Apparently you just can't keep a bull market down, as the broad-based S&P 500 (SNPINDEX:^GSPC) demonstrated this morning.
Although there was no key economic data today, and we likely won't even see anything of substance for traders to latch onto until Wednesday, merger and acquisition news again took the spotlight, even if investors were being hypercritical of the announced deals and rumors. Investors enjoy seeing large M&A deals because it signifies that businesses are willing to take on additional risks, and taking on risks implies that visibility is good and growth is expected over the interim. In other words, the M&A announcements and would-be deals we've witnessed recently involve much more than just the companies involved and could signify that the health of the overall market is viewed favorably by the many of the world's biggest companies.
By day's end, the S&P 500 had trudged steadily higher, erasing some very early morning losses, and finished in the plus column by 7.22 points (0.38%) to close at 1,885.08.
Leading all companies to the upside today was orphan fibrotic disease-focused biopharmaceutical company InterMune (NASDAQ:ITMN) which shot 13.4% higher after presenting positive data from its phase 3 ASCEND trial at the American Thoracic Society meeting in San Diego over the weekend. As noted in its press release, pirfendione, its idiopathic pulmonary fibrosis drug hopeful which is approved in numerous EU countries under the brand name Esbriet, met its primary endpoint of reducing the risk of a meaningful decline in forced vital capacity compared to the placebo group from baseline at week 52. Just 16.5% of patients experienced this FVC decline of 10% or more compared to 31.8% of patients in the placebo group. Furthermore, 22.7% of patients experienced no FVC decline, which was 132.5% higher than the placebo group. Data presented in the New England Journal of Medicine supported InterMune's findings as well. It's certainly looking as if pirfenidone has a better than 50-50 shot at approval in the U.S., however I'd caution investors that much of that optimism has been baked into its share price already, and to invest accordingly.
Shareholders in Senomyx (NASDAQ:SNMX) woke up to a sweet deal this morning with shares rising 10.2% on the day after it and its partner PepsiCo. (NYSE:PEP) announced a two-year extension of their current sweet flavoring agreement through August 2016. For PepsiCo. this is a no-brainer as it gives the company a possible edge to develop sweeter-tasting beverages that remove sugar and could make them healthier than their competitors' beverages. For Senomyx this deal is critical because it aligns its sweet flavor products up with a global giant that can introduce it to domestic and foreign markets. It'll still be a little while before Senomyx turns the corner to profitability, but I'd consider it worth a closer look on any extensive dips.
Finally, in-flight Internet and connectivity supplier Gogo (NASDAQ:GOGO) ascended 5.9% after receiving positive commentary from research firm UBS. According to covering analyst John Hodulik, who raised his full-year revenue forecast, but lowered Gogo's full-year EBITDA outlook due to the expectation of higher capital expenditures, Gogo represents an attractive wireless play because of its long-term airline contracts and consumers' want to stay connected, even while flying.
On the heels of this report, UBS upgraded Gogo to a "buy" rating from "neutral" but simultaneously lowered its price target to $23 from $26. Although I often feign from placing much faith in analyst ratings, I believe Hodulik hit the nail on the head here that Gogo is set up to outperform for the long-run, but that losses are going to continue for the next couple of years. Patient investors who wait for moderate pullbacks could be rewarded here.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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