Today's Must Read
Higher Pricing Aids Altria (MO) Earnings; Volumes to Hurt
Bristol-Myers' (BMY) Opdivo Looks Strong Amid Competition
Tuesday, August 1, 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 Procter & Gamble (PG), Altria (MO) and Bristol-Myers (BMY). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Procter & Gamble shares have outperformed the Zacks Consumer Staples sector in the past year (+4.8% vs. +2.1%). However, P&G shares have underperformed the S&P 500 index in the year-to-date period (up +8.1% vs. +10.5%).
P&G’s earnings and revenues surpassed expectations in fourth-quarter fiscal 2017. Adjusted earnings increased 8% year over year but net sales remained unchanged with the year-ago level.
The company has been struggling to boost market growth for the last few quarters. But the Zacks analyst likes the fact that P&G is speeding up innovations and investments to counter softening industry growth. Its productivity improvements and aggressive cost-saving efforts, projected to save $10 billion over the next five years, are also consistently helping to boost profit levels.
Sharesof Altria have lagged the Zacks Tobacco industry in the year-to-date period, with the stock down -3.1% vs. the peer group’s +12.2% gain. Both Altria’s earnings and revenues grew year-over-year in the second quarter 2017 driven by strong cigarette pricing and increase in smokeless products.
Altria, the U.S.-based entity whose international sibling is Phillips Morris International (PM), is operating in a mature and heavily regulated market that has been undergoing consistent volume declines over the last many years. But the strength of Marlboro brand and a solid portfolio or low-risk smokeless tobacco products positions it to profitably navigate this market.
Further, the takeover of SABMiller by Anheuser-Busch InBev has helped Altria maximize the value of its SABMiller investment. An attractive dividend, currently yielding 3.8%, is a notable part of this story as well.
Bristol-Myers’s shares have underperformed the broader market as well as the large cap pharma group this year, losing -2.5% in the year-to-date period. Bristol-Myers delivered yet another strong quarter with the top and the bottom line beating expectations driven by sales of drugs like Opdivo, Eliquis and Yervoy.
Meanwhile, Bristol-Myers is looking to expand Opdivo’s label further which should boost performance. However, Opdivo is currently facing competitive challenges in the U.S. With the FDA approving Merck’s Keytruda, for the first-line treatment of metastatic nonsquamous NSCLC, the company is expected to see further loss of market share. Shares were down after Q2 results as concerns from AstraZeneca’s failed study on lung cancer drug Imfinzi loomed large on the company’s CheckMate 227 study on Opdivo.
Other noteworthy reports we are featuring today include Stryker (SYK), ConocoPhillips (COP) and Electronic Arts (EA).
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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>>>