Daily Update - Jan 06, 2023

Selected highlights of the day

By: Matthew Otto

Fate to be challenged in court for refusing Janssen

Wohl & Fruchter LLP is examining whether Fate Therapeutics broke any federal securities laws related to their January 5th disagreement with Janssen Biotech, Inc., leading the two entities to sever ties and wind down all collaboration efforts on January 5, 2023, FATE made the surprise announcement that it had declined Janssen’s proposal for an extension of their collaboration agreement. Consequently, all activities related to the project will be brought to a close during Q1 2021 – leaving many with questions as to why this decision was taken and where both companies go from here.

  • Michael Ulz revised Morgan Stanley’s price target from $35 to $8 while maintaining an equal-weight rating.
  • Tazeen Ahmad decreased her forecast for BOFA Securities’ stock price from a high at $72 to only$4 and revising the buy recommendation to underperform.
  • Benjamin Burnett dropped his estimation for Stifel by more than 80% – going on record with a hold outlook after reducing hos stock forecast from $107  down to $5.3.
  • Tony Butler maintained his confidence in EF Hutton lowered slightly less (from $16 to $10)
  • David Nierengarten lowered to neutral for outperform.
  • Daina Graybosch of SVB Leerink dropped from $62 to $10.

 

Crypto under pressure

Silvergate Capital reported a major slump in its crypto-related deposits on Thursday as the FTX collapse caused investors to withdraw more than $8 billion from their accounts. As the industry downturn worsened, Silvergate announced that it would reduce their workforce by 40%, adding to Genesis’ second round of layoffs within six months which will affect nearly 30% of employees according to an inside source. Investors have taken legal action against Silvergate Capital Corporation for their reported losses in 2022. A class-action lawsuit has been filed.

  • Brandon Berman at BOFA Securities decreased his target from 37 dollars to 8 while switching the rating Neutral to Underperform.
  • Jared Shaw maintained an Equal Weight rating even as his estimated value went all the way down  48% ($27 to $16).
  • Canaccord Genuity’s Joseph Vafi not only kept hold on ‘Buy’ but also slashed off 85% ($150 to $25).
  • Mark Palmer cut from 51$  to 21$ yet keeping his original Buy rating.

 

Graphite Bio had two major analyst updates that shook the market

  • RBC Capital’s Luca Issi downgraded his price target from $11 to $4 while keeping a Sector Perform rating.
  • SVB Leerink’s Mani Foroohar lowered his projection all the way to just $2 with a downgrade from Outperform to Market Perform.

Graphite reversed its earlier prediction of obtaining initial proof-of-concept data concerning their promising nula-cel treatment for sickle cell disease in mid 2023 after a serious adverse event occurred involving the first patient dosed with this experimental therapy. This individual is said to be suffering from prolonged low blood cell counts and requires both transfusion and growth factor support due to what experts believe is likely related directly to study treatments prescribed during its clinical trial phase 1/2 CEDAR Study — making it necessary for Graphite Bio’s scientists halt any further progress at this time pending investigations into the matter being conducted by officials from U.S Food & Drug Administration as well as other medical entities involved in research on nulabeglogene autogedtemcel (nula cel).

 

Century Therapeutics announced a strategic re-alignment of their internal portfolio

Allowing for accelerated development and planning to extend the cash runway until 2026. In order to achieve this goal, employee headcount was reduced by 25%. The company’s lead candidate CNTY-101 remains on track in its Phase 1 study targeting CD19 in relapsed/refractory B-cell lymphoma with no impact made to partnered programs with Bristol Myers Squibb. Century is also prioritizing several key programs including CNTY107 focusing on Nectin 4 tumors while de-prioritizing further investment into other areas such as glioblastoma and hematologic malignancies.

  • Tony Butler of EF Hutton dropped his prediction to $16 while still advocating for investors to Buy.
  • Daina Graybosch of SVB Leerink went down even further to $14 while maintaining an Outperform rating.
  •   HC Wainwright & Co.’s Mitchell Kapoor had his view reduced significantly as well – from $25 to $19 – with maintaining a Buy rating

 

The Simply Good Foods Company had a strong first quarter of 2023

With net sales increasing 7.0% and revenue rising from $21.2 million to $35.9 million year-over-year. Adjusted EBITDA also grew significantly, up to an impressive 60.8 for the quarter – despite slipping slightly below last year’s results. Looking ahead into fiscal year 2023, the company is expecting slighter greater growth than their 4%-6% long term algorithm suggests.

 

Constellation Brands saw analysts make adjustments to their price targets.

  • Morgan Stanley’s Dara Mohsenian maintained an Overweight rating but decreased her price target from $298 to $277
  • UBS’ Peter Grom went a step further and dropped his estimated value down from $281 to $270 while still staying with a Buy rating.
  • BMO Capital analyst Andrew Strelzik also lowered his appraisal for STZ adjusting it downward from nearly $300 to $265 despite maintaining an Outperform rating
  • Credit Suisse’s Kaumil Gajrawala cutting from $260 to $250 – yet maintaining an  “Outperforming.”
  • Cowen’s Vivien Azer had slashed from$275 to $200 with Market Perform rating.

The makers of Corona beer and Svedka vodka, just faced a dimmed outlook for their fiscal year. They announced that earnings would be in between $11 to $11.20 per share; previously they had anticipated up to 11.60 per share profit margin this fiscal year instead. However, Constellation’s performance has been bolstered by its Modelo Especial and Chelada brands showing eight percent growth since November last year.

 

Conagra Brands saw an impressive quarter

With net sales increasing 8.3% and organic net sales growing by 8.6%, resulting in a 320 basis points increase to the operating margin at 16.6%. Diluted EPS for the second quarter rose 38.6% to $0.79 and adjusted EPS increased 26.6 %to $0..81 as well! The company is now looking ahead towards fiscal 2023 with expectations of 7-8% growth in organic net sales, 15-16& operating margins along with 10 – 14$ adjused EPS versus prior year projections.

  • Analyst Ken Goldman from JPM raised his target to $43 while maintaining a neutral.
  • Pamela Kaufman from Morgan Stanley  lifted her goal to $48 with an overweight rating.
  • Cody Ross of UBS increased his projection up to a ‘buy’ and a $45 stock forecast.
  • Credit Suisse Robert Moskow set his price target at$40 and a neutral rating.
  • lastly Nik Modi of RBC kepthis Sector Perform level and a $38 price target.