Today's Must Read
Caterpillar (CAT) Poised on Momentum in Asia & Construction
Xeon Scalable, Core 8 Chips Launch to Benefit Intel (INTC)
Thursday, August 31, 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 Merck (MRK), Caterpillar (CAT) and Intel (INTC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Merck’s shares have underperformed the Zacks Large Cap Pharmaceuticals industry over the last year, gaining +3.3% versus +7.5%. However, Merck has been pursuing acquisitions and business development deals to boost its pipeline. New products like Keytruda and Zepatier should continue to contribute meaningfully to the top line.
Keytruda is gaining strong momentum from new indication of first-line lung cancer. The Keytruda development program also significantly advanced in the first half with several key regulatory approvals.
Meanwhile, Merck will continue to focus on cost-cutting initiatives to drive the bottom line. However, generic competition for several drugs and pricing pressure will continue to be overhangs on the top line. Rising competition in the immuno-oncology market is also a significant concern. The Zacks analyst discusses all of these issues in the updated research report issued today.
Shares of Strong Buy-rated Caterpillar have gained +29.7% year-to-date, outperforming the Zacks Construction and Mining industry which has increased +27.2% over the same period. Caterpillar has been awarded a five year $663.6 million fixed-price contract from the Pentagon to supply commercial construction equipment. Caterpillar reported 12% rise in sales in July, its best performance so far in 2017.
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 Asia Pacific will continue to be a catalyst for both Resource Industries as well as construction, owing to increased infrastructure and residential investment in China.
Leading indicators of U.S. construction signal robust conditions ahead that bode well for Caterpillar. Further, efforts to reduce costs will boost margins.
Buy-rated Intel’s shares have lost -1.7% year to date, in contrast to the broader Technology sector as well as the red-hot semiconductors space (each up +19.7%). But Intel’s growing focus on the data-centric part of the business is encouraging. The launch of Xeon Scalable is anticipated to improve its footprint in the data center as well as AI space, going forward.
The company unveiled Myriad X, which will boost footprint in the IoT space. Moreover, the recent Core 8 launch will boost PC market share amid intensifying competition from AMD. Further, anticipated improvement in cost structure and lower spending, primarily due to improving operational efficiency will aid in expansion of margins going forward.
Additionally, aggressive share buyback will boost the bottom line in 2017. However, Top-PC makers like HP, Lenovo, and Asus are set to launch PCs based on Qualcomm’s ARM-based Snapdragon processor, which is a headwind for the company. Moreover, declining PC-shipments is a concern.
Other noteworthy reports we are featuring today include Brown-Forman (BF.B), Analog Devices (ADI) and Best Buy (BBY).
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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>>>