Transcripts For CNBC Fast Money 20160824 : vimarsana.com

CNBC Fast Money August 24, 2016

Mylan filing and pushing the nasdaq lower into the close. This is the outrage over the companys price hikes intensifies. For more, lets bring in meg. Hey, melissa. Washington really ratcheted up the pressure on mylan over these epipen increases today. This coming in succession of different areas of the government. Hillary clinton putting out a tweet this afternoon saying that epipens can be the difference between life and death. No justification for these price hikes sign iing it h. That means hillary herself was involved in that tweet. Then the white house weighing in. John earnest, he responded by saying while they cant second guess mylan, these kinds of price increases can raise moral and ethical questions. Pharmaceutical companies that often try to portray themselves as the inventors of life saving medication, often do real damage to their medication by being greedy and jacking up prices in a way that victimizes vulnerable americans. Finally, a letter being sent from the senate ageing xae xhe to the ceo asking for more information about what went into these price increases and asking for an inperson briefing, were asking you provide a briefing on the staff on the price of epipen no later than two weeks from today. Mylan responding says weve reached out to every member of congress who sent us a letter. We look forward to meeting with them and responding to their questions. Not affecting just mylan shares, around 2 0 o p. M0 p. M. , thats hillary tweeted. Hillary strikes again. You mentioned a briefing. Does na imply its a private briefing or could reach the level of a testimony given the controversy that this whole thing has started . Right now, it sounds like its at the information collecting stages, of course, this is same committee that he will hearings focusing on valiant. Thats the fear that this could turn into that. Meg, thank you. All over that story from day one for us. So, is there a fundamental analysis of this stock at this point . Can we say this is this part of the business and this stock is worth this and therefore, its a buying opportunity . Is that possible . Zpl its a franchise product thats under assault from generics. Its possible to stay 41. 5, 42 bucks. The stock is very attractive. Probably buy for a trade at that level, but they raised eye breauxe brow, bad timing. Just managements issue. Bad decision on them to make the decision to raise this price that much. It is their franchise drug. Under assault from generics, so for a trade, id buy it at 41, 42. The question is, what does this contribute to operating eps. Thats really the question. Look at 2014, 2015. Its not clear. Mylan doesnt provide the this information and to be clear, mylan is not a bio tech company. This is a generics story and this is a bipartisan issue. So, try not to put this on the whole sector. I love valuation, fundamentals, thats what i like to use as the tools to figure out what to do, but here, i think the environment for just a political environment is so bad and will be for at least until the election. That i dont know, maybe by going right into the election, but from here, this is a great cause for her. It plays well. I think shes going to do it again and again. Because its not a bio tech company. Maybe this is worse, theres price gouging at that level on the generics level. Im not here to be a voice on whether this is good or bad, but people who say this is going to go to specialty pharma, it wont. This is something these its one of the top holdings. The actually or the weights. Lets go back one year. When the bio tech in general was at a high. There was a couple of pillars, obviously a pretty decent environment until hillary and some of these, this bipartisan thing b about pricing became an issue. Now we have m a again, so maybe this is the way you can get some of these names off the map. All you have to do is go back. So, the contest is different. What im saying is that the regulatory thing is going to stick around. M a is not even really working for the acquirers. Gilead is 52 off its highs. I think theres lower lows. More of mylan on the fast line is Institutional Investors topranked analyst. The senior analyst, hes got a hold rating on mylan. Thaungs thanks so much for phoning in. At this point, what is your best guess, your best estimate, as to what the impact on mi lar could be if theyre forced to roll back not just the epipen price increases, but they have a list of drugs that have seen 400, oo 500 increases this the first half of this year. Sure, thanks for having me. Theres two broad issues. Epipen pricing and generic pricing. Epipen is not general. Headlines are theres a potential hear ng the work, but if you talk numbers in particular relative to expectations, expectations are that this drug will go down by about 25 to 30 over the next four year, mainly in expectation for a potential generic watch. Could that accelerate more . Perhaps, but i think mylan is more dependent on it, but having said that, its still somewhere between 10 and 20 . As it stands currently. And consensus models the drug decline. On the flip side, you asked about generics. Just like many of the other companies, there is a subset of the portfolio that has taken unusual increases, so well have some of the other big Generic Companies and those increases sometimes happen when competitors fall off and limiteded supply of a couple of competitors. That side of the equation has started to louosen up. I think theres a more Market Dynamic thats fixing that portion. But on epipen in particular, fda has really made mylan is only standing