Market Brief: April 28, 2020

Alphabet reported first-quarter earnings of $6.84 billion, or $9.87 a share, compared with $6.66 billion, or $9.50 a share, in the year-ago period, though the 2019 results took a hit from a large fine levied by the European Commission. Revenue after removing traffic-acquisition costs grew to $33.7 billion from $29.48 billion in the year-ago period.

This marks the 25th straight year that the computer giant has raised its payout—up a penny to $1.63 a share. IBM has been paying quarterly dividends continuously since 1916. Its shares now yield 5.17%.

Pfizer reported first-quarter earnings of 80 cents per share, beating the S&P Capital IQ Consensus estimate of 71 cents. The company reported revenue of $12 billion for the quarter. Merck reported earnings of $1.50 per share, 16 cents more than the S&P Capital IQ Consensus estimate, and quarterly revenue of $12.1 billion. But while Merck lowered its guidance for the full 2020 fiscal year in light of the Covid-19 pandemic, Pfizer reaffirmed the guidance it issued before the pandemic was in full force.

The company earned $2.16 a share from $8.1 billion in sales, while Wall Street was looking for $2.03 in per-share earnings and $7.9 billion in sales. Health-care sales jumped 21% year over year. Last year, health-care sales grew 0.3% in the first quarter. Overall, health care represents about 22% of total sales at 3M.

Covid-19 shelter-in-place mandates went into place at the end of March, so conditions for Caterpillar for most of the first quarter qualified as normal. What is most important to investors right now is the shape of the coming economic recovery. There isn’t, however, much in the earnings press release about a recovery. The company, like many other firms, has suspended its full-year financial guidance, cut costs, and gathered cash resources.

It was a wild quarter. Results reflect that. No one knew exactly what to expect. Many industrial businesses that UPS delivers to are closed to help slow the spread of Covid-19. Wall Street earnings estimates, as a result, fell over the past few weeks. But UPS, along with its peer FedEx, are still working hard, delivering packages to homes and essential businesses despite the health risks.

The beverage maker, which also owns Lay’s and Doritos, said organic sales grew 7.9% in the first three months of the year as consumers stocked up due to lockdown measures and shelter-in-place orders. Chief financial officer Hugh Johnston told analysts he expected second-quarter sales to decline at a low single-digit rate as restaurants, movie theaters, and other venues remain closed around the world.

The vaccine effort, highlighted Monday in a New York Times article, is being run out of the British university’s Jenner Institute, which focuses on vaccine development. The laboratory began Phase 1 trials of the experimental vaccine on April 23, and said on April 24 that it planned to vaccinate 800 volunteers over the course of a month.

Since the beginning of April, meatpacking plants across the country have been forced to shut in response to viral outbreaks that have infected thousands of workers. Meatpackers work in tight spaces and breathe recirculated air during long shifts, which makes it easy for the virus to transmit across the thousands of workers in a single plant. The United Food & Commercial Workers union estimates that 20 workers in meatpacking and food processing have already died from Covid-19, the disease caused by the new coronavirus.

“Covid-19 has dramatically changed our business environment and it is critical we respond with agility to this new reality,” said Jochen Zeitz, who stepped in as acting chief executive after the February resignations of longtime leader Matt Levatich. He said the company was formulating a new strategic plan for growth and profits.