Today's Must Read
HSBC's (HSBC) Cost Saving Efforts to Continue Growing Profitability
Starwood Buyout & Solid Expansion Drives Marriott (MAR)
Wednesday May 31, 2017
Pharmaceutical stocks have been under pressure since last year on pricing and regulatory concerns and Eli Lily shares have been no different. That said, the stock has done modestly better than the peer group; it is up +5.7% over the last 12 months vs. +1.7% gain for the Zacks Pharma industry and -0.7% decline for the Zacks Medical sector as a whole. Lilly’s recent high-profile pipeline setbacks are a concern for investors. But the Zacks analyst is encouraged by the fact that Lilly expects to launch 20 new products in a 10 year time-frame ranging from 2014 to 2023 and could launch at least 2 new indications/line extensions on average every year. Moreover, Lilly returned to annual dividend hikes in Dec 2016 and plans to return excess cash through share buybacks. (You can read the full research report on Eli Lily here >>>).
Shares of Buy rated HSBC outperformed the Zacks Foreign Banks industry over the last three months, gaining +7.3% vs -1.7%. The Zacks analyst likes its extensive global network, strong capital position and a solid asset growth. Moreover, continued disposal of unprofitable/non-core operations has enhanced its efficiency, as operating costs remain manageable. Further, the company remains on track to achieve its 2017 cost savings target. However, operating uncertainty in the post-Brexit Europe remains a major cloud on the bank as are recent muted trends in loan demand. (You can read the full research report on HSBC here >>>).
Marriott’s shares have outperformed the Zacks Hotels industry in the year-to-date period (the stock is up +28.9% vs. +3.9% gain for the industry). With the purchase of Starwood, Buy-rated Marriott became the world’s largest hotel company that provides it with increased scale and a robust development pipeline. The Zacks analyst likes Marriott’s rising North American business and large international exposure and thinks they should continue to drive growth. Further, investments in technology for hotel bookings are likely to improve guest experience and thus boost occupancy. Yet, political uncertainties in key international markets and currency headwinds remain causes of concern. (You can read the full research report on Marriott here >>>).
Other noteworthy reports we are featuring today include Kinder Morgan (KMI), American Airlines (AAL) and Humana (HUM).
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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>>>