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Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio,
Speaker 1: YouTube and Bloomberg Originals.
Speaker 2: On today's Bloomberg Intelligence Show, we dig inside the big
Speaker 2: business story is impacting Wall Street and the global markets.
Speaker 3: Each and every week we provide in depth research and
Speaker 3: data on some of the two thousand companies and one
Speaker 3: hundred and thirty industries are analysts covered worldwide.
Speaker 2: Today, we'll look at earnings reports from some of the
Speaker 2: world's largest retailers.
Speaker 3: Plus look at why the Danish drug maker Novo Nordisk
Speaker 3: will be further lowering the prices of its obesity drugs
Speaker 3: for cash paying patients first.
Speaker 2: We'll begin with earnings from chip Giant and Video.
Speaker 3: This week, the company reported third quarter earnings that topped
Speaker 3: analyst estimates, and Vidia also delivered a surprisingly strong revenue
Speaker 3: forecast and pushback on the idea that the AI industry
Speaker 3: is in a bubble.
Speaker 2: For more, we were joined by Kunjohn Sabani, Bloomberg Intelligence
Speaker 2: Senior Semiconductor analyst. We first asked Kunjohn for his take
Speaker 2: on in Vidia this week.
Speaker 4: This was one of the more bullish earnings we have
Speaker 4: seen from this name in a while, not just on
Speaker 4: the numbers of the three Q four Q guide, which
Speaker 4: they blew past even the loftiest Byside targets, but just
Speaker 4: beyond that the long term the twenty six sort of
Speaker 4: and going into twenty seven demands signals that they showed,
Speaker 4: namely the half a trillion of the pipeline, which we
Speaker 4: think now is a conservative number given the number of
Speaker 4: deals they have announced. If supply keeps on coming up
Speaker 4: as it has, and if their customers continue executing on
Speaker 4: these bills without any missteps, we think their significant upside
Speaker 4: to the current numbers.
Speaker 3: Yeah, just looking through the numbers, clearly a beaten Rais report,
Speaker 3: but you know, the scale at which it can be
Speaker 3: in race is impressive. Although within the third quarter numbers,
Speaker 3: I did see that chips used in gaming PCs missed
Speaker 3: analess estimates, and I know that that's a shrinking part
Speaker 3: of the business, or at least it's not as big
Speaker 3: a part of the business, given that the data center
Speaker 3: is where the growth is really at. Are there any
Speaker 3: flaws in this earnings report? Conjohn?
Speaker 4: Not really? I mean, look, the gaming is becoming so
Speaker 4: unimportant for analysts that the reliability of the predictability of
Speaker 4: those numbers against which we are comparing the bet and
Speaker 4: miss for gaming is no longer as reliable. So no
Speaker 4: real flaws to really point out in this. We did
Speaker 4: see their supply commitments go up quarter work quarter and
Speaker 4: inventory is rising. I don't think that's a negative. While
Speaker 4: it might seem on the face that's just them getting
Speaker 4: up and getting ready for that next wave to supply
Speaker 4: the chips in the next year.
Speaker 2: So could John what's the latest and Gentin want about
Speaker 2: how he've used China going forward?
Speaker 4: Nothing has changed on the China side. They still don't
Speaker 4: assume any revenues when it comes to data center AI
Speaker 4: China GPUs or the H twenty has been shipped into
Speaker 4: They do have the clearance licenses so they could, but
Speaker 4: it seems because of the geopolitical issues, China has basically
Speaker 4: been shut down for American GPU providers or AC providers
Speaker 4: to be able to ship in the country. There isn't,
Speaker 4: to be honest, no demand. So it seems, you know,
Speaker 4: because of geopolitical issues, the customers in China are not
Speaker 4: just reading and getting up to buy in media chips
Speaker 4: right now.
Speaker 3: Jensenhang said that he from his vantage point, does not
Speaker 3: see anything like an AI bubble. We see something very different,
Speaker 3: and he says competitive pressures remain fairly low because this
Speaker 3: is a company with more than ninety percent of the
Speaker 3: market for those high end super fast AI chips. Who
Speaker 3: is the closest competitor if there is one t Invidia.
Speaker 4: Yeah, in terms of the size of the markets, the
Speaker 4: next closest competitor would be the AIA six chips, So
Speaker 4: Broadcome is one of the biggest providers of AI six chips,
Speaker 4: namely the TPU that Google uses. Another example would be
Speaker 4: Amazon's Treanium chips, which are on different AI asic designers supply.
Speaker 4: So in terms of revenues, or units in terms of
Speaker 4: the market that those are the next closest competitors within
Speaker 4: Nvidia's realm, which it sells merchant gipus, AMD would be
Speaker 4: the second closest competitor in that our Thanks.
Speaker 3: To Kunjan Sabani, Bloomberg Intelligence Senior semiconductor analyst.
Speaker 2: We continue in the tech space.
Speaker 3: This week we heard that the tech giants Microsoft and
Speaker 3: Nvidia are committing to invest up to a combined fifteen
Speaker 3: billion dollars in the AI research and development company Anthropic.
Speaker 2: We heard the investment will be part of anthropics next
Speaker 2: funding round. The companies also said Anthropic has committed to
Speaker 2: purchase thirty billion dollars of computing capacity for Microsoft's Azure
Speaker 2: cloud service.
Speaker 3: So of course we had to enlist. Mandeep Singh, global
Speaker 3: tech research head at Bloomberg Intelligence.
Speaker 2: First asked man Deep to tell us a little more
Speaker 2: about Anthropic and what it does well.
