Big Pharma Breakout… And A Billionaire Boycott On Netflix 10/1/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square this is fast money. Here's what's on tap tonight. Strong prognosis. Pharma surging for a second straight day following the president's drug pricing deal. Is this the kickstart the stalled sector has needed? We'll debate that. Plus, a binging backlash. Why Elon Musk is joining the call to cancel Netflix. The impact on the stock and the story behind the cancel culture drama. And later, Intel's latest lifeline giving shares a lift. How Nike's results are leaving other shoemakers in the dust and why one firm is ready to hang up on AT &T.

0:35I'm Melissa Lee. Come to you live from the studio. Be at the Nasdaq on the desk tonight. Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami. Well, the S &P 500 closing at an all-time high once again, crossing above the 6 ,700 level for the first time ever. The Nasdaq and Dow also closing in on positive territory today. More on the markets coming up. But first, we've got to get to day two of the big pharma breakout. Biogen surging more than 10 % today. Eli Lilly, Merck, Moderna, Pfizer also building on yesterday's big gains. These bullish moves coming after President Trump announced a drug pricing deal with Pfizer yesterday, and there's speculation that there's more to come.

1:09The S &P Healthcare ETF has been underperforming the broader market this year, but could new deals help pump life into a trade that's been barely showing a pulse? Karen, you actually made a trade based on yesterday's game. Yes, the PPH, which was the Vanax Big Cap Pharma. You know, it's been interesting. This space has been under pressure for so long. And, you know, the multiples, while they were cheap up here, they just kept getting cheaper and cheaper and cheaper. We know Tim and my Pfizer. My Pfizer. My Pfizer now. We are all Pfizer's now. But I think, you know, it's an interesting space. You do have this catalyst in that, yes, there's a deal that it sounds like it would be bad for Pfizer, but the idea of certainty is so much more important.

1:53Now, we don't have 100 % certainty, but we do have the idea that maybe, you know, the target is off the back of this industry. And this is an industry that is not correlated to AI in the way that some other things are. Yeah, we talk about drug discovery and that, but that is really attractive in terms of multiples and has balance sheets that are in great shape for the most part. So there's a lot of things to like here and to just steal a line from my co-panelist, panelist, I guess. You know what? You can use my name unless you've forgotten it. Timote. Timote, which you make the most money when things go from terrible to just bad.

2:31And we've seen a move away from terrible. Yeah. Well, I think the positioning in the health care sector is so underweight. And so that alone gives a lot of sustainability. We'll get into the fundamentals here. But I know when I saw this news, it just it felt like a gift from the White House. This felt like to me this was the White House saying, especially understanding the power of the pharma industry behind the scenes, the lobbying power, the ability to really make change and companies that I think are in a very good position and in many ways are very much on board with a lot of the policy that this administration is bringing forth.

3:01I feel like this was a gift because Medicare as a percentage of revenues for the sector is so low that if you start to play most favored nation with the government and basically say, we'll do whatever you want in terms of negotiating on Medicare, that's a win. When your Pfizer, who's said 70 billion will spend when they were already, if you look at their R &D and CapEx spend over the next four or five years, this is easy for them. This is something that they were going to do anyway. Or, you know, they put a little bit more emphasis into certain subsectors. So I think this is a very important couple of days for the sector, because I do think that the headlines that all we do is talk about, And a lot of them are just headlines in terms of also just posturing by HHS and different dynamics.

3:42Hopefully some of it's posturing, but we'll see. I think this was an opportunity for Big Pharma to continue to move. And you brought up the valuations and where a lot of these companies are relative to multi-year, at least EPS, relative value to themselves. That's what's really interesting about this. And we can talk more about Pfizer. I mean, that deal last week with MetSera on top of this, that's your turning point in the stock. I'm not sure if this was that bottom for the entire sector, but I think for Pfizer. Well, coincidentally, there was a mid-stage readout of the long-acting GLP-1 drug that was acquired from Metzera, and that happened yesterday also.

