA opportunity: An FDA green light would make exa-cel the first approved drug using CRISPR and could offer a permanent solution for patients with severe SCD, a genetic disorder where red blood cells morph into a collapsed "sickle" shape that makes it difficult for them to travel in the bloodstream.

From the NIH website on Sickle Cell Disease...

SCD is a group of inherited red blood cell disorders that affect hemoglobin, the protein that carries oxygen through the body. Normally, red blood cells are disc-shaped and flexible enough to move easily through the blood vessels. In sickle cell disease, red blood cells become crescent- or "sickle"-shaped due to a genetic mutation. These sickled red blood cells do not bend or move easily and can block blood flow to the rest of the body.

Bottom line on FDA AdCom: The panel agreed that there were theoretical off-target edit risks for exa-cel, but overall it was unanimous that its efficacy benefit outweighs that risk. While this was not a formal FDA approval (just an Advisory Committee) the news was very encouraging and gave several Wall Street analysts, many of whom are either MDs or PhDs in the life sciences, greater confidence in an eventual FDA approval.

Following the Oct 31 AdCom, Truist analysts led by Dr. Joon Lee reiterated their $220 price target on CRSP shares as they envision strong physician support and sales for Casgevy (the commercial name for exa-cel) once it hits the market.

Then, on November 16 after a 2-week 50% rally in CRSP shares, the UK became the first national health regulator to approve Casgevy. Here's what I told investors in my Healthcare Innovators portfolio where we bought CRSP again in the $40s...

CRISPR Goes Boom!

Healthcare Investor

Big News: The first CRISPR treatment has been approved!

We've been waiting a long time for this and the setbacks have been numerous. But this marks the early innings of what could become a very profitable field to invest in.

Vertex and CRISPR won UK conditional marketing authorization for their Casgevy gene therapy, marking the world's first approval of a drug using the gene-editing technology known as CRISPR.

The companies announced on Thursday that the Medicines and Healthcare products Regulatory Agency ("MHRA") of the United Kingdom has granted conditional marketing authorization to their CRISPR/Cas9 gene-edited therapy, Casgevy (exagamglogene autotemcel, or "exa-cel") for treating two debilitating blood disorders, sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT).

Pressure on the FDA... and on Insurance Payers

While the FDA had already set a decision date of December 8 for Casgevy in SCD, the Nov 16 approval from the UK put some added pressure on US regulators.

Then there is the pricing issue as these new gene therapies are expensive and require intense rounds of treatment. In Europe, insurance companies have resisted the need to pay for therapies costing over $1 million per patient.

And this proposed treatment is particularly complex as it involves extracting blood stem cells from a patient's bone marrow, editing those cells in the lab ex vivo (outside the body), and then infusing them back into the patient's body. This ex vivo approach is considered less risky because it can avoid off-target edits to other genes. But this complex treatment regime also includes chemotherapy and patients must be hospitalized for a month or possibly longer.

On Friday after the FDA announcement, Vertex and CRISPR revealed the price tag for the Casgevy treatment in SCD: $2.2 million. The market reaction by CRSP investors, after a pre-FDA spike on Friday above $75 to 16-month highs, was a classic "sell the news" back down to the mid-$60s. But volume was enormous at 17 million shares and that told me buyers were coming in off the lows near $62.

More important than investor reaction right now, for me anyway, was the response of one Nobel laureate with a huge stake in the development of CRISPR science into actual medicines. In her 2017 book, A Crack In Creation: Gene Editing and the Unthinkable Power to Control Evolution, she took a strong ethical stand on the power of technologies such as CRISPR to be misused. Here's what she had to say upon the FDA approval of Casgevy...

"Going from the lab to an approved CRISPR therapy in just 11 years is a truly remarkable achievement," Doudna said, adding she was especially pleased that the approval helps patients with "a disease that has long been neglected by the medical establishment."

Writing for Genetic Engineering & Technology News, Kevin Davies, PhD. shared this perspective...

It is ironic that the first approved CRISPR therapy -- a technology barely ten years old -- should be for the genetic disorder that Linus Pauling famously dubbed "the first molecular disease" almost 75 years ago.

Davies, author of the 2020 book Editing Humanity: The CRISPR Revolution and the New Era of Genome Editing, also highlighted other voices who've been pointing out the neglect for SCD patients...

