Today's Must Read
Strong Optum, Solid Balance Sheet Aids UnitedHealth (UNH)
Pfizer's (PFE) New Drugs, Cost Cuts & Lower Tax to Aid Profits
Tuesday, April 3, 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 Facebook (FB), UnitedHealth (UNH) and Pfizer (PFE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Facebook shares have underperformed the S&P 500 index in the last three months, losing -15.7% vs. -5.3%. Facebook has been battered by the recent data leak, which reportedly affected 50 million users. The fiasco has sparked concerns about user privacy on the platform. The incident not only grabbed the attention of government regulators worldwide but also fetched harsh criticism from the likes of Apple CEO Tim Cook.
Although CEO Mark Zuckerberg has apologized, it may not be enough to restore user as well as advertiser trust immediately. But the Zacks analyst thinks Facebook’s efforts to plug security loopholes as well as limit fake news will eventually boost trustworthiness.
The company’s focus on building strong “community” can hurt engagement over the next few quarters, the steps are prudent enough to expand user base over the long run. Meanwhile, estimates have been stable ahead of the company’s Q1 earnings release. Facebook has positive record of earnings surprises in recent quarters.
Shares of Buy-rated UnitedHealth have underperformed the Zacks Medical Insurance industry over the last six months (up +8.4% vs. +8.8%). The Zacks analyst likes the company