4:14So that's another kicker to this, that they're making deals in a good way, in a meaningful way, to improve their pipeline, which has been, regardless of whether or not Washington has them in their crosshairs anymore, Pfizer or any other drug company, the patent cliff is still a major issue that remains. Especially for Merck, without question. We've talked about it. Welcome back, Tim, by the way. Tim Ote was the one. Thank you. Thank you. Grazie. Miragrazi. Miragrazi. It was in Italy. That's all he knows. Anyway, I mean, I think all this does now is unleash the potential for valuation to get to some semblance of normalcy.

4:46Bristol's trading at eight and a half times next year's Merck, probably about the same. You just give them a 12 multiple, which, by the way, is still historically cheap. Bristol-Myers very quickly becomes a$72 stock. And all of a sudden, Merck looks like a$120 stock. And I don't think that that's far-fetched with the crosshairs being off their back now. I mean, the rotation here, you have to wonder whether or not this is going to stick in terms of generalists entering the space. But one argument is that people in general, hedge funds, investors are so overweight technology that they can't be any more overweight technology.

5:20And they've got to go someplace else. Well, you've got to ask, though, is there a secular thing going on here? And it doesn't really appear to be right. So we've had plenty of time to digest some of these different, you know, the drugs, the GLP ones. We saw what happened there and we saw it give it all the way back. and not Lilly for that matter, but, you know, like you say, all right, so Pfizer's getting the game. Is it right? It's the GLP. Maybe it's fine. I just don't see why you chase this stuff. I think it's like a win-win sort of deal, I think, for the industry. I think it is for consumers, you know, patients, that sort of thing.

5:47And it's obviously a win-win for the government because they get some concessions. These are the sorts of things I think make sense from a public-private sort of partnership. We've seen some stuff about some of the investments, and we start asking ourselves, where does that end? You know what I mean? But I would look around and see what are other industries that the government, you know, they could kind of do deals like this. Is there something in the energy to put, you know, who knows? But this seems like something they want to continue. And if you're trying to make the stock market great again, it's actually been pretty great for the last few years.

6:14This is not a bad way to juice different sectors and keep the market going higher, because I know we're going to talk about the markets. But S &B closed at a new all time high today. And there was a time in the not so distant future where we would have said, oh, you know, a government shutdown at this point with the labor market doing what it's doing, that sort of thing would not be a good thing. And the market just doesn't care. I think that you bring up an interesting point in terms of chasing the run. Can you call this two day winning streak, which is the best two day streak for the S &P 500 Pharma Index since October of 2008?

6:45But can you call this a run because it's been so short lived and the valuations are still so low? even with the run, I think Pfizer is still single digit forward PE at this point. With 6.4 percent dividend yield. And back to the relative underperformance that you talked about. And I do believe in looking at relative performance of sectors. And we'll talk when we have our market chat to talk about semis, which are about to make a relative all time high, which I think is important. But health care has underperformed by 28 percent over the last two years. And we're talking about some of the biggest companies, some of the most important companies.

7:17And that's also during a time when Lilly was certainly treated almost like a tech stock. We sometimes refer to kind of the GLP dynamics of what was going on there. So I do think also bring, I mean, Lilly's move today was insane. I mean, of all the stocks we haven't talked about yet, how about Lilly? How about an 8 % move? How about a trade that was very disappointing where a lot of people got in towards the near, I think, the highs on this one? So I think there's a lot to go. So I could make an argument that as a group, we've had valuations lower than they've been in 20 years. And in terms of positioning, this is a case where because of the crowd out from big cap tech, but because of the headwinds from Washington, there is more to go in whatever this run is.

7:58Nova, though, also had a very big move today, six plus. Nova has had a tough couple of days or two weeks, maybe, where it was north of 60 and then traded down to the low 50s. Here it's getting back close to 60 again. But I still like I have more money in Lilly, but I still like Novo. And I definitely wanted to have more exposure to the whole space. You know what season is coming up, Melissa? We're in fall. Well, no, not in the seasons like spring. Hockey season, you know. Oh, sports season. Well, yeah. Do we ever leave hockey season? Well, that's an excellent point. That's a great point by Melissa.

8:35I only mention that because sometimes people spend an inordinate amount of time in the penalty box. Oh, boy. Nice. Nice metaphor. Thank you, Tim. And then they get out of the penalty box and then the whole world sort of changes. These names have been in the penalty box, which is why I'll disagree with Dan slightly and say, I think once they're out now, you get a valuation re-rate. And there's another 25 or 30 percent in all of these names. May I continue with the metaphor? Thank you. One of the worst metaphors in markets is skating to where the puck is going. Boy, isn't that awful? And yet it does feel as if you've been investing in a couple of names over the last.

