Author: The INO.com Team

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

Posted on by The INO.com Team

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. Continue reading "Navigating A Major Lawsuit: Will Pharma Stock ABBV Hold Strong Under Scrutiny?" →

Dollar Stores Change As Inflation Rises

Posted on by The INO.com Team

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.” Continue reading "Dollar Stores Change As Inflation Rises" →

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

Posted on by The INO.com Team

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. Continue reading "Subpoenas to Biden Agencies Over Social Media 'Censorship': Impact on Big Tech and Stock Market" →

3 Beverage Stocks that Could Win on Bud Light's Bad Publicity

Posted on by The INO.com Team

Editor’s Note: In this piece, we look at how Bud Light’s self-inflicted pain could become its rivals’ gain.

Bud Light’s support for diversity and inclusivity backfired when an Instagram video by trans influencer Dylan Mulvaney featuring herself drinking a Bud Light as part of an ad campaign by the brand to celebrate the end of March Madness and promote a sweepstakes contest for the company drew flak from some its outspoken conservative fans.

With Mulvaney sharing a photo of a commemorative Bud Light can with her face on it celebrating her "365 days of girlhood" series on TikTok documenting her gender transition, affiliate brands such as Bud Light and Maybelline have become a target of the ire of conservatives over transgender rights.

The vocal and explicit outrage ranged from calls to boycott the brand, with rapper-singer Kid Rock going as far as shooting up cases of Bud Light with an automatic rifle while wearing a MAGA hat, to death threats to Anheuser-Busch InBev SA/NV (BUD) marketing executives who supervised the campaign with Dylan Mulvaney.

This has prompted Alissa Heinerscheid, vice president of marketing for Bud Light, and her boss, Daniel Blake, Budweiser's group vice president for marketing, to take a leave of absence.

In an attempt to pacify its irked consumers and restore their images, Bud Light’s sister brands have pivoted away from their inclusive messaging. On April 14, Budweiser released an ad featuring its signature Clydesdale horse mascot to invoke patriotic sentiments in its patrons.

According to the experts, changing demographics suggest that Bud Light’s inclusive ad campaigns make good sense in the long run and are expected to keep the brand in what, according to BUD’s CEO, is “the business of bringing people together over a beer.”

However, the soup the brand has landed in might warm up the prospects of other beverage stocks. While the “woke-free” beer being brewed by “Conservative Dad” may not make the cut, here are some contenders to look out for. Continue reading "3 Beverage Stocks that Could Win on Bud Light's Bad Publicity" →

Cruising To Profits

Posted on by The INO.com Team

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…

Demand is picking up again for the cruise industry, especially among the over-60 crowd. This demographic typically makes up a third of cruise passengers.

The Cruise Lines International Association (CLIA) expects the number of cruise passengers to reach 31.5 million this year, a 6% uplift on pre-pandemic levels, according to its annual forecast. And on a first-quarter earnings call last month, Josh Weinstein, CEO of Carnival Corporation (CCL), said bookings for the peak 2023 cruise season had been "phenomenal."

Carnival, the world's biggest cruise line operator, operates more than 90 ships, and reported customer deposits of $5.7 billion for the three months ending February 28 - well ahead of its previous first-quarter record of $4.9 billion in 2019. This meant it generated a positive cash flow from operations for the first time in almost three years!

The world's second-biggest cruise line, Royal Caribbean (RCL), also said in February it was seeing "record-breaking" bookings, with all seven of the strongest weeks in the company's history occurring since November 2022. The company, which operates 64 ships, expects its cash profit (EBITDA) in 2023 to exceed 2019 levels of around $3.3 billion, as it raises prices to reflect both higher demand and costs.

The industry expects the growth trend to continue.

More than half of the 71 ships currently on order are the mega-vessels capable of carrying more than 4,500 passengers, compared with just 12% of the active fleet. To fill that expanding capacity, the cruise industry will have to grow faster than other tourism sectors. But keep in mind that ship owners are retiring their older vessels, and the bigger ships are much more profitable in terms of accommodation, food, and service costs per passenger.

These bigger ships contain more family-focused attractions such as zip lines, water parks and more event venues, meaning there's a lot more to do onboard. The days when the experiences were all at port and the cruise ship was just your transport between destinations are long gone.

So, we thought we'd do a comparison of these two cruise companies - CCL and RCL - over this past, very volatile, year. The quick and easy way to do this is to ask Magnifi Personal to run the comparison for us. It's as simple as asking this investing AI to "Compare CCL to RCL." Continue reading "Cruising To Profits" →