But despite these scientific milestones, the experience of SCD patients has not advanced to the same degree. As the late science journalist Sharon Begley put it plainly: "The U.S. healthcare system is killing adults with sickle cell disease." And while FDA approval of Casgevy is a moment for celebration, this approach won't help the vast majority of patients worldwide. As Dhruv Khullar wrote in the New Yorker: "If we truly want to cure sickle-cell disease, editing genomes will only get us so far. We'll need to rewrite our medical system, too."

Casgevy, Sickle Cell, and the Future of CRISPR

Approximately 100,000 people in the US have sickle cell disease (SCD), of mostly African-American descent, and more than 20 million people globally are afflicted.

Vertex and CRISPR say they hope to help the 20,000 Americans with the most severe cases of SCD who are willing to take the long road of complex treatment and cost hurdles to potentially transform their lives.

As always with debilitating disease and potential cures that offer both promise and risk, it helps to look at the individual stories of patients and their families that transform all the hard numbers into real faces.

I've heard at least three of these heart-wrenching stories in the past few months. In a Friday piece for the Wall Street Journal by Joseph Walker, FDA Approves World's First Crispr Gene-Editing Drug for Sickle-Cell Disease, he highlighted the story of a woman named Marie Tornyenu who had to be hospitalized sometimes and got monthly transfusions of healthy blood from a donor. Walker described how Tornyenu lived in fear of the bouts of extreme pain in her hips and legs that felt like a "dull ache that just burns and gets exponentially worse."

Knowing some of the forthcoming risks of the necessary chemotherapy, she began receiving Casgevy treatments in a clinical trial in 2021 after undergoing fertility treatment to preserve her eggs in case she wanted to have children in the future. After a few months, she was in a resurggence where not only the pain was gone but also the effecs of chemo.

Walker writes...

For the first time, she could take a walk around her neighborhood without getting fatigued. "I still thought about, 'What if I have pain?'" said Tornyenu, 22 years old, of Bethlehem, Pa. "But the pain never came."

Bottom line on CRSP: The breakthrough medical miracles should continue and open up all kinds of paths for CRISPR technology to make life better for millions of people with other "incurable" genetic diseases.

Bear of the Day:

Dollar General delivered a mixed Q3 earnings report last Thursday and I wanted to provide an update after my colleague Derek Lewis reported on the company's downward earnings trend last month.

In mid-November, Derek wrote "Analysts have taken a bearish stance on the company's earnings outlook, with expectations decreasing across all timeframes over the last several months. Negative earnings estimate revisions from analysts and crunched profitability paint a challenging picture for the company's shares in the near term."

Further Deterioration

Q3 earnings came in at $1.26 per share, which beat the Zacks Consensus Estimate of $1.19 per share but decreased 45.9% from the prior-year period.

Net sales of $9,694.1 million rose 2.4% from the prior-year period on sales contributions from new stores, partly offset by a fall in same-store sales and the impact of store closures. The top line came in $48 million, or half a percent, ahead of the Zacks Consensus Estimate of $9,646 million.

Dollar General's same-store sales fell 1.3% year over year, owing to a lower average transaction amount, partly offset by an increase in customer traffic. Same-store sales reflected declines in the home, seasonal, consumable and apparel categories.

Sales increased 3.6% year over year to $ 7,940.5 million for Consumables. However, sales declined 0.2% to $940.6 million for Seasonal, 7% to $534.5 million for Home Products and 1.5% to $278.5 million for the Apparel category.

Gross profit dipped 2.5% to $2,812.5 million in the reported quarter and the gross margin decreased 147 basis points to 29%. The decline in the gross margin can be attributed to lower inventory markups, increased shrink and higher markdowns, partly offset by a lower LIFO provision and decreased transportation costs.

General Outlook

The company has been taking actions to accelerate the pace of inventory-reduction efforts and additional investments in planned areas like retail labor to elevate the in-store experience.

For fiscal 2023 (ends January), management now projects net sales growth to be in the band of 1.5-2.5% versus the previous expectation of 1.3-3.3%. This includes a negative impact of about two percentage points owing to the lapping fiscal 2022 53rd week. Same-store sales growth is likely to come in the range of a decline of about 1% to flat against the previous guidance range of a 1% decline to 1% growth.

For fiscal 2023, the company now expects earnings per share to be $7.10-$7.60 or a decrease of 29-34% versus the prior expectation of about a 22-34% decline. This view includes the adverse impact of nearly four percentage points owing to higher interest expense.

