Monday, January 27, 2020
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 Merck (MRK), Broadcom (AVGO) and Sanofi (SNY). 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 >>>
Merck’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+17.9% vs. +16.1%). The Zacks analyst believes that Merck’s products like Keytruda, Lynparza and Bridion are driving sales.
Keytruda sales are gaining from continued uptake in lung cancer and increased usage in other cancer indications. Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide. Animal health and vaccine products are also doing well and remain core growth drivers.
However, generic competition for several drugs and pricing pressure will continue to be overhangs on the top line. Rising competitive pressure on the diabetes franchise and on products like Isentress and Zepatier remains a concern. Estimates have gone up slightly ahead of Q4 results. Merck has a positive record of earnings surprises in recent quarters.
(You can read the full research report on Merck here >>>)
Shares of Broadcom have gained +7.4% in the past six months against the Zacks Electronics - Semiconductors industry's rise of +20.2%. The Zacks analyst believes that Broadcom is benefiting from strong demand of its wireless solutions and expanding product portfolio, which makes it well-positioned to address the needs of rapidly growing technologies like IoT and 5G.
Further, strong ties with leading OEMs across multiple target markets are expected to help the company to gain key insights into the requirements of customers. Recent multi-year agreements with Apple estimated to be worth $15 billion, hold promise. Moreover, the company intends to strengthen presence in the infrastructure software vertical particularly.
In this regard, acquisition of CA remains extremely significant. Nonetheless, the company faces intensifying competition and integration risks due to frequent acquisitions. Further, the company’s leveraged balance sheet remains a major concern.
(You can read the full research report on Broadcom here >>>)
Sanofi’s shares have gained +5% over the past three months against the Zacks Large Cap Pharmaceuticals industry's rise of +9.6%. The Zacks analyst believes that Sanofi’s Specialty Care segment is on a strong footing, particularly with regular label expansion of Dupixent. Dupixent is now annualizing at around €2 billion in sales and could prove to be key long-term driver.
The performance of the Vaccines and Consumer Healthcare franchises also improved of late. Sanofi’s R&D pipeline is strong with several positive data read-outs and the achievement of regulatory milestones expected in 2020.
However, headwinds include weak performance of the Diabetes unit, generic competition for many drugs and slower-than-expected uptake of core products like Praluent. Estimates have gone down slightly, ahead of Q4 earnings release. Sanofi has a positive record of earnings surprise in the recent quarters.
(You can read the full research report on Sanofi here >>>)
Other noteworthy reports we are featuring today include Prologis (PLD), Equinix (EQIX) and American Electric Power (AEP).
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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
Keytruda is Key to Merck's (MRK) Long Term Growth Prospects
Broadcom (AVGO) Banks on Wireless Products & Acquisitions
Sanofi (SNY) Diabetes Sales Weak, Specialty Care Unit Strong
High Industrial Real Estate Demand to Aid Prologis (PLD)
Per the Zacks Analyst, Prologis is well poised to benefit from high demand for industrial real estate space. However, rising supply will likely impede rent and occupancy growth.
Acquisitions Aid Equinix (EQIX) Amid Intense Competition
Per the Zacks Analyst, acquisitions will expand its data-center footprint and enhance interconnection offerings.
Investment Aids American Electric (AEP), Rate Dependency Hurts
Per the Zacks Analyst, it plans to invest $33 billion over 2019-2023 period in regulated operations to boost earnings.
Phillips 66 (PSX) Banks on Midstream Business, Refining Weak
The Zacks analyst believes that Phillips 66 is well positioned to gain from rising demand for midstream assets in the United States. However, weak refining business is a concern.
Pasadena Terminal to Aid Valero (VLO), High Corn Prices Ail
Valero's Pasadena terminal, expected to come online in 2020, will boost profits from exports. However, the Zacks analyst is concerned over rising corn prices that are affecting the ethanol business.
Higher Production in Productive Regions to Aid ONEOK (OKE)
Per the Zacks analyst, increase in natural gas and NGLs production volumes in the STACK and SCOOP areas will drive demand for ONEOK's pipeline services.
DaVIta (DVA) Gains From Strength in Dialysis Services Segment
DaVIta's strength in its Dialysis Services arm has consistently boosted the company's topline. The Zacks Analyst is however apprehensive of stiff competition in the U.S. dialysis market.
Arista (ANET) to Benefit from Product Portfolio, Partnerships
Per the Zacks analyst, Arista is likely to benefit from the expanding cloud networking market driven by strong demand for scalable infrastructure while partnering with SK Telecom and Vocus Group.
Markel (MKL) Benefits From Strategic Buyouts, Organic Growth
Per the Zacks analyst, strategic buyouts have aided the company to achieve growth in insurance operations and expand reinsurance product offerings. Organic initiatives also strengthen its portfolio.
Strategic Buyouts, Reducing Costs Aid Community Health (CYH)
Per the Zacks analyst, several buyouts have helped the company boost its portfolio, aiding its top-line. Moreover, its reducing expenses on the back of its planned business rejig also contributes.
Lower Metal Prices & Outages Ail Teck Resources (TECK)
Per the Zacks analyst, weaker prices of metals, including copper and zinc, amid the global slowdown as well as outages across certain facilities will hurt Teck Resources' near-term results.
Yelp (YELP) Hurt by Increasing Competition, Slow Ad Growth
Per the Zacks analyst, fierce competition from giants like Google and Facebook is a major threat to Yelp. Decelerated advertising revenue growth is a key concern.
Sonic Automotive (SAH) to be Hurt by High Debt and SG&A Costs
Per the Zacks analyst, Sonic Automotive's rising SG&A expenses may hamper its net income in the future. High leverage of 57% also limits its financial flexibility to tap onto growth opportunities.
Sanofi (SNY) : Free Stock Analysis Report
Prologis, Inc. (PLD) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Equinix, Inc. (EQIX) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report
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