Today's Must Read
HIV, Coronavirus Drug Boost Gilead (GILD) Amid Competition
Dividends Aid Canadian National (CNI) Amid Weak Volumes
Friday, September 25, 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 Anheuser-Busch InBev (BUD), Gilead Sciences (GILD) and Canadian National Railway (CNI). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Anheuser-Busch shares have underperformed the Zacks Alcoholic Beverages industry in the year to date period (-35.5% vs. -23.4%). The Zacks analyst believes that gradual reopening of the on-premise channels across many countries led to improved volume trends on a month-to-month basis for AB InBev.
Though overall volume declined year over year in the quarter, volume trends improved on a month-to-month basis. Further, strength in the off-premise channel and premium brands remain encouraging. Driven by these trends, it reported better-than-expected top and bottom line result in second-quarter 2020.
Additionally, the company’s investment behind B2B platforms, e-commerce channels and digital marketing have accelerated in the past few months, which is likely to aid growth in the coming quarters. However, the company’s second-quarter top and bottom lines declined year over year driven by significant the impacts of the pandemic.
Shares of Gilead have lost -1.6% over the past year against the Zacks Biomedical and Genetics industry’s rise of +15.9%. The Zacks analyst believes that Gilead's strong HIV franchise should help the company maintain its momentum. Newly launched products should continue to perform well, thereby driving the top-line growth.
The ongoing pandemic impacted Gilead’s sales for both the HCV and HIV franchises, which caused fewer healthcare provider visits and screenings. HIV sales are impacted by lower sales volume of Truvada. Meanwhile, the company lifted its annual guidance probably to account for sales from its antiviral drug remdesivir for COVID-19.
Gilead is also seeing early signs of recovery from this impact and expects a full rebound by the second half. Increase in demand for remdesivir should boost the top line as the pandemic continues to impact more and more people globally. Yescarta too is picking up gradually. However, the prospects of remdesivir will be hit once a vaccine is out.
Canadian National’s shares have gained +36.3% over the past six months against the Zacks Rail industry’s rise of +37.3%. The Zacks analyst believes that Canadian National is being aided by shipments of higher volumes of grains.
The company moved a record 15 million metric tonnes of Canadian grain in the first half of 2020. The company's buyout of TransX is another positive and has contributed to its supply chain and intermodal businesses across North America. The company’s efforts to continue paying dividends to shareholders despite adversities are an added boon.
Strong free-cash flow generation (up 97.8% in first-half 2020) supports such activities. However, decline in freight revenues, mainly due to coronavirus-led weak volumes, is concerning. Deterioration in the operating ratio due to high operating expenses is an added bane. The company's liquidity position is also worrisome.
Other noteworthy reports we are featuring today include Zoetis (ZTS), Stryker (SYK) and Goldman Sachs (GS).
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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>>>