Today's Must Read
Solid Top Line Drives UnitedHealth (UNH) Amid Membership Dip
AbbVie (ABBV) U.S. Humira Demand Solid, Skyrizi, Rinvoq Shine
Wednesday, September 9, 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 Alphabet (GOOGL), UnitedHealth Group (UNH) and AbbVie (ABBV). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Alphabet shares have lagged the Zacks Internet Services industry in the year-to-date period (+13.8% vs. +19.5%), reflecting cyclical exposure to ad spending trends as a result of the pandemic-driven economic downturn. But the Zacks analyst sees the company's strengthening cloud unit as a source of substantial long-term growth. Moreover, expanding data centers will continue to bolster its presence in the cloud space.
Further, major updates in its search segment are enhancing the search results, which is a major positive. Moreover, Google’s robust mobile search is gaining solid momentum. Additionally, strong focus on innovation of AI techniques and the home automation space should aid business growth in the long term.
Further, its deepening focus on wearables category remains a tailwind. However, the company’s growing litigation issues and increasing expenses might hurt profitability. Further, the company faces persistent pressure from advertisers to tighten controls on YouTube video service.
Shares of UnitedHealth have gained +9.7% over the past six months against the Zacks Medical Insurance industry’s rise of +0.7%. The Zacks analyst believes that UnitedHealth's continued strong growth at Optum and UnitedHealthcare segments have been driving revenues. Its favorable government business and strong capital position are other positives.
It has been benefiting from higher segmental contributions, which helped it counter the coronavirus-led fund crunch. Its numerous acquisitions bolstered its inorganic growth profile. Its expansion of the health services segment and international business provides significant diversification benefits.
The company's solid balance sheet and consistent cash flow generation not only encourage investment in business but also enables it to return shareholders’ value. Retaining 2020 earnings guidance instills investor confidence. However, it is witnessing a slowdown in its international operations. Commercial membership may also see attrition due to increased joblessness.
AbbVie shares have gained +32.3% over the past year against the Zacks Large-Cap Pharmaceuticals industry’s rise of +11.8%. The Zacks analyst believes that AbbVie has been successful in expanding labels of its cancer drugs, Imbruvica and Venclexta. It has an impressive late-stage pipeline.
The company gained approvals for two new drugs with significant potential, Skyrizi (risankizumab) and Rinvoq, in 2019. Both are off to a strong start. Allergan’s acquisition has diversified AbbVie’s revenue base into new therapeutic areas, enhancing its long-term growth potential.
However, sales erosion due to direct biosimilar competition to Humira in international markets is a big headwind. Also, the decline in HCV drug Mavyret’s sales is a concern.
Other noteworthy reports we are featuring today include Microsoft (MSFT), Adobe Systems (ADBE) 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>>>