big player in the market and thats not changing anytime soon. So, where is it a buy then . Sounds like to a degree, you say you know, a competitor is going to come on the market. Its expected that tevas generic version will be approved in 2017. At what value do you see mylan being a buy . Look, the feedback from the broader Institutional Investors on this name is ultimately, they are potentially on a track toward Something Like 6 in earnings next year. So, when everythings said and done, if they really continue to be on the track towards 6, irrespective of the noise around pricing, corporate governorer nance, at some level, that 6 tlrs has a floor. Have said said that, having said that, i think given where we are right now, it seems like at least right now, its trading on incremental news on senators tweeting or newspaper writing about tax issues, so theres a lot of noise on it at this fulltime and at that point in time, nobody wants to step in, at least thats the feedback im hearing. Is what you are telling people . Dont step in. Im neutral rated. For compliance reasons, i cant say anything but that. Say this becomes, this seems to really skr struck quarter in terms of this being a drug thats potentially life saving, found in almost every classroom across america. This is different than a therapeutic, which is for rare disease or a subset of the population. This is for children and it seems like both sides of the aisle are heated up about this and this could go farther than just mylan. Yeah, this is, look, youre right. This is clearly an issue. Clearly been price ins, price has gone up 500 over the last few years, so theres no arguing there. The only thing that ill add to that is this broader debate. Theres been a a large inkrecre is understood. I think the parts less understood are couple of things. Number one, so, fda has rejected one of the networks. They would have launched a potential generic. That got rejected on certain grounds, and fda took out a mylan key competitor in the market. That was a san ta faye product. Its made mylan Even Stronger than it is, so theres a regulatory element involved and the second element is and i think this is the part thats the least understood. In 2015, mylan took Something Like a 30 price increase and their volumes grew. Something close to 37 or a fraction of that. Year over year, but in reality, it only, it was flat that year. In fact, down 2 , meaning the price increases didnt go to mylan in 2015. It went somewhere else. Thats the prt of this debate and this is not a mylan specific issue, this is an issue across many of the drug stocks. Whos keeping those rebates. I think that part of the discussion still hasnt come up. My sense is as this conversation goes on on epipen or drugs in the past, this side of the story is oxygen going to get more important. Where do the price increases go. They dont go to drug companies. Didnt even go to them. All right. We hope youll come back to the show. Topranked institutional analyst in pharmaceuticals. Where do we go from here . It sounds like hes saying that this is going to go much broader inquiry. Its not a mylan specific issue. Its not even noesly drugs. I think it goes to the insurers. It goes to so cv is srk, a name i love. I think everyone in that value asks where to do the rebates go. Some could xwo there. I think its broader than that. And its still evolving. Zpl so, does that make the sell off we saw in health care today down 1 ppt 6 compared to the broader markets. Justify. No. It doesnt. And in fact, for people complaining about whats going with earnings in general across the corporate, health care is one of the few places were seeing earnings go, where the multiples with explainable in this environment. To paint everybody with a brush, its a branded instrument. Not a generic. Zpl but mylan largely is producing generics. This is the important, thats the core of their business and to say that specialty pha ma or some of the Bio Tech Companies are going to get destroyed because of this, thats not the case. Weve talked about it the past couple of days. Theres a conditioning if you will monster investors. They understand the rhetoric, the noise, theyve got their head around it. Theyre buying the dips, not selling the rallies. Is this sector going to pull back another little bit based on this noise gien the fact volume rs so low . Would you buy look at this was a pullback. Are you buying . Sfwl i think you could see more weakness maybe tomorrow given the fact people are on vacation. Desks are light. Sounded like you lean bullish. We had a nice run. Thats the health care selecting and a lot of big pharma, Johnson Johnson is really heavy in there, too. You have yield, defensive nature. Thats the one trading in late june at 70 bucks. When it rally almost 10 . If you get that probably in the low 70s, thats probably a good level and i think umt to be on some of the more defensive things. I think you want to avoid some of the names or etfs. Gold hitting a logging their worst performance since march 23th. Well tell you whether our trader rs buying, plus, Corporate Cash piles are hovering near record levels. And later, happy five years at the helm. Sam cook and to celebrate, well hear from john sculley for his take on the past, present and future for all things apple. Much more after this. Your Business Needs Better Technology to drive better performance. So you need it to be reliable and fast. Really fast. Introducing the comcast business Summer Savings event. Fast Internet Speed to drive performance, plus cutting edge wifi for your employees and customers, and voice mobility so your calls find you wherever you are. Get some of our most advanced products at a great price with over 500 in savings. Call today and ask how to get these savings plus a 250 prepaid card. Comcast business. Built for business. Welcome back. The latest on hps earnings, shares moving lower in afterhours trading on disappointing fiscal Fourth Quarter and full year guidance. Though this Third Quarter earnings beat on both the top and bottom line. On the call that just got underway, hp emphasizing Free Cash Flow and improvements taking about a billion dollars of costs out and the companys move to address customer demand going from transactional, buying something once, to contractual service. The key driver was notebook sales. 