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What the Supreme Court’s ruling on affirmative action means for colleges
© Reuters. FILE PHOTO: Students walk through the campus of the University of North Carolina at Chapel Hill, North Carolina, U.S., September 20, 2018. Picture taken on September 20, 2018. REUTERS/Jonathan Drake/File Photo
By Joseph Ax
(Reuters) – The U.S. Supreme Court on Thursday struck down race-conscious policies in college admissions, ending decades of precedent that had allowed schools nationwide to use such programs to increase the diversity of their student bodies.
Here is an explanation of the policies commonly known as affirmative action, their history and the possible consequences of the court’s decision.
WHAT IS AFFIRMATIVE ACTION?
In the context of higher education, affirmative action typically refers to admissions policies aimed at increasing the number of Black, Hispanic and other minority students on campus.
Colleges and universities that take race into consideration have said they do so as part of a holistic approach that reviews every aspect of an application, including grades, test scores and extracurricular activities.
The goal of race-conscious admissions policies is to increase student diversity in order to enhance the educational experience for all students. Schools also employ recruitment programs and scholarship opportunities intended to boost diversity, but the Supreme Court litigation was focused on admissions.
WHICH SCHOOLS CONSIDER RACE?
While many schools do not disclose details about their admissions processes, taking race into account is more common among selective schools that turn down most of their applicants.
In a 2019 survey by the National Association for College Admission Counseling, about a quarter of schools said race had a “considerable” or “moderate” influence on admissions, while more than half reported that race played no role whatsoever.
Nine states have banned the use of race in admissions policies at public colleges and universities: Arizona, California, Florida, Idaho, Michigan, Nebraska, New Hampshire, Oklahoma and Washington.
WHAT IS THE CURRENT LITIGATION ABOUT?
The Supreme Court decided two cases brought by Students for Fair Admissions, a group headed by Edward Blum, a conservative legal strategist who has spent years fighting affirmative action.
One case contended that Harvard’s admissions policy unlawfully discriminates against Asian American applicants. The other asserted that the University of North Carolina unlawfully discriminates against white and Asian American applicants.
The schools rejected those claims, saying race is determinative in only a small number of cases and that barring the practice would result in a significant drop in the number of minority students on campus.
HOW HAS THE SUPREME COURT RULED IN THE PAST?
Before Thursday, the court had largely upheld race-conscious admissions for decades, though not without limits.
A divided Supreme Court took up the issue in the landmark 1978 case, Regents of the University of California v. Bakke, after schools began using affirmative action in response to the Civil Rights era to correct the effects of racial segregation.
The swing vote, Justice Lewis Powell, ruled that schools could not use affirmative action to rectify past racial discrimination and struck down the university’s practice of setting aside a certain number of spots for minorities.
Nevertheless, Powell found that increasing campus diversity was a “compelling interest” because students of all races – not just minorities – would receive a better education if exposed to different viewpoints. Powell ruled that schools could weigh race in admissions as long as it remained only one factor among many.
In 2003, the court struck down the University of Michigan’s use of a system that awarded “points” to minority applicants as going too far, but affirmed Bakke’s central finding that schools could use race as one of several admission factors.
The court in 2016 again upheld race-conscious admissions in a challenge backed by Blum to University of Texas policies. But the court has moved sharply to the right since then, with six conservative justices now and only three liberals.
WHAT WILL COLLEGES DO IN RESPONSE?
The decision on Thursday will force elite colleges and universities to revamp their policies and search for new ways to ensure diversity in their student populations. Many schools have said other measures would not be as effective, resulting in fewer minority students on campuses.
In briefs filed with the Supreme Court, the University of California and the University of Michigan – top public college systems from states that have outlawed race-conscious admissions – said they have spent hundreds of millions of dollars on alternative programs intended to improve diversity, but that those efforts have fallen far short of goals.
In a turbulent market environment, Five9 (NASDAQ:) Inc’s stock has touched a 52-week low, reaching a price level of $28.74. This significant downturn reflects a broader trend for the cloud software company, which has seen its shares plummet by -58.79% over the past year. Investors are closely monitoring Five9’s performance as it navigates through a period of heightened volatility and shifting industry dynamics, which have contributed to the stock’s current valuation at this low point. The company’s efforts to rebound from this position will be under scrutiny in the coming quarters as market participants look for signs of a strategic turnaround or further indications of market pressures.
In other recent news, Five9 Inc . has achieved an annual revenue run rate exceeding $1 billion in Q2, a significant milestone despite lowering its annual revenue guidance by 3.8% due to customer budget constraints. The company’s adjusted EBITDA margin rose to 17% of revenue, contributing to a strong operating cash flow of $126 million. The company also confirmed plans to reduce its global workforce by approximately 7% by the end of 2024, a strategic move projected to cost between $12 million and $15 million.
Five9’s recent acquisition of Acqueon, a firm specializing in proactive outbound omnichannel customer engagement, aims to expand its AI offerings and bolster its growth. This move is in line with the company’s focus on managing expenses and improving profitability, with initiatives like FedRAMP and expansion into India anticipated to improve gross margins.
In their analysis, Piper Sandler maintained an Overweight rating for Five9, with a steady price target of $47.00, while Needham and BTIG both maintained a Buy rating with price targets of $48.00 and $45.00 respectively. These ratings reflect the firms’ confidence in Five9’s strategic positioning and potential for growth, despite the current challenges and workforce reduction.
