The Zacks Analyst Blog Highlights: Moderna, Twilio and Wayfair

For Immediate Release

Chicago, IL – May 5, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Moderna MRNA, Twilio TWLO and Wayfair W.

Here are highlights from Monday’s Analyst Blog:

Think Suppression, Not Recession: Global Week Ahead

The Global Week Ahead ends with a face-plant of a Friday U.S. nonfarm jobs report. It will be one for the record books.

Perhaps you will read about it? LOL.

Before it arrives, I caution you. This is the mark of suppression, not recession. The choice of words does matter.

To sum matters up for you: U.S. nonfarm payroll employment is set to fall by 22 million in April compared with a drop of -701K in March, according to 10 analysts polled by Bloomberg.

This would mark the biggest decline since records began in 1939. However, the April numbers are also inflated, because the last monthly survey period for U.S. non-farm payrolls ended on March 12th.

The U.S. household unemployment rate analysts estimate likely soars to 16.3% in April, up from 4.4% in March. This would be the highest monthly rate since at least 1948. That is as far back as monthly data from the U.S. Bureau of Labor Statistics stretches.

On an annual basis, the U.S. household unemployment rate would be the highest since 1939, according to records from the Bureau of the Census.

Next are Reuters’ five world market themes, reordered for equity traders.

This time around, I sorted them in chronological order.

I see that as the proper way, so that none of the catalysts stand out meaningfully.

(1) COVID-19 repressions get partially lifted in some countries, starting Monday

COVID-19 is still here but many European countries are getting ready to test post-lockdown life.

Italian factories and building sites reopen from Monday after Europe’s longest lockdown. So do German schools, museums and churches, following the reopening of small shops, while Britain will lay out its exit strategy in coming days.

“Easy does it” seems to be the message from governments wary of a renewed spike in infections. But with the ECB predicting the euro area economy to shrink by as much as 15% this quarter, authorities are also keen to get activity going again.

They’ll watch April trade and industrial output data in coming days for clues on how Q2 might shape up. And finally, Italy faces a review from Moody’s on Friday — at a notch above junk, the rating is very likely safe, but an unexpected downgrade from Fitch has jangled some nerves.

(2) Mainland China is off on a May Day break, until Tuesday

China has headed off on Labor Day holidays, but its leaders won’t be resting easy. President Trump has ratcheted up anti-China rhetoric again. He is threatening trade tariffs to punish Beijing for its alleged failure to contain the coronavirus, even accusing a Chinese lab of manufacturing the pathogen.

With Chinese markets shuttered through May 5th, the concerns showed up in offshore-traded yuan, which tumbled on Friday to a one-month low. Whether Trump will risk the collapse of his trade deal with China is unclear, but he will be mindful of the threat the coronavirus death toll and economic damage pose to his chances of re-election in November.

As for China, its holiday travel figures will reflect the pandemic’s effect and also offer a glimpse of post-COVID leisure. Around 90 million people will vacation this break, travel operator Trip.com forecasts — less than half year-ago levels. Bookings are down nearly a third on Alibaba’s platform, Fliggy.

(3) Brazil’s central bank meets on Wednesday

Brazil is back in crisis — the IMF predicts a 5.3% economic contraction this year, impeachment talk is swirling around President Jair Bolsonaro and Latin America’s biggest economy is emerging as the next deadly COVID-19 hotspot.

Brazil’s central bank could shave a half-point from its 3.75% interest rate at its Wednesday meeting but that will put the currency into further jeopardy. The real is the world’s second worst performing currency this year, having tumbled 27%. Brazilian bonds have seen the largest exodus of international investors anywhere, according to Deutsche Bank.

And a multibillion-dollar coronavirus support package will send its junk-rated public debt to close to 90% of GDP.

Economy Minister Paulo Guedes says interest rates could fall below 3%. He also suggested the central bank print money and buy government debt. Whether BCB governor Roberto Campos Neto is amenable to taking that advice remains to be seen.