Speaker 5: Anthropic is one of the five frontier lms that are remaining,
Speaker 5: I mean, and they are leading the charge when it
Speaker 5: comes to generative AI. So it's one of the five.
Speaker 5: The other one are Google, Open Ai, Meta and XAI.
Speaker 5: And so look, when it comes to these commitments, it's
Speaker 5: pretty obvious that open Ai has raised the bar by
Speaker 5: announcing they're going to spend one point four trillion. So
Speaker 5: the question is what are the other LLM companies going
Speaker 5: to do? And Entropic is also a pure play LLLM,
Speaker 5: and in their case, they don't have the funding. I mean,
Speaker 5: they don't have the balance sheet like Google or Meta have,
Speaker 5: so they have to raise the money either in the
Speaker 5: private markets or from someone like Nvidia, or get into
Speaker 5: an agreement with Microsoft, which also has an agreement with
Speaker 5: open Ai. So that's where you know. Llms need compute.
Speaker 5: That's how you serve billion plus users, and that's where
Speaker 5: you know the numbers get bigger and bigger when it
Speaker 5: comes to the tie ups with cloud provider.
Speaker 3: This is like the popular click in high school, where
Speaker 3: everyone knows each other and everyone's messing around with each other.
Speaker 3: Just give us a little bit of background here on Anthropic,
Speaker 3: because my understanding is that it was founded by folks
Speaker 3: who used to work at open Ai and some of
Speaker 3: the early investors like big stakeholders include Alphabet and include
Speaker 3: Amazon and now you've got Microsoft in there. I mean,
Speaker 3: is there anyone who's not part of Anthropic and not
Speaker 3: committed to investing in this company.
Speaker 5: Well, you could say Meta, they're doing things.
Speaker 3: They're doing their own thing.
Speaker 5: They are doing their own thing in terms of, you know,
Speaker 5: using the computer internally, and they don't have a cloud business.
Speaker 3: Is that a problem for them that Meta's out there
Speaker 3: on its own I know, it doesn't have its own
Speaker 3: cloud business, but it's not buying stakes or committed to
Speaker 3: invest up to five billion or ten billion in any
Speaker 3: of these AI companies.
Speaker 5: I mean so far, just to go to Meta, it
Speaker 5: feels like, you know, investors were okay with them using
Speaker 5: the GPU compute for their own family of apps. But
Speaker 5: the fact that they're talking about one hundred billion plus
Speaker 5: in capex for next year without having a substantial ROI
Speaker 5: and what I mean by rois in the case of Microsoft,
Speaker 5: yes they're raising their CAPEX two hundred and twenty billion,
Speaker 5: but they're winning deals like the one with Nthropic thirty
Speaker 5: billion dollar in commitment from Entropic, so somebody is paying
Speaker 5: for that compute. In the case of Microsoft, you don't
Speaker 5: have that with a Meta. How are you generating ROI
Speaker 5: outside of your family of apps? And over there you
Speaker 5: have to show a really substantial increase in engagement to
Speaker 5: convince investors it's worth hundred billion plus in capex.
Speaker 2: Any of these open aies anthropics, are they going to
Speaker 2: ever come public? Do you think?
Speaker 5: I mean, in the case of Entropic, look, I know
Speaker 5: the numbers are getting big, but their gross margins at
Speaker 5: this point are probably better than open AI, which is
Speaker 5: doing too much any things. I mean, the biggest risk
Speaker 5: I see for Opening Eyes they feel they can get
Speaker 5: into any business, whether it's chip business, whether it's you know,
Speaker 5: obviously LLLM is their turf, any type of applications, and
Speaker 5: that's where there's a possibility of a misstep. You can
Speaker 5: end up wasting time because you just don't have, uh,
Speaker 5: you know, the capability. Yeah, the focus Entropic is more.
Speaker 3: Focused our thanks Toman deep saying, global tech research head
Speaker 3: at Bloomberg Intelligence.
Speaker 2: We move next to some earnings from some of the
Speaker 2: world's largest retailers.
Speaker 1: This week.
Speaker 3: Target posted a drop in third quarter sales due to
Speaker 3: intense competition and a weakening economy, with shoppers pulling back
Speaker 3: on apparel and home goods.
Speaker 2: Separately, Walmart reported third quarter earnings that beat analysts expectations.
Speaker 2: The retailer also increased its outlook for sales in the
Speaker 2: full year. It's a sign Walmart is winning over priced
Speaker 2: sensitive shoppers while digesting costs it expects to rise in
Speaker 2: the coming months.
Speaker 3: For more, we were joined by Jennifer bartashis Bloomberg Intelligence
Speaker 3: senior analysts covering retail staples and packaged foods.
Speaker 2: First test jenf for her take on the most recent
Speaker 2: results at Walmart.
Speaker 6: You know, Walmart had another good quarter, and I think
Speaker 6: that it's very easy to attribute a lot of their
Speaker 6: success to just the value seeking behavior of consumers in
Speaker 6: this environment. But I think that would also be overlooking
Speaker 6: a lot of the investments they've made in things like
Speaker 6: convenience that is really spurring the e commerce growth. And
Speaker 6: that was really a notable takeaway.
Speaker 3: Yeah, that e commerce aspect helps draw on higher income shoppers,
Speaker 3: so it's a larger pool of customers at Walmart now
Speaker 3: has access to and in our Bloomberg News reporting we
Speaker 3: indicate that the digital offerings now include luxury items like
Speaker 3: pre owned Chanel bags. I had no idea that that
Speaker 3: kind of stuff was available on walmart dot com.
