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Speaker 2: Looking at the news, Met Sarah shares tumbled after Noboode
Speaker 2: nord Dick's declined to further raise its offer for the
Speaker 2: US maker of an experimental weight loss drug, bringing a
Speaker 2: bidding war with Pfizer to an end.
Speaker 3: I like the good bidding war. Being a former.
Speaker 2: Banker, Sam Fazzelli joins US here director of research for
Speaker 2: Global Industries. He covers all the healthcare stuff for Bloomberg Intelligence.
Speaker 3: He's based in London.
Speaker 2: So how good is this Met Sarah company? Sam and
Speaker 2: their drug? How good is met Sarah? Because boy, it
Speaker 2: seemed like everybody wanted a piece of it.
Speaker 4: Yeah. So, Paul, before this last week, sorry, I've been
Speaker 4: off and you know what happens to your brain when
Speaker 4: you're off for a few days. Before last week, which
Speaker 4: is called we had the obesity week right where my
Speaker 4: colleague mug Show was at. There was a little bit
Speaker 4: of confusion around how good their data was, how good
Speaker 4: their assets were in the obesity space, and some questions
Speaker 4: about can they really be dosed once a month if
Speaker 4: people wanted to do that. Do we really know what
Speaker 4: the side effect profile is like? Given the way that
Speaker 4: disclosed so far, and of course last week you cleared
Speaker 4: most of it up. The side effect profile is the
Speaker 4: same as most of these GLP wilogy. You get some nausea,
Speaker 4: in some tough cases, you get some vomiting, but those
Speaker 4: are early on and they get out of the way
Speaker 4: if you can withstand them. You seem to get the
Speaker 4: benefit and it seems to work pretty well as a
Speaker 4: once monthly drug, but there's always more wood to be chopped.
Speaker 4: You know what these things are like. So the assets
Speaker 4: look great, they're competitive. Adfiser just stood this ground and
Speaker 4: put the bid up. And of course I think what
Speaker 4: Clinch did was what we'd be going on for ages
Speaker 4: about for the past ten days or twenty days about,
Speaker 4: is that Nova's deal had the risk of not being
Speaker 4: able to pass due to competition competition issue with FTC issues,
Speaker 4: and it sounds like the FTC had had given Metzera
Speaker 4: call saying look, if you go with that there is
Speaker 4: a risk you won't close, so do whatever you think
Speaker 4: is the right thing for your shareholders. And they did
Speaker 4: in the end and find as it did a bit
Speaker 4: spit right.
Speaker 5: So Novo Nordisk one in a way in that Vizer
Speaker 5: is paying up more. Does that actually work in Nova
Speaker 5: Nordisks favor or does it? Is it still as desperate
Speaker 5: as it was before to look for some new catalysts
Speaker 5: in the obesity market.
Speaker 4: I mean, I'm not going to call Novo desperate. I
Speaker 4: think they have assets in there. I think they wanted
Speaker 4: to add some more options to their their sales reps
Speaker 4: bags over time, so I wouldn't call them desperate, but
Speaker 4: they're obviously by going after this, they did say that
Speaker 4: we need more assets in our bang so and Lily
Speaker 4: wasn't in the game. So it just gives them. That
Speaker 4: gives you that flavor that they are and I think
Speaker 4: the market's telling you that. Look at the divergence of
Speaker 4: the share price performance of Lily versus never noticed that
Speaker 4: there's the market favoring the drugs that Lily has got
Speaker 4: on the market today and to compete they needed to
Speaker 4: get some more. So I think this is not the
Speaker 4: end for novo at all in this space. There's lots
Speaker 4: of other interesting obviously assets coming up with different mechanisms.
Speaker 4: That's the thing that I think the company is now
Speaker 4: going to have to think about rather than trying to
Speaker 4: go after the same mechanism all the time.
Speaker 2: So, Sam, all these big, big cap pharmaceutical companies that
Speaker 2: you've covered for decades, I kind of always thought they
Speaker 2: were big diversified portfolios of lots of different drugs and
Speaker 2: therapeutics and you know, but Bay, when I look at
Speaker 2: your stocks this year, it seems like there's halves and
Speaker 2: have nots. If you have obesity exposure, the stocks up,
Speaker 2: and if you don't, they're down. Is that kind of
Speaker 2: how your world's evolved into over the last several years.