After the report, analysts have taken down sales and profit estimates further, likely keeping DG in the doghouse of the Zacks Rank. Current FY23 consensus is now $7.42, representing a 30.5% annual decline and next year looks to only grow 2% from there.

Store Update

In the third quarter of fiscal 2023, Dollar General opened 263 stores, remodeled 545 stores and relocated 44 stores. In fiscal 2024 (begins in February), the company anticipates carrying out 2,385 real estate projects, including 800 store openings, 1,500 remodels and 85 store relocations.

The company still sees an opportunity to open about 12,000 more stores in the US over the next several years. But given increased capital and construction costs, the pace is slowing versus the 990 store openings in 2023.

Bottom Line on the General

After reaching for 3-month highs near $140, DG shares were rejected post-earnings. That will likely prove resistance until next quarter since it was also the site of the last earnings gap down in late August.

DG may prove to be a value stock again at some point -- it currently trades at an attractive price/sales ratio of 0.7 on about $40 billion in revenues. But we'll need to see a turnaround in the next quarter or two. The Zacks Rank will let you know.

Additional content:

3 Dividend Stocks to Watch in a Volatile Energy Market

Since the onset of the coronavirus pandemic, the market has witnessed wild swings in oil prices. This reflects that notorious volatility is an integral part of the energy sector. However, due to some key factors, dividend-paying stocks in the same space are relatively less volatile, thereby poising Marathon Petroleum Corp., EOG Resources, Inc. and Phillips 66 for growth.

Extremely Volatile Energy Market

We should not forget how oil prices behaved since the beginning of the coronavirus outbreak. The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity's price plunged to a negative $36.98 per barrel on Apr 20, 2020.

However, with the rapid development of vaccines by scientists, which led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration. Oil is currently trading at slightly higher than $70 per barrel and has been volatile on weak China demand concerns amid global supply surplus.

Dividend Stocks to Keep an Eye On

Overall, the oil pricing scenario seems scary, which could easily deter an investor from allocating money to energy companies. Despite this volatility constraint, investors could consider dividend-paying companies belonging to the industry. This is because, generally, companies with stable dividend-paying history are usually relatively less volatile than stocks with no dividend history. It is expected that companies that have been rewarding stockholders with dividends will try their best to continue paying at the same pace or higher, making the stocks attractive and less volatile to the vagaries of the market.

We have employed our Stock Screener to zero in on three such stocks. All the stocks carry a Zacks Rank #3 (Hold). With a dividend yield of more than 2%, all the companies have raised dividends over the past five years. Moreover, with a payout ratio of less than 60%, the companies ensure sustainability with enough scope for future dividend increases.

3 Stocks to Gain

Marathon Petroleum Corporation: As a leading, integrated, downstream energy player, Marathon Petroleum is the operator of the largest refining system in the nation. MPC is well poised to gain from strong refining fundamentals, backed by the reduction in refining capacity across the world. It pays out a quarterly dividend of 82.5 cents ($3.30 annualized) per share, which gives it a 2.33% yield at the current stock price. (Check Marathon Petroleum's dividend history here).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

EOG Resources, Inc: In the United States, EOG Resources is a leading exploration and production player. Since transitioning to premium drilling, EOG boasted that it has returned billions in cash to shareholders. The firm has hiked the quarterly dividend on the common stock by 10.3% from the prior level to 91 cents per share ($3.64 annualized), payable on Jan 31, 2024, to shareholders of record as of Jan 17, 2024. EOG will also pay a special dividend of $1.50 per share on Dec 29 to stockholders of record as of Dec 15. (Check EOG Resources' dividend history here).

Phillips 66: Phillips 66 is a diversified energy manufacturing and logistic player with a presence in Midstream, Chemicals, Refining, and Marketing and Specialties businesses. With a strong focus on disciplined capital allocation and maintaining financial strength, PSX is well-positioned to continue rewarding shareholders with dividend growth. Phillips 66 pays a quarterly cash dividend on the common stock of $1.05 ($4.20 annualized) per share. (Check Phillips 66's dividend history here).

Why Haven't You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.

See Stocks Free >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

https://www.zacks.com

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Dollar General Corporation (DG) : Free Stock Analysis Report

EOG Resources, Inc. (EOG) : Free Stock Analysis Report

Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report

Phillips 66 (PSX) : Free Stock Analysis Report

CRISPR Therapeutics AG (CRSP) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research