Investors remained on edge Wednesday morning, waiting to see what the Federal Reserve would do with interest rate policy after the huge spike in inflation that the global economy has seen over the past year. As of 8:45 a.m., stock futures contracts were little changed, with Dow Jones Industrial Average (^DJI 0.47%) futures falling 18 points to 35,534. S&P 500 (^GSPC 0.98%) futures picked up 2 points to 4,639, and the Nasdaq Composite (^IXIC) also saw its futures contracts post a 2-point rise to 15,927.
Pharmaceutical stocks have seen a lot of cross-currents lately, as the COVID-19 pandemic has created opportunities for some companies and challenges for others. On Wednesday morning, shares of Eli Lilly (LLY 1.64%) climbed after the drugmaker issued an upbeat outlook. However, Lilly's gains paled in comparison to those of a little-known business in the semiconductor industry that got an offer it couldn't refuse. Below, we'll take a closer look at both companies.
Lilly puts its best foot forward
Shares of Eli Lilly rose nearly 5% in premarket trading on Wednesday morning. The drugmaker released some sneak peeks at presentations it expects to make throughout the day, including some financial guidance that shareholders liked quite a bit.
Overall, Lilly has set an ambitious target to ensure that it can keep up with the pace of innovation in the industry. Lilly expects to meet the goal it set in the early 2010s of launching 20 new treatments in the decade between 2014 and 2023, having already delivered 16 medicines and expecting five more to gain approval from the U.S. Food and Drug Administration in the next two years. Target areas range from immunology, oncology, and neuroscience to diabetes and obesity.
In addition, Lilly thinks its success will improve its financial performance. The company's adjusted earnings for fiscal 2021 should come in between $8.15 and $8.20 per share, representing growth of 20% or more. Lilly's range for 2021 revenue is $28 billion to $28.3 billion, with $2.1 billion coming from COVID-19 antibody sales. For 2022, Lilly expects consistent performance, with flattish sales of $27.8 billion to $28.3 billion but higher earnings of $8.50 to $8.65 per share on an adjusted basis.
With key treatments in hot areas of healthcare, Lilly has a lot of potential. That could send the stock upward enough to flirt with all-time highs in the not-too-distant future.
A big deal in the semiconductor materials space
The big mover of the morning, however, was CMC Materials (CCMP). The stock got a 27% boost after industry peer Entegris (ENTG 4.37%) announced an acquisition deal that will give shareholders a nice payday for their CMC stock.
CMC makes consumable materials that semiconductor manufacturers need in order to produce electronics for consumer and business use. In particular, CMC claims the status of global leader in providing slurries for the chemical mechanical planarization process, which allows for smaller chips with higher levels of sophistication.
Under the terms of the deal, Entegris will pay $133 per share in cash to CMC shareholders, in addition to 0.4506 of Entegris stock for every CMC share. That's a roughly 35% premium to CMC's closing price before the announcement. Entegris sees the purchase as dramatically improving its competitive position in supplying the semiconductor industry, as well as driving more innovation through research and development.
The semiconductor industry has seen several strategic moves lately as companies jockey for position in the fast-growing competitive market. Entegris is trying to scale up, and that's good news for CMC shareholders today.