Market Brief: May 11, 2020

The notable thing about the news is how rare it is—oil and gas producers have stayed out of bankruptcy court even amid the worst oil slump in decades. Chesapeake, an Oklahoma City producer, has long carried substantial debt, and was recently at risk of having its stock delisted. Chesapeake’s financial situation had been improving, with the company signing a distressed debt exchange late last year that reduced its near-term obligations. But debt covenants loom, and the larger market is unlikely to save the company.

Stage Stores’ portfolio includes Stage department stores, Bealls, Goody’s, and Palais Royal. “[T]he increasingly challenging market environment was exacerbated by the Covid-19 pandemic, which required us to temporarily close all of our stores and furlough the vast majority of our associates,” said CEO Michael Glazer in a statement. “Given these conditions, we have been unable to obtain necessary financing and have no choice but to take these actions.”

Losses totaled $590 million, or $1.30 share, on sales of $930 million, compared with a profit of $22.5 million on sales of $1.2 billion a year earlier. Sales fell 23% year over year. When adjusted for restructuring and impairment charges, losses totaled $152 million, or 34 cents a share—still well below the 19-cent loss Wall Street expected.

The British newspaper the Daily Mail, citing unidentified sources, reported on Saturday that the two companies “are thought to have held talks about a potential takeover of AMC by Amazon,” but that “it is not clear if the discussions are still active or if they will lead to a deal.” AMC is the world’s largest movie theater operator, with about 1,000 theaters world-wide with 11,000 total screens, with leading market share in both the U.S. and Europe.

Musk, for his part, appears anxious to reopen the facility. Tesla has new a growing backlog to deliver as well as its new Model Y crossover SUV.

The MAX, is on the verge of returning, according to the company, and will re-enter service amid the disruption in air travel caused by the coronavirus pandemic. “The airplane is in great shape…I’m confident we will start our [assembly] line again this month,” Calhoun said in a Fox Business interview.

Gilead has said it would donate 1.5 million doses of the drug globally, all of its existing supply, roughly enough to treat 140,000 people. The Food and Drug Administration issued an emergency-use authorization on May 1 allowing the drug to be prescribed to treat Covid-19 patients in the U.S.; Japan’s drug regulator followed with its own special approval on May 7.

The company reported earnings of $1.62 a share for the quarter, beating the S&P Capital IQ Consensus by 17 cents. Cardinal also maintained its previously issued guidance for non-GAAP diluted earnings of between $5.20 and $5.40 a share. The report continued a trend of health-care companies reporting solid sales figures for the start of the year, but warning of troubles to come.

KKR, a global investment firm, has agreed to buy 60% of the beauty and hair operations in a deal that values the Coty unit, which includes the Wella, Clairol, OPI, and ghd brands, at $4.3 billion. Coty said it and KKR have signed a memorandum of understanding on the transaction, which would carve out the Wella business into a stand-alone company jointly owned by the two firms.

That has Morgan Stanley analyst Brian Nowak thinking about the possibility that Amazon might evolve into a substantial player in Covid-19 testing—to the benefit of the company’s reputation, its competitive position, and, well, the health of humanity.