Today's Must Read
Solid S/4HANA Adoption Aids SAP, Soft License Uptake Hurts
Revlimid, Eliquis Fuel Bristol-Myers (BMY) As Opdivo Weakens
Wednesday, October 28, 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 Thermo Fisher Scientific (TMO), SAP SE (SAP) and Bristol-Myers Squibb (BMY). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Thermo Fisher shares have outperformed the Zacks Medical Instruments industry in the year-to-date period (+50.6% vs. +20.6%) on the back of strong momentum in the company's Life Sciences Solutions and Specialty Diagnostics segments.
Thermo Fisher ended the third quarter with better-than-expected numbers. The company delivered an outstanding quarterly performance, leveraging on its capacity to extend support amid the pandemic. In terms of end market, pharma and biotech registered growth on robust performance in bioproduction and pharma services.
In diagnostics and healthcare, the company experienced exceptionally high demand for COVID-19 testing. A strong capital structure looks encouraging. However, the coronavirus outbreak has massively disrupted the global supply chain. One of the end markets registered loss in the third quarter, largely due to customer shutdowns in China.
Shares of SAP have lost -13% over the past year against the Zacks Computer Software industry’s rise of +39.3%, with the German software giant losing big following weak cloud computing results in the Q3 report. That said, the Zacks analyst believes that SAP is poised to gain from robust uptake of S/4HANA, Fieldglass, and SuccessFactors Employee Central solutions. Further, SAP's alliances with IBM, Microsoft, Accenture and Verizon favor business prospects.
SAP’s Q3 earnings gained from solid contribution from Sapphire Ventures. However, revenues fell on soft uptake of software licenses and support offerings. Also, lingering coronavirus crisis led business impacts dented 2020 view. Nevertheless, high demand for e-commerce, digital supply chain, Qualtrics and cloud platform solutions, limited the decline.
However, rise in investments to enhance cloud-based offerings are likely to weigh on margins in near term. Also, coronavirus crisis led reductions in business travel are anticipated to impact Concur revenues.
Bristol-Myers shares have lost -4.7% over the past six months against the Zacks Biomedical and Genetics industry’s fall of -5.2%. The Zacks analyst believes that the label expansion of Opdivo for first-line NSCLC should boost prospects. The addition of sales from Celgene’s drugs has boosted growth prospects.
Blockbuster immuno-oncology drug, Opdivo, and blood thinner drug, Eliquis, drive growth for Bristol-Myers. Eliquis is the leading oral anti-coagulant drug and the company continues to witness growth in both Eliquis brand and the market.
Moreover, the addition of Revlimid has strengthened the oncology portfolio and fueled the top line. The company lifted its earnings guidance for 2020 in hope of a possible recovery in the second half. However, Opdivo’s performance was dismal as it faces stiff competition. Moreover, concerns will rise once Revlimid loses patent protection.
Other noteworthy reports we are featuring today include NextEra Energy (NEE), BHP Group (BHP) and Morgan Stanley (MS).
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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>>>