Pfizer (+4.7%) forecast 2025 revenue and earnings in line with market expectations, despite an expected $1 billion hit from the redesign of federal drug benefits. The guidance comes less than two months after the New York pharmaceutical giant posted positive third-quarter results and raised its outlook for the current year, punching back at activist investor Starboard Value, which has said poor investments in research and dealmaking helped destroy billions of dollars in market value. Last week, the company raised its quarterly dividend in a move Chief Executive Albert Bourla said underscored the company’s strong financial performance, execution and commitment to returning capital to shareholders. Pfizer generated record profits after it introduced its Covid-19 vaccine, which powered the company’s stock to a record high in 2021. But since then, shares have lost about half their value, weighed down by Pfizer’s inability to shake off a post-pandemic slump. Shares rose 3% to $26 in premarket trading. The company on Tuesday said it expects 2025 revenue of $61 billion to $64 billion, with a similar performance from Covid-19 products to that seen in 2024. Analysts polled by FactSet forecast full-year 2025 revenue of $63.22 billion. Pfizer said the forecast takes into account an unfavorable impact to revenue of about $1 billion from changes to the Inflation Reduction Act Medicare Part D benefit redesign. Stripping out one-time items, the company anticipates 2025 earnings in the range of $2.80 to $3 a share, reflecting operational growth of 10% to 18% from the prior year. Wall Street expects adjusted earnings of $2.86. For 2024, Pfizer stuck by guidance for revenue of $61 billion to $64 billion and adjusted earnings of $2.75 to $2.95 a share.

The Swiss stock market ended trading slightly firmer on Tuesday. The SMI gained 0.3 per cent to 11,741 points. Among the 20 SMI stocks, there were ten losers and ten winners. A total of 19.28 (previously: 20.81) million shares were traded. The market received support from the heavyweights Nestlé (+1%), Novartis (+0.8%) and Roche (+0.6%). Among the individual stocks, Swiss Re again saw some profit-taking after the shares had reacted strongly to the reinsurer's higher earnings targets on Friday. The shares dropped by 0.7 per cent on Tuesday. Logitech outperformed the market, advancing by 1.2 per cent. According to observers, technology stocks generally benefited from weaker economic data, which had fuelled hopes of further interest rate cuts. Richemont (+1.4%) was also in demand. The analysts at Stifel reiterated their buy recommendation for the share. In the second tier, Sandoz slipped 0.7 per cent. The generics manufacturer had concluded an old antitrust court case in the USA with a settlement. The company is paying USD 275 million, which is already included in the financial results for the year and has no impact on the forecasts for 2024 and the medium-term outlook.

Europe
Europe's main stock indices lost ground on Tuesday, affected by Wall Street's caution on the eve of the Federal Reserve's (Fed) monetary policy decision. The Stoxx Europe 600 index lost 0.4% to 513.7 points. The DAX 40 in Frankfurt shed 0.3%, while the FTSE 100 in London gave up 0.8%. Against the trend of the other indices, the CAC 40 and SBF 120 both picked up 0.1%. SANOFI (+3.3%): on Tuesday, the pharmaceutical company announced positive phase 2 results for duvakitug, its treatment for ulcerative colitis and Crohn's disease, developed in partnership with the Israeli laboratory Teva. Teva's depositary receipt increased by 22.9% on Tuesday afternoon on Wall Street. VIVENDI (-3.9%): in the wake of the demerger of the former entertainment and media group, Deutsche Bank lowered its recommendation on the share from ‘buy’ to ‘hold’. Euronext also published an announcement on Tuesday evening that Vivendi had been removed from the CAC 40 index and replaced by Bureau Veritas.

United States
The Dow Jones Industrial Average notched its longest losing streak in nearly 47 years on Tuesday. The blue-chip index fell 0.6%, or 268 points, to lead major U.S. indexes lower. The last time the Dow declined nine days in a row was in February 1978. Meanwhile, the S&P 500 shed 0.4% and the tech-heavy Nasdaq Composite dropped 0.3%. The declines were most likely tied to traders reconsidering the path of borrowing costs ahead of the Federal Reserve’s interest-rate decision on Wednesday. Investors expect another quarter-point interest-rate cut. The bigger question is whether the resilience of the economy will lead the Fed to be more cautious about future easing. Data out Tuesday showed retail sales rose by a brisker-than-forecast 0.7% in November. On the flip side, industrial production fell again last month, defying expectations for a rise. The prospect of rates staying higher for longer has begun to weigh on parts of the stock market, particularly shares of smaller companies and those in cyclical industries, such as automakers, entertainment companies and some retailers. The Russell 2000 index of smaller companies ended Tuesday 1.2% lower. Shares of the parent companies of pharmacy benefit managers also took a hit Tuesday after President-elect Donald Trump and others indicated that the new administration planned to crack down on the business. UnitedHealth shares lost 2.6% to lead the Dow lower. Bitcoin briefly traded above $108,000 for the first time, surpassing Monday’s previous all-time high of $107,812. It ended at $106,734.51, a record close. In the pharmaceuticals sector, Teva Pharmaceuticals jumped 26.5 per cent after a drug developed jointly with France's Sanofi for the treatment of chronic inflammatory bowel disease showed encouraging results in a trial. The drug is now to be tested further. Walmart (+0.6%) was slightly supported by news that the retail giant has entered into a partnership with Chinese delivery service Meituan. Red Cat Holdings fell by 7.5 per cent after the drone manufacturer reported a loss for the second quarter. Solaredge jumped 16.6 per cent following an upgrade to ‘buy’ from ‘sell’ by Goldman Sachs. Tesla gained a further 3.6 per cent to USD 479.86 after the previous day's strong performance and a record closing high. Monday's rise was triggered by a price target increase by Wedbush to USD 515 from USD 400.

Asia
In Asia, major indexes broadly closed with gains in the middle of the week. The Shanghai Composite rose by 0.7 per cent and the Hang Seng Index gained 0.6 per cent. The Nikkei-225 in Tokyo fell by 0.4 per cent. In the automotive sector in Tokyo, shares in Nissan Motor and Mitsubishi Motors are booming, rising 23.7 per cent and 19.7 per cent respectively. Honda shares, on the other hand, fell by 3.3 per cent. Honda and Nissan have said they are considering a merger after Nissan's results deteriorated and both carmakers are struggling in China. Local media are further reporting that Mitsubishi Motors could also be brought on board.

Bonds
The 10-year Treasury note yield was virtually unchanged at 4.40% while the 2-year Treasury note yield gave up one basis point to 4.25%. The U.S. Treasury yield curve is expected to steepen as the Federal Reserve rate cuts anchor short-term yields, while intermediate- and long-term yields are set to rise.

Analysis
Citi upgrades Swiss Re target to CHF 153 (146.20) - Buy
Vontobel lowers Zehnder target to CHF 62 (68) - Buy
Target price Sika: Citi cuts target to CHF 250 (275) - Neutral

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