Speaker 6: Well, you know, Walmart has done a lot to really
Speaker 6: expand its marketplace, and that includes bringing in items that
Speaker 6: you know, will appeal to that higher income consumer, you know,
Speaker 6: And the tactic behind all of this is that the
Speaker 6: more people are integrated with e commerce in going to stores,
Speaker 6: they become sticky and they become loyal customers, so that
Speaker 6: when the macre can comic backdrop fades, it really increases
Speaker 6: Walmart's ability to hang onto these customers going forward, and
Speaker 6: that just drives future growth. So it's a really interesting
Speaker 6: play out of how they're applying that tactic.
Speaker 3: Jen, I also want to get your take on Walmart transferring.
Speaker 3: It's listing to the NASAC that's going to happen on
Speaker 3: December ninth, and that of course is to reflect as
Speaker 3: focus on being a tech forward company. But I'm wondering,
Speaker 3: I mean, how much of this is really just about
Speaker 3: being included in the Nazak one hundred and therefore the
Speaker 3: qqq etl Oh.
Speaker 6: Yeah, there's certainly part of that scarlet where you know,
Speaker 6: that's that's probably part of the motivation. I think that
Speaker 6: there is. You know, obviously there's a perception with regards
Speaker 6: to being perceived more as a tech company, which Walmart
Speaker 6: in all truthfulness, has evolved into a tech company, especially
Speaker 6: amongst other retailers. By being listed at NASDAK, you know,
Speaker 6: long term, maybe it helps their valuation, you know, just
Speaker 6: in terms of having that perception of being more you know,
Speaker 6: aligned with peers. You know, Amazon listed on Nasdaq, things
Speaker 6: like that. So I think that there's a lot of
Speaker 6: those components together combined, are really behind the move.
Speaker 2: Jen nobody arguably has a better finger on the pulse
Speaker 2: of the consumer than Walmart. What are they saying these days?
Speaker 6: Actually, they seem relatively optimistic. You know, they talk about
Speaker 6: you know, spending, holding study for kind of that middle
Speaker 6: income consumer, high end consumer seemed to be spending pretty freely,
Speaker 6: a little bit of concern about some of the lower
Speaker 6: end consumer, but it does seem to be sort of
Speaker 6: evening out. And so when they were looking forward to
Speaker 6: the holiday season, which is you know, the most important
Speaker 6: thing with regards to the retailers that I cover, they
Speaker 6: seem cautiously optimistic that there will be a pretty good
Speaker 6: holiday season this year. We do think that they're going
Speaker 6: to people will prioritize spending on kids. That's usually what
Speaker 6: happens first if they're holding back in other parts of
Speaker 6: their budget. But all indicators right now seem that we're
Speaker 6: headed towards a reasonably solid holiday season.
Speaker 3: Are thanks to Jennifer Bartash's Bloomberg Intelligence senior analysts covering retail,
Speaker 3: staples and packaged food. Coming up, we'll take a look
Speaker 3: at why the global payments services provider Klarna reported record
Speaker 3: revenue in its first quarter since going public.
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
Speaker 2: depth research and data on two thousand companies and one
Speaker 2: hundred and thirty industries.
Speaker 3: You can access Bloomberg Intelligence via Bigo on the terminal.
Speaker 3: I'm Scarlet Foo and.
Speaker 2: I'm Paul Sweeney, and this is Bloomberg.
Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
Speaker 1: on Bloomberg Radio.
Speaker 2: We move next to earnings from some of the world's
Speaker 2: largest home improvement retailers.
Speaker 3: This week, Low's reported third quarter profit that topped analyst estimates.
Speaker 3: This was a result of online sales and demand from
Speaker 3: professional contractors.
Speaker 2: Separately, we heard from Home Depot, who cut its full
Speaker 2: of your guidance. This come as a company warned that
Speaker 2: some unsteady consumers are hitting the pause button on big
Speaker 2: ticket home purchases.
Speaker 3: So we spoke with Drew Redding Bloomberg Intelligence US home
Speaker 3: building analyst.
Speaker 2: We first Saske Drew to break down this week's results
Speaker 2: from Low's and how they compare it to Home Depots.
Speaker 7: So, I think Loew's result could be best characterized as
Speaker 7: better than feared, particularly in light of what we heard
Speaker 7: from Home Depot. They did fall short of consensus estimates
Speaker 7: on same store sales, but I think the buy side
Speaker 7: was probably looking for something flat to lower, so a
Speaker 7: little bit better than they were looking for. Now that
Speaker 7: being said, they did trim their four year outlook. Now
Speaker 7: they're looking for four year comp sales to be flat
Speaker 7: from flat to up one percent, So that would imply
Speaker 7: that four Q is relatively flat. But you know, similar
Speaker 7: to what we heard from Home Depot, they had about
Speaker 7: one hundred basis point impact from hurricane activity that was
Speaker 7: not replicated this year. So again, if you were to
Speaker 7: back that out, it looks like the underlying trends in
Speaker 7: the business are pretty stable.
Speaker 5: You know.
Speaker 7: That being said, they're still grappling with the same consumer
Speaker 7: uncertainty and you know, the same weak housing market that
Speaker 7: their competitors, so you know, still challenges out there in
Speaker 7: the market.
Speaker 2: Drew, I think I understand it. Correctly that Lows has
Speaker 2: a lower percentage of sales to professional contractors than does
Speaker 2: Home Depot If so, are they trying to narrow the gap?
Speaker 2: Are they targeting that segment a little more?
Speaker 7: Yeah, great question. So Low's is about thirty percent professional
Speaker 7: contractors seventy percent DIY. Home Depot is about fifty to
Speaker 7: fifty maybe even a little bit higher on the pro front.
