Monday’s Pre-Market: Here’s What You Need To Know Before The Market Opens

Following the market’s worst week since March, U.S. stock futures surged in pre-market trading on Monday. Futures tied to the Dow Jones Industrial Average rallied 435 points, or 1.7%. S&P 500 and Nasdaq-100 futures gained 1.48% and 1.31%, respectively. This rally came even as England enacted a stay-at-home order to curb COVID-19’s spread and as investors prepare for the U.S. presidential election on Tuesday. 

In COVID-19 news, Tiziana Life Sciences announced it has initiated a collaborative clinical study investigating nasally administered Foralumab either alone or in combination with orally administered dexamethasone in COVID-19 patients in Brazil. The study will begin treating patients on November 3, and clinical data is set to be released before the end of 2020. The stock is already up 253% year-to-date, but H.C. Wainwright analyst Ram Selvaraju believes shares can still climb higher. “We note that our current valuation does not include any contribution from the use of Foralumab to treat COVID-19-infected patients. Thus, if the Brazilian trial proves successful, this could constitute meaningful upside to our estimates,” he said. 

Becton, Dickinson and Company revealed that the Dutch Ministry of Health has ordered 9.2 million of its rapid, point-of-care, SARS-CoV-2 antigen tests for use on the BD Veritor Plus System, which can detect the virus in symptomatic patients in about 15 minutes. This marks the first European government contract for this test, which was CE marked to the IVD Directive (98/79/EC) in September. Although shares have dipped 15% year-to-date, Goldman Sachs analyst Amit Hazan put the company on the firm’s Conviction Buy list, arguing the recent pullback reflects an “improved buying opportunity that we don’t often see.” 

Meanwhile, Johnson & Johnson surged 2% in pre-market trading on Monday following its announcement of a preliminary agreement with Aspen Pharmacare Holdings to manufacture its COVID-19 vaccine candidate Ad26.COV2-S at a factory in South Africa. This factory has the manufacturing capacity to produce over 300 million doses per year. Although the Phase 3 U.S. trial was paused after one of the participants experienced a serious illness, the company stated on October 23 that it’s preparing to restart the trial, as there was “no evidence” linking the vaccine to the illness.  

In terms of earnings news, shares of customer service software company Zendesk gained 1% in Monday’s pre-market session after it announced better-than-expected Q4 sales guidance, thanks to improvements across multiple key revenue metrics in Q3. For Q4, management expects revenue to land between $274 million and $279 million, compared to the Street’s $273.6 million estimate. In response, Oppenheimer analyst Koji Ikeda reiterated a Buy rating and $130 price target (17.2% upside potential), commenting, “We believe the results lend support to our thesis that the bad news is behind the business and think Q3 could mark the beginning of a more consistent results trend, which should catalyze a re-rating of ZEN’s current discount valuation multiples higher.” 

Digital Turbine, however, experienced a 10% pullback following its fiscal Q2 earnings release. Non-GAAP EPS of $0.15 beat the consensus estimate by $0.04 while revenue of $70.89 million landed $10.35 million above the Street’s forecast. That said, GAAP EPS missed the analysts’ forecast by $0.09. In response to the print, Ladenburg Thalmann analyst Jon Hickman downgraded Digital Turbine from Buy to Hold, stating that despite delivering “another impressive quarter,” the valuation is now too high.  

Shares of shoe maker Skechers tumbled 9.2% after its better-than-expected Q3 earnings release. Sales declined by 3.9% year-over-year to $1.3 billion, compared to the $1.2 billion consensus estimate. This was a major improvement from the 42% sales drop in the second quarter. Weighing in on the post-earnings share price decline, Berenberg analyst Brian McNamara stated, “Weakness after hours is likely a combination of inventory concerns and weaker gross margins; we do not share these concerns.” To this end, the analyst reiterated a Buy rating and $52 price target.  

On the deal front, Nielsen Holdings announced on November 1 that it has sold its global connect business to private equity firm Advent International for $2.7 billion. The definitive agreement signed by Nielson will see affiliates of Advent International in partnership with James Peck, former CEO of TransUnion, acquire the business. “The sale of this business to Advent will deliver substantial value sooner than was anticipated through the planned spin-off and creates certainty for all stakeholders. The proceeds from the sale will allow Nielsen to significantly reduce debt, which will provide greater financial flexibility to execute our growth strategy and expand our role in the global media marketplace,” David Kenny, Nielsen’s CEO, said.   

Additionally, Sanofi has made an offer to acquire biotech company Kiadis for an aggregate adjusted equity value of €308 million ($358.5 million). This purchase would help Sanofi expand its range of cell-based immunotherapy products. Kiadis develops “off the shelf” natural killer (NK) cell-based therapies designed to treat life-threatening diseases. The bid comes after Sanofi licensed Kiadis’ pre-clinical K-NK004 program for potential combination treatment of multiple myeloma back in July.