Today's Must Read
Revlimid's Growth Being Offset By Otezla at Celgene (CELG)
Equity Focus, Acquisitions Support BlackRock (BLK) Revenues
Monday, November 6, 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 Facebook (FB), Celgene (CELG) and BlackRock (BLK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Facebook’s shares have outperformed the S&P 500 index over the last year, gaining +46.5% vs. +21.3%. Facebook reported strong third quarter 2017 results as mobile and live video efforts continue to pay off in a big way. Instagram remains another important revenue stream.
Apart from mobile and video, the monetization opportunities of the company’s other subsidiaries – Messenger, WhatsApp and Oculus – and a huge user base/higher engagement levels are expected to drive growth going ahead. Facebook is also dabbling in AR/VR and AI technologies, which bodes well for long term growth.
However, due to the recent uproar caused by apparent usage of the platform by Russian elements for interfering in the election process has put Facebook in a spot. As a result, Facebook CEO Mark Zuckerberg has said that it will make sizable investments to tighten security on the platform which along with continued investments in video, AR/VR and AI, will dent operating margins going ahead.
Shares of Celgene have underperformed the Zacks Biomedical and Genetics industry in the year so far, losing -13.6% vs. an increase of +3.9%. Celgene’s third-quarter results were mixed with the company beating on earnings but missed on sales estimates.
While Revlimid sales were impressive yet again, Otezla sales in the United States were weak due to challenges in the dermatology market which led the management to cut guidance. Celgene’s Revlimid continued to outperform driven by further market share increases in newly diagnosed myeloma and the continued increase in treatment duration. Pomalyst and Abraxane also performed well.
The Zacks analyst likes the company’s progress with its label expansion efforts and pipeline development. The approval of Idhifa in the United States for relapsed and/or refractory acute myeloid leukemia has further boosted the company’s portfolio.
However, Celgene is highly dependent on Revlimid while Abraxane sales are under competitive pressure. Weakness in Otezla’s performance will also remain a headwind.
Buy-rated BlackRock’s shares have outperformed the Zacks Investment Management industry in the last six months, (+25.3% vs. +16.9%). This performance is supported by impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters.
The company’s third quarter 2017 earnings were supported by a rise in revenues and steady asset inflows while higher expenses were the undermining factor. The Zacks analyst likes Blackrock’s initiatives to restructure its actively managed equities business with an aim to meet changing client needs.
These efforts, along with technological changes and its attempt to expand globally via acquisitions will further help top-line growth going forward. However, mounting expenses mainly due to continued rise in marketing costs and high dependence on overseas revenues remain major concerns.
Other noteworthy reports we are featuring today Danaher (DHR), EOG Resources (EOG) and BP (BP).
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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>>>