Speaker 7: What's interesting, and to your point on investment, is the
Speaker 7: pro space, especially in building products distribution, has really become
Speaker 7: a battleground among home improvement retailers. You had Home Depot
Speaker 7: recently do acquisitions for srs and gms, and then you
Speaker 7: have Lows who recently acquired foundation building materials, So it's
Speaker 7: certainly an area where they're making a concerted effort to grow. Now.
Speaker 7: Lows has historically focused on the small and medium sized
Speaker 7: pro and what this acquisition does is it gives them
Speaker 7: exposure to larger pros who do more complex projects, so
Speaker 7: they're able to be the supplier of choice across more
Speaker 7: building product categories and at a larger scale.
Speaker 3: So basically directly competing with Home DEEPO in many ways.
Speaker 3: Is this going to become a duopoly or are there's
Speaker 3: still a lot of other places that professional contractors can
Speaker 3: go to.
Speaker 7: Yeah, so the building products distribution space is still very
Speaker 7: highly fragmented, you know, I wouldn't be surprised to see
Speaker 7: further consolidation within the industry, you know, across different categories.
Speaker 7: Home Depot and Lows are certainly, you know, two of
Speaker 7: the behemoths in the industry who have, you know, the
Speaker 7: scale and financial flexibility to further consolidate the industry. But
Speaker 7: there's some other players as well, like QXO. So it
Speaker 7: is a mented industry, but I would expect, you know,
Speaker 7: in the coming years, it's something that continues to get consolidated.
Speaker 2: I can't keep track of where all the tariffs are
Speaker 2: these days on all the different products, but I'm just
Speaker 2: guessing if I'm a Low's or Home Depot, my plywood
Speaker 2: from Canada that's probably being tariff A power tool from
Speaker 2: somewhere in Asia that's probably subject to tariff's. How are
Speaker 2: these companies dealing with it? What have they been telling
Speaker 2: you guys?
Speaker 7: So, Lows gets about sixty percent of its products from
Speaker 7: the US, so their exposure internationally is maybe not as
Speaker 7: high as you would expect. China's probably around fifteen to
Speaker 7: twenty percent. You know, there hasn't been a whole lot
Speaker 7: of talk. I think we have seen their average ticket
Speaker 7: increase this quarter was up about three percent, and part
Speaker 7: of that is in response to tariff related price increases.
Speaker 7: Loose told us that they were only modest increases, and
Speaker 7: you know, they'll take a portfolio approach to how they
Speaker 7: increase prices. They'll look at their product line up and
Speaker 7: see where they have more elasticity. But I think the
Speaker 7: impact of costs will start to come in a little
Speaker 7: greater as we look into Q four in early twenty
Speaker 7: twenty six. And you know some of the areas that
Speaker 7: we're looking at. You mentioned plywood so lumber tariffs from Canada.
Speaker 7: We also had the implementation of tariffs on cabinetry both
Speaker 7: the kitchen and bath, which to go up to fifty
Speaker 7: percent in January. So I do think that the impact
Speaker 7: gets a little greater as we look at the next year.
Speaker 7: So I would expect further price increases from both retailers.
Speaker 3: Are Thanks to Drew Reading Bloomberg Intelligence, US home building analyst.
Speaker 2: We've moved to third quarter earnings from the global payment
Speaker 2: services provider Klina this week.
Speaker 3: Kliner reported record revenue that beat analysts estimates on Wall Street.
Speaker 3: The firm also set aside more provisions for credit losses
Speaker 3: in its first set of earnings since going public.
Speaker 2: For more, I was joined by Anthony Hughes, Bloomberg Equity
Speaker 2: Capital Markets reporter. I first asked Anthony to talk to
Speaker 2: us about Cliner's most recent results.
Speaker 8: Yeah, Well, klan is a company that's actually been around
Speaker 8: for about two decades. It's just that since about twenty
Speaker 8: and nineteen they've really expanded quickly in.
Speaker 2: The US and by now.
Speaker 8: Pay Later is a lending slash payments product which basically
Speaker 8: allows people to buy products and obviously pay for them
Speaker 8: over time. And this is an alternative to the credit
Speaker 8: card in a credit card option. So really a lot
Speaker 8: of Klana's growth really reflects the fact that this product's
Speaker 8: becoming more popular relative to credit cards and for a
Speaker 8: lot of consumers, it's a good way to manage your
Speaker 8: cash flow and you know, obviously buy a product and
Speaker 8: not have to pay for over time, and that suits
Speaker 8: a lot of people, and it is a fast growing
Speaker 8: part of the fintech or say consumer lending space.
Speaker 2: And as a consumer, how does Clorina make money on
Speaker 2: my one hundred dollars purchase that they put on their system. Yeah,
Speaker 2: well they trudge me interest.
Speaker 8: No, well, this number of different products that some of
Speaker 8: the longer term lending products do have interests associated with them.
Speaker 8: But that paying for product they talk about, which is
Speaker 8: paying in four installments over a few months, that is
Speaker 8: an interest free product. And really the source of revenue
Speaker 8: in this in that instance is from the merchant, and
Speaker 8: merchants pay merchant service fee. It's high for them, it's
Speaker 8: higher than they pay on a credit card transaction. But
Speaker 8: basically they see the benefit of Klana bringing in extra
Speaker 8: customers so they can sell more product. And you know,
Speaker 8: people will ask themselves, well, who actually pays the merchant
Speaker 8: service fee? While the merchant does pay that to Klana,
Speaker 8: but the merchant does incorporate that as a cost of
Speaker 8: doing business into the products that these sells to you
Speaker 8: and I. So we in the sense we all pay
Speaker 8: for the fees that are hidden within the payment system
Speaker 8: and really merchants passed on to the consumer depending on
Speaker 8: how you pay the interesting you pay for.