InvestingPro Insights
Amid the current market conditions, Five9 Inc’s recent performance can be put into perspective with select data from InvestingPro. The company’s market capitalization stands at roughly $2.15 billion, indicating the size and scale of the business amidst its challenges. Despite the stock’s decline, analysts are showing a hint of optimism, with 20 analysts having revised their earnings estimates upwards for the upcoming period. This could signal a potential turnaround in sentiment or underlying business performance.
Importantly, Five9’s liquid assets are reported to surpass short-term obligations, suggesting that the company maintains a degree of financial flexibility to navigate its current difficulties. Furthermore, while the stock is trading near its 52-week low, it’s worth noting that the relative strength index (RSI) suggests the stock is in oversold territory, which can sometimes precede a rebound in share price. Investors looking for comprehensive analysis and additional InvestingPro Tips on Five9 can find more insights, including 14 other tips, at https://www.investing.com/pro/FIVN.
In terms of financial health, the company operates with a moderate level of debt and is expected to become profitable this year, according to analysts’ predictions. These elements may offer some solace to investors considering the stock’s substantial price fall over the last year. For those seeking a deeper dive into Five9’s valuation and future prospects, the InvestingPro platform provides a fair value estimate of $45.04, which is considerably higher than the current trading price, suggesting potential undervaluation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
TD Cowen reiterated its Buy rating on shares of Terns Pharmaceuticals (NASDAQ:TERN), following the company’s investor call. The call was held to manage expectations for the upcoming Phase 1/2 CARDINAL study data for chronic myeloid leukemia (CML). The firm noted the challenges in measuring the efficacy endpoint (EP) due to disease progression and the absence of treatment switch guidelines, which makes major molecular response (MMR) a challenging efficacy endpoint for Phase 1/2 trials.
The interim Phase 1/2 data aims to evaluate descriptive efficacy signals, considering patients’ baseline BCR-ABL levels and treatment history. The analyst highlighted that the once-daily (QD) dosing and the lack of food effect could potentially enhance the quality of life for patients compared to other allosteric tyrosine kinase inhibitors (TKIs).
Terns Pharmaceuticals has been focusing on the development of improved treatment options for CML. The company’s approach to dosing, which does not require food intake, may offer a more convenient alternative for patients, potentially leading to better adherence and outcomes.
The topline data from the 6-month Phase 1/2 CARDINAL study is anticipated to be available in 2025. This data will provide further insights into the treatment’s efficacy and safety, which are critical factors in the ongoing development and potential approval process.
Investors and stakeholders in Terns Pharmaceuticals are expected to closely monitor the progress of the CARDINAL study, as it could have a significant impact on the company’s future prospects and position in the CML treatment landscape.
In other recent news, Terns Pharmaceuticals has experienced significant developments. The biopharmaceutical company reported robust earnings and revenue results, with Mizuho Securities maintaining an Outperform rating on Terns shares, citing strong enthusiasm for the company’s drug, TERN-701, a potential treatment for chronic myeloid leukemia.
The firm expects the first interim Phase 1 CARDINAL study data for TERN-701 in December.
Terns also announced the appointment of Elona Kogan as its new chief legal officer, a move that underscores the company’s strategic development and pipeline advancement.
The company also secured an extension of its office lease in Foster City, California, through 2027, reflecting Terns Pharmaceuticals’ operational stability and long-term planning.
In terms of clinical trials, Terns has made progress in its ongoing Phase 1 study of TERN-701, with interim findings suggesting the drug can be administered once daily with or without food.
This development, coupled with the forthcoming Phase 1 data for another of Terns’ drugs, TERN-601—an oral GLP-1 receptor agonist for obesity—expected next month, underscores the company’s commitment to innovative therapies.
These recent developments, from financial performance to executive appointments and clinical trials, highlight Terns Pharmaceuticals’ ongoing efforts to advance its strategic objectives and deliver on its mission. The company’s activities are closely watched by investors and industry analysts, including those from Mizuho Securities, who continue to support the company’s potential.
InvestingPro Insights
As Terns Pharmaceuticals (NASDAQ:TERN) navigates the complexities of its Phase 1/2 CARDINAL study, investors are keeping a keen eye on the company’s financial health and stock performance. According to InvestingPro, Terns holds more cash than debt, which is a positive signal for financial stability. Additionally, with five analysts revising their earnings upwards for the upcoming period, there is a sense of optimism about the company’s potential performance.
However, it’s important to note that Terns is not currently profitable and has been quickly burning through cash, which may raise concerns about long-term sustainability. The company’s P/E Ratio stands at -5.71, reflecting these profitability challenges. Despite these hurdles, Terns has managed a 1 Year Price Total Return of 45.42%, indicating some investor confidence in the company’s growth prospects. The anticipated fair value from analysts stands at 15 USD, while the InvestingPro Fair Value is calculated at 5.8 USD, highlighting a divergence in valuation perspectives.
For those looking for more in-depth analysis, additional InvestingPro Tips on Terns Pharmaceuticals can be found at https://www.investing.com/pro/TERN, offering a comprehensive look at the company’s financial details and stock performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
PARIS (Reuters) – French President Emmanuel Macron discussed the importance of maintaining support for Ukraine and the need for a ceasefire in Gaza during talks on Friday with German Chancellor Olaf Scholz, said the French presidency.
Regarding Ukraine, the two leaders expressed their determination to support the country “for as long and as intensively as necessary” in its war against Russia, the Elysee said.
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