Today's Must Read
Amgen's (AMGN) New Drugs Driving Sales in 2017
Caterpillar (CAT) Buoyed by Asia, Cost Cuts & Construction
Friday, August 11, 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 Disney (DIS), Amgen (AMGN) and Caterpillar (CAT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Disney’s shares have underperformed the Zacks Media Conglomerates sector over the last three months, declining -7.6% vs. -3.5%, primarily due to ongoing concerns regarding ESPN’s future. Identical to its performances over the past few quarters, ESPN results disappointed in the third quarter yet again. Further, the stock came under pressure after the company reported mixed third-quarter fiscal 2017 results.
Earnings came in above expectations but revenues lagged the same for the fourth straight quarter. However, the Zacks analyst likes the company’s decision to terminate its distribution agreement with Netflix for subscription streaming and launch its own streaming services – one for Disney and Pixar brands and another for ESPN followers.
Further, in an effort to attract online viewers, Disney which had earlier acquired 33% stake BAMTech announced its intention to acquire another 42% stake in the firm. Moreover, its Movies and Parks & Resorts businesses look promising.
Amgen shares have outperformed the Zacks Biomedicals and Genetics industry year to date, gaining +15.7% vs. +5.6%. Amgen beat estimates on both earnings & sales in the second quarter. While Amgen slightly tightened the sales guidance, it raised the earnings outlook backed by strong profits in the first half. The Zacks analyst likes the performance of Amgen’s newer drugs – Prolia, Xgeva, Vectibix, Nplate and Sensipar.
Amgen is also progressing with its pipeline including biosimilar drugs. However, the company has some challenges in store, given the presence of biosimilar competition and slowdown in sales of mature drugs. Volume growth of new drugs may not be enough to offset the lost sales due to the decline in mature brands. Also the softness in Enbrel sales due to stiff competitive pressure is a key cause for concern. Meanwhile, uptake of Repatha has been slow due to payer restrictions.
Strong Buy-rated Caterpillar's shares have gained +22% year-to-date, outperforming the Zacks Construction and Mining industry which has increased +19.8% over the same period. Caterpillar’s top and bottom line both improved on a year-over-year basis in the second quarter and also beat expectations. Better-than-expected results in first-half 2017 can be attributed to its cost-control actions.
Backed by upbeat results and improved order activity, Caterpillar hiked revenue guidance to the range of $42–$44 billion and projects earnings per share of $5.00. The Zacks analyst thinks the Asia Pacific region will continue to be the catalyst in both Resource Industries as well as construction, owing to increased infrastructure and residential investment in China.
Also, leading indicators of U.S. construction signal robust conditions ahead that bodes well for Caterpillar. The company’s efforts to reduce costs will help boost margins.
Other noteworthy reports we are featuring today include NextEra Energy (NEE), S&P Global (SPGI) and Emerson Electric (EMR).
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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>>>