Thursday, September 21, 2023
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Eli Lilly and Company (LLY), Toyota Motor Corporation (TM) and Accenture plc (ACN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Eli Lilly shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date period (+56.9% vs. +1.5%). The company’s revenue growth is being driven by higher demand for drugs like Verzenio, Trulicity, Taltz and others. It is regularly adding promising new pipeline assets through business development deals.
Sales of its new drug, Mounjaro, are already benefiting from strong demand trends. Mounjaro is expected to be a key long-term top-line driver for Lilly as it has the potential to be approved for obesity and other diabetes-related diseases. Mounjaro showed superior weight-loss reduction in clinical studies for obesity. Lilly expects regulatory decisions for some key pipeline candidates this year.
However, generic competition for some drugs, rising pricing pressure and challenges in meeting strong demand for incretin products are some top-line headwinds.
(You can read the full research report on Eli Lilly here >>>)
Shares of Toyota Motor have outperformed the Zacks Automotive - Foreign industry over the year-to-date period (+40.4% vs. +34.2%). Continued demand for vehicles and a robust product lineup are set to fuel the sales volumes of Toyota. To capitalize on the accelerated global shift to green cars, the auto giant is deepening its focus on manufacturing electric and fuel-cell vehicles, which will bolster the company’s product competitiveness.
The ratio of electrified vehicles sold to total sales in fiscal 2023 was 29.6%. The company expects the ratio to increase to 37% in fiscal 2024. Fiscal 2024 sales are expected to total ¥38 trillion, implying an increase from ¥37.15 trillion fiscal 2023 levels.
However, commodity cost inflation, high interest rates, a tough labor market and logistical challenges pose risks. High capex and R&D expenses on advanced technologies may dent cash flows. Rising debt levels are another concern. Thus, the stock warrants a cautious stance.
(You can read the full research report on Toyota Motor here >>>)
Accenture shares have outperformed the Zacks Consulting Services industry over the year-to-date period (+20.1% vs. +19.7%). The company has been steadily gaining traction in its outsourcing and consulting businesses backed by high demand for services that can improve operating efficiencies and save costs.
Accenture has been strategically enhancing its cloud and digital marketing suite through buyouts and partnerships. The company’s strong operating cash flow has helped it reward its shareholders in the form of dividend payments and share repurchases, and pursue opportunities in areas that show true potential. Partly due to these tailwinds,
On the flip side, pricing pressure due to significant competition from strong companies like Genpact, Cognizant and Infosys, remains a concern. Global presence exposes it to foreign currency exchange rate fluctuations. Buyout-related integration risks continues to remain a concern.
(You can read the full research report on Accenture here >>>)
Other noteworthy reports we are featuring today include The Walt Disney Company (DIS), Prologis, Inc. (PLD) and CVS Health Corporation (CVS).
Director of Research
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Lilly (LLY) New Products Hold Key to Long-Term Growth
Robust Line-up Aids Toyota (TM), High Debt Ails
Accenture (ACN) Gains From Service Demand Amid Talent Cost
Strong Content Portfolio & Parks Business Aids Disney (DIS)
Per the Zacks analyst, Disney benefits from strong content portfolio across its platforms including Disney+. Moreover, revival of the theme parks business bodes well for the company's prospects.
E-commerce Adoption, High Inventory to Aid Prologis (PLD)
Per the Zacks analyst, the fast adoption of e-commerce and high inventory levels are likely to drive demand for Prologis' facilities in key markets. Rising supply and high interest rates are key woes.
CVS Health (CVS) Digital Offerings Grows Amid Stiff Rivalry
The Zacks analyst is impressed with CVS Health's increasing digital base as it exceeded 53 million unique digital customers till second-quarter end. Yet stiff competition remains a concern.
Everest Group (EG) Banks on Solid Premiums Amid High Costs
Per the Zacks analyst, Everest Group is set to grow on solid Insurance segment on the back of new business opportunities, which drives premium growth. However, high costs remain a concern.
Strong Performance Across Reliability Business Aid Flex
Per the Zacks analyst, Flex's performance benefited from strong revenue growth across the Reliability Solutions segment. However, rising macroeconomic uncertainty is a concern.
Range Resources (RRC) Banks on Prolific Appalachia Resources
Range Resources excels with diversified asset portfolio spread between low-risk and long reserve-life Appalachian assets. Yet, balance sheet weakness due to high debt concerns the Zacks analyst.
Strategic Initiatives and Expansion Aid RH, Amid High Costs
Per the Zacks analyst, RH is benefiting from various strategic initiatives and expansion efforts. However, the ongoing inflationary environment hurts the company's bottom line.
MercadoLibre (MELI) Gains From Total Payment Volume Growth
Per the Zacks analyst, MercadoLibre benefits from solid total payment volume growth which is driven by strong momentum across Mercado Pago and mobile-point-of-sale business.
PACCAR (PCAR) to Gain From Strong Portfolio of New Trucks
Per the Zacks analyst, a strong portfolio of new trucks bodes well for PACCAR's growth. It expects to deliver 48,000-52,000 trucks in the third quarter, up 7.5-14.6% from the year-ago quarter.
Align (ALGN) Rides on Growing Invisalign Volume, Innovation
The Zacks analyst is optimistic about Align's strong market rollout of several Invisalign products globally. The company's focused efforts to expand portfolio aids growth.
Hormel Foods (HRL) Hurt by High Costs, Supply-Chain Woes
Per the Zacks analyst, Hormel Foods is battling high costs and supply-chain woes. The company saw impacts from shortages, additional logistic costs and escalated levels of distressed inventory in Q3.
Sysco (SYY) Appears Troubled Due to Product Cost Inflation
Per the Zacks analyst, product cost inflation is a concern for Sysco. In the fourth quarter, the company witnessed product cost inflation of 2.1%, mainly due to frozen, canned and dry categories.
Global Economic Conditions Hurt Spirit Aerosystems (SPR)
Per the Zacks analyst, geopolitical events like Russia's invasion of Ukraine and the associated U.S. sanctions have had a material adverse effect on orders from Spirit AeroSystems' customers.
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