Monday, July 13, 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 Alphabet (GOOGL), Merck (MRK) and Medtronic (MDT). 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 >>>
Alphabet shares have been strong performers relative to the market, the Tech sector, and even the Zacks Internet Services industry over the past year (+33.8% vs. +27.8%) despite cyclical pressures weighing on ad spending levels. The Zacks analyst believes that Alphabet's outperformance, which is expected to continue over the coming quarters, is the company's strengthening cloud unit that is aiding substantial revenue growth.
Moreover, expanding data centers will continue to bolster its presence in the cloud space. Further, major updates in its search segment are enhancing the search results, which is a major positive. Moreover, Google’s robust mobile search is gaining solid momentum.
Additionally, strong focus on innovation of AI techniques and the home automation space should aid business growth in the long term. Further, its deepening focus on wearables category remains a tailwind. However, the company’s growing litigation issues and increasing expenses might hurt profitability.
(You can read the full research report on Alphabet here >>>)
Shares of Merck have lagged the peer group in the recent past as a result of long-standing genericization, competitive pressures and Covid-related disruptions. But Zacks analyst believes the long-term will likely be favorable given products like Keytruda, Lynparza and Bridion that have been driving sales.
Animal health and vaccine products remain core growth drivers. The potential separation into two companies makes strategic sense as the remaining Merck should be able to achieve higher profits than the combined company. However, Merck expects COVID-related business disruptions to impact sales in its Pharmaceuticals as well as Animal Health units in 2020 with maximum impact in the second quarter.
Meanwhile, generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line. Estimates have declined slightly ahead of Q2 results. Merck has a positive record of earnings surprises in recent quarters.
(You can read the full research report on Merck here >>>)
Medtronic’s shares have lost -10.3% over the past three months against the Zacks Medical Products industry’s rise of +0.4%. The Zacks analyst believes that headwinds like unfavorable currency movement and global economic uncertainties continue to adversely affect Medtronic.
Medtronic saw significant growth in airways and ventilators sales in the fourth quarter of fiscal 2020 amid the pandemic. It is currently focusing on the geographical diversification of its businesses, apart from product innovation. Also, Medtronic demonstrated a strong solvency position. Its fourth quarter performance saw better-than-expected revenues.
Nonetheless, lower-than-expected earnings and weak performances demonstrated by the company at CER, backed by dismal performance in all major business segments and geographies are concerning. The company’s performance was primarily impacted from deferred procedures due to the pandemic.
(You can read the full research report on Medtronic here >>>)
Other noteworthy reports we are featuring today include Netflix (NFLX), Novo Nordisk (NVO) and Anheuser-Busch InBev (BUD).
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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
Alphabet (GOOGL) Rides on Diversification; Risks Remain
Keytruda is Key to Merck's (MRK) Growth Prospects
Ventilator Sales Aid Medtronic (MDT) amid Procedural Delay
Robust Content Aids Netflix (NFLX) Amid Stiff Competition
Per the Zacks analyst, Netflix's robust content portfolio is driving subscriber addition that is helping to it steer away competition from Disney+, Apple TV+ and Amazon prime video.
Novo Nordisk (NVO) Boasts Strong Pipeline Amidst Competition
Per the Zacks analyst, Novo Nordisk has a strong presence in the Diabetes Care market and boasts of a strong pipeline.
AB InBev's (BUD) China Business Show Recovery Post COVID
Per the Zacks analyst, AB InBev is witnessing positive trends in China and South Korea, in the post-lockdown phase.
Robust I&SS Segment Aid Sony (SNE) Amid Headwinds in G&NS
Per the Zacks Analyst, Sony's Imaging & Sensing Solutions (I&SS) segment is benefiting from growth in sales of image sensors.
Investment Aids American Electric (AEP), Rate Dependency Hurts
Per the Zacks Analyst, it plans to invest $26.6 billion over 2021-2024 period to boost earnings.
Kinder (KMI) Poised for Huge Gains From PHP Pipeline Project
The Zacks analyst believes that Kinder Morgan will earn massive profits from its Permian Highway Pipeline (PHP) project.
Verisk (VRSK) Rides on Data Analysis Strength Amid High Debt
The Zacks analyst is impressed with Verisk's expertise in providing predictive data analytics solution by interpreting different types of data sets.
Bayer (BAYRY) Boasts a Strong Product Portfolio
Per the Zacks analyst, pharmaceutical products launched over the last few quarters should continue to drive top line at Bayer. Deals and acquisitions also look encouraging.
UBS (UBS) Remains Focused on Achieving Performance Targets
Per the Zacks analyst, UBS Group's several financial targets are expected to improve operating efficiency. Also, these efficiency programs are likely to support the company's bottom-line.
Post Holdings (POST) Benefits From Coronavirus Led Demand
Post Holdings has been gaining on rising demand from coronavirus-led stockpiling and higher at-home consumption. The Zacks analyst expects such trends to offer cushion against soft Foodservice unit.
Rising Expenses, Concentration Risk Hurts Fifth Third (FITB)
Per the Zacks analyst, consistently rising expenses on accounts of investments in technology impacts Fifth Third's financials. Also, substantial exposure to commercial loans keeps us apprehensive.
Weak Surface Technologies Unit to Weigh on TechnipFMC (FTI)
The Zacks analyst believes that operating profit of TechnipFMC's Surface Technologies unit will be under pressure due to lower North American drilling activity.
Coronavirus & Higher Debt Hinders j2 Global (JCOM) Progress
Per the Zacks analyst, coronavirus-led uncertainty along with a debt-ridden balance sheet is expected to impede j2 Global's prospects.
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Novo Nordisk AS (NVO) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Merck Co., Inc. (MRK) : Free Stock Analysis Report
Medtronic PLC (MDT) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
AnheuserBusch InBev SANV (BUD) : Free Stock Analysis Report
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