Speaker 2: Your who's a typical Klarner consumer out there? Like what
Speaker 2: what's and what's kind of a typical transaction for a
Speaker 2: buy nine.
Speaker 8: Yeah, well, these are mainly small transactions of you know,
Speaker 8: can be a few hundred dollars or you know, not
Speaker 8: not not large transactions. And and you know, this obviously
Speaker 8: suits a younger audience, and that's where a lot of
Speaker 8: the you know, a lot of their customer bases come from.
Speaker 8: But they've built a large business which globally has something
Speaker 8: like one hundred and ten billion of what they call
Speaker 8: gross merchandise volume, and that's you know, it's a fast
Speaker 8: growing business in the US. It's been growing pretty fast
Speaker 8: for them, forty fifty percent in this recent quarter. And
Speaker 8: obviously there's a couple of other companies that are in
Speaker 8: this area as well, so it's a competitive area as well,
Speaker 8: with a firm which is another company went public perhaps
Speaker 8: about five years ago.
Speaker 3: That was Anthony Hughes, Bloomberg Equity Capital Markets Reporter.
Speaker 2: We moved to some news in the biotech space this week.
Speaker 3: We heard that the Danish drug maker Novo Nordesk will
Speaker 3: be further lowering the prices of its obesity drugs for
Speaker 3: cash paying patients.
Speaker 2: It's in an effort to call back a larger share
Speaker 2: of the US market from arch rival Eli Lilly. Nova
Speaker 2: said introductory doses of its blockbuster drugs we Govi and
Speaker 2: ozembic will be available for one hundred and ninety nine
Speaker 2: dollars a month.
Speaker 3: That price applies to the first two months of treatment.
Speaker 3: After that, Nova will offer the drugs through its Novocare
Speaker 3: direct to consumer portal for three hundred and forty nine
Speaker 3: dollars a month, that is thirty percent less than the
Speaker 3: current self pay price.
Speaker 2: For more, we were joined by Michael Shaw, Bloomberg Intelligence
Speaker 2: Senior pharma biotech analyst. Well first asked Michael to break
Speaker 2: down what exactly Nova nord Disk is doing.
Speaker 9: And this is obviously ahead of the White House tales.
Speaker 9: So you're seeing starting dice is being reduced two hundred
Speaker 9: dollars per month and then doses thereafter being charged at
Speaker 9: an average of three hundred and fifty dollars per month
Speaker 9: compared to five hundred dollars previously. So, I mean, you know,
Speaker 9: those prices kind of align to, you know, the pricing
Speaker 9: in the White House statement coming from Trump RX, but
Speaker 9: compared to Lily, I mean they're under cutting them by
Speaker 9: about you know, hundred dollars at each dose. And this
Speaker 9: is basically a ployed to basically compete for new patient starts.
Speaker 9: As we know, Lee's got the more effective product in
Speaker 9: terms of weight loss profile, and they're also you know,
Speaker 9: executing better on the launchers. And I think that's clear
Speaker 9: from three Q results where we saw contrasting fortunes between
Speaker 9: those two particular drug makers.
Speaker 2: Mikey, give us a sense of this marketplace here, what
Speaker 2: percentage of the addressable market is actually taking these obesity
Speaker 2: drugs versus because it seems like as the price comes down,
Speaker 2: more and more people will be able to get access
Speaker 2: to them.
Speaker 9: Yeah. Absolutely, I mean it's a highly priced sensitive market.
Speaker 9: When we look at penetration rates in the US, you know,
Speaker 9: low single digits, that's obviously going to accelerate as these
Speaker 9: drugs become cheaper. Looking outside the US, penetration rates are
Speaker 9: even lower, So there's you know, still significant kind of
Speaker 9: you know patient runway out there in terms of US penetration.
Speaker 9: I mean, the White House pricing deal on GLP one drugs,
Speaker 9: you know, supports kind of use of these these GLP
Speaker 9: one drugs in medicare you know there we think that
Speaker 9: it can unlock you know, seven to eight million patients
Speaker 9: according to a White House statement. I think they said
Speaker 9: ten percent of Medicare beneficiaries would become eligible for GP
Speaker 9: one drugs based on the pilot program, and that's going
Speaker 9: to be introduced in twenty six, and I think it's
Speaker 9: going to become mandatory in twenty seven. And then they've
Speaker 9: also you know, loaded the price in Medicaid too. I
Speaker 9: think the uplift in terms of patients there is a
Speaker 9: bit harder to deduce or to kind of model, given
Speaker 9: that you know, coverage is going to be on a
Speaker 9: state by state basis, and there's also kind of different
Speaker 9: qualifying criteria, which again is state dependent.
Speaker 3: What does this mean, Michael? For the companies like Hymns
Speaker 3: and Hers, the companies that make compounded copycat versions of
Speaker 3: these anti obesity drugs, they've done very well. And I
Speaker 3: know those stock for Hymns and Hers has been kind
Speaker 3: of all over the place, but it is modestly higher
Speaker 3: from where it was at the start of the year.
Speaker 9: Yeah, I mean I think that whole well, you know,
Speaker 9: the compounding situation. I believe that you know, one point
Speaker 9: two million patients from compounding GLP one at the moment.
Speaker 9: That's based on kind of comments and Novo made during
Speaker 9: their three key results obviously loaning down the price. Would
Speaker 9: kind of of the branded treatments would basically well, I
Speaker 9: mean it would it would you know, lessen the delta
Speaker 9: between you know, coffycats and branded treatment. So I guess
Speaker 9: it's a negative for for for these you know, compounded
Speaker 9: GLP one drug makers.
