The major indices are all trading slightly lower at midday as stocks started out the day in a bearish fashion in the wake of a volatile overnight session in global financial markets. Stocks, commodities, and long-dated Treasury yields have all been under pressure in pre-market trading due to the slight risk-off shift, with crude oil dropping sharply for the second day in a row. This morning's bullish corporate earnings reports from Morgan Stanley and United Health weren't enough to stop the bleeding, as small-caps continued to drop, with the Russell 2000 hitting a two-month low, and weighing heavily on the broader market.
Stock Pick Summary:
With our portfolio looking extremely solid even after the market pullback, we are ready to take some risks today. We are looking at a specialty pharmaceutical company with a broad range of products in narcolepsy, hematology and oncology, pain and psychiatry.
The company is headquartered in Dublin, Ireland and identifies, develops and commercializes pharmaceutical products otherwise unavailable to treat a medical condition. It has a strong portfolio of sleep drugs, with three marketed drugs including Xyrem that generate the bulk of its sales. A low-sodium formulation of Xyrem, Xywav has experienced strong demand since its launch in 2020. Xywav and other new drugs are likely to reduce its dependence on Xyrem, which is set to face generic competition in 2023.
Moreover, cancer drugs are bringing additional revenues. Meanwhile, the acquisition of GW Pharmaceuticals adds a third high-growth commercial franchise to the business. The company reiterated its financial guidance for 2021, which does not include the impact of the pending GW Pharmaceuticals acquisition. There is the risk that it may not be able to raise prices as rapidly as it has in the past. There is also the risk that other manufacturers could have treatments approved. Failure to have pipeline products approved could cause the shares to plummet. However, we are ready to take some chances on back of a very solid portfolio.
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