Today's Must Read
Robust Loan Balance, Branch Expansion Support JPMorgan (JPM)
Ibrance & Other Key Drugs to Drive Pfizer's (PFE) Sales
Friday, January 22, 2021
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the Q4 earnings season, in addition to new research reports on 16 major stocks, including Amazon.com (AMZN), JPMorgan Chase (JPM) and Pfizer (PFE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Q4 Earnings Season Scorecard
As of Friday, January 21st, we have seen Q4 results from 66 S&P 500 members, with another 113 index members on deck to report results next week, including a host of bellwethers like Facebook (FB), Apple (AAPL), Tesla (TSLA) and others.
Total earnings for the 66 index members that have reported are up +0.3% from the same period last year on +0.6% higher revenues, with 87.9% beating EPS estimates and 78.8% beating revenue estimates.
This is better growth numbers than we saw from the same group of companies in the first three quarters of 2020, while the proportion beating EPS and revenue estimates is one of the highest in years.
Looking at Q4 as a whole, combining the actuals that have come out with estimates for the still-to-come companies, total earnings are now expected to be down -5.3% on +0.6% higher revenues.
Estimates for the current period (2021 Q1) have been steadily going up, a trend that has been in place since July 2020. Total earnings for 2021 Q1 are now expected to be up +13.8%, which is up from +11.7% on December 9th.
Amazon shares have outperformed the S&P 500 over the past year (+74.5% vs. +17.9%) on the back of solid Prime momentum owing to ultrafast delivery services and strong content portfolio.
Further, coronavirus-led spike in online orders continues to be a major tailwind. Also, solid growth in its online stores sales remains a positive. Moreover, surge in online grocery shopping is another positive. Additionally, strong adoption rate of AWS is aiding the company’s cloud dominance.
Moreover, expanding AWS services portfolio is continuously helping Amazon in gaining further momentum among the customers. Further, improving Alexa skills and expanding smart home products portfolio are positives. However, accelerating coronavirus related expenses remain risks for the company’s margin expansion in the near term. Also, rising cloud competition poses risk.
Shares of JPMorgan have gained +35.4% in the last six months against the Zacks Major Banks industry’s gain of +30.3%. The Zacks analyst believes that branch openings in new regions, inorganic expansions and strong mortgage banking business are likely to continue supporting financials.
The company's earnings have outpaced the Zacks Consensus Estimate in three of the trailing four quarters. Its fourth-quarter 2020 results reflect reserve releases, solid fee income performance, and adverse impact of low rates and weak loan demand.
While the Fed's accommodative policy and near-zero rates are expected to hurt interest income and margins, and coronavirus-induced economic downturn has hampered business activities, thereby hurting loan demand, gradual economic recovery amid vaccine breakthroughs will aid. Additionally, the company’s enhanced capital deployments reflect earnings strength and solid balance sheet.
Pfizer shares have lost -4.5% over the past three months against the Zacks Large-Cap Pharmaceuticals industry’s rise of +10.2%. The Zacks analyst believes that currency headwinds and pricing pressure are top-line headwinds for the company.
However, Pfizer expects strong growth of key brands like Ibrance, Inlyta and Eliquis to drive sales. Its COVID-19 vaccine candidate is now approved for emergency use in several countries. However, coronavirus-related business disruption hurt sales in Q2 and Q3. The pace of recovery of COVID-19 impact is slower than expected.
Meanwhile, currency headwinds and pricing pressure are other top-line headwinds. Estimates have gone down ahead of Q4 earnings. Pfizer has a mixed record of earnings surprises in the recent quarters.
Other noteworthy reports we are featuring today include Bank of America (BAC), salesforce.com (CRM) and Chevron (CVX).
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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>>>