Friday, July 5, 2019
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 Amazon (AMZN), UnitedHealth (UNH) and AbbVie (ABBV). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Amazon’s shares have outperformed the broader market in the past year (the stock is up +10.8% vs. the +7.4% increase for the S&P 500 as a whole). The Zacks analyst thinks Amazon continues to ride on its aggressive retail strategies, distribution strength and robust Prime program. Moreover, rapid adoption of Prime driven by customer benefits and strengthening grocery services is aiding its top line. Expanding content portfolio of Prime remains a tailwind.
Further, strengthening AWS services portfolio, rising number of availability zones and growing adoption are aiding Amazon’s dominance in the cloud space. Improving Alexa skills and growing advertisement business remain major positives.
However, intensifying competition in the cloud computing market from the likes of Microsoft (NASDAQ:MSFT) Azure and Google (NASDAQ:GOOGL) cloud is a significant headwind. Heavy investment in fulfillment centers remains a concern.
Shares of UnitedHealth have lost -2.8% in the past year, underperforming the Zacks Medical Insurance industry, which has declined -1.4% over the same period. The Zacks analyst likes its strong operating performance, favorable business profile and disciplined enterprise risk management. It stands apart in the industry by virtue of healthcare services, technology and innovations offered by its unit, Optum.
Numerous acquisitions made by the company have broadened its business profile and provide benefits of diversification. Its solid balance sheet and consistent cash flow generation has enabled higher investment in business which will drive long term growth.
Capital management by dividend payment and share buyback is another positive. However, slowdown of growth in international operations and underperformance in Medicaid business are concerns. An increase in leverage and interest burden raises financial risk.
AbbVie’s shares have declined -21.3% year to date, underperforming the Zacks Large-Cap Pharmaceuticals industry's increase of +4.7%. The Zacks analyst thinks AbbVie’s key drug, Humira is performing well based on strong demand trends despite new competition. Imbruvica has multibillion dollar potential.
AbbVie has been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta. Moreover, AbbVie has an impressive late-stage pipeline comprising several products with multibillion-dollar potential expected to be launched in the near term. The acquisition of Allergan (NYSE:AGN), if successful, will add the former’s blockbuster Botox to AbbVie’s portfolio.
Sales erosion due to direct biosimilar competition to Humira in international markets will be a major headwind in 2019. Estimates have gone down ahead of Q2 earnings. However, AbbVie has a positive record of earnings surprises in the recent quarters.
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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>>>
Per the Zacks analyst, Simon Property is expected to benefit from new development, redevelopment, expansion and acquisition efforts. However, the online sales boom will likely impede top-line growth.
While Sherwin-Williams should gain from synergies of the Valspar acquisition, hefty costs related to the buyout will weigh on its earnings, per the Zacks analyst.
Per the Zacks analyst, decent loan growth, relatively higher interest rates and expense savings efforts will support SunTrust.
While rising operating costs are a concern, AutoZone should gain from its offering of high-quality DIY and commercial products through an efficient supply-chain network, per the Zacks analyst.
The Zacks analyst believes that MPLX will capitalize on the Permian bottleneck problem once its Wink-to-Webster (W2W) oil pipeline comes online.
The Zacks analyst likes the company's efforts to check costs. Efforts to reward shareholders are encouraging too.
Per the Zacks analyst, Pinnacle West's long-term capital expenditure in infrastructure and battery storage projects will help it to serve customers efficiently.
The Zacks analyst thinks that Papa John's efforts expand globally by strengthening its franchise relations will drive topline growth. Digital ordering has also been driving the company's sales.
Per the Zacks analyst, Abiomed has been gaining from its flagship Impella platform. Moreover, Impella's patient success stories and strong global adoptions raise optimism.
Per the Zacks analyst, FLIR frequently innovates products to capture larger market share to compete in diverse industries. It also pursues acquisitions to boost its core and non-core businesses.
Per the Zacks analyst, Michaels' margins are hurt by rise in distribution-related costs and occupancy cost deleverages along with adverse sales mix. This might weigh on the company's bottom line.
The Zacks analyst is worried over Oasis Petroleum's rising interest expenses, which is roughly 7% of the company's total revenues.
Per the Zacks analyst, Autodesk's growth is negatively impacted by increasing spending and the ongoing business model transition to mobile and cloud.
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