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Speaker 2: Chipotle Mexican Grill. I was just there yesterday. Love it.
Speaker 2: It's my kind of my once a week thing. Was
Speaker 2: it crowded?
Speaker 3: Uh?
Speaker 4: Yeah, yeah, It's always crowded when the schools get out
Speaker 4: because all the kids come in there and then that's
Speaker 4: Itay're big fans.
Speaker 2: Yeah.
Speaker 4: Anyway, it was good, but apparently not so good in
Speaker 4: the quarter. They had some disappointing results of their guidance.
Speaker 4: Was a little cautious here, and the stock is down
Speaker 4: fifteen point seven percent today, down about forty percent year
Speaker 4: to date. Michael Hanlin joins a senior restaurant and food
Speaker 4: service analysts for Bloomberg Intelligence.
Speaker 2: Mike, is this a Chipotle thing?
Speaker 4: Is this a fast service quick service restaurant thing?
Speaker 2: What is this going on there? Now? Listen there there is.
Speaker 5: You know, some other companies are talking about a little
Speaker 5: bit of a pullback here in October. I think a
Speaker 5: big part of it is really around the DC metropolitan
Speaker 5: area and has to do with the government shut down.
Speaker 5: But this is you know, Chipoti is trying to blame
Speaker 5: the macro but you know, this is largely self inflicted
Speaker 5: in our view. I mean, if you look at the
Speaker 5: other earnings that have been released, Shake Shack this morning
Speaker 5: had a great print. Restaurant brands which owns, you know,
Speaker 5: Burger King, Tim Horton's, Popeyes had a very good print.
Speaker 5: Domino's Chili's are crushing it right now. So you know,
Speaker 5: for them to come out and blame low income consumers.
Speaker 2: Which they have a very low exposure to.
Speaker 5: As well as gen Z, which you know, there's some
Speaker 5: anecdotal stuff out there about how gen Z employment isn't great,
Speaker 5: but you know, the survey data that we see is
Speaker 5: showing that gen Z is spending spending more than other
Speaker 5: age cohorts and expect to spend more next year. So
Speaker 5: it's really, I think, largely self inflicted.
Speaker 6: I love the pushback against the narrative that Chipotle is
Speaker 6: peddling here. Having said that, you're seeing shares of Sweet
Speaker 6: Green and Comma Group decline in tandem and sympathy with Chipotle.
Speaker 6: What does this mean whether it's a macro backdrop story
Speaker 6: that Chipotle is, you know, putting the blame on, or
Speaker 6: a Chipotle specific problem. What does this mean for how
Speaker 6: it prices its food? Up until now, it's been moving
Speaker 6: forward with price increases.
Speaker 5: Yeah, so this is this is one of the things
Speaker 5: that kind of really got me going on this call yesterday,
Speaker 5: and then calls in the past as well.
Speaker 2: So you know, last year.
Speaker 5: I would say about fifteen months ago, a little more
Speaker 5: sixteen months ago, there was it went viral that their
Speaker 5: portion sizes were getting smaller, right, and they made an
Speaker 5: investment to increase the portion sizes, which they've done, right,
Speaker 5: So there was a problem last year.
Speaker 7: Then on a.
Speaker 5: Fall earlier this year, they were talking about how much
Speaker 5: value they have and we think we're still a great value.
Speaker 2: Values not our issue.
Speaker 5: Then they came back on this call and they spoke
Speaker 5: out of both sides of their mouth. They said, we're
Speaker 5: priced twenty to thirty percent below our peers. And at
Speaker 5: the same time they said their survey data was showing
Speaker 5: that some people thought their food was way too expensive.
Speaker 2: So which one is it?
Speaker 3: Right?
Speaker 5: Like, if you don't even know what your problem is,
Speaker 5: how are you supposed to fix it.
Speaker 4: Interesting, So what are some of the competitors doing in
Speaker 4: terms of price increases to I don't know, cover the
Speaker 4: cost of tariffs or as general rising costs of bee
Speaker 4: for what are some of the competitors doing in the industry.
Speaker 5: I think the biggest problem here is that they don't
Speaker 5: have any everyday value on their menu. And I understand
Speaker 5: their reluctance to go there, but I mean customers want
Speaker 5: to see it. And I think Shakeshack today, which has
Speaker 5: been one of our favorite names this year, talked about
Speaker 5: how they they have this new one three five dollars offer, right,
Speaker 5: so one dollar drinks, three dollars, fries five dollars, shakes. Right,
Speaker 5: It's not like a crazy discount, and it's it's items
Speaker 5: that are typically pretty good margin, right.
