Today's Must Read
United Technologies (UTX) Rides High on Rockwell Merger
Strong Optum, Solid Balance Sheet Aids UnitedHealth (UNH)
Friday, January 19, 2018
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 UnitedHealth (UNH), Amgen (AMGN) and United Technologies (UTX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated UnitedHealth’s shares have outperformed the Zacks Medical Insurance industry in the last year (up +53.2% vs. +52.9%). The company’s fourth-quarter earnings beat expectations and grew year over year, led by higher revenues in both its segments and membership growth.
The Zacks analyst likes the company’s robust Government business and continued strong growth at Optum. Its international business and strong capital position that allows for business investment are the other positives. It has been witnessing an increase in membership for several years.
The company has raised its 2018 earnings guidance, led by tax reform upside. Nevertheless, membership loss in its fee-based commercial and Brazilian businesses may pull down overall membership growth.
Shares of Amgen have gained +21.3% over the past one year, outperforming the Zacks Biomedical and Genetics industry, which has gained +4.2% over the same period. Amgen is well positioned for growth with several blockbuster drugs in its portfolio. Amgen’s newer drugs – Prolia, Xgeva, Vectibix, Nplate and Sensipar – are performing well.
Amgen is also progressing with its pipeline including biosimilar drugs. Additionally, the Zacks analyst thinks Amgen’s restructuring plan is making it leaner and more cost efficient. The company has a positive record of earnings surprises in the recent quarters. Estimate movement has been mixed ahead of the company’s Q4 earnings release.
However, the company has some challenges in store, given the presence of biosimilar competition and slowdown in sales of mature drugs. Also the softness in Enbrel sales due to stiff competitive and pricing pressure is a key cause for concern. Meanwhile, uptake of key new drug Repatha has been slow due to payer restrictions.
Buy-rated United Technologies’ shares have outperformed the Zacks Conglomerates sector in the last six months (the stock is up +10% vs. the -3.8% decline for the sector). United Technologies remains focused on four key priorities to fuel its growth momentum: flawless execution, innovation for growth, structural cost reduction and disciplined capital allocation.
The Zacks analyst thinks the acquisition of Rockwell Collins will offer the company bigger clout in the industry and increase its bargaining power as the combined entity would emerge as one of the largest global aircraft equipment manufacturers. The company’s aftermarket services business is relatively stable compared to new product delivery, and it helps offset the negative impact of downturns in the new products market.
Management further increased its guidance for 2017 on healthy growth dynamics. However, United Technologies is exposed to market price volatility and availability risks related to raw materials, which hamper its ability to meet delivery schedules and increase operating costs.
Other noteworthy reports we are featuring today include CSX Corporation (CSX), Becton, Dickinson (BDX) and General Dynamics (GD).
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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>>>