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Chipotle Mexican Grill. I was just there yesterday. Love it. It's my kind of my once a week thing. Was it crowded?
Uh?
Yeah, yeah, It's always crowded when the schools get out because all the kids come in there and then that's Itay're big fans.
Yeah.
Anyway, it was good, but apparently not so good in the quarter. They had some disappointing results of their guidance. Was a little cautious here, and the stock is down fifteen point seven percent today, down about forty percent year to date. Michael Hanlin joins a senior restaurant and food service analysts for Bloomberg Intelligence.
Mike, is this a Chipotle thing?
Is this a fast service quick service restaurant thing?
What is this going on there? Now? Listen there there is.
You know, some other companies are talking about a little bit of a pullback here in October. I think a big part of it is really around the DC metropolitan area and has to do with the government shut down. But this is you know, Chipoti is trying to blame the macro but you know, this is largely self inflicted in our view. I mean, if you look at the other earnings that have been released, Shake Shack this morning
had a great print. Restaurant brands which owns, you know, Burger King, Tim Horton's, Popeyes had a very good print. Domino's Chili's are crushing it right now. So you know, for them to come out and blame low income consumers.
Which they have a very low exposure to.
As well as gen Z, which you know, there's some anecdotal stuff out there about how gen Z employment isn't great, but you know, the survey data that we see is showing that gen Z is spending spending more than other age cohorts and expect to spend more next year. So it's really, I think, largely self inflicted.
I love the pushback against the narrative that Chipotle is peddling here. Having said that, you're seeing shares of Sweet Green and Comma Group decline in tandem and sympathy with Chipotle. What does this mean whether it's a macro backdrop story that Chipotle is, you know, putting the blame on, or a Chipotle specific problem. What does this mean for how it prices its food? Up until now, it's been moving forward with price increases.
Yeah, so this is this is one of the things that kind of really got me going on this call yesterday, and then calls in the past as well.
So you know, last year.
I would say about fifteen months ago, a little more sixteen months ago, there was it went viral that their portion sizes were getting smaller, right, and they made an investment to increase the portion sizes, which they've done, right, So there was a problem last year.
Then on a.
Fall earlier this year, they were talking about how much value they have and we think we're still a great value.
Values not our issue.
Then they came back on this call and they spoke out of both sides of their mouth. They said, we're priced twenty to thirty percent below our peers. And at the same time they said their survey data was showing that some people thought their food was way too expensive.
So which one is it?
Right?
Like, if you don't even know what your problem is, how are you supposed to fix it.
Interesting, So what are some of the competitors doing in terms of price increases to I don't know, cover the cost of tariffs or as general rising costs of bee for what are some of the competitors doing in the industry.
I think the biggest problem here is that they don't have any everyday value on their menu. And I understand their reluctance to go there, but I mean customers want to see it. And I think Shakeshack today, which has been one of our favorite names this year, talked about how they they have this new one three five dollars offer, right,
so one dollar drinks, three dollars, fries five dollars, shakes. Right, It's not like a crazy discount, and it's it's items that are typically pretty good margin, right.
But they talked about how.
They switched the focus to that and value and it boosted traffic four hundred basis points and this week over the week prior. So customers right now do want value and Chapotle doesn't really have it on its menu.
All right, God's you know, lips in your ears or whatever that thing is.
And we have the anecdotal evidence that you just provided my Anecdotal evidence is when they started giving you more stuff in my taco I didn't need three.
I only order two now because they overflow it. They don't like that.
Michael Halen, Senior restaurant analyst Bloomberg Intelligence, pulling no punches on the folks that told he had the alternate take exactly, and he often has that take. Any often is contentious on earnings conference calls. I've heard this lot of self back in the day. Still listen in on some of those.
Stay with us. More from Bloomberg Intelligence coming up after this.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am. He's dene on Apple, Cocklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Comcast reported some earnings here, stocks down three percent, down twenty six percent year to date.
Tough tough sledding for these cable companies. Here.
Let's go to Keitha rong Anathan. She covers all the media stuff for Bloomberg Intelligence. Etha, what's the takeaway from the Comcast earnings here? Another tough quarter.
Yes, Paul, another tough quarter. For Comcasts, and we suspect it's going to beat that a way for a while. For these cable companies, they've been having a lot of competition in their broadband business, remember broadband. Comcast is the largest broadband provider in the United States, has over thirty million subscribers, but they've been losing customers at an increasing pace. Even though this quarter actually subscriber losses came in slightly
better than what we had feared. Comcast is doing everything that they can do to get subscribers to stay on their platforms, just given the very, very intense competition from the telcos. That's working, but you know, it's come at a cost. So they you know, we're seeing quite a bit of pressure on the RPU side as well, as we saw a decline in their ebidof almost four percent, and they warned that we're going to continue to see ABADA declines for many more quarters to come.
So this idea of using price lock guarantees and bundled plans to slow down to stem the bleeding of folks who are cutting the cord. Now that it started this, it has to kind of stay with it, right. You can't stop that promotional activity.