4. 3 billion. Nearly half a billion dollars better thap expected. The ceo saying that the markets remain challenged and that the company has rigor needed to take profitable market share. Though there were no financial updates on 3d printing, he said its off to a good start. Thank you. The notebook thing is is interesting. We know apple in july reported that they were up 5 , so i think that people got negative about the pc environment and what the declines were going on year over year, so maybe theres something there. Thats not bad for them, but again, printers is pretty heavy in that component. Its cheap stock. I think you want to be in the hpe. Lets get to our turn of the day now. Gold miners, gdx, 7 as gold hits a onemonth low. Gold and the miners now trading below their 50day moving average. Are we seeing an exit to the trade . For the First Time Since january, so its significant. This is the break. Whats significant to me is how bullish everyone was on gold. This was another one of these consensus trades, i realize this is easy to be in hindsight. Brexit threw 60 to 70 bucks an ounce in gold. I think things get interesting again. Look at yield, commodities in gold and dollar specifically and it tells you, it tells me, that the fed is more in play than people think about the market is telling you theres going to be more of a hawkish tone. That bill dudley and stan fisher have started to resognate with investo investors. Are you say thag the market is not expecting the hike as much. The fed is very hawkish in between meetings. We dont trust the fed anymore. Im say sg that actually, i think the commentary over the last couple of week, the housing data, payroll, we have enough for the fed to come out and feel differently. September hike. I think, yeah. On the table. I think it is. And i dont know whats pricing in. 20 something percent. I would say its higher. Higher. No, i dont think so september. I think its too difficult to do ahead of the election. Probably december. I think they have enough data to do it in september, but they wont do it ahead of the election. But separately as the miner trade did. Crowd ed trade, i think its coming off here. Gold i think 1280, 1300, probably you see a little support. Whats that, 26. 5 on etf, so maybe for a trade at that level, id buy, i think this product trade is rolling over. Still ahead, walmart surging more than 17 and why traders are betting 1. 7 million that the stock is heading much hire. Well take you behind that trade later on. Heres what else is coming up. Oh, yes. Were talking big, fat stacks of money. Because Corporate Cash piles are fast approaching record levels this quarter. And were telling you which sectors are flush with the most cash right now. Plus the magic man. Now, you see me, now you dont. And wed say apple ceo tim cook is quite the magic man as he celebrates five years at the helm and tonight, former apple ceo john sculley is here to weigh in on cook and give us his insight into apples future. Thats ahead on fast. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Dont put off checking out your Medicare Options until 65. Now is a good time to get the ball rolling. Medicare only covers about eighty percent of part b medical costs. The rest is up to you. Thats where aarp Medicare Supplement insurance plans insured by Unitedhealthcare Insurance Company come in. Like all standardized Medicare Supplement insurance plans, they could help save you in outofpocket medical costs. 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According to howard at S P Dow Jones indices, were on pace to see record levels of cash and equivalent holdings and a handful of companies to report in 2q and theres 1. 3 trillion of cash on the books. Big caveat here about the number. It excludes companies in the financial and utility sector, as well as certain transportation related stocks that keep high amount of cash due to just their Business Needs daytoday. Recordless, you get the picture, were on pace for record level of cash in s p. As for the sectors that are the cash richest, technology has the most. Health care in second. Around 273 billion and Consumer Discretionary at 147 billion. Whether that leads to more m and ax ak, that remains to be scene and theres a a lot of variables to be scene, like if the cash is here in the u. S. Or stored abroad or whoo the Interest Rate environment is with regard to bow rowing money, credit ratings, thats part of the picture, it may be fair to say Corporate America has a good amount of dry powder to work with. Thank you so much. So, lets get, the these es here is that while theyve got a lot of kark, theyre going to spend it somehow and could that benefit shareholders. Whether it be three buybacks or dividends which weve seen plenty of or by ak wcquisitioac. If you want someone food shg smart. Other times, youd rather them spend the money on give iing it back to shareholders because youre afrai

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