Speaker 2: But they talked about how.
Speaker 7: They switched the focus to that and value and it
Speaker 7: boosted traffic four hundred basis points and this week over
Speaker 7: the week prior. So customers right now do want value
Speaker 7: and Chapotle doesn't really have it on its menu.
Speaker 2: All right, God's you know, lips in your ears or
Speaker 2: whatever that thing is.
Speaker 6: And we have the anecdotal evidence that you just provided
Speaker 6: my Anecdotal evidence is when they started giving you more
Speaker 6: stuff in my taco I didn't need three.
Speaker 2: I only order two now because they overflow it. They
Speaker 2: don't like that.
Speaker 4: Michael Halen, Senior restaurant analyst Bloomberg Intelligence, pulling no punches
Speaker 4: on the folks that told he had the alternate take exactly,
Speaker 4: and he often has that take. Any often is contentious
Speaker 4: on earnings conference calls. I've heard this lot of self
Speaker 4: back in the day. Still listen in on some of those.
Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
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Speaker 4: Comcast reported some earnings here, stocks down three percent, down
Speaker 4: twenty six percent year to date.
Speaker 2: Tough tough sledding for these cable companies. Here.
Speaker 4: Let's go to Keitha rong Anathan. She covers all the
Speaker 4: media stuff for Bloomberg Intelligence. Etha, what's the takeaway from
Speaker 4: the Comcast earnings here? Another tough quarter.
Speaker 3: Yes, Paul, another tough quarter. For Comcasts, and we suspect
Speaker 3: it's going to beat that a way for a while.
Speaker 3: For these cable companies, they've been having a lot of
Speaker 3: competition in their broadband business, remember broadband. Comcast is the
Speaker 3: largest broadband provider in the United States, has over thirty
Speaker 3: million subscribers, but they've been losing customers at an increasing pace.
Speaker 3: Even though this quarter actually subscriber losses came in slightly
Speaker 3: better than what we had feared. Comcast is doing everything
Speaker 3: that they can do to get subscribers to stay on
Speaker 3: their platforms, just given the very, very intense competition from
Speaker 3: the telcos. That's working, but you know, it's come at
Speaker 3: a cost. So they you know, we're seeing quite a
Speaker 3: bit of pressure on the RPU side as well, as
Speaker 3: we saw a decline in their ebidof almost four percent,
Speaker 3: and they warned that we're going to continue to see
Speaker 3: ABADA declines for many more quarters to come.
Speaker 6: So this idea of using price lock guarantees and bundled
Speaker 6: plans to slow down to stem the bleeding of folks
Speaker 6: who are cutting the cord. Now that it started this,
Speaker 6: it has to kind of stay with it, right. You
Speaker 6: can't stop that promotional activity.
Speaker 3: You cannot Scarlet. You're right, and you know these price
Speaker 3: locks are five year price logs. They're giving away more
Speaker 3: the lines for free. I mean, that's definitely having some impact.
Speaker 3: So we did see, you know, the subscriber numbers come
Speaker 3: out much better. In fact, the mobile the number of
Speaker 3: wireless customers that they added was a record, the highest
Speaker 3: ever that they've had. But obviously it is going to
Speaker 3: continue to put a lot of pressure on the top
Speaker 3: line as well as on the bottom line, and there's
Speaker 3: no way they can stop it. They have to keep
Speaker 3: going with it, which means that the Ibadah pressure is
Speaker 3: going to be sustained.
Speaker 6: So that's a reminder to me, Paul, that I have
Speaker 6: to call Verizon and some of the other providers to
Speaker 6: argue down whatever package I have right now.
Speaker 2: Absolutely it works, Githa.
Speaker 4: The fundamentals are one thing, but probably the big big
Speaker 4: thing overhanging this story right now the Comcast is what
Speaker 4: are they going to do as it relates to the
Speaker 4: M and A front and Warner Brothers Discovery. Here, where's
Speaker 4: the narrative there right now?
Speaker 3: They need to do something, Paul. And I mean you
Speaker 3: just said this stock is down twenty six percent year
Speaker 3: to date, it's down over thirty percent for the past year.
Speaker 3: And they have some great media assets. They have NBC Universal,
Speaker 3: but it's just not enough. They're getting punished both sides.
