Today's Must Read
Cisco (CSCO) Drives on Partnerships, Enhanced ACI Solution
Gilead (GILD) Acquires Kite to Diversify As HCV Remains Weak
Friday, October 13, 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 NIKE (NKE), Cisco Systems (CSCO) and Gilead Sciences (GILD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
NIKE has lagged the Zacks Shoes and Retail Apparel industry in the past three months (-12.4% vs. -10.7%), due to lackluster sales in its key North American market. Notably, sales in the region dipped 3% in first-quarter fiscal 2018, wherein the gross margin was hurt by currency woes and a higher mix of off-price sales. The company anticipates near-term results to be hurt by the tough retail environment, which led to a bleak second quarter view.
However, the company’s robust growth and innovation efforts have been reflected in every quarter’s results for over three fiscal years now. The company’s last reported quarter gained from strength in international business and the global NIKE Direct business.
Also, NIKE has been focused on its Consumer Direct Offense plan. Driven by its Triple Double strategy, this restructuring plan focuses on using digital methods for rapid innovation and product development, along with strengthening consumer relations by operating through core regions.
Cisco has outperformed the Zacks Computer Networking industry on a year-to-date basis, gaining +10.1% vs. a rise of +9.5%. The company’s expanding footprint in the rapidly growing security market presents significant growth opportunity. Further, the company’s focus on driving cost improvement, operational efficiencies and productivity will help in margin expansion. Additionally, partnerships with Telenor, Apple, IBM and Microsoft are positive in our view. Moreover, the recently updated ACI solution will boost expertise in the SDN market.
However, top-line will continue suffer from intensifying competition, slowing order growth from service providers and challenges in the emerging markets. The Zacks analyst continues to believe that the time-consuming transition to subscription-based business model will hurt top line growth at least in the near term. Estimates have been stable lately ahead of the company's Q1 earnings release. The company has mixed record of earnings surprises in recent quarters.
Shares of Gilead have outperformed the Zacks Biotech industry so far in 2017, increasing +13.5% vs. a gain of +13%.The company acquired Kite Pharma to foray into the CAR T therapy space which represents immense potential at this juncture and a potential approval of lead candidate axi-cell (expected in November) will be a significant boost for Gilead’s prospects which has dampened of late.
Gilead had a strong cash balance and the decline in the once lucrative hepatitis C (HCV) market due to competitive pressure made the company look for strategic alternatives. The Zacks analyst notes that Gilead is known for its presence in the HCV market because of its blockbuster HCV drugs, Sovaldi and Harvoni.
However, the HCV franchise is under pressure because of competition and pricing issues. Meanwhile, the HIV franchise maintains momentum driven by the rapid adoption of TAF-based regimens in the U.S. and EU.
Other noteworthy reports we are featuring today include Las Vegas Sands (LVS), Dominion Energy (D) and Aon (AON).
4 Stocks to Watch after the Massive Equifax Hack
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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>>>