Merck stock drops and Tesla pops on news, Avis rises on bullish call

Yahoo Finance's Ines Ferre provides an update on Merck, Tesla, and Avis stocks.

Video Transcript

ALEXIS CHRISTOFOROUS: Turn things over to Ines Ferre now with a look at some of our big trending tickers. And we're going to start with Merck, Ines, because I know that stock not participating in this rally today. What can you tell us about that?

INES FERRE: That's right. Merck right now trading at a two-month low. Let's take a look at it. In fact, it's the worst performer right now on the Dow, down about 6%. This is a head of an FDA advisory committee meeting that's going to take place on Tuesday to review results for the company's oral antiviral drug against COVID-19.

Now, data against that drug is showing that the drug is cutting hospitalization and death rates with mild to moderate COVID, those with mild to moderate COVID, by 30%. But previously, that data showed that it could cut those rates by 48%. So it's that revision downward in the efficacy of that drug that is causing this stock to be under pressure today and also losing, really, its gains from year to date because year to date, it's right now down about 5%.

Now, analysts have been commenting on this, saying that Merck is likely still going to get emergency use authorization for this drug. But it's going to be used less than, for example, Pfizer's pill or Pfizer's drug against COVID-19. In fact, Pfizer CEO saying in an interview earlier today that he's confident that the Pfizer pill can combat omicron, that variant of COVID-19. And last week, we now know that we saw that Pfizer stock-- I'll just pull it up quickly-- that stock had reached new highs on Friday after the company said that it could come up with a vaccine against the variant in about 100 days. Alexis, Kerina.

KERINA MITCHELL: And Ines, switching gears a little bit, Tesla also revving up after reports production at its German facility could start as soon as December.

INES FERRE: Yeah, that's right. And if we pull up Tesla right now, it's up 4%. And that's after reports one, coming out of a German automotive news site and also out of Electric, basically saying that any day now, Tesla could receive authorization, the green light, to start production at its Berlin gigafactory, the gigafactory it's been working on for over a year now. Now, production is expected to ramp up slowly. It's expected that about 1,000 units per week will be made in January at that factory, no more than 30,000 vehicles in the first half of 2022.

But these vehicles are really to supply Europe. And this will reportedly really kind of free up vehicles that are made in Fremont, in Shanghai, and also lower transportation costs, part of the whole idea of making this a Berlin factory. So news of this Berlin factory reportedly start gearing up to start up as soon as December is what's sending the stock higher today. And year to date, the stock you can see is up more than 56%.

ALEXIS CHRISTOFOROUS: All right, sticking with the auto sector there, Ines, Avis getting a big bullish call, I guess, from Jefferies. They're raising their price target on the stock by a lot. What's behind that?

INES FERRE: Yeah, three-fold. So Jefferies now has a price target of $333 versus the $100 price target it had previously on the stock. And basically, the analyst is saying that this is because of a structural change in pricing power for the industry. And the analysts at Jefferies are predicting that Avis can run at structurally higher margins and also sustain high single digit growth going forward. Now, you'll recall that this stock touched intraday highs of $545 per share. This is after they had announced their quarterly results recently and also announcing that they were going to be expanding their EV fleet, although they didn't give details about that.

But this analyst is saying, look, the market consensus has been to really downgrade the stock based on valuation. But valuation, he's saying, is really no longer based on historical multiples, basically saying that the sector has structurally changed. By the way, there are two buys, two holds, and four sells on this stock. And you'll notice that it's part of also this meme chart that we have here, because this has also been a retail trade favorite, this company, the stock that has been shorted in the past. It's come a long way since the thick of the pandemic last year. And certainly, its results have been really astounding this year.

ALEXIS CHRISTOFOROUS: Yep, a meme favorite for sure. Ines Ferre, thanks for the roundup.