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STMicro Gets a Boost, but This Tiny Biologics Stock's Seeing the Biggest Rise Friday Morning

The Motley Fool logo The Motley Fool 1/7/2022 Dan Caplinger

The stock market looked like it would open on a quiet note on Friday, as investors looked to digest the latest jobs report. As of 8:45 a.m. ET, futures on the Dow Jones Industrial Average (DJINDICES: ^DJI) were down 38 points to 36,085. S&P 500 (SNPINDEX: ^GSPC) futures had fallen 2 points to 4,685, while Nasdaq Composite (NASDAQINDEX: ^IXIC) futures had dropped 22 points to 15,737.

The semiconductor stock space has been doing quite well over the past year, as chip shortages have spurred higher demand. STMicroelectronics (NYSE: STM) has recently climbed to levels it hasn't seen since the tech boom of the late 1990s, and it got good news that sent its shares higher Friday morning. Yet the modest gains for STMicro are small compared to the huge rise of more than 50% for a small biologics stock that announced a huge partnership. Below, you'll learn more about STMicro's news, and the name of that small-cap gainer will be revealed.

Researcher wearing mask and glove looking at semiconductor chip. © Getty Images Researcher wearing mask and glove looking at semiconductor chip.

Strong sales for STMicro

STMicro shares were up almost 4% in premarket trading Friday morning. The Swiss semiconductor company announced preliminary fourth-quarter results that signaled the continuing strength of the industry.

The numbers STMicro reported were higher than the company had previously expected. Fourth-quarter revenue is likely to be $3.56 billion, up more than 11% from where it was three months ago and well above the $3.4 billion from STMicro's previous guidance. That brought full-year 2021 sales to $12.76 billion, which was nearly 25% higher than its 2020 revenue.

STMicro said it saw strong performance across all of the end markets that it serves. In addition, the efforts it has made to engage customers more closely appear to have been successful.

STMicro's stock hasn't been a top performer in the semiconductor space, rising just 20% over the past year. Nevertheless, the company is benefiting from favorable trends in the industry, and those trends appear to be still in place for now.

A Merck deal just sent this stock soaring

Elsewhere, shares of Absci (NASDAQ: ABSI) soared 52% in premarket trading. The biologic drug discovery specialist announced a major collaboration that should dramatically boost its visibility in the investing community.

Absci's collaboration is with Merck (NYSE: MRK), and the pharmaceutical giant will take advantage of Absci's artificial intelligence (AI)-powered integrated drug creation platform to boost its research capabilities. Under the deal, Absci will use its non-standard amino acid technology, dubbed Bionic Protein, to produce enzymes that are specially tailored to the biomanufacturing applications that Merck is seeking.

Payment will come in two forms. Once Merck nominates up to three target candidates and enters into a drug discovery collaboration agreement, Absci will be eligible to receive up to $610 million in upfront fees. In addition, Absci would also get milestone payments for the named targets, as well as research funding and royalties on future sales of those treatments if they get approved.

Given that Absci's market cap was less than that $610 million figure coming into the day, the Merck deal is obviously a blockbuster. Moreover, investors are hopeful that the vote of confidence from Merck will spur other pharma giants to look to Absci for help in their own drug development programs. With the stock having fallen precipitously since its initial public opening just last summer, today's news is a nice respite from the pain Absci shareholders have suffered.


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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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