9:09if you had been investing, say, Novo and Lily over the last few years, you were already ahead of that, and that puck's now passed you by. Bring it back to Pfizer, because this MetSara deal, and I think you referenced the data that we actually now have on Met091, which is essentially the core drive. I mean, if you think about the weight loss comparisons to this, and actually Lily and ZepBound, you know, 14 % to 18 % in terms of weight loss. I mean, the numbers are very similar. And then it just gets into dosage frequency and whatnot. What it means is for a company like Lily, who's been investing aggressively in oncology and other places and now has a GLP trade in there.

9:44I, you know, I'm long. I think you can get longer here. What do the charts say for pharma? Let's bring in the chart master. Why not? Carter Braxton Worth are worth charting. Carter, what do you see? Well, how fun. Finally, a little life out of this very dormant area of the market. But let's get right to it. A couple of charts to look at. The first, of course, and you've all covered this. It's how poor the performance of the S &P 500 pharmaceutical sector has been to the market. In fact, not depicted here, but it is making all-time lows right now. So you're talking about going back to 1989, so the beginning of sector data.

10:21But let's look at the absolute chart of the S &P 500 pharmaceutical sub-industry group. It's in an uptrend, but again, it's been underperforming because it's going up less in the market. But we're at a critical juncture. And you can see just today, we've moved out of this formation to the upside. The next chart is a judgment. It's an up arrow. I think we continue to move higher, this breakout above the downtrend line, in effect, since the peak of past two years. Now, what names? Obviously, this is a group move. And I would do it. And Karen mentioned an excellent ETF. But let's look at three that all have potential by my work.

10:59The first, of course, is Merck. This is the definition of a bearish to bullish reversal buy. 150 days flattening. That's how something bases and bottoms. Next, take a look at Biogen, B-I-I-B. It's the exact same circumstance, the precondition of shocking, unrelenting weakness, and then basing and bottoming for three, four months, and then big strength today, news-related or not. And then finally, Pfizer. Again, same exact circumstance, unbelievable weakness, unrelenting. And again, the strength today is a follow on of strength that's been going on for months. And so today's strength confirms the bottoming out action of the preceding three, five months.

11:41And it just, I would say, is very nascent. More to come. Carter, you know, when we were looking through the health care ETFs, they vary greatly in terms of size, obviously, but also in terms of holdings. And one of the biggest differences between them is awaiting Johnson & Johnson. And so I'm wondering, I don't mean to pick on Johnson & Johnson per se, but what do you think the charts look like for that one, since it does seem to be one of the biggest differences between the health care ETFs out there? That's right. I mean, think of all health care stocks, UnitedHealthcare was the biggest weight.

12:11And then, of course, it had its fall from race. Pfizer has been the biggest. J &J has been the biggest. But right now, J &J is not quite as interesting, I would think, as some of these very beaten up names that have a lot of beta and prospective catch up. So I would go with those that are the most bombed out that are showing signs of early turns. So, Carter, so pick any of those early ones, Pfizer, Merck, whatever. And I see clearly the reversal. Do you have any sense of how far they could run before you would sort of say, all right, time to take money off the table? Sure. And I remember a lot of them are up quite a bit over the past three, five months already.

12:48The question is how far, as you point out, before it's too much. This kind of bullish price volume correlation with very heavy volume is hard to stop day-to-day, week over week. So I would think at least 10%, 15 % higher in these names and thematically for left-for-dead health care names. Carter, thank you. You bet. Carter Braxton Worth of Worth Charting. And I think the question, how long can they go for? How long until we start to refocus on the original problem with this space? And that was the patent cliff. And that will not go away anytime soon. I mean, they all face it. But the value, you know, they got the double whammy of the patent cliff, which is out there.

