Today's Must Read
Key Drugs Drive Merck's (MRK) Sales Amid Generic Woes
Intelligrated Unit Drives Honeywell (HON), Weak Demand Ails
Thursday, November 12, 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 Coca-Cola Company (KO), Merck (MRK) and Honeywell International (HON). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Coca-Cola shares have underperformed the Zacks Soft Drinks Beverages industry in the year to date period (-4.1% vs. -1.3%). The Zacks analyst believes that it is poised to gain from the streamlining of portfolio and accelerating investments to expand digital presence due to a shift in consumer preference.
However, continued pressures in the away-from-home channel, which account for nearly half of its revenues, hurt revenue growth. It also lost global value share in NARTD beverages on negative channel mix.
Meanwhile, gains from aggressive cost management aided the bottom line in the third quarter. Moreover, revenues surpassed the Zacks Consensus Estimate. Although the earnings and sales declined on a year-over-year basis, the company’s third-quarter revenues and volume reflected improved trends from the second quarter.
Shares of Merck have lost -5.8% over the past year against the Zacks Large Cap Pharmaceuticals industry’s rise of +8.3%. The Zacks analyst believes that generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line.
Sales of some key products like Gardasil 9 vaccine are being hurt due to COVID-19-related business disruption. Meanwhile, Merck beat Q3 estimates for both earnings and sales. Merck drugs like Keytruda, Lynparza and Bridion have been driving sales. Keytruda sales are gaining from continued uptake in lung cancer and increasing usage in other cancer indications.
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.
Honeywell’s shares have gained +61.9% over the past six months against the Zacks Diversified Operations industry’s rise of +44.9%. The Zacks analyst believes that strength in defense and space businesses as well as solid demand for warehouse automation products are likely to boost Honeywell’s revenues in the quarters ahead.
Solid demand for personal protective equipment, along with a strong backlog conversion rate, will act as tailwinds. Increased commercial and operational excellence initiatives are likely to improve its near-term profitability. It is committed to rewarding shareholders handsomely.
However, the company believes that the coronavirus outbreak-led market downturn and weak commercial aerospace will adversely impact its near-term results. Given its extensive geographic presence, its business is subject to political, economic and geopolitical issues. Rise in debt levels can increase its financial obligations.
Other noteworthy reports we are featuring today include Wells Fargo (WFC), 3M Company (MMM) and General Electric (GE).
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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>>>