Speaker 4: I would just give you one little caveat to the Astrosenicasenica.
Speaker 4: I think it's doing fine. And then they have an
Speaker 4: obesity asset, but it's not their major game. Their big
Speaker 4: plays in oncology cardiovascular is there and they're adding it
Speaker 4: to it. So, yes, obesity the has been the talk
Speaker 4: of this this past twenty twenty five. I think you'll
Speaker 4: still be the talk of twenty twenty six. But there's
Speaker 4: a lot more going on in pharma neuroscience. Diseases of
Speaker 4: the brain, diseases of mental health are getting much more attention.
Speaker 4: Cardiovascular aside from obesity, is getting quite a lot of
Speaker 4: attention in heart to treat hype atension, et cetera. I
Speaker 4: have to tell you, I don't think there's an area,
Speaker 4: perhaps antibiotics set aside, that is not getting a significant
Speaker 4: amount of progress across some farmer company somewhere.
Speaker 5: Is what happened with Metsara, no Nordisk afisor an unabashed
Speaker 5: victory for Eli Lilly. I mean, does it just kind
Speaker 5: of keep on moving forward or does any of this
Speaker 5: kind of hurt Eli Lilly's market position.
Speaker 4: No, I mean, at the end of the day, there'll
Speaker 4: be multiple players in this space as that are now
Speaker 4: too at least, and I think Eli Lily is currently
Speaker 4: very well placed with the assets that they have today
Speaker 4: to compete, and they're showing that they're competing very very
Speaker 4: effectively and in some cases winning market share from Noma,
Speaker 4: not disc.
Speaker 2: Sam got about thirty seconds left. What's that you have
Speaker 2: a little hindsight here, President Trump threatening medical funding at.
Speaker 4: The university level.
Speaker 3: What's the updated there with the status of that.
Speaker 4: Yeah, it seems to be that some universities are getting
Speaker 4: some reprieve from general funding issues, but medical funding is
Speaker 4: something that I keep scratching my head on. I don't
Speaker 4: understand why you would want to cut off funding to
Speaker 4: research and funding to medicine in general, because that is
Speaker 4: a major driver of economic boom in the US. And
Speaker 4: it's not just medicine, it's also stem I don't understand it.
Speaker 3: Stay with us more from Bloomberg Intelligence coming up after this.
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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
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Speaker 2: Man Deep Singh just barely made it under the wire
Speaker 2: to get here to talk to us today. Then I
Speaker 2: was going to give him a hard time, but then
Speaker 2: I remember he has like five other jobs. He's like
Speaker 2: senior research channels covering technology. He manages a bunch of people.
Speaker 5: He's also updating the AI tech guide, that that slide
Speaker 5: that you're always talking about.
Speaker 2: You know, all right, we'll cut a break here. Many
Speaker 2: Deep sing joints us here. He's our senior techauist the
Speaker 2: Bloomberg Intelligence managing it's like hurting it.
Speaker 4: You know, a group of cats.
Speaker 2: And you're managing research channels because they, by definition, they
Speaker 2: don't want to be managed. You know, Taiwan semiconductor manufacturing,
Speaker 2: we don't pick attention to this one.
Speaker 3: It's chips and stuff like that. That's not a lot
Speaker 3: of fun.
Speaker 4: But this is interesting.
Speaker 2: They reported some numbers slower growth, and I think for
Speaker 2: those that are concerned about the growth of this AI
Speaker 2: juggernaut that we've all been on over a couple of years,
Speaker 2: you're wondering does slow and growth at Taiwan Semi confector
Speaker 2: mean anything for the industry? Written large, Andy, what do
Speaker 2: you think when you saw the Taiwan Semiconductor numbers.
Speaker 6: I mean, Taiwan Semi is unique because they give you
Speaker 6: monthly numbers. So all of our companies report on a
Speaker 6: quarterly basis. And when I look at Taiwan Semi's quarterly results,
Speaker 6: they had over thirty percent growth. Gave a guide where
Speaker 6: AI would be growing, you know, almost fifty percent plus
Speaker 6: over the next five years. And so if you know
Speaker 6: this deceleration is happening for a reason, you know I
Speaker 6: would attribute it to the diversification of their business, because
Speaker 6: you have to remember Apple is more than twenty percent
Speaker 6: of their revenue and video is close to twenty percent now,
Speaker 6: and then they also have some auto's revenues, some analog business.
