Today's Must Read
Goldman (GS) Exhibits Cost Control; Legal Issues Linger
Tesla (TSLA) Rides on Energy Storage Products Ramp Up
Friday, February 9, 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 Merck (MRK), Goldman Sachs (GS) and Tesla (TSLA). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Merck’s shares have underperformed the Zacks Large Cap Pharmaceuticals industry over the last year, losing -14.7% versus +9.8%. However, Merck beat estimates for earnings while missing the same for sales in Q4. New products like Keytruda, Lynparza, and Bridion should continue to contribute meaningfully to the top line in 2018.
Keytruda sales are gaining strong momentum with approval for additional indications especially in the first-line lung cancer setting as it is the only anti-PD-1 approved in this setting. The Animal Health unit is also strong and remains a core growth driver for Merck. 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 competitive pressure on the diabetes franchise and on products like Isentress (HIV), Zepatier (HCV) and Zostavax (vaccine) will remain headwinds in 2018.
Shares of Goldman Sachs have gained +9.3% over the six months, underperforming the +15.3% gain of the Zacks Investment Banking industry. However, the company boasts an impressive earnings surprise history. It has surpassed expectations for earnings in three out of the trailing four quarters.
Despite weak fixed income trading revenues, the company’s fourth-quarter 2017 results were supported by continued momentum in investment banking business. Though several issues, including sluggish global economic growth and lower client activity levels, remain near-to-medium-term headwinds, the Zacks analyst thinks the company’s well-diversified business and focus to capitalize on growth opportunities through strategic moves will continue to strengthen the overall business.
Further, cost-control measures are commendable. Additionally, steady capital-deployment activities have boosted investors' confidence.
Tesla’s shares have gained +4.1% over the past three months, outperforming the. -3.7% decline for the Zacks Domestic Automotive industry. Tesla reported mixed results during the fourth quarter. The company is making serious efforts to address Model 3 production bottlenecks and ramping up energy storage products.
Tesla continues to target weekly Model 3 production rates of 2,500 by the end of first-quarter 2018 and 5,000 by the end of second-quarter 2018. Tesla is also focused on geographical expansions and acquisitions for growth. The company is also rapidly developing a network of superchargers. However, high research and development costs, low number of chargers and high requirement of capital expenditure are some headwinds.
Other noteworthy reports we are featuring today include T-Mobile (TMUS), Activision (ATVI) and Prudential (PRU).
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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>>>