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Stock Markets Open Mixed Friday as Netflix Gets Upgraded, Gilead Reports Positive Coronavirus Treatment Results

By Dan Caplinger – Jul 10, 2020 at 10:46AM

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Major market benchmarks moved in different directions Friday morning.

The stock market has been resilient even in the face of ongoing uncertainty about the future of the economy, and Friday morning was no exception. Although economic weakness has persisted and COVID-19 cases have been at elevated levels in the U.S. far longer than in other parts of the world, investors remain optimistic that the financial markets will make it through the disruptions the coronavirus pandemic has caused. That helped several key indexes rise. Just before 11 a.m. EDT, the Dow Jones Industrial Average (^DJI -1.71%) was up 167 points to 25,873, and the S&P 500 (^GSPC -1.51%) gained 7 points to 3,159. However, the Nasdaq Composite (^IXIC -1.51%) fell off from its record performance, losing 25 points to 10,522.

Many companies have suffered severe damage from the pandemic, but some have seen rising demand for their products and services as a result of the crisis. Netflix (NFLX -1.78%) has seen subscriber counts jump during stay-at-home orders from government officials to try to control the spread of COVID-19, and its stock climbed today. Also rising was Gilead Sciences (GILD -2.19%), which has been working on treatments to try to lessen the health effects of COVID-19.

Wall Street likes Netflix

Shares of Netflix were higher by 3% on Friday morning. Investors celebrated a positive outlook from prominent Wall Street stock analysts.

Analysts at Goldman Sachs were responsible for the latest upbeat view on the streaming video giant. Goldman boosted its price target on the stock by $130 per share to $670, and it kept its strong "conviction buy" rating on Netflix. The analysts believe that Netflix has had a stronger second quarter than most of those following the stock expect, especially with record levels of app downloads. Subscriptions could rise by 12.5 million or more during the quarter.

Netflix logo in red, with See What's Next tagline underneath.

Image source: Netflix.

Moreover, Goldman is optimistic about the second half of 2020. Although some have predicted that interest in Netflix could wane once coronavirus conditions improve, Goldman believes that churn rates are likely to remain lower than some fear.

Even with competition, Netflix has managed to hang onto the leadership position in streaming video. That bodes well for its future prospects, and it's easy to see why Goldman is optimistic about the stock.

Hoping for better treatment for COVID-19 patients

Gilead Sciences saw its stock rise 2% Friday morning. The biotech giant released more information about a key antiviral treatment it's looking at for treating severe COVID-19 patients, and the data from its phase 3 trial included some encouraging signs of potentially reducing mortality rates and improving clinical recovery.

Gilead's data from its phase 3 SIMPLE-Severe trial of remdesivir showed a 62% reduction in the risk of mortality compared with the ordinary standard of care. Moreover, Gilead looked at a more granular level at subgroups of patients, seeking to analyze the safety and efficacy of the treatment on those in different racial and ethnic groups. The biotech said that "traditionally marginalized" groups experienced similar clinical outcomes as the overall population in the study.

Remdesivir also showed signs of helping people recover from COVID-19 more quickly. In the study, more than 74% of those receiving the Gilead drug had recovered by day 14, compared to 59% of those receiving ordinary standard of care treatment.

Gilead has already enjoyed substantial share price gains in the first half of 2020, but a lot's riding on its coronavirus work. If remdesivir can indeed live up to its full potential, then the biotech stock could see a lot more of a boost ahead.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Gilead Sciences and Netflix. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
$235.44 (-1.78%) $-4.27
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$61.69 (-2.19%) $-1.38
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$28,725.51 (-1.71%) $-500.10
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,585.62 (-1.51%) $-54.85
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$10,575.62 (-1.51%) $-161.89
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
$293.05 (-1.03%) $-3.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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