Speaker 4: Mikey.
Speaker 2: When I look at the big cap farm of names,
Speaker 2: is it as simple as I want to own the
Speaker 2: ones with exposure to obesity market and not own the
Speaker 2: ones that don't. Because I'm looking at your your slate
Speaker 2: of stocks and you either up thirty percent or you're down.
Speaker 9: Yeah, I mean I think you know, there's a there's
Speaker 9: a few large farmer names which which has entered the space.
Speaker 9: You know, in the in the recent years you've seen
Speaker 9: kind of deals with Ross and Zealand for an Amlin drug.
Speaker 9: Most recently you've obviously got the fires and met Sarah
Speaker 9: an a deal. I mean, I think obesity is obviously
Speaker 9: appealing given you know the size of the target population,
Speaker 9: how underpenetrated it currently is, and you know, if you're
Speaker 9: looking to you know, offset patent expirations later in the decade,
Speaker 9: you know there's an abundance of of kind of Jill
Speaker 9: point on products out there as well as other assets too.
Speaker 9: So I think that's the appeal of the space. It's
Speaker 9: a large market, it's underpenetrated, and there's high demand for
Speaker 9: these treatments too.
Speaker 3: I mentioned M and A, And of course we know
Speaker 3: that JANJ is making a purchase to increase its pipeline
Speaker 3: to get away from relying on these older drugs that
Speaker 3: have lost patent protection. Is every farmer company doing the
Speaker 3: same thing. Is that you know they're not only strategy,
Speaker 3: but is that the way they move forward? Is there
Speaker 3: anyone who's kind of like in a good position and
Speaker 3: doesn't need to make a deal.
Speaker 9: I mean, I think that's always been part of the
Speaker 9: large farmer model. They supplement kind of in house innovation
Speaker 9: with extern of innovation, particularly if they want to get
Speaker 9: into areas perhaps outside of their cool competency. But I mean,
Speaker 9: I think that's just that the model in general. Biotechs
Speaker 9: always been the pipeline for large farmer companies, or at
Speaker 9: least help Bell cault that pipeline.
Speaker 3: Our thanks to Michael shop Bloomberg Intelligence senior pharma biotech
Speaker 3: analyst coming up a look at why the global sports
Speaker 3: company a Maorsports raised it's full your guidance.
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
Speaker 2: depth research and data on two thousand companies and one
Speaker 2: hundred and thirty industries.
Speaker 3: You can access Bloomberg Intelligence through Bigo on the terminal.
Speaker 3: I'm Scarlett Foe.
Speaker 2: And I'm Paul Sweeney, and this is Bloomberg.
Speaker 1: This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney
Speaker 1: on Bloomberg Radio.
Speaker 2: We move next to earnings from the department store TJX.
Speaker 3: The off price retailer reported third quarter sales that beat
Speaker 3: analyst estimates. It also raised its guidance for comparable sales
Speaker 3: this year.
Speaker 2: It's a sign that your shoppers are turning to cheaper
Speaker 2: options as economy shows signs of d for more. We
Speaker 2: were joined by Mary Ross, Gilbert, Bloomberg Intelligence Senior Equity Analyst.
Speaker 3: We began by asking Mary for her take on this
Speaker 3: week's results and whether she is a fan of TJX.
Speaker 10: I'm a fan too, and they it's because they carry
Speaker 10: such a variety of brands and it appeals to all
Speaker 10: income groups. So if you have a luxury consumer, you
Speaker 10: can get Balanciaga you can get Chloe low. So they
Speaker 10: carry all of the brands. And then if you're more
Speaker 10: oppressed and you're really a valued consumer, they have Steve Madden,
Speaker 10: they have Theory, so they really they have Puma, they
Speaker 10: have Nike, Adidas, so they have all the brands that
Speaker 10: consumer want and that's why they're Marmax, which is tj
Speaker 10: max and Marshall's division, reported a comp sales increase of
Speaker 10: six percent, and that's why. You know, if you look
Speaker 10: at the overall results, they were up five percent, so
Speaker 10: a lot of strength there within the Marmas home goods
Speaker 10: and of course Canada. Canada was up eight So we're
Speaker 10: seeing consumers flock to get the brands that they want
Speaker 10: and they've had some amazing buying opportunities, so their margins
Speaker 10: were higher.
Speaker 3: So the way that TJX stocks at stores is that
Speaker 3: they get inventory that hasn't sold at full price stores.
Speaker 3: But if all these merchants, all these retailers are managing
Speaker 3: their inventories better and don't have a lot of excess inventory,
Speaker 3: where does tj X get its inventory. I mean it
Speaker 3: has to have another option, right.
Speaker 10: Yeah, Scarlett, you raise a good question, But the fact
Speaker 10: is is that some of the retailers, but also the
Speaker 10: brands themselves. So if you think of for example, PVH,
Speaker 10: which has the Tommy Hill Figure and Calvin Klein brands,
Speaker 10: we see those brands pretty prevalent throughout off price. So
Speaker 10: that's been a good channel for them to sort of
Speaker 10: release some of that excess inventory, and when they work
Speaker 10: with some of their wholesale partners, including the department stores,
Speaker 10: So were you have product that's not selling off price
Speaker 10: is just a natural fit to be able to release
Speaker 10: that inventory. So you want to keep your inventory fresh
Speaker 10: in the stores, especially when you're a full price operator,
Speaker 10: and there hasn't been any slow down in terms of
Speaker 10: that excess inventory. And that's why even on the luxury side,
Speaker 10: where typically you wouldn't think you'd find markdowns, it's been
Speaker 10: pretty prevalent, especially with overall weakness and luxury.
