Today's Must Read
Wireless Network Expansion Strategies to Boost Verizon (VZ)
Merck's (MRK) New Drugs to Drive Sales, Generic Pressures Stay
Friday, July 14, 2017
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 Facebook (FB), Verizon (VZ) and Merck (MRK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>>
Facebook’s shares have outperformed the S&P 500 index over the last one year, gaining +35.8% vs. +13.1%. Apart from mobile and video, the potential for monetization of its Instagram, Messenger, WhatsApp and Oculus assets, a huge user base and room for higher engagement levels remain at the core of the company's attractive fundamentals.
Longer term, Facebook's investments in augmented reality/virtual reality (AR/VR) and artificial intelligence (AI) technologies also remain promising. On the flip side, Facebook has stated that revenues will now face tougher year-over-year comparisons. Stiffening competition for ad dollars is another major concern. (You can read the full research report on Facebook here >>>).
Shares of Verizon have been laggards over the past year -- the stock is down -22.1% over the past 12 months vs. AT&T's -15.6% decline and the +13% gain for the S&P 500 index. Verizon's underperformance reflects the market's concerns about the company's muddled strategy in the digital media domain and rising competitive pressures in its core U.S. wireless business.
The Yahoo purchase, as well as other previously acquired digital properties like AOL, Huffington Post will boost its digital media suite. The long-term expectation is that these assets will give it a sizable enough platform to capture digital marketing dollars. The jury is still out on the long-term viability of these efforts, but the company is also trying to be a player in the online TV streaming space and defend its leadership position in the wireless market through 5G wireless network trials.
However, a full-phased 5G wireless network will be offered only in 2020.The company's dividend appears safe (currently yields more than 5%), but the inherent capital intensity of its core business and the need for purchases on the digital side ends up eating up more than it generates in its operations. In the updated research report issued today, the Zacks analyst discusses the pros and cons of investing in Verizon shares at present. (You can read the full research report on Verizon here >>>).
Buy-rated Merck’s shares have outperformed the Large Cap Pharmaceuticals industry over the last one year, gaining +5.4% versus the industry’s -1.1% decline. This momentum reflects the progress it has made with product pipeline.
While generic competition for several drugs and pricing pressures as are material in the Merck story as they are for many of its peers, the Zacks analyst points out that the company's new products like Keytruda and Zepatier hold great potential. Also, Merck will continue to focus on cost-cutting initiatives to drive the bottom line.
Estimates have remained stable ahead of the company’s Q2 earnings release. Merck has a positive record of earnings surprises in the recent quarters. The Zacks analyst discusses all of these issues in the updated research report issued today. (You can read the full research report on Merck here >>>).
Other noteworthy reports we are featuring today include ExxonMobil (XOM), Pepsi (PEP) and HCA Healthcare (HCA).
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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>>>