Today's Must Read
Strong International Business, Cost Control Aids Aetna (AET)
Becton (BDX) Banks on Bard Takeover, Medical Unit Sluggish
Friday, September 8, 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 Home Depot (HD), Aetna (AET) and Becton, Dickinson (BDX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Home Depot's shares are up +26.7% over the last year, outperforming the Zacks Retail sector (up +17.8%) as well as the broader market (S&P 500 up +18.3%) in that same time period. The company has been consistently gaining from its interconnected strategy, focus on Pro customers, and housing market recovery. These factors helped the company post a stellar second-quarter fiscal 2017 performance, which marked its highest ever quarterly sales and earnings.
Pro category sales continued to outperform, driven by constant efforts to enrich customers’ experiences. The sturdy first half performance and expectations of improved home prices encouraged the company to raise its fiscal 2017 view. However, gross margin remains plateaued, and is likely to fall 10 bps in fiscal 2017. Also, competition from online retailers may impact results.
Shares of Buy-rated Aetna have outperformed the Zacks Health Maintenance Organization industry year to date (up +31.4% vs. +28.3%). The Zacks analyst expects the company to derive long-term growth from its Government business. Cost-reduction initiatives and growing ACO collaborations have paved the way for long-term growth.
A strong balance sheet is another positive. Its International expansion is also perceived as an opportunity in the face of increased regulation in the U.S. Following strong second-quarter results, Aetna raised its earnings guidance which cements investors' confidence in the company.
Becton, Dickinson’s shares have outperformed the Zacks Dental Supplies industry year to date, gaining +22.3% vs. +18%. The company is steadily progressing with its planned acquisition of medical technology player, C. R. Bard. The $24-billion transaction is slated to be completed in the fourth quarter of fiscal 2017. Post completion, BD expects growth in adjusted earnings starting fiscal 2019.
The Zacks analyst thinks the acquisition as a strategic fit which will generate benefits from complementary businesses and geographical expansion. BD's cost-control initiatives are also noteworthy. On the flipside, unfavorable sales performance from the BD Medical segment is a concern in the near term. Performance in the segment was affected by sluggishness in the Medication Management Solutions and Pharmaceutical Systems units in the U.S. (You can read the full research report on Becton, Dickinson here >>>).
Other noteworthy reports we are featuring today include Kellogg (K), Conagra (CAG) and FirstEnergy (FE).
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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>>>