Speaker 2: So what does the folks at Cheak, TJ Max, what
Speaker 2: are they saying about the consumer these days?
Speaker 10: Well, the consumer, I mean they're really seeing strength. So
Speaker 10: it's interesting because when you sort of read the take
Speaker 10: on Target with their results and they sort of cited
Speaker 10: you know, the consumer is very cautious, but that caution
Speaker 10: I think what's really going on is that they've got
Speaker 10: the brands that consumers want. So those that are executing
Speaker 10: are the ones that are getting the sales, because even
Speaker 10: some retailers that are more full price oriented are generating
Speaker 10: sales or they may be promotional, so the consumer is
Speaker 10: flocking to value, There's no doubt about it. But we
Speaker 10: do see some you know operators. You've got Ralph Lauren
Speaker 10: on the luxury side. They continue to outperform and their
Speaker 10: sales are always topping expectations too. And consumers there are
Speaker 10: willing to pay full price, so there are a lot
Speaker 10: less promotional every year. They seem to be less promotional
Speaker 10: for that reason, they're able to sell at full price.
Speaker 3: So clearly TJX has a strategy that works well given
Speaker 3: the current environment, and even when the economy is doing well,
Speaker 3: I would argue it has a strategy that works well.
Speaker 3: At what point do investors want more from the company
Speaker 3: than just executing on the strategy? Well, they want I
Speaker 3: don't know, am an age or do they want consolidation?
Speaker 3: Do they want innovation from TJX?
Speaker 10: Yeah, Well, so that's the reason why TGX is focused,
Speaker 10: you know, internationally, so they're going to be entering Spain
Speaker 10: in twenty twenty six, so coming next year. And of
Speaker 10: course they've had some They have two joint venture investments,
Speaker 10: one in Mexico and then one in the Middle East,
Speaker 10: and they're both off price retailers that they've invested in,
Speaker 10: So they're basically taking their talent and providing them a
Speaker 10: platform to leverage their talent in these joint ventures and
Speaker 10: to grow that way. So they're always looking for ways.
Speaker 10: Because Scarlett, you bring up a good point. TJX trades
Speaker 10: at a pretty high premium in the off price space,
Speaker 10: and generally it's a pretty big premium that is due
Speaker 10: to their very consistent execution. But you're right, consumers keep wondering, well,
Speaker 10: how can they keep growing on top of all this growth,
Speaker 10: and yet they keep doing it. But as they talk about, look,
Speaker 10: they have drops several times a week. There's not a
Speaker 10: lot of retailers that offer fresh merchandise several times a week,
Speaker 10: and they curate the merchandise by location, so they're very
Speaker 10: cognizant of the demographics for each location.
Speaker 2: Thanks to Mary Ross Gilt at Bloomberg Intelligence, senior ecody analysts.
Speaker 3: We moved next to news from the Global sports company
Speaker 3: a mere Sports.
Speaker 2: This week, the company raised it's for your guidance for
Speaker 2: the third time this year. That's after a strong demand
Speaker 2: for its Solomon footwear drove quarterly sales to a record.
Speaker 3: Sales growth at the group's other two units, including the
Speaker 3: technical apparel segment and the ball and Racket sports unit,
Speaker 3: also surpassed estimates, and overall group sales they hit a
Speaker 3: new high.
Speaker 2: For more, we were joined by Abigail gil Martin Bloomberg
Speaker 2: Intelligence at leisure and footwear analysts on amer sports earnings,
Speaker 2: the first to as Abigail to break down amer sports
Speaker 2: most recent earnings report.
Speaker 11: They did really well, you know, sales up thirty percent,
Speaker 11: broad based strength across regions, across channels, and across brands.
Speaker 11: I think the key thing people are looking for was China.
Speaker 11: Arctics recently had some controversy in China with fireworks display
Speaker 11: in the Himalayas that what fireworks display.
Speaker 2: Displayed fireworks in the Himalayans.
Speaker 11: Arctics for set off fireworks exactly. It was definitely a
Speaker 11: misstep for an outdoor brand that's really focused on sustainability,
Speaker 11: and there was definitely some concern that there would be
Speaker 11: a little backlash in China. There's definitely a lot of
Speaker 11: people upset about it, and they were fined by the
Speaker 11: Chinese government and working to restore the ecology there. But
Speaker 11: Greater China was up forty seven percent, momentum is continuing
Speaker 11: into four Q so I think that was really a
Speaker 11: big takeaway, just quelling investors' concerns about potential backlash in China,
Speaker 11: especially because they're the number one outdoor sports brand in China.
Speaker 3: Arctereric So, I had no idea that they have such
Speaker 3: strong brands. I mean, a Mare Sports on its own
Speaker 3: is kind of it doesn't it's not memorable the name,
Speaker 3: the parent company name, right, but the brands of course
Speaker 3: are Solomon, Arctic, so Wilson. As you mentioned, what does
Speaker 3: the tariff picture look like for this company.
Speaker 11: Yeah, I think it's very similar to most of the
Speaker 11: other companies. I think for them, what benefits them as
Speaker 11: their premium positioning. They're able to raise prices and they're
Speaker 11: not seeing any from consumers or pullback. They're still seeing
Speaker 11: very strong full price sell through, so they're able to
Speaker 11: offset some of those tariff costs with that, which I
Speaker 11: think is really helping. And we're seeing that with a
Speaker 11: lot of more of the premium brands are able to
Speaker 11: kind of navigate through the tariffs since their consumers are
Speaker 11: willing to pay upper KU, upper.
