Today's Must Read
Glaxo's (GSK) Pipeline Growing Amid Rising Competition
Strategic Initiatives Aid Anthem (ANTM), Rising Costs Hurt
Thursday, August 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 Visa (V), salesforce.com (CRM) and Anthem (ANTM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Visa shares have outperformed the Zacks Financial Transaction Services industry in the year-to-date period (+7% vs. +4.2%) despite the pandemic's negative impact on cross-borader transactions. The Zacks analyst believes that numerous acquisitions and alliances as well as technology upgrades have paved the way for long-term growth and consistently driven revenues for the company.
A transition to new methods of payments such as mobile, cards, online as well as via wearables bodes well for the long term. The acquisition of Visa Europe is a growth strategy as well. Its strong balance sheet enables it to make acquisitions and fund capital expenditure. Its strong cash position enables effective capital deployment measures for its shareholders.
Also, Visa’s second-quarter earnings beat estimates. However, high operating expenses owing to personnel-related costs put operating margins under pressure. Ramped-up client initiatives will dent the top line. It is likely to see a slowdown in cross-border business due to the coronavirus outbreak.
Shares of GlaxoSmithKline have lost -5.5% over the past six months against the Zacks Large Cap Pharmaceuticals industry’s rise of +1.7%. The Zacks analyst likes the company’s initiatives that focus on its oncology pipeline. In 2020, Glaxo expects at least five potential approvals in oncology, HIV, and respiratory areas.
Glaxo’s earnings and sales missed Q2 estimates. Its three newest products, Trelegy Ellipta, Shingrix and Juluca, are doing well, particularly Shingrix. These products coupled with restructuring in the Consumer Health unit have strengthened Glaxo’s competitive position.
However, pricing pressure and competitive dynamics due to generic competition for key drug, Advair, are hampering sales of Glaxo’s respiratory products. Competitive pressure on HIV drugs has risen. Slowdown in vaccination rates hurt sales of its key vaccines in Q2 and there is uncertainty about the timing of recovery.
Anthem shares have gained +1.2% over the past three months against the Zacks Medical Insurance industry’s rise of +7%. The Zacks analyst believes that Anthem’s prudent acquisitions and collaborations complement its inorganic growth profile and help it boost Medicare Advantage growth.
Anthem’s second-quarter 2020 earnings of $9.20 per share beat the Zacks Consensus Estimate by 4.9% and also soared 98.3% year over year on the back of Medicaid and Medicare businesses. The company is the fourth largest individual Medicare Advantage plan in the nation. Its increasing top line paves the way for long-term growth. Its solid guidance also impresses.
The company witnessed a rise in usage of its Telehealth and virtual care services. However, it has been suffering from high benefit costs and selling, general and administrative expense, which continues to weigh on its bottom line. Its weak balance sheet remains a concern too.
Other noteworthy reports we are featuring today include General Dynamics (GD), Sempra Energy (SRE) and Ross Stores (ROST).
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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>>>