You cannot Scarlet. You're right, and you know these price locks are five year price logs. They're giving away more the lines for free. I mean, that's definitely having some impact. So we did see, you know, the subscriber numbers come out much better. In fact, the mobile the number of wireless customers that they added was a record, the highest ever that they've had. But obviously it is going to continue to put a lot of pressure on the top line as well as on the bottom line, and there's
no way they can stop it. They have to keep going with it, which means that the Ibadah pressure is going to be sustained.
So that's a reminder to me, Paul, that I have to call Verizon and some of the other providers to argue down whatever package I have right now.
Absolutely it works, Githa.
The fundamentals are one thing, but probably the big big thing overhanging this story right now the Comcast is what are they going to do as it relates to the M and A front and Warner Brothers Discovery. Here, where's the narrative there right now?
They need to do something, Paul. And I mean you just said this stock is down twenty six percent year to date, it's down over thirty percent for the past year. And they have some great media assets. They have NBC Universal, but it's just not enough. They're getting punished both sides. So they own cable broadband assets, which makes up about eighty eighty five percent of EBITDA. Again, cable is under
tremendous pressure because of this telecom competition. You know, those multiples are at around five to six x media, which is you know, the NBC assets brings in about fifteen percent of their EBITDA. They have some great assets, but again they have this funny thing going on with the conglomerate discounts. So they're not able to catch a break either on the media side or on the cable side. They need to do something transformative. I think Warner Brothers
is definitely the solution. The question is can they afford to get into a bidding war with paramount And I'm not sure if they can afford it.
All Right, Keith is my favorite Wall Street cable analys out there. My number two is Craig Moffitt of Moffitt Nathan. So he's out with a note today saying and he's covered the stock forever and one of the big bear cases for Comcast is that they are a serial acquirer. Every five years, the feel they need to go out and buy something big. And the problem is Iskeetha well knows being a buyer of media assets is generally not
a good allocation of capital. It's not good here, Sokeitha, there's a a concern here that, you know, maybe it's just not going to be worth it. If they go out and do another big deal, they're going to lever up their balance sheet. They can have years and years of integration risk and that could be a big long term drag on the stock.
How do you counter that.
Or Yeah, that's always kind of been the you know, that's always pooked investors. Paul. I mean, you know very well what they did a few years ago. They overpaid for Sky a fifteen x multiple and they should have probably paid like six or seven. So they do have this kind of propensity to go out pay the big dollars. Warner Brothers, I think there was a little bit of a different story for them. They have they can extract tremendous synergies. I think from the asset. There's a really
good fit in terms of IP. We know that they already license, you know, Harry Potter and a lot of those other you know, Warner Brothers ip into their parks. So there is a good fit. You know, there's a lot that can be done on this sheet side. Again, you look at Peacock, very heavy on sports, HBO, very heavy on scripted originals. I think it's really a nice complementary portfolio. I think this time it could be a little bit different. But again who knows.
Yeah, some big questions and of course they need to figure out their strategy on this. You mentioned Peacock. What is the latest with Peacock? Because subscriber growth when we cared about it, and you know that was a while ago, because now we care about profitability rose fourteen percent that Miss danalyssesstimates even after raising prices, that Missanael assessments. And it's not making money, is it.
It's not. It's not scartant, and it's not going to for you know, for the foreseeable future. So they are definitely a subscale service. They have just about you know, forty two forty three million subscribers. Again, you're comparing that to Netflix, which has about three hundred and ten, three hundred and fifteen million, So just a huge catch up game that that peacock has to play. They do have some really good programming though, you know, especially when you
look at sports. They just recently acquired the rights to NBA, so we do have that now you know they have the NFL, so there is quite a bit of good sports property. I just don't know what they can do to necessarily up those subscriber numbers, which is why they absolutely need something transformative from an M and a.
Perspective, Gita, before we let you go, what about the theme park business? Universal obviously a huge attraction in California and in Orlando. The revenue rose nineteen percent. Is that in good shape? And what might that tell us about what Disney tells us.
It's in very good shape, and which is why we're you know, we have more and more confidence in the theme park business. Comcast saw this coming. They knew that this was, you know, the next big thing, you know, this whole thing with the experience economy, and they're riding that wave in a big way. We saw them open Epic Universe earlier this year. They've opened some other new attractions in Texas in Las Vegas, so there and there's a big park that's coming near London in about four
or five years. So they're making big investments. It's paying off and you know, just like a Comcast, we're pretty bullish on on the Disney business as well.
Yeah, theme park business. Who would have thunk it.
Githa Ronganatha, and thank you so much for joining us. Githa is the media analyst at Bloomberg Intelligence.
Stay with us. More from Bloomberg Intelligence coming up after this.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
The frenzied m and A taking place in the pharmaceutical sector. Let's dig into that right now, because Novo Nordisk, who is kind of the OG when it comes to weight loss drugs, is now making an aggressive, unsolicited bid for Metserah, which had already agreed to a deal with Pfizer. Let's bring in Robert Langworth, Bloomberg News healthcare reporter on the latest here, and I mean, this is kind of the highest level of corporate drama given that Novo Nordisk is
moving very aggressively. Just step back for a moment here, who is scrambling more?
