Intel Corp. (INTC) shares fell dramatically on July 24 after announcing that it would see significant delays until 2022 for its latest cutting-edge nanometer (nm) chip.
The announcement marked one of the worst stock drops for the chipmaker since March, while conversely bringing a boost to Intel's competitor Advanced Micro Devices (AMD).
At market close on Friday, Intel's shares were down 16% at $50.59 per share, while AMD's stock was up 17% at $69.40.
Intel CEO Bob Swan said on an earnings call on July 23, "We have identified a defect mode in our 7-nanometer process that resulted in yield degradation.” He added, "We've root-caused the issue and believe there are no fundamental roadblocks, but we have also invested in contingency plans to hedge against further schedule uncertainty."
The contingency plans included "somebody else's foundry," according to Swan. The use of a third-party to assist Intel in manufacturing the chip has raised questions about Intel’s competency to produce cutting-edge technology amidst competition from AMD.
The delayed chips became the prominent news item even as the chipmaker posted positive Q2 earnings announcements. Intel reported on July 23 a net income of $5.1 billion or $1.19 per share, compared to $4.18 billion, or 92 cents per share for the same period last year. Revenue came in at $19.7 billion, up 20% year-over-year, and beating consensus estimates of $18.5 billion.
Bernstein analyst Stacy Rasgon said on July 23 that of the 45 Intel earnings calls he's listened in-on during his career, their chip delay news made it the worst call he's ever heard. The analyst noted, "From here, we see things growing increasingly painful as 7-nm delays are likely to overshadow anything good they can put forth." He added, "While magnifying any negative events, all while they fight an existential conflict with themselves as they attempt to figure a way out of the hole they have dug."
The analyst downgraded the stock to a Sell rating and set his price target to $45, which implies 11% downside potential.
Overall, 8 analysts assign Buy ratings, 15 Hold ratings, and 9 Sell ratings, giving INTC a Hold Street consensus. The average analyst price target stands at $57.52, suggesting 13.70% upside potential, with shares down 15% year-to-date. (See Intel's stock analysis on TipRanks).
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Tesla Inc. (TSLA) is pursuing litigation against the electric startup Rivian for unspecified damages due to alleged trade theft.
The electric car giant highlights what it calls a “disturbing pattern” of employees departing Tesla for Rivian and taking with them confidential information and trade secrets.
Rivian is considered one of the world’s most heavily financed startups receiving backing over the last year and a half for more than $5 billion. The company is expected to debut an electric pickup car and an SUV in 2021 before the availability of Tesla’s Cybertruck.
Since 2018, Rivian has hired nearly 2,400 employees from across the automotive and flight industries. According to the Tesla suit filed last week, 178 employees were former Tesla workers, with 70 people directly transferring to Rivian. Tesla highlighted four of those employees as defendants and identified more people as possibly stealing or bringing proprietary information to Rivian.
Tesla says it is seeking unspecified punitive damages for alleged “despicable, wanton, oppressive, willful, malicious, and duplicitous” conduct.
A spokesperson for Rivian said on July 23, “We admire Tesla for its leadership in resetting expectations of what an electric car can be. Upon joining Rivian, we require all employees to confirm that they have not, and will not, introduce former employers’ intellectual property into Rivian systems. This suit’s allegations are baseless and run counter to Rivian’s culture, ethos, and corporate policies.”
Last year, Tesla filed a suit against the recent Amazon-acquired Zoox for stealing confidential documents. Zoox reportedly settled the lawsuit for an undisclosed sum in April after admitting that four of its employees stole sensitive information from their previous employer, Tesla.
Oppenheimer analyst Colin Rusch noted on July 23, “We believe Tesla continues to extend its product and process technology advantages as it disrupts the transportation industry by being better, faster and cheaper than competitors.” He reiterated a Buy rating on Tesla’s stock and more than doubled his price target from $968 to $2209, which implies 56% upside potential.
Tesla’s stock is up 235% year-to-date with a Hold analyst consensus that breaks down into 4 Buy ratings versus 14 Hold ratings and 10 Sell ratings. The $1334.48 average price target suggests 6% downside potential for the shares in the coming 12 months. (See Tesla’s stock analysis on TipRanks).
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TCR2 Therapeutics Inc. (TCRR) has announced positive interim data from the first five patients treated in the Phase 1 portion of the TC-210 Phase 1/2 clinical trial for mesothelin-expressing solid tumors.
