Monday, December 11, 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 Merck & Co., Inc. (MRK), Equinor ASA (EQNR) and Illinois Tool Works Inc. (ITW). 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 >>>

Shares of Merck have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-2.2% vs. +7.3%). The company is witnessing generic competition for several drugs, and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line. There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity later in the decade.

Nevertheless, Merck’s products like Keytruda and Gardasil have been driving sales. With continued label expansion into new indications, particularly earlier-stage launches, Keytruda is expected to remain a key top-line driver.

Animal health and vaccine products are core growth drivers. Merck boasts a strong cancer pipeline, including Keytruda, which should drive long-term growth. Merck is investing in M&A activity to strengthen its pipeline.

(You can read the full research report on Merck here >>>)

Shares of Equinor have gained +11.5% over the past six months against the Zacks Oil and Gas - Refining and Marketing industry’s gain of +16.7%. This integrated energy company has a global footprint spanning across more than 30 countries. In Europe, it ranks as the second-largest supplier of natural gas. It is proactively directing investments into renewable energy projects to tackle the issues posed by climate change.

Equinor anticipates a significant expansion of its renewable production capabilities, targeting a range of 4-6 GW by 2026, with further ambitions to elevate this capacity to 12-16 GW by 2035.

However, its balance sheet has a notable level of debt exposure compared with industry peers, which could potentially affect its financial flexibility. The company also reported weak third-quarter earnings due to reduced production volumes and lower prices of liquids and gas in Norway. Its ambitious capital budget poses a challenge. As such, the stock warrants a cautious stance.

(You can read the full research report on Equinor here >>>)

Shares of Illinois Tool Works have outperformed the Zacks Manufacturing - General Industrial industry over the past year (+13.9% vs. +13.7%). The company is benefiting from improving supply chains and underlying demand. Strength in the Automotive OEM segment, driven by favorable customer mix and product line simplification activities is aiding the company’s performance.

Decreasing cost of sales and enterprise initiatives are supporting Illinois Tool’s margin performance. The company’s efforts to add shareholder value are encouraging. However, persistent weakness in the Test & Measurement and Electronics segment due to softness in semiconductor-related business in the North American region is concerning.

The decline in the specialty films, consumer packaging, specialty films and strength films businesses within the Specialty Products segment is an added woe. Given Illinois Tool’s international presence, foreign currency headwinds are weighing on its top line.

(You can read the full research report on Illinois Tool Works here >>>)

Other noteworthy reports we are featuring today include Motorola Solutions, Inc. (MSI), Arthur J. Gallagher & Co. (AJG) and Atlassian Corp. (TEAM).

Mark Vickery
Senior Editor

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>>>