ETF Strategies to Gain From Vaccine Progress, M&A Deals

The optimism surrounding the progress in the coronavirus vaccine development and several corporate M&A deals seems to be supporting the Wall Street rally since a couple of days. Let’s look at these driving factors in detail:h3 M&A Activities on a Roll/h3

ByteDance, TikTok’s Chinese owner, selected Oracle (NYSE:ORCL) to be its technology partner in the United States. Notably, Oracle is expected to assume management control of TikTok’s U.S. user data, per a Reuters article. Moreover, the software giant is negotiating to acquire a stake in TikTok’s U.S. operations, according to the same report.

Gilead Sciences, Inc. (NASDAQ:GILD) announced that it will purchase the oncology company Immunomedics (NASDAQ:IMMU) for a deal consideration of $88 per share in cash or approximately $21 billion. Per the terms of the merger agreement, a wholly-owned subsidiary of Gilead will immediately commence a tender offer to buy all the outstanding shares of Immunomedics’ common stock. The transaction worth a price of $88 per share represents a 108% premium to Immunomedics’ closing price on Sep 11, 2020.

Notably, Nvidia (NASDAQ:NVDA) agreed to acquire the UK-based chip designer Arm Ltd from Japan's SoftBank Group Corp for as much as $40 billion after weeks of speculation. It will mark the biggest acquisition in the history of the semiconductor industry. Per the terms of the deal, Nvidia will pay SoftBank $12 billion in cash including $2 billion payable at the time of signing the agreement and 44.3 million Nvidia shares at an estimated value of $21.5 billion.

h3 Encouraging Vaccine Progress/h3

Investors heave a sigh of relief as AstraZeneca (NYSE:AZN) resumed its late-stage studies on its coronavirus vaccine candidate AZD1222, which is being developed in partnership with Oxford University. The company recently put a hold on its global trials including the late-stage analyses to allow an independent data committee to review the safety data. Some unexplained illness observed in a study participant was the reason behind this decision.

Notably, the company is one of the three vaccine developers to begin the Phase 3 trials, which were being conducted in the United States, Britain, Brazil and South Africa. AstraZeneca’s COVID-19 vaccine candidate is probably the most advanced in terms of development and is being viewed as one of the first candidates to reach the market.

Pfizer (NYSE:PFE) in collaboration with German biotech firm BioNTech also started its late-stage study on coronavirus vaccine. The trial comprises around 30,000 participants and will be conducted at nearly 120 sites globally. Meanwhile, Pfizer recently applied to the FDA to expand the late-stage trial enrolment strength to to 44,000 participants from 30,000 stated previously. Moving on, the company’s CEO Albert Bourla said that Americans could receive the vaccine before 2020-end if its safety and efficacy are proven successfully, per a CNBC article. Going by the same report, the company is expecting to receive key data from the late-stage trials by the end of October.

h3 Other Factors Raising Optimism/h3

A slew of encouraging updates indicating that the U.S. economy is gradually returning to the pre-pandemic level is instilling investors’ confidence in the stocks. In fact, the latest employment statistics, which showed that the economy added 1.4 million jobs in August and the unemployment rate dropped to 8.4% from 10.2%, is an indication of an improving economy. Encouragingly, about half the jobs that were lost during the pandemic have been recovered to date.

The third quarter of 2020 already witnessed the rise in U.S. manufacturing activity to nearly a Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Written By: Zacks Investment Research