Speaker 6: So what is happening right now is everyone is putting
Speaker 6: their dollars in AI capex, but then they have to
Speaker 6: take away spending from elsewhere, and so the non AI
Speaker 6: piece of the hardware spend that seems to be slowing down,
Speaker 6: although we haven't really seen that. Even with PC sales
Speaker 6: things seem to be steady. But that could be one
Speaker 6: reason I can think of in terms of why the
Speaker 6: monthly number was slightly weak, And there could be seasonality
Speaker 6: as well. I mean, this is a monthly number. Could
Speaker 6: happen that the next two months actually are above thirty percent,
Speaker 6: and then the overall quarter may still look solid.
Speaker 5: Very good point. And just to recap the numbers, a
Speaker 5: sixteen point nine percent increase in October sales, which was
Speaker 5: on track with analyst estimates, but that is the slowest
Speaker 5: pace in about eighteen months. Well, I keep reading how
Speaker 5: TSMC is constrained by limited capacity, so if it wanted to,
Speaker 5: it would want to actually have higher sales. It's just
Speaker 5: physically limited.
Speaker 6: Well limited capacity again on the AI side. Okay, so
Speaker 6: you know TSMC does one hundred and twenty billion dollars
Speaker 6: run rate business in a year, so out of that
Speaker 6: AI is still fifteen percent, you know. And so from
Speaker 6: that perspective, not everything that TSMC manufacturers is at the
Speaker 6: cutting edge. And then you can slice it by leading
Speaker 6: versus you know, some of the trailing notes. So from
Speaker 6: that perspective, the utilization is far higher in terms of
Speaker 6: the leading notes versus some of the other notes that
Speaker 6: they manufacture on. And it could happen that, you know,
Speaker 6: because of the lower utilization they're not seeing as much
Speaker 6: customer orders flow in. And look, I mean it's hard
Speaker 6: to say for sure, given you know the book of
Speaker 6: their business and how many customers they have, and for
Speaker 6: some customers, they're still the only game in town. You know.
Speaker 5: So TSMC makes custom chips for companies that order it
Speaker 5: from TSMC. It's a manufacturer overall. We know that all
Speaker 5: these big tech companies in the US are starting to
Speaker 5: turn on their own capabilities of making their own chips.
Speaker 5: Is that competition or is that out of necessity? I mean,
Speaker 5: does that take away market share from TSMC down the road.
Speaker 6: I mean, look, if Intel is successful in terms of
Speaker 6: reviving itself on the manufacturing side, and that's what everyone
Speaker 6: is hoping, you know, with the initiative with the government
Speaker 6: taking a ten percent stake Intel, that the fab side
Speaker 6: really gets a lift in terms of other companies using
Speaker 6: Intel fabs to manufacture chips. That's when you got to
Speaker 6: be worried about TSMC. But for now, there is nothing
Speaker 6: on the horizon where you think and Open Ai or
Speaker 6: any of these chip companies is going to go to
Speaker 6: Intel for manufacturing their chips.
Speaker 2: And TSMC marketcap one point five trillion, stock up fifty
Speaker 2: five zero percent this year.
Speaker 3: Maybe I should pay a little more attention to this one.
Speaker 3: What do you think?
Speaker 2: In a related story in Nvidia, more Bloomberg News reporting
Speaker 2: these people are everywhere in Nvidia, chief executive officer Jensen
Speaker 2: Wang said he had asked Taiwan Semiconductor Manufacturing for more
Speaker 2: chips supplies as artificial intelligence demand remained strong.
Speaker 3: So there you go. I mean, I mean, that's hey,
Speaker 3: is this thing slowing down? Well, not the Gensen Wong.
Speaker 6: The Blackwell ramp up is actually accelerating. And if all
Speaker 6: the hyperscalers are telling you they're raising their capex for
Speaker 6: twenty twenty six and it's going to be another fifty
Speaker 6: percent plus year. They need more TSMC capacity, and Nvidia
Speaker 6: needs more TSMC allocation because TSMC can allocate to anyone
Speaker 6: outside of Nvidia as well. So from that perspective, you
Speaker 6: can see how much Nvidia cares about TSMC capacity.
Speaker 4: Let me ask a dumb question.
