Today's Must Read
PBM Unit Aids Express Scripts (ESRX) Amid Cutthroat Competition
Fleet Upgrade, Passenger Revenue Growth Buoy Southwest (LUV)
Friday, March 2, 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 Intuit (INTU), Express Scripts (ESRX) and Southwest Airlines (LUV). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Intuit’s shares have underperformed the Zacks Software industry over the last year, increasing +29.9% vs. a gain of +33.8%. However, Intuit reported encouraging Q2 results. Its revenue and earnings performance improved on a year-over-year basis, backed by better-than-expected growth in Turbo Tax and QuickBooks Online.
The company also issued impressive earnings guidance for the third quarter. The Zacks analyst likes Intuit’s growing SMB exposure and believes that its strategic acquisitions will fortify this segment. Due to the continuously emerging new technologies and current market trends, cloud-based business and financial software solutions have been gaining momentum.
As Intuit is already a market leader in this segment, the increased adoption helped it gain new customers, in turn, boosting the overall performance. Moreover, the company’s strategy of shifting its business to cloud-based subscription model will help generate more stable revenues over the long run.
Shares of Express Scripts have outperformed the Zacks Medical Services industry over the last one year, gaining +3.5% vs. +0.5%. Express Scripts ended the fourth quarter on a solid note, beating both earnings and revenue estimates.
The company has been benefitting from a rise in patient claims and strong customer retention lately. Express Scripts’ solid guidance for 2018 holds promise. The company recently inked an agreement to acquire eviCore healthcare for $3.6 billion. Express Scripts' pharmacy-benefit management segment (PBM) coupled with eviCore's complementary medical-benefit solutions is likely to build a comprehensive PBM solution worldwide.
On the flip side, the company recently announced that its biggest customer and leading health insurer Anthem is not likely to extend its PBM agreement with Express Scripts anymore. Persistent drug pricing issue is also anticipated to affect the stock. Intensifying competition also adds to the woes.
Southwest Airlines’ shares have outperformed the Zacks Airline industry over the past six months, gaining +11.2% vs. +10.9%. Further, the stock has outperformed its fellow low-cost carrier, JetBlue Airways, which has gained +6.4% over the same period.
In fact, Southwest seems to benefit from robust growth in passenger revenues backed by strong demand for air travel. This is further highlighted in the company's impressive January traffic report.
Additionally, Southwest's projection on unit revenues for the first quarter of 2018 is encouraging. The Zacks analyst is also impressed with the company's efforts to upgrade its fleet.
Moreover, efforts to reward shareholders through dividends and buybacks raise optimism in the stock. The new tax law is an added positive for Southwest. However, high operating expenses mainly due to the rise in fuel costs are hurting the bottom line.
Other noteworthy reports we are featuring today include Kroger (KR), Sempra Energy (SRE) and Agilent (A).
Don’t Even Think About Buying Bitcoin Until You Read This
The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks’ has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
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>>>