13:33And then the government putting a bullseye on their back, which has been out there for a while, which seemingly now is gone. So you've eliminated that. The patent thing is still out there. But that's more than priced in, in my opinion, in terms of the valuations. I'll say this. J &J is not trading at the same multiple. It's actually probably two turns more expensive than some of these other pharma names. And if we do a longer term chart, we're right up against levels that we saw a couple of years ago. So this is a critical level, this 185 to 190 level in Johnson & Johnson. And drilling into Johnson & Johnson further, this is a stock that also, though, has been dead money for a long time, other than, you know, this recent move has been very impressive off the lows.

14:10I'm long the name. I have a bunch of clients that are very long the name. And let's be clear. It's it's the litigation overhang from the talc cancer dynamics and lawsuits, but also their attempts to settle it. That, to me, is a catalyst out there in this because they're very far along in this process. It's been going on for years. So you have a really sexy med tech business. You have different parts of their consumer products business where I think they've they've actually streamlined that. They've sold off certain names that haven't done so well. I like J &J. I'm long J &J, and because it doesn't look as attractive on multiple, I get that, but I think there are other drivers here.

14:46All right. Sexy medtech. I mean, it's great having Tim back. I mean, that's probably the first time that term is a sexy medtech. Yeah, but you're Mr. Metaphor tonight when we refer to this. No, no, what does that mean tonight? This is 14 minutes into the show. We're going to stick with pharma and move on. Our next guest says the sector still has room to run and could benefit from the AI trade. Let's bring in the ticks. This is Jack Genesiewicz. He is the lead portfolio manager. Jack, great to have you with us. And I guess the question is, you know, is this enough to get generalists back in? Because it's been a space that has been underinvested in for some time now.

15:19Yeah, you know, I think we've had some overhang, right, in those dark clouds. I think a little bit more clarity going forward. And that probably brings some interest back. You know, as we were talking earlier, you know, the concerns are around the tariff pricing as well as, you know, what else could we be seeing with regard to the pricing policies going forward? And over the last couple of days, we've got some clarity on this front. And so with that clarity, that overhang sort of starts to lift. It's certainly a cheap from a multiple perspective. You're looking at 15 year lows. And with regard to positioning, it's certainly one of the biggest underweights, most unloved sectors of the marketplace.

15:55So we could have room to run here in the near term. When you say that it can be helped by the AI trade, you mean helped by a stall, helped by questions around the AI trade, helped by concerns that the AI trade is slowing down? Well, when you start to get the concerns about, you know, when are we going to see the monetization of the AI trade really work its way into some of these real world markets? I think this is one area you could see that with, you know, a lot of the concerns around all this capex spend. One of the areas we could see benefit would certainly be on the on the drug front and some of the potential research and development we could see with get accelerated on the back of the AI trade.

16:30So that's one of the places maybe we could actually see that impact kick in a lot sooner than maybe some are expecting. Jack, it's Karen. Thanks for being on. I'll ask you the same question I asked Carter, which is how much upside do you think there could be from here? Pretend you never saw any of the charts prior to this. What would you say? I know it's not a monolith, but you could pick a couple of names or the group. Sure. I think the group in general has probably room to run again from a technical perspective. I think there's still upside in here simply because just the lack of ownership, cheap multiples.

17:00You've got those overhangs that are finally lifting, you know, and you could see a pretty good move into the end of the year as maybe we get a little bit of rotation. People are getting a little bit more worried about valuations within the markets. And this is one of the areas that quite frankly doesn't have that concern. So maybe it's a little bit of an area of maybe one foot in the market, but still have that valuation cushion if you still want to have sort of that chicken long into the end of the year. How are you feeling about the markets at this point and how they are valued with the S &P 500 sitting above 6 ,700 for the first time?

17:28Yeah, you know, I still think there's plenty of upside in here because when I've been out meeting with clients the last couple of weeks, you know, it's certainly that wall of worry still persists. And I think in past instances, you've had a little bit more of a flavor that, you know, people are actually invested and looking to get even longer. I think the other way around when I start to hear a lot of the client conversations we're having in here. So, you know, it's certainly far from being extended from positioning that we're looking at. And more questions seem to be arising than sort of the bullish content.