All five patients showed tumor regression including two RECIST unconfirmed partial responses (one of which remains subject to independent central review) and two patients with stable disease through six months.
Translational data further demonstrated TRuC-T cell expansion and activation.
A manageable toxicity profile was observed with only one patient exhibiting TC-210-related non-hematologic grade >2 toxicity and no evidence of neurotoxicity or on-target, off-tumor toxicity.
“We are delighted that our very first dose of TC-210 induced consistent tumor regression and clinical benefit in heavily pre-treated cancer patients,” cheered CEO Garry Menzel.
“There are very few options for patients with solid tumors and those expressing mesothelin represent a significant frontier of unmet medical need. While these are early data requiring further study, we are encouraged by the potential of our TRuC-T cells as we continue to enroll and treat patients with the goal of quickly finding a recommended Phase 2 dose for TC-210” he added.
The primary objectives of the Phase 1 portion of the study are to define the safety profile of TC-210 in patients whose tumors overexpress mesothelin and to determine the recommended Phase 2 dose (RP2D). Secondary objectives include overall response rate (ORR) and disease control rate (DCR). Exploratory objectives include the assessment of expansion, tumor infiltration, and persistence of TC-210 T cells.
In the Phase 2 portion of the clinical trial, approximately 50 patients are planned to receive TC-210 at the RP2D in four groups according to their cancer diagnosis: NSCLC, ovarian cancer, malignant pleural/peritoneal mesothelioma and cholangiocarcinoma.
Each group will include ten patients, except the NSCLC group which will include 20 patients with eight patients to receive TC-210 as single agent and 12 patients to receive TC-210 in combination with a programmed cell death 1 (PD-1) blocking antibody.
Mesothelin is a cell-surface glycoprotein highly expressed in a wide range of solid tumors- and overexpression of mesothelin is associated with poorer prognosis in some cancers due to its active role in both malignant transformation and tumor aggressiveness.
Of the wide range of solid tumors expressing mesothelin, non-small cell lung cancer, ovarian cancer, mesothelioma and cholangiocarcinoma represent a significant patient population up to 80,000 in the United States alone.
Both HC Wainwright's Robert Burns and BMO Capital's Do Kim have recently issued buy ratings on the stock. Their average price target of $27 indicates that shares can double from current levels. Shares are down 9% year-to-date. (See TCRR stock analysis on TipRanks).
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Kratos Defense (KTOS) has announced that Kratos Unmanned Systems Division has been awarded a five-year indefinite delivery, indefinite quantity (IDIQ) contract of up to $400M for the development, integration, and prototype air vehicle delivery for the US Air Force’s Skyborg program.
Shares in the unmanned system specialist popped 9% on the news, and spiked a further 3% in Friday’s after-hours trading.
Work under the program award will be performed at secure Kratos manufacturing and production facilities located in Oklahoma and California over the next 60 months, Kratos says.
“Skyborg is a critical U.S. Air Force Vanguard program that will ensure the United States maintains our technological dominance in a period of significant nation-state competition and our readiness for the future of aircraft-based warfare” commented Steve Fendley, President of Kratos Unmanned Systems Division.
He added: “Kratos has been and remains committed to advancing affordable unmanned technologies, and we are proud to be a Skyborg prime contractor, helping enable the DoD to significantly increase mass and effect at dramatically reduced cost compared to traditional aircraft programs.”
Indeed according to the Department of Defense’s statement, Skyborg is an autonomous attritable aircraft capable of achieving a diverse set of missions to generate massed combat power; delivering a future Air Force which can deter, blunt and defeat peer adversaries.
Analysts have a unanimously bullish take on KTOS stock with five recent back-to-back buy ratings. The Strong Buy analyst consensus comes with a $23.60 average analyst price target for upside potential of 22%. Shares are up 7% year-to-date.
Following the news B Riley FBR analyst Mike Crawford reiterated his buy rating on the stock with a $24 price target (24% upside potential).
“We believe Skyborg is a landmark development for KTOS. To the extent the DoD releases the first task order on Skyborg as expected in coming weeks, we don’t believe any other ID/IQ winner would be poised to compete against KTOS given its flight-proven Valkyrie and hot production line” he commented. (See Kratos stock analysis on TipRanks).
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