Today's Must Read
Adobe (ADBE) Rides on Creative Strength; Expenses A Concern
Ibrance & Other Key Drugs to Drive Pfizer's (PFE) Sales
Thursday, October 29, 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 UnitedHealth Group (UNH), Adobe (ADBE) and Pfizer (PFE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
UnitedHealth shares have outperformed the Zacks Medical Insurance industry in the year to date period (+2.9% vs. -2%). The Zacks analyst believes that its numerous acquisitions bode well for its inorganic growth profile. Further, expansion of its health services segment provides significant diversification benefits.
A solid balance sheet and consistent cash flow generation not only encourage investments in business but also add shareholder value. The company’s top line has been bolstered by new deals, renewed agreements and expansion of service offerings.
It's third-quarter earnings of $3.51 per share beat estimates by 17.8%, but declined 9.5% year over year as the pandemic-disrupted healthcare utilization returned closer to normalcy. However, it is witnessing a slowdown in its international operations. Commercial membership may also see attrition due to increased joblessness.
Shares of Adobe have gained +65.9% over the past year against the Zacks Computer Software industry’s rise of +31%. The Zacks analyst believes Adobe is gaining from strong demand for its creative products. The company’s Creative Cloud, Document Cloud and Adobe Experience Cloud products are driving the top-line growth.
Further, rising subscription revenues and solid momentum across mobile apps are major positives. Additionally, growth in emerging markets, robust online video creation demand and improving average revenue per user are tailwinds. We remain optimistic about Adobe’s market position, compelling product lines, continued innovation, solid adoption of Creative Cloud and Adobe marketing cloud.
However, lower end-market demand is a concern. Further, significant exposure in Europe is an overhang due to foreign currency headwinds. Additionally, high acquisition expenses do not bode well for margin expansion.
Pfizer’s shares have lost -8.8% over the past six months against the Zacks Large-Cap Pharmaceuticals industry’s fall of -6.1%. The Zacks analyst believes that the Consumer Healthcare joint venture with Glaxo and the pending merger of Upjohn unit with Mylan will make Pfizer a smaller company with a diversified portfolio of innovative drugs and vaccines.
The smaller Pfizer should see better revenue growth as the Lyrica loss of exclusivity (LOE) cliff will go away. Pfizer expects strong growth of key brands like Ibrance and Eliquis to drive sales in future quarters. The focus remains on the progress of its COVID-19 vaccine.
Pfizer beat Q3 estimates for earnings while missing the same for sales. It narrowed its 2020 guidance due to a slow pace of recovery from pandemic. However, currency headwinds and pricing pressure are key top-line headwinds. Coronavirus-related business disruption hurt sales in Q2 and Q3.
Other noteworthy reports we are featuring today include Roche (RHHBY), Intel (INTC) and T-Mobile US (TMUS).
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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>>>