In this sneak peak from Action Alerts PLUS, portfolio manager Chris Versace said it's too early to worry about stocks like PepsiCo (PEP) -) and McDonald's (MCD) -). Watch the video above to find out the data Versace is waiting for before making any moves as Ozempic and weight-loss drugs leave some investors worried about the fast food industry.
FULL VIDEO TRANSCRIPT BELOW:
J.D. DURKIN: All right, this next one-- I'm going to be-- well, I don't know. I don't want to get ahead of the conversation. There's been so much chatter about this next point the last few weeks. I'm a little skeptical on the impact, but please correct me if you think I'm wrong. What are your latest thoughts on the potential Ozempic-- yes, it's time for the obligatory Ozempic reference-- what is the impact there on companies like PepsiCo and McDonald's?
CHRIS VERSACE: So it's hard to measure, right? So far we haven't really seen any results. But as we know, the market tends to be a forward-looking animal.
So it's saying to itself, geez, what could this be possibly in 12, 18, 24 months? And the issue is that when we see forecasts and expectations like this, they tend to get ahead of themselves, and I think that's exactly what's happening here again.
In some of the notes that we've written to members talking about this, whether it was with McDonald's and PepsiCo or some other companies that are making comments, Walmart, for example, it's just simply too early to say, aha, this is going to destroy the particular business. If anything, some of the other forecasts that are out there, not necessarily the revenue amount for these weight loss drugs, but when you parse the forecasts and you look at how many people are expected to be on them?
How many people will be on them for certain periods of time? What the impact is on muscle loss and other factors. There's a lot of questions, I think, that cause a lot of, as you put it, correct skepticism on what the impact could be.
J.D. DURKIN: Yeah, it's-- also, by the way, you know you've got members of congress that are saying oh, this is good for the overall health and wellness of the American people. And they are quite literally out there- like congressman Schweiker, a republican in the House, saying, hey, consider this Ozempic stuff. George Santos says he's on Ozempic, for whatever that's worth. I don't know what that's worth, but anyway that conversation is not dying down any time soon.
CHRIS VERSACE: So J.D., I don't want to be a naysayer, right, because I do recognize that there are some people out there who struggle with their weight, people who have medical conditions where it's important to keep weight off. But, you know, my-- my concern here is that once again we're focused on the latest shiny new thing that just simply may not be what it's all cracked up to be.
J.D. DURKIN: No, I appreciate that. You and I have talked many times about people's impulse to kind of chase or talk about that new shiny thing. This is something getting a lot of chatter. We will absolutely cover any potential market business implications, especially, as it gets worked into more references or analyst notes or things like that.