Speaker 3: So they own cable broadband assets, which makes up about
Speaker 3: eighty eighty five percent of EBITDA. Again, cable is under
Speaker 3: tremendous pressure because of this telecom competition. You know, those
Speaker 3: multiples are at around five to six x media, which
Speaker 3: is you know, the NBC assets brings in about fifteen
Speaker 3: percent of their EBITDA. They have some great assets, but
Speaker 3: again they have this funny thing going on with the
Speaker 3: conglomerate discounts. So they're not able to catch a break
Speaker 3: either on the media side or on the cable side.
Speaker 3: They need to do something transformative. I think Warner Brothers
Speaker 3: is definitely the solution. The question is can they afford
Speaker 3: to get into a bidding war with paramount And I'm
Speaker 3: not sure if they can afford it.
Speaker 4: All Right, Keith is my favorite Wall Street cable analys
Speaker 4: out there. My number two is Craig Moffitt of Moffitt Nathan.
Speaker 4: So he's out with a note today saying and he's
Speaker 4: covered the stock forever and one of the big bear
Speaker 4: cases for Comcast is that they are a serial acquirer.
Speaker 4: Every five years, the feel they need to go out
Speaker 4: and buy something big. And the problem is Iskeetha well
Speaker 4: knows being a buyer of media assets is generally not
Speaker 4: a good allocation of capital. It's not good here, Sokeitha,
Speaker 4: there's a a concern here that, you know, maybe it's
Speaker 4: just not going to be worth it. If they go
Speaker 4: out and do another big deal, they're going to lever
Speaker 4: up their balance sheet. They can have years and years
Speaker 4: of integration risk and that could be a big long
Speaker 4: term drag on the stock.
Speaker 2: How do you counter that.
Speaker 3: Or Yeah, that's always kind of been the you know,
Speaker 3: that's always pooked investors. Paul. I mean, you know very
Speaker 3: well what they did a few years ago. They overpaid
Speaker 3: for Sky a fifteen x multiple and they should have
Speaker 3: probably paid like six or seven. So they do have
Speaker 3: this kind of propensity to go out pay the big dollars.
Speaker 3: Warner Brothers, I think there was a little bit of
Speaker 3: a different story for them. They have they can extract
Speaker 3: tremendous synergies. I think from the asset. There's a really
Speaker 3: good fit in terms of IP. We know that they
Speaker 3: already license, you know, Harry Potter and a lot of
Speaker 3: those other you know, Warner Brothers ip into their parks.
Speaker 3: So there is a good fit. You know, there's a
Speaker 3: lot that can be done on this sheet side. Again,
Speaker 3: you look at Peacock, very heavy on sports, HBO, very
Speaker 3: heavy on scripted originals. I think it's really a nice
Speaker 3: complementary portfolio. I think this time it could be a
Speaker 3: little bit different. But again who knows.
Speaker 6: Yeah, some big questions and of course they need to
Speaker 6: figure out their strategy on this. You mentioned Peacock. What
Speaker 6: is the latest with Peacock? Because subscriber growth when we
Speaker 6: cared about it, and you know that was a while ago,
Speaker 6: because now we care about profitability rose fourteen percent that
Speaker 6: Miss danalyssesstimates even after raising prices, that Missanael assessments. And
Speaker 6: it's not making money, is it.
Speaker 3: It's not. It's not scartant, and it's not going to
Speaker 3: for you know, for the foreseeable future. So they are
Speaker 3: definitely a subscale service. They have just about you know,
Speaker 3: forty two forty three million subscribers. Again, you're comparing that
Speaker 3: to Netflix, which has about three hundred and ten, three
Speaker 3: hundred and fifteen million, So just a huge catch up
Speaker 3: game that that peacock has to play. They do have
Speaker 3: some really good programming though, you know, especially when you
Speaker 3: look at sports. They just recently acquired the rights to NBA,
Speaker 3: so we do have that now you know they have
Speaker 3: the NFL, so there is quite a bit of good
Speaker 3: sports property. I just don't know what they can do
Speaker 3: to necessarily up those subscriber numbers, which is why they
Speaker 3: absolutely need something transformative from an M and a.
Speaker 6: Perspective, Gita, before we let you go, what about the
Speaker 6: theme park business? Universal obviously a huge attraction in California
Speaker 6: and in Orlando. The revenue rose nineteen percent. Is that
Speaker 6: in good shape? And what might that tell us about
Speaker 6: what Disney tells us.
