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The Zacks Analyst Blog Highlights: Roche Holding, Pfizer, Baxter International, STMicro and Philips

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For Immediate Release

Chicago, IL – January 25, 2022 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Roche Holding RHHBY, Pfizer PFE, Baxter International BAX, STMicro STM and Philips PHG.

Here are highlights from Monday’s Analyst Blog:

Oxygen from Earnings: Global Week Ahead

In the Global Week Ahead, Q4 S&P500 earnings will supply the latest details on how major global companies are dealing with rising wage cost pressures.

Advance January PMIs will share the latest on spiraling service sector costs.

Consumer and producer price inflation will stay front-and-center, everywhere.

Overseas this week, rising CPI data likely forces Australia’s central bank to admit the need for earlier policy rate hikes.

On Wednesday afternoon, stock traders will look to the U.S. FOMC meeting communication and presser.

This will supply hints on when — and how much — that governing body tightens monetary policy to combat inflation at 40-year highs.

Finally - politics complicate things, as always.

Russia, Ukraine, and Italy will make headlines.

Next are Reuters’ five world market themes, reordered for equity traders.

(1) Flood of Q4 Earnings from Both the U.S. and Europe

Could 2022 could be the year European equities break a six-year run of underperformance against U.S. peers?

The old continent is home to an army of cyclical and value (read cheap) stocks like banks, which typically outperform tech in times of monetary tightening. With Wall Street lagging European markets this year, this dynamic seems already in play.

The Q4 earnings season offers encouragement to Europe bulls; Refinitiv I/B/E/S data shows earnings surging +49% year-on-year. Luxury groups awed markets with quarterly updates. European profits also appear less threatened by wage inflation, Barclays analysts note.

U.S. earnings are seen growing +23%, and markets are still coming to terms with some Wall Street banks' profit misses and hefty cost increases.

In coming days, European names STMicro and Philips are among those reporting along with many big-name U.S. companies.

(2) FOMC Meeting Tuesday and Wednesday

If markets have it right, the Fed's Jan. 25-26 meeting will be the last one before interest rates lift off.

Roughly four rate hikes are priced for this year, starting in March, but the rates outlook aside, markets will listen for what the Fed says about its $8-plus trillion balance sheet.

December meeting minutes showed lengthy discussions about reducing bond holdings. Fed Chairman Jerome Powell said the balance sheet could be shrunk faster than in the past.

A Reuters poll predicts the Fed to start trimming its balance sheet by end-September, though some reckon it may happen sooner and faster than flagged. Hawkish signals could extend the selloff in Treasuries and tech shares.

Meanwhile, the Bank of Canada isn't waiting around for its neighbor and could commence raising rates on Wednesday.

(3) Advance January PMIs Out Today

Considering the spread of Omicron, global business activity held up surprisingly well in December, purchasing manager indexes (PMI) showed. But when advance January PMIs emerge on Monday, focus will be on how cost pressures are shaping up.

Composite input prices slipped last month as factories' supply chain delays eased, but U.S. service sector input prices rose to the highest since 2009. In Europe they stayed near November's record high, and rose in China for the 18th straight month.

In countries where services contribute the lion's share of economic output, soaring costs add more uncertainty to the inflation outlook.

(4) High-Level Italian Politics in Play

Italy needs a new president, and the complex process to replace outgoing Sergio Mattarella kicks off Monday, with PM Mario Draghi a frontrunner for the post.

It could mean weeks of political instability for Italy. If Draghi gets the job, a new prime minister must be found and the multi-party coalition supporting his government could unravel. The same could happen if the parties fail to agree on an alternative candidate.

All this just as bond market angst grows about rising inflation and a more aggressive ECB response. Russia’s troop build-up near Ukraine’s border is stoking war fears, meaning geopolitical developments more broadly will continue to grab markets' attention.

(5) Reserve Bank of Australia Meets, Likely to Follow FOMC’s Lead

The Fed is not the only central bank to have underestimated inflation. Australian CPI data on Tuesday may well force Reserve Bank of Australia Governor Philip Lowe to capitulate on his long-held contention that rate hikes this year are "extremely unlikely.”

Money markets have long doubted Lowe's scenario, and are pricing a first hike to a quarter percent as soon as May with at least three additional quarter-point increases by year-end.

Australia's jobless rate has plunged to its lowest since 2008 and some economists predict core inflation could jump to its highest since 2009, at 2.5%. At the very least, such a reading should seal an end to pandemic-time bond purchases at the Feb. 1 RBA meeting.

Top Zacks #1 Rank (STRONG BUY) Stocks

With Omicron cases exploding — to little surprise — I found three major Big Pharma stocks on our #1 list this week.

(1) Roche Holding: We put this European-based firm into the Large Cap Pharma industry. I see an $49 share price and a market cap of $337.4B. There is a Zacks Value score of D, a Zacks Growth score of A and a Zacks Momentum score of B. Nice to see the A on Zacks Growth.

(2) Pfizer: This firm is in the Large Cap Pharma industry, too. I see an $54 share price and a market cap of $303.4B. There is a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentum score of C. Nice to see the B on Zacks Growth.

(3) Baxter International:This firm is put into the Medical Products industry. I see an $86 share price and a market cap of $43B. There is a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of C. Average long-term Zacks VGM scores appear across the board.

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