Right now? Who is more?
You know, I don't want to say desperate, but you know, kind of desperate here to do something.
Yeah, right now, Eli Lilly is dominant in the weight loss area. It just reported great sales. So it's weight loss and diabetes drugs. And Nova was you know, was the first move originally, but it's been falling behind. It is a new ceo. You know, some of their drugs had less than stellar trial results. It's really trying to get back into the area. And Piser too. Pfizer has been trying to doesn't have anything weight loss. I've been trying to break in, had some trials of pills, it
didn't work out so well. And this was like and so now this was their deal to try to like get back in with a new thing that was injectable but had less nausea and vomiting. But now you know, Nova's coming in over the top suddenly with this super aggressive, hyper aggressive deal, you know, and that Pfizer is calling reckless and illusory, and you know it's gonna be very dramatic. The next few days to see what happens.
This is cool.
I mean, it's just like barbarians at the Gate kind of thing. People fighting over it. So tell us about Metzerah. I mean, what have they got that these people are Yeah.
So they have a new you know, the existing drugs they target things like GLP one, which you've heard of, and also zep bound Eli's drug also targets another related hormone called jip uh vip and uh met Sarah is something targeting something called amulan. It's kind of another related hormone and it's had some early trial results were good and hope is that this one, it's also an injectable, will have less of kind of the nausea involving it's a very kind of common side effect of the existing drugs.
And that's so that's gotten people excited. It's only earlier stage results.
Uh.
But you know, if Pfizer really doesn't have anything, the BC do they really want something? And so this was something that by all accounts, they are very excited about. And now they're going to be under great pressure to you know, either try to come in over the top of something or maybe like work their angles in the Trump administration to try to see if, like NOV, some could be blocked.
But it's going to be super dramatic, right because regulators would need to approve whatever happens. But before we even get there, met Sarah has to decide which offer it's going to accept. Did it or accept Pfizer's bid, which I believe max is out at seventy dollars a share.
Yees, so Pfizer, you know that's a Pfizer deal. I think this was last month, and uh, you know, now there's Nova's coming over the top of this bid, and you know, Metsaria has already said like, hey, this is this new one is superior, and apparently Pfizer has four days, you know, to come up with a better offer. Now, you know, we'll have to see what's going to happen. Could there be legal action, Fizer could pursue legal action.
They're already selling grounds well, they're already saying this is reckless, an illusory. There's some very complicated conditions to the NOVE offer, and that someone at Sarah's shareholders will get the money before the anti trust approval happens, as I understand it. So it's a very kind of complicated structure that you know, Pfiser is claiming that's engineered this way to try to avoid anti trust scrutiny, and you know, saying that this
isn't this isn't right. But you know, Metsiah meanwhile saying, hey, we've got a superior deal. What are you going to do for us?
Pfizer.
So Pfizer is a US company, right, Novo Nordisk is a Danish company.
Does that be playing to it at all?
I mean, well, you know that's you know, some of the people I was talking to said, you know, Pfizer is one of the companies, you know, come up with the big, big companies on a handful of big companies have made kind of pricing deals with the Trumpet administration already to avoid tariffs. Right, so it seemed, you know,
seems to have good relations there. So you know it, could you know, could it work its contacts in the Trump administration, you know, to get them to you know, give indications that this deal is going to have a hard time going through. And I trust grounds if Novo does it, because Nova's already took the number two weight loss company right now.
Uh Noah is being led by a new CEO he's a lifer from the company, but he's trying to make some big changes, put his own stamp on the company, and he's moving very aggressively. What has he been doing lately? What is his mandate? What is his philosophy here?
Yeah, I don't know a lot about him, you know, he's really new. But clearly what I can say, uh, is that you know, this is a sign that they're not confident, you know, and what they have internally, Okay, they have to come in this hyper aggressive deal. This is a sign that they kind of it's kind of acknowledgement they're falling behind you, like Lily, and they need to come up with the new and better drugs and
have to get that externally. Mean drug companies do that when they don't have the internal goods.
So Lily, just to wrap it up here, Lily had some pretty darn good numbers, right.
Yeah.
So they have two drugs to zepp It's tied. It's the same drug. The diabetes version is called Munjaro and the obesity is one is called zep Bound. Together this quarter they eight over ten billion in sales. It's crazy. This is going to be like together, this is going to be the best selling drug in the world next year. Both ones are up over one hundred percent, and that's with you know, with increasing pricing discounts. It still is
up over one hundred percent. So they are becoming just totally dominant.
They keep talking about this being one hundred billion dollars a year industry, right.
Yeah, there's like huge potential numbers out there. You know, we'll see whether they achieve that. Oh and Lily is also ahead and coming on with the weight loss pill.
Game game changer.
Yeah, you know it's gonna be another one, a pill that grows hair, are right?
You figure that out, Lily, get to work on that one.
Robert Langrett, the Bloomberg News healthcare reporter, on the drama that we're seeing in the healthcare series The Pharmaceutical Space, as well as Eli Lilly's earnings.
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