Speaker 3: It's in very good shape, and which is why we're
Speaker 3: you know, we have more and more confidence in the
Speaker 3: theme park business. Comcast saw this coming. They knew that
Speaker 3: this was, you know, the next big thing, you know,
Speaker 3: this whole thing with the experience economy, and they're riding
Speaker 3: that wave in a big way. We saw them open
Speaker 3: Epic Universe earlier this year. They've opened some other new
Speaker 3: attractions in Texas in Las Vegas, so there and there's
Speaker 3: a big park that's coming near London in about four
Speaker 3: or five years. So they're making big investments. It's paying
Speaker 3: off and you know, just like a Comcast, we're pretty
Speaker 3: bullish on on the Disney business as well.
Speaker 2: Yeah, theme park business. Who would have thunk it.
Speaker 4: Githa Ronganatha, and thank you so much for joining us.
Speaker 4: Githa is the media analyst at Bloomberg Intelligence.
Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
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Speaker 6: The frenzied m and A taking place in the pharmaceutical sector.
Speaker 6: Let's dig into that right now, because Novo Nordisk, who
Speaker 6: is kind of the OG when it comes to weight
Speaker 6: loss drugs, is now making an aggressive, unsolicited bid for Metserah,
Speaker 6: which had already agreed to a deal with Pfizer. Let's
Speaker 6: bring in Robert Langworth, Bloomberg News healthcare reporter on the
Speaker 6: latest here, and I mean, this is kind of the
Speaker 6: highest level of corporate drama given that Novo Nordisk is
Speaker 6: moving very aggressively. Just step back for a moment here,
Speaker 6: who is scrambling more?
Speaker 2: Right now? Who is more?
Speaker 6: You know, I don't want to say desperate, but you know,
Speaker 6: kind of desperate here to do something.
Speaker 8: Yeah, right now, Eli Lilly is dominant in the weight
Speaker 8: loss area. It just reported great sales. So it's weight
Speaker 8: loss and diabetes drugs. And Nova was you know, was
Speaker 8: the first move originally, but it's been falling behind. It
Speaker 8: is a new ceo. You know, some of their drugs
Speaker 8: had less than stellar trial results. It's really trying to
Speaker 8: get back into the area. And Piser too. Pfizer has
Speaker 8: been trying to doesn't have anything weight loss. I've been
Speaker 8: trying to break in, had some trials of pills, it
Speaker 8: didn't work out so well. And this was like and
Speaker 8: so now this was their deal to try to like
Speaker 8: get back in with a new thing that was injectable
Speaker 8: but had less nausea and vomiting. But now you know,
Speaker 8: Nova's coming in over the top suddenly with this super aggressive,
Speaker 8: hyper aggressive deal, you know, and that Pfizer is calling
Speaker 8: reckless and illusory, and you know it's gonna be very dramatic.
Speaker 8: The next few days to see what happens.
Speaker 2: This is cool.
Speaker 4: I mean, it's just like barbarians at the Gate kind
Speaker 4: of thing. People fighting over it. So tell us about Metzerah.
Speaker 4: I mean, what have they got that these people are Yeah.
Speaker 8: So they have a new you know, the existing drugs
Speaker 8: they target things like GLP one, which you've heard of,
Speaker 8: and also zep bound Eli's drug also targets another related
Speaker 8: hormone called jip uh vip and uh met Sarah is
Speaker 8: something targeting something called amulan. It's kind of another related
Speaker 8: hormone and it's had some early trial results were good
Speaker 8: and hope is that this one, it's also an injectable,
Speaker 8: will have less of kind of the nausea involving it's
Speaker 8: a very kind of common side effect of the existing drugs.
Speaker 8: And that's so that's gotten people excited. It's only earlier
Speaker 8: stage results.
Speaker 3: Uh.
Speaker 8: But you know, if Pfizer really doesn't have anything, the
Speaker 8: BC do they really want something? And so this was
Speaker 8: something that by all accounts, they are very excited about.
Speaker 8: And now they're going to be under great pressure to
Speaker 8: you know, either try to come in over the top
Speaker 8: of something or maybe like work their angles in the
Speaker 8: Trump administration to try to see if, like NOV, some
Speaker 8: could be blocked.
Speaker 6: But it's going to be super dramatic, right because regulators
Speaker 6: would need to approve whatever happens. But before we even
Speaker 6: get there, met Sarah has to decide which offer it's
Speaker 6: going to accept. Did it or accept Pfizer's bid, which
Speaker 6: I believe max is out at seventy dollars a share.