Speaker 5: I used to cover Taiwan equities when I worked in
Speaker 5: Hong Kong, and there are two big companies in Taiwan,
Speaker 5: TSMC and UMC United Microelectronics, and it feels like TSMC
Speaker 5: just ran away with it and UMC is kind of
Speaker 5: a shadow of its former self. Is there anyone any
Speaker 5: company with in Taiwan that can really compete or even
Speaker 5: hope to compete against TSMC?
Speaker 6: Not right now, and especially when it comes to leading notes.
Speaker 6: I think that's where our TSMC talking about two nanometer.
Speaker 6: I mean, we have seen why Intel has struggled in
Speaker 6: the last five years because they are not able to
Speaker 6: make the note transitions even though they are a leading
Speaker 6: note manufacturer. So from that perspective, I mean TSMC, it
Speaker 6: feels like they have an unassailable mode, and not just
Speaker 6: in terms of manufacturing, but also their efficiency when it
Speaker 6: comes to using these semicap equipment tools, like they are
Speaker 6: probably the best in terms of the leverage they have
Speaker 6: shown in terms of the useful life of these tools
Speaker 6: that other manufacturing companies haven't been able to show.
Speaker 2: All Right, got about a minute and a half left.
Speaker 2: Instead of me asking a dumb question, why don't I
Speaker 2: just say, Hey.
Speaker 3: What are you and your keem working on? What's the
Speaker 3: next cool thing we need to be we're reading about
Speaker 3: from you guys.
Speaker 6: I mean, we are in the process of updating our
Speaker 6: GENII numbers and they are going up for twenty twenty six.
Speaker 6: And also there's a heavy emphasis on data centers. So
Speaker 6: our next big report our dashboard is going to be
Speaker 6: on data center utilization, data center capacity editions. Everyone is
Speaker 6: talking in terms of gigawatts, so opening I said, they'll
Speaker 6: be adding thirty gigawatts over the next five years. Well,
Speaker 6: we want to track overall gigawats from all these vendors, Microsoft,
Speaker 6: all the Hyperscaler.
Speaker 3: Do we have a utilities analyst?
Speaker 4: We do?
Speaker 2: Who is that?
Speaker 6: Well, I mean it's covered by multiple people. Craw Barnett
Speaker 6: and because.
Speaker 3: Guys, those guys become front center. I mean, do we
Speaker 3: have the grid to power all this stuff?
Speaker 6: I mean everyone has called that power. In fact, right now,
Speaker 6: the consensus is your power is the biggest constraint, even
Speaker 6: more so than the GPUs, which was the case for
Speaker 6: the past three years.
Speaker 5: So it's always going to be something.
Speaker 2: Yeah, all right, And how many analysts aren't covering like
Speaker 2: technology browding defined for BI We're close to twenty people,
Speaker 2: twenty people globally, right, They're not just stuck in New
Speaker 2: York everywhere?
Speaker 4: Right there? You need that stay with us.
Speaker 3: More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am easterne on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 5: Let's head over now to company news, because we do
Speaker 5: still have companies reporting earnings, and Tyson is the latest
Speaker 5: to do so. Tyson of course reporting results today and
Speaker 5: it looks like we had a fourth quarter adjusted earnings
Speaker 5: for share Beat. And Jennifer Bartashis is joining us now.
Speaker 5: Jen Covers Senior she's the senior retail staples and packaged
Speaker 5: food analysts for us here at Bloomberg Intelligence, and Jen,
Speaker 5: you know, we think about Tyson, I think about chicken
Speaker 5: right away, and hired demand for chicken certainly was a
Speaker 5: factor that helped fourth quarter results. But beef is going
Speaker 5: to be a problem on the road, isn't it.
Speaker 7: Well, it's an interesting thing because obviously Tyson has been
Speaker 7: doing very well with the chicken business. They've invested in
Speaker 7: the last couple of years and improving their operations and
Speaker 7: we've seen that come through with a better margin, better
Speaker 7: operating usage, and that sort of thing. But when we
Speaker 7: look at the guidance for next year, over half of
Speaker 7: their adjusted operating income is expected to come from chicken.
Speaker 7: And for a diversified protein company, that's putting a lot
Speaker 7: of eggs in one basket, so to speak. And so
Speaker 7: you know it, it's doing well. There's there's a lot
Speaker 7: of momentum behind chicken in general, but Tyson is going
Speaker 7: to be very dependent on the continued success of that
Speaker 7: segment to hit its guidance for next year.
