Medicare Drugs Targeted Under Inflation Reduction Act

We’re getting Case-Shiller home price numbers ahead of the opening bell this morning, but there’s not enough time to dig into it. Give us til this afternoon to speak about these. Pre-market indices are in the red currently, albeit marginally. Investors cool their heels early after back-to-back up days. All four — the Dow, the Nasdaq, the S&P 500 and the small-cap Russell 2000 — are still up over the past week of trading.

Best Buy BBY outperformed estimates in its Q2 earnings results released before today’s open. Earnings of $1.22 per share amounted to a +15% positive earnings surprise over the $1.06 per share expected. It’s also Best Buy’s fifth-straight quarterly beat. Revenues of $9.58 billion outpaced the $9.2 billion in the Zacks consensus. Same-store sales were down, but gross profit margins increased. Shares are up a cool +1% in early trading, though still down roughly -7% year to date. For more on BBY’s earnings, click here.

S.J. Smucker SJM also shines bright on quarterly earnings for the Retail sector as a whole: earnings of $2.21 per share beat the expected $2.07 for a +6.76% surprise, while $1.81 billion in sales bettered estimates by +1.95%. Smucker’s — owners of Dunkin and Bustelo coffees, Milk-Bone and Meow Mix, among others, in addition to its flagship brand — has not missed a consensus earnings estimate since 2019. Both it and Best Buy carried a Zacks Rank #2 (Buy) rank into its earnings release. For more on SJM’s earnings, click here.

A segment of last year’s Inflation Reduction Act comes into view this morning, with the U.S. government targeting the first 10 medical drugs to have costs subject to negotiation. Together, they made up $50 billion, about 20%, of Medicare part D costs from June 2022 through May 2023. The idea is that lowering costs of these widely-used products would help bring down inflation.

Included in the list are anti-blood clotting drugs Eliquis and Xarelto, from Bristol Myers BMY and Johnson & Johnson JNJ, respectively; type-2 diabetes med Januvia, from Merck MRK; Enbrel for rheumatoid arthritis, from Amgen (AMGN); Entresto for heart failure from Novartis NVS and various insulin distribution systems from Novo Nordisk NVO, to name just a few. On the news, only J&J is slipping a little in the pre-market; perhaps this news is already partially priced-in?

After today’s opening bell, we’ll see a new Job Openings and Labor Turnover Survey (JOLTS), expected to tick down from 9.58 million open jobs in the U.S. to around 9.5 million. And Consumer Confidence for August looks to dip from 117.0 to 116.0. We’ll also see earnings results from Hewlett Packard Enterprises HPE and original recipe HPQ after today’s close.
Novartis AG (NVS): Free Stock Analysis Report

HP Inc. (HPQ): Free Stock Analysis Report

Bristol Myers Squibb Company (BMY): Free Stock Analysis Report

Johnson & Johnson (JNJ): Free Stock Analysis Report

Novo Nordisk A/S (NVO): Free Stock Analysis Report

Merck & Co., Inc. (MRK): Free Stock Analysis Report

Best Buy Co., Inc. (BBY): Free Stock Analysis Report

The J. M. Smucker Company (SJM): Free Stock Analysis Report

Hewlett Packard Enterprise Company (HPE): Free Stock Analysis Report

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