Speaker 8: Yees, so Pfizer, you know that's a Pfizer deal. I
Speaker 8: think this was last month, and uh, you know, now
Speaker 8: there's Nova's coming over the top of this bid, and
Speaker 8: you know, Metsaria has already said like, hey, this is
Speaker 8: this new one is superior, and apparently Pfizer has four days,
Speaker 8: you know, to come up with a better offer. Now,
Speaker 8: you know, we'll have to see what's going to happen.
Speaker 8: Could there be legal action, Fizer could pursue legal action.
Speaker 8: They're already selling grounds well, they're already saying this is reckless,
Speaker 8: an illusory. There's some very complicated conditions to the NOVE offer,
Speaker 8: and that someone at Sarah's shareholders will get the money
Speaker 8: before the anti trust approval happens, as I understand it.
Speaker 8: So it's a very kind of complicated structure that you know,
Speaker 8: Pfiser is claiming that's engineered this way to try to
Speaker 8: avoid anti trust scrutiny, and you know, saying that this
Speaker 8: isn't this isn't right. But you know, Metsiah meanwhile saying, hey,
Speaker 8: we've got a superior deal. What are you going to
Speaker 8: do for us?
Speaker 3: Pfizer.
Speaker 4: So Pfizer is a US company, right, Novo Nordisk is
Speaker 4: a Danish company.
Speaker 2: Does that be playing to it at all?
Speaker 8: I mean, well, you know that's you know, some of
Speaker 8: the people I was talking to said, you know, Pfizer
Speaker 8: is one of the companies, you know, come up with
Speaker 8: the big, big companies on a handful of big companies
Speaker 8: have made kind of pricing deals with the Trumpet administration
Speaker 8: already to avoid tariffs. Right, so it seemed, you know,
Speaker 8: seems to have good relations there. So you know it,
Speaker 8: could you know, could it work its contacts in the
Speaker 8: Trump administration, you know, to get them to you know,
Speaker 8: give indications that this deal is going to have a
Speaker 8: hard time going through. And I trust grounds if Novo
Speaker 8: does it, because Nova's already took the number two weight
Speaker 8: loss company right now.
Speaker 6: Uh Noah is being led by a new CEO he's
Speaker 6: a lifer from the company, but he's trying to make
Speaker 6: some big changes, put his own stamp on the company,
Speaker 6: and he's moving very aggressively. What has he been doing lately?
Speaker 6: What is his mandate? What is his philosophy here?
Speaker 8: Yeah, I don't know a lot about him, you know,
Speaker 8: he's really new. But clearly what I can say, uh,
Speaker 8: is that you know, this is a sign that they're
Speaker 8: not confident, you know, and what they have internally, Okay,
Speaker 8: they have to come in this hyper aggressive deal. This
Speaker 8: is a sign that they kind of it's kind of
Speaker 8: acknowledgement they're falling behind you, like Lily, and they need
Speaker 8: to come up with the new and better drugs and
Speaker 8: have to get that externally. Mean drug companies do that
Speaker 8: when they don't have the internal goods.
Speaker 4: So Lily, just to wrap it up here, Lily had
Speaker 4: some pretty darn good numbers, right.
Speaker 2: Yeah.
Speaker 8: So they have two drugs to zepp It's tied. It's
Speaker 8: the same drug. The diabetes version is called Munjaro and
Speaker 8: the obesity is one is called zep Bound. Together this
Speaker 8: quarter they eight over ten billion in sales. It's crazy.
Speaker 8: This is going to be like together, this is going
Speaker 8: to be the best selling drug in the world next year.
Speaker 8: Both ones are up over one hundred percent, and that's
Speaker 8: with you know, with increasing pricing discounts. It still is
Speaker 8: up over one hundred percent. So they are becoming just
Speaker 8: totally dominant.
Speaker 6: They keep talking about this being one hundred billion dollars
Speaker 6: a year industry, right.
Speaker 8: Yeah, there's like huge potential numbers out there. You know,
Speaker 8: we'll see whether they achieve that. Oh and Lily is
Speaker 8: also ahead and coming on with the weight loss pill.
Speaker 2: Game game changer.
Speaker 4: Yeah, you know it's gonna be another one, a pill
Speaker 4: that grows hair, are right?
Speaker 2: You figure that out, Lily, get to work on that one.
Speaker 6: Robert Langrett, the Bloomberg News healthcare reporter, on the drama
Speaker 6: that we're seeing in the healthcare series The Pharmaceutical Space,
Speaker 6: as well as Eli Lilly's earnings.
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