Speaker 2: Talk to us about the cattle herd in this country,
Speaker 2: how does that work here? I mean, prices are so high,
Speaker 2: and I thought, for like a lot of commodities, when
Speaker 2: you see a price, you know, move materially higher, it
Speaker 2: brings on more supply. But I guess it's a little
Speaker 2: different in the cattle business. What's your understanding.
Speaker 7: Yeah, it's a little bit harder in the cattle business.
Speaker 7: You know, you have to remember that raising cattle is
Speaker 7: a it's a capital intensive activity, and so there have
Speaker 7: been a lot of things that have held ranchers back
Speaker 7: from increasing the size of their herds. We've had high
Speaker 7: interest rates because a lot of them have to borrow
Speaker 7: in order to rebuild herds. We've had drought conditions, especially
Speaker 7: in the West and in the South, which make it
Speaker 7: difficult to commit to raising more animals if your land
Speaker 7: can't sustain them. And so those are some of the
Speaker 7: kind of structural impediments that have really held us back
Speaker 7: from what we would typically at this point have expected
Speaker 7: to see some rebuilding of those herds already. You know,
Speaker 7: Tyson says they see a couple of indicators in the
Speaker 7: Northwest and sorry in the Upper Midwest that there's some
Speaker 7: some heifer retention coming that means that cows are not
Speaker 7: being sent to slaughter, but it's not enough to really
Speaker 7: move the needle. So from our estimate, we're not looking
Speaker 7: at a meaningful change in supply until twenty twenty eight,
Speaker 7: So you know, expect high beef pace beef prices to continue.
Speaker 5: Yeah, okay, so not great news if you're a hamburger lover.
Speaker 5: And it's because these consumer beef prices that are at
Speaker 5: record highs is what prompted President Trump to ask the
Speaker 5: DOJ to investigate the meat packing industry. He is blaming
Speaker 5: majority foreign owned companies for driving up these beef prices. Jen,
Speaker 5: how do you think about this?
Speaker 7: Well, you know, when we look at this, I mean,
Speaker 7: this seems like it's more of a political maneuver than
Speaker 7: actually based on anything from a market perspective. At this
Speaker 7: point we will see what the dj comes up with
Speaker 7: and what they actually share, but this seems to be
Speaker 7: looking for a rationalization for high beef prices versus actually
Speaker 7: understanding what the market fundamentals are. And the other thing
Speaker 7: you have to remember is that we import a huge
Speaker 7: amount of beef, especially for ground beef, from Brazil, and
Speaker 7: we have tariffs on that. So part of the part
Speaker 7: of the government's own policy is contributing to the higher
Speaker 7: beef prices, but that's not part of this investing at all.
Speaker 2: All right, So what's next for Tyson is this, I mean,
Speaker 2: are these kind of companies are they how much did
Speaker 2: they have in their control because they don't have control
Speaker 2: of herd sizes and bird flus and things like that,
Speaker 2: whether the weather exactly is how do investors kind of
Speaker 2: invest in a company like Tyson's.
Speaker 7: Yeah, you really have to look at you know, how
Speaker 7: how are they controlling what they can control? And so
Speaker 7: that that comes down to their operations. Are they generating
Speaker 7: the efficiency they need to out of their plants? You know,
Speaker 7: are they operating at capacity? Do they still have excess
Speaker 7: capacity to fill? It really comes down to operational execution
Speaker 7: in this kind of backdrop when there are a lot
Speaker 7: of unknown variables that can impact supply. But ultimately, you know,
Speaker 7: supply at least for chicken does look pretty good. It
Speaker 7: looks pretty solid. So if all things go well, you know,
Speaker 7: Tyson should be in a position to be able to
Speaker 7: hit that guidance.
Speaker 5: Before we let you go, Jen, what does pricing for
Speaker 5: turkeys look like as we get closer to things.
Speaker 7: Getting Yeah, you know, turkey has been hit harder by
Speaker 7: avian flu than chicken. And so if you're talking about
Speaker 7: a frozen turkey, you're gonna be fine. Those turkeys have
Speaker 7: been in frozen storage for quite a while. They'll be
Speaker 7: ready to go. If you're more interested in the fresh bird,
Speaker 7: your price is probably going to be a little bit
Speaker 7: higher this year than it was last year.
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