Today's Must Read
Commercial Jet Demand Aids Boeing (BA), Deferred Costs Ail
Merck's (MRK) New Drugs Drive Sales amid Generic Pressure
Tuesday, December 5, 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), Boeing (BA) and Merck (MRK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Home Depot’s shares have gained +37.9% year to date, compared with the +31.5% gain of the Zacks Retail Building Products industry, backed by its five-year long trend of beating earnings estimates. The company delivered bottom-line beat in third-quarter fiscal 2017, while sales topped estimates for the fifth straight quarter.
Results gained from strength in core business as well as relentless focus on affording innovative products, boosting interconnected customer experience and driving productivity. Steady housing market recovery and strong customer demand also remained tailwinds.
While hurricane-related activities aided comps growth, gross margins on such sales were significantly below average. This led to a decline in gross margin, which is likely to continue in fiscal 2017. Moreover, competition from online retailers may impact performance.
Shares of Boeing have surged +78.6% over the past year, outperforming the Zacks Aerospace & Defense sector, which gained +39.2% during the same time period. Notably, Boeing is the largest aircraft manufacturer in the world in terms of revenue, orders and deliveries, and one of the largest aerospace and defense contractors.
In this regard, the company’s 20-year market outlook forecasts commercial jetliner demand to increase by 3.6%. Yet, this aerospace company continues to face challenges from order cancellations, stiff competition as well as falling delivery numbers. Furthermore, Boeing’s 787 Dreamliner's deferred production cost remains a cause of concern.
Merck’s shares have underperformed the Zacks Large Cap Pharmaceuticals industry over the last year, losing -6.8% versus +18.5%, as the company has suffered some notable pipeline setbacks this year. Merck enjoys a diversified business across branded drugs, vaccines and animal health.
Merck has made significant progress with its pipeline and is working on bringing new products to the market. 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 this year 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.
Other noteworthy reports we are featuring today include Sinopec (SNP), Allstate (ALL) and Illumina (ILMN).
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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>>>