17:57And so from that perspective to us, it still feels like that wall of where he's in play. And as a result, you probably can still see us grind higher until the end of the year. Jack, great to see you. Thanks. Pleasure. Thank you. Jack Janisiewicz. I don't know. Dan, what do you think? Yeah, you know, that seems to be consensus, the grind higher. I read a stat today. I think 80 percent of the time the S &P is up more than 12 percent going to the Q4. It's up maybe four and a half percent or so on average, which, you know, I mean, it's hard to come up with a reason right now. that the stock market sells off meaningfully.

18:29We're okay with tariffs. It seems like, you know, the rate stuff is going to take care of at least the worries about the labor market. Inflation seems okay. We're seeing a reacceleration a little bit in S &P-like profits or at least estimates going into next year. So you see an environment that, okay, it's been working. Why can't it continue to work? I'm hard pressed. I know you guys think of me as the silver lining guy. I'm trying to find a couple reasons why the market can go down more than a few percent right now. And it's hard to come up with that right now. The Fed. Well, it's a price too much in.

18:59OK, well, just think about this. OK, what if we have a protracted, you know, shutdown right here? You know, does the Fed go 50 at the end of the month? Is that the sort of thing that could support the equity markets, at least evaluations here? So that I think that's the push and pull right here. Let's get to the government shutdown. Lawmakers are still stuck in a stalemate. The rhetoric is getting red hot. Emily Wilkins is developing story from Washington. Emily, what's the latest? Hey, Melissa. Well, look, this is all coming as Jobs Day is now in peril. As this government shutdown, it's going to extend beyond Friday morning.

19:31Senators have already left the Capitol for tomorrow's holiday. And S &P Global is now out with a new report saying that an extended delay in the release of key U.S. economic data, like that jobs data, is going to add uncertainty to the Federal Reserve's monetary policy outlook. Now, a vote today on that seven-week stopgap, It failed to get enough Democratic votes as those lawmakers are holding out for some sort of solution on extending those premium tax credits for health insurance. Now, you did see three Democrats cross the aisle to vote with Republicans. But again, that magic number is eight.

20:06And the finger pointing from both sides of Capitol Hill is only increasing. Democrats want to avert this crisis, but Republicans tried to bully us. and it's clear they can't. They don't have the votes. Is this going to be a long shutdown? You know, I don't know. I can't predict what congressional Democrats are going to do, Peter, but I actually don't think it's going to be that long of a shutdown. This is a pure guess from the vice president of the United States, because I think you already saw some evidence that moderate Democrats are cracking a little bit. Vance also said that federal layoffs could begin in the next day or two, And Trump's chief budget officer is already cutting federal funds that would have otherwise gone to states with Democratic senators.

20:55Melissa. Emily, thank you. Emily Wilkins. Typically, the market looks through these things. You've got to wonder if the Fed is going to look through these things. They should. They absolutely should. I mean, if there's anything that's transitory, theoretically, it should be this. And I think we talked about it whilst Tim was here last week. We said, you know. Excuse me? Whilst? Whilst. Four score and 20 years ago, Guy? That's a word. Okay, keep going. I'm sorry. Anyway. I could have said while, but it sounds smarter. For me, it's a big... Anywho, do not try to sort of game this out. It's not going to work.

21:28And I think we were pretty consistent saying, no, there were a number of reasons to sell the market. A government shutdown probably wasn't one of them. Do you remember back in May what Moody said about the government and its credit rating? Sure. In terms of government dysfunction. And you have to wonder if this goes on for a prolonged way, if the ratings agencies start to rethink again this aspect of government dysfunction impeding the creditworthiness of the United States? Yeah, that was, I think, two stones ago. But I'm not sure. Four score and... Stones is a weight. Whatever. Okay, don't correct me on this.

22:04The question is, will the market care whether this Moody's downgrade or not? You know, is it relevant that ADP also reported today a revision for August that now had two successive months of negative job growth, at least in the ADP report, which is typically totally not correlated. But somehow maybe we want to talk about that today because that would be seen as the beginning of recessionary. So anyway, I would agree. I think this is going to be a short term moment in time. Coming up, Intel jumping another 7 percent as a beaten down chipmaker reportedly readies another Foundry customer. all the wheeling and dealing they've been doing and how it's helped turn that stock around.

22:40Plus, a Reddit reduction. Shares getting hit on reports of falling traffic. The AI effect sinking those shares ahead. Don't go anywhere. Fast Money is back in two.