(4) The Bank of England (BoE) meets on Thursday

The Bank of England’s monetary policy report in January mentioned coronavirus twice. Expect it to feature more often at its meeting on Thursday.

The meeting will take stock of the impact of the BOE’s record bond buying to finance the government’s coronavirus response. While interest rates, cut twice in March, should stay at a record low 0.1%, many reckon the bank could announce another 100 billion pounds ($125 billion) worth of purchases — on top of the 645 billion pounds it has already pledged.

The BOE may also face questions about its agreement to lend money directly to the government, which lays it open to accusations of “monetary financing” — when central banks fund governments by printing money.

The BOE says the measure is temporary. Yet the government has huge borrowing needs this year, stemming from the pandemic but also Brexit, which is exacerbating a recession tipped to be the worst in three centuries.

(5) A blockbuster April U.S. nonfarm jobs report lands on Friday

Speaking of economic damage from coronavirus, investors will get a stark piece of U.S. data on Friday, when the Labor Department releases its employment report for April.

The overall picture could be staggering: Non-farm payrolls are expected to fall by 20 million for the month, according to a Reuters poll. That would be a steeper drop than the 701,000 decline in March, when an historic 113 straight months of employment growth ended.

Other U.S. data too has been grim: More than 30 million Americans have sought unemployment benefits since March 21, while the economy contracted in the first quarter at its sharpest pace since the Great Recession around a decade ago.

Stocks have so far shrugged off the data, with the S&P 500 up +30% from March lows. Investors looking ahead to recovery will focus also on whether more states announce gradual re-openings of business.

Top Zacks #1 Rank (STRONG BUY) Stocks

According to the latest Zacks Rank stats, a number of tech-enabled firms are profiting mightily off of “Stay-at-Home” orders and the spread of a novel virus.

Here are three top stocks in a post-virus trading world.

(1) Moderna: This is a $15.8B market cap biomedical and genetics drug stock.

Shares trade around $48 each. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of F.

On May 1st, Cambridge, MA-based biotech Moderna announced an agreement with Swiss drugmaker Lonza Group to manufacture up to a billion doses per year of mRNA-1273, Moderna's vaccine candidate for the novel coronavirus.

The two companies initially plan to establish manufacturing capabilities at Lonza's facilities in the U.S. and Switzerland to make the vaccine at both locations, with additional production suites to be established across Lonza's worldwide facilities under the 10-year agreement.

The companies expect to produce the first batches of mRNA-1273 at Lonza's U.S. facility in July 2020.

A portion of the funding for the manufacturing operations in the U.S. will come from Moderna's contract with Biomedical Advanced Research and Development Authority (BARDA), part of the U.S. Department of Health and Human Services.

(2) Twilio: This is a $15.0B market cap stock in the Internet-Software industry.

Shares trade around $108 each. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Momentum score of C.

Headquartered in San Francisco, Twilio Inc. was founded in 2007 and got listed on the NYSE in Jun 2016.

Twilio provides Cloud Communications Platform-as-a-Service. The company enables developers to build, scale and operate real-time communications within software applications.

The company’s platform consists of three layers, Engagement Cloud, Programmable Communications Cloud and Super Network.

(3) Wayfair: This is a $11.5B market cap stock in the Internet-Commerce industry space.

Shares trade around $122 each. I see a Zacks Value score of D, a Zacks Growth score of C, and a Zacks Momentum score of B.

Wayfair Inc. is headquartered in Boston, MA. The company is one of the world's leading online sellers of home goods products, consisting of furniture and home decor.

Founded in 2002 as multiple e-commerce websites, the company came together as Wayfair.com in 2011.

It operates worldwide through Wayfair.com and four other branded websites namely – Joss & Main, AllModern, Birch Lane and Perigold.

The company currently offers more than 18 million products from more than 12,000 suppliers.

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