Shares of Eastman Kodak Co. (KODK, Financial), a photographic film pioneer, quadrupled following President Trump’s surprise announcement that the U.S. government has announced a deal with the company to produce drug ingredients under the Defense Protection Act in response to the Covid-19 outbreak in the U.S.
President of the United States discusses groundbreaking deal
Trump said in a press conference Tuesday evening that his administration announced a “groundbreaking” deal within the U.S. pharmaceutical industry, in which Kodak will begin producing critical pharmaceutical ingredients “right here in America.”
Under the Defense Protection Act, the administration will provide $765 million in loans to support the launch of Kodak Pharmaceuticals, a new division that will produce generic active pharmaceutical ingredients. Trump added that the ingredients represent “key building blocks” for cost-competitive and environmentally safe drugs.
Kodak Executive Chairman Jim Continenza said in a statement that the Rochester, New York-based company seeks to strengthen the U.S.’s pharmaceutical supply chain by leveraging its vast infrastructure, chemical manufacturing expertise and innovation heritage. The company plans to expand facilities in Rochester, New York and St. Paul, Minnesota.
Trump’s deal with Kodak comes as confirmed coronavirus cases around the globe exceed 16.7 million, with over 4.36 million cases in the U.S. according to Johns Hopkins University statistics. Additionally, 10 states in the U.S. set a new record seven-day average in virus casualties, according to CNBC calculations based on the data.
Kodak shares soar over 300%
Shares of Kodak traded around $33 Wednesday morning, up approximately 315.62% from Tuesday’s close of $7.94.
GuruFocus ranks Kodak’s financial strength 4 out of 10 on several warning signs, which include a weak Altman Z-score of 1.35 and a debt-to-equity ratio that underperforms 73.96% of global competitors.
Gurus with holdings in Kodak include Mason Hawkins (Trades, Portfolio)’ Southeastern Asset Management and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.
Disclosure: No positions.
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