Today's Must Read
Cancer Drugs to Drive AstraZeneca's (AZN) Sales in 2020
Cost Curbs Help Union Pacific (UNP), Volume Dip Dents Growth
Monday, July 20, 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 Netflix (NFLX), AstraZeneca (AZN) and Union Pacific (UNP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Netflix shares have outperformed the Zacks Broadcast Radio and Television industry over the past year (+58.7% vs. +15.2%), though the stock has lost some ground following last week's quarterly release. The Zacks analyst believes that rising competition from Apple TV+, Amazon prime video, HBO Max, Disney+, TikTok is a major headwind. Netflix’s leveraged balance sheet and higher streaming obligation is a concern.
However, the company is dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content and an expanding international footprint.
However, Netflix expects subscriber growth to decline in the second half of 2020 due to less demand. Moreover, absence of new seasons of popular shows like Money Heist and Stranger Things is expected to affect subscriber growth.
Shares of AstraZeneca have gained +20.3% over the past six months against the Zacks Large Cap Pharmaceuticals industry’s rise of +0.7%. The Zacks analyst believes that AstraZeneca’s products like Nexium, Crestor and Seroquel are facing generic competition, which is hurting sales.
The diabetes franchise also faces stiff competition while pricing pressure is hurting sales in the respiratory unit. Also, the coronavirus outbreak may hurt its profits in 2020. Nonetheless, AstraZeneca’s newer drugs, mainly cancer medicines Lynparza, Tagrisso and Imfinzi, should keep driving revenues in 2020.
Its pipeline is strong with abundance of pipeline catalysts lined up for 2020. Several launches are underway across each of the therapeutic areas. Cost-cutting efforts should drive earnings. The company has a mixed record of earnings surprises in the recent quarters. Estimates have gone up ahead of Q2 earnings release.
Union Pacific shares have gained +25.5% over the past three months against the Zacks Rail industry’s rise of +24.8%. The Zacks analyst expects Union Pacific's second-quarter 2020 results, scheduled to be released on Jul 23, to be affected severely by low volumes in these coronavirus-ravaged times.
Due to coronavirus-induced supply-chain disruptions and closure of the U.S. automotive plants, overall volumes are likely to have declined in the to-be-reported quarter. In fact, second-quarter volumes are expected to plunge nearly 20%. Weakness in the Bulk, Premium and Industrial units is likely to have weighed on the overall volume picture as well.
However, efforts to control costs, courtesy of the precision scheduled railroading operating plan, are a positive, particularly, in the light of revenue concerns. The company's ability to generate free cash flow is also a boon. Further, the uptick in e-commerce demand during the pandemic is encouraging.
Other noteworthy reports we are featuring today include NextEra Energy (NEE), Sanofi (SNY) and Estee Lauder (EL).
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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>>>