Today's Must Read
Revenue Growth, Solid Balance Sheet Aid Mastercard (MA)
Lilly (LLY) Makes Significant Pipeline Progress
Thursday, August 6, 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 Apple (AAPL), Mastercard (MA) and Eli Lilly (LLY). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple shares have outperformed the S&P 500 year to date (+51.5% vs. +3.3%), with the stock benefiting from momentum in the Services business, strong adoption of Apple Pay and growing Apple Music subscriber base.
Apple’s third-quarter fiscal 2020 results reflected continued momentum in the Services segment, driven by a robust performance of App Store, Apple Music, video and cloud services. iPad and Mac also contributed strongly to the quarterly results. Moreover, iPhone sales recovered, driven by strong demand in May and June, primarily for iPhone SE.
Apple devices also continued to gain traction among enterprises, particularly healthcare providers. Apple didn’t provide any guidance due to uncertainties triggered by the pandemic. However, it expects fiscal fourth-quarter iPhone sales to benefit from strong demand for iPhone SE. Apple stated that sale of new iPhones will begin a few weeks later against the usual late September. It also expects iPad and Mac to post strong year-over-year growth.
Shares of Mastercard have lost -0.1% over the past six months against the Zacks Financial Transaction Services industry’s fall of -4.2%. The Zacks analyst believes that the company is gaining from transition in payments from physical to digital. Investment in technology keeps it at the forefront of the rapidly-evolving payments industry.
Mastercard’s earnings of $1.36 per share beat the Zacks Consensus Estimate by 18.3% but were down 26% year over year, due to a contraction in gross dollar volume, lower switched transactions and a weak cross-border business.
Mastercard is also witnessing buoyant demand for its Data & Analytics and Cyber solutions. Its solid capital position enables investment in business. However, escalating costs might put pressure on the company’s margins. It also cancelled its annual 2020 outlook for net revenues and operating expense due to coronavirus-induced business loss.
Eli Lilly shares have lost -0.6% over the past three months against the Zacks Large Cap Pharmaceuticals industry’s rise of +3.3%. The Zacks analyst believes that generic competition for several drugs, rising pricing pressure in the United States, and price cuts in some international markets like China, Japan and Europe are some top-line headwinds in 2020.
Lilly beat Q2 estimates for earnings but missed the same for sales. Reduction in new prescription trends of several medicines hurt sales in Q2. However, volume trends are likely to improve in the second half.
Lilly still expects revenue growth to be driven by higher demand for drugs like Trulicity, Taltz, and others and from product launches. Lilly is making significant pipeline progress including its efforts to make therapies to treat COVID-19. It is regularly adding promising new pipeline assets through business development deals.
Other noteworthy reports we are featuring today include BHP Group (BHP), PetroChina (PTR) 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>>>