Speaker 3: K of the K shaped economy.
Speaker 2: I guess I know that's I guess where you want
Speaker 2: to be there. Talk to us about the footwear market here.
Speaker 2: I think you know, Nike, Adidas, all that kind of stuff.
Speaker 2: What's going on there?
Speaker 11: Yeah, I think you know, we're in store for a
Speaker 11: very interesting holiday season. I think that we're going to
Speaker 11: continue to see the premium brands continue to do well
Speaker 11: on holdings. Recently just reported and did phenomenal, and they
Speaker 11: also said they're not seeing any backlash on raised prices
Speaker 11: and they'll continue to do you know, limited discounting through
Speaker 11: the holidays. So we may see some differences between the
Speaker 11: two companies, but we just had our recent BI survey
Speaker 11: and Nike continues to let I think there's been concerns overnight,
Speaker 11: but they still are the major shareholder and still a
Speaker 11: favorite brand of millennials. Gen Z's everyone for the holidays,
Speaker 11: so they should continue to do well too.
Speaker 3: What is the maorsports distribution strategy? Do they have a
Speaker 3: DTC offering or are they going through third party retailers.
Speaker 11: Yeah, that's a great question. So it's a little different
Speaker 11: for each brand. For Arctics, they're leaning a lot more
Speaker 11: into DTC. They've changed their distribution strategy from basically nine
Speaker 11: eighty percent wholesale to eighty percent DTC over the last
Speaker 11: three years, and they're really focusing on growing their store
Speaker 11: base because I think not a lot of people know
Speaker 11: about Arctics. It's really going to help the brand awareness.
Speaker 11: So even in the US, they're looking to double their
Speaker 11: store account by twenty thirty so that through Solomon continues
Speaker 11: to be wholesale, especially for footwear, we're seeing this holiday
Speaker 11: season consumers strap for cash.
Speaker 5: They're wanting to.
Speaker 11: Go into the stores and try on their shoes and
Speaker 11: make sure it's the right fit and buy them versus
Speaker 11: you know, buy five pairs and return them. Yeah, so
Speaker 11: the wholesale distribution for Solomon and is really key, and
Speaker 11: they're in a lot of key premium partners, I would say,
Speaker 11: and you know the running specialty stores as well.
Speaker 2: I mean, I'm looking at your report here research your
Speaker 2: reportal on the sneaker business. I didn't know there were
Speaker 2: so many shoe manufacturers. I mean, Nike's the dominant one,
Speaker 2: as you said, but there's like fourteen in your survey here. Yeah, yeah, No,
Speaker 2: that's a competitive marketplace.
Speaker 11: Definitely, it's getting even more competitive as consumers with AI technology,
Speaker 11: you know, there's just such more of a breath of discovery.
Speaker 11: So that's where product is really coming into play this
Speaker 11: holiday season. I think, you know, the innovation, product and style.
Speaker 3: If there's one thing to be worried about when it
Speaker 3: comes to amre sports, what would it be? I mean,
Speaker 3: what's an area that they're not executing on?
Speaker 11: So I think the China thing was the one uncertainty
Speaker 11: for this quarter that we were Definitely it could have
Speaker 11: gone either way, so that would be the biggest thing.
Speaker 11: But honestly, they're executing on most of their things as
Speaker 11: drivers are, DTC, Women's and China and all of those
Speaker 11: were up double digits and more. And they're really gaining
Speaker 11: share in women's which I think is a big new
Speaker 11: opportunity for them as more women joined the outdoor market.
Speaker 2: All right, which have you purchased in the last twelve months?
Speaker 2: Sneaker brands for baby boomers? Sketchers?
Speaker 7: Yeah?
Speaker 2: What what Sketches continues to win?
Speaker 5: It is Honestly, they're.
Speaker 11: So comfortable, they're like the price point, the quality. I know,
Speaker 11: I know, I know, I know, but.
Speaker 3: This is not something that they market out there, that
Speaker 3: they put out there.
Speaker 11: No, and they're the third largest footwear brand globally. Really, yeah,
Speaker 11: I think right behind Adidas.
Speaker 3: Next, you're going to tell me that, you know, the
Speaker 3: boomers are using the shoes with the little wheel in
Speaker 3: the back of.
Speaker 2: The No, the wheelers, the wheels.
Speaker 5: Yeah, No, they're doing the step ins.
Speaker 11: You don't even have to bend down exact it.
Speaker 2: That's what I think it is. I think you're right,
Speaker 2: all right, Yeah, there you go. I mean the kids,
Speaker 2: the gen z, the millennials, they're still in that Nike.
Speaker 2: You yet, brands still audience.
Speaker 11: Or Hokahs, yeah, ka Hoka and on are gaining, but
Speaker 11: they're you know, they're still small, and I think people
Speaker 11: don't realize that just because there's been such a big boom,
Speaker 11: they're still very like West Coast East Coast oriented, you know,
Speaker 11: they still have a lot more room to grow brand
Speaker 11: awareness in the US, especially in the middle of America.
Speaker 3: That was Abigail Gilbart and Bloomberg Intelligence at Leisure and
Speaker 3: Footwear Analysts.
Speaker 2: That's this week's edition of Bloomberg Intelligence on Bloomberg Radio,
Speaker 2: providing in depth research and data on two thousand companies
Speaker 2: and one hundred and thirty industries.
Speaker 3: And remember you can access Bloomberg Intelligence via b I
Speaker 3: go on the terminal. I'm Scarlett Foe and I'm Paul Sweeney.
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