Today's Must Read
Keytruda & Other Key Drugs Drive Merck's (MRK) Sales
AT&T (T) Rides on HBO Max, 5G Deployment to Spur Growth
Monday, August 31, 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 salesforce.com (CRM), Merck Co. (MRK) and AT&T (T). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Salesforce shares have outperformed the Zacks Computer Software industry in the year-to-date period (+65.4% vs. +40.1%) on the back of a robust demand environment as customers undergo a major digital transformation. The rapid adoption of its cloud-based solutions is driving demand for its products. The company's addition to the Dow Jones Industrial Average represents another source of spotlight for this stock.
salesforce’s sustained focus on introducing more aligned products as per customer needs is driving its top-line. Continued deal wins in the international market is another growth driver. Furthermore, the recent acquisition of Tableau positions the company to be a leader in business analytics for actionable results in everything from operations to HR.
However, stiff competition from Oracle and Microsoft is a concern. Besides, unfavorable currency fluctuations along with increasing investments in international expansions and data centers are an overhang on near-term profitability.
Shares of Merck have gained +5.2% over the past six months against the Zacks Large Cap Pharmaceuticals industry’s rise of +7.2%. The Zacks analyst believes that Merck’s products like Keytruda, Lynparza and Bridion are driving sales.
Animal health and vaccine products remain core growth drivers. The potential separation into two companies makes strategic sense as the remaining Merck should be able to achieve higher profits than the combined company.
Merck experienced less-severe-than-anticipated COVID-19 impact on second-quarter results and expects trends to improve in the second half. However, generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line.
AT&T shares have lost -3.3% over the past three months against the Zacks Wireless National industry’s rise of +10.9%. The Zacks analyst believes that AT&T is well placed to benefit from the streaming services of its newly launched HBO Max. The company is committed to a three-year financial framework with sustained investments and debt-reduction efforts.
AT&T intends to deploy a standards-based, nationwide mobile 5G network to spur growth. The company expects to gain a competitive edge through edge computing services that offer the flexibility to better manage data traffic.
However, AT&T is witnessing a steady decline in linear TV subscribers, legacy services and wireline division. Continued cord-cutting remains a perennial challenge as consumers increasingly cancel pay TV packages for cheaper streaming options. As it tries to woo customers with discounts, freebies and cash credits, margins tend to fall. Spectrum crunch in a saturated wireless market is another operational headwind.
Other noteworthy reports we are featuring today include NIKE (NKE), Honeywell International (HON) and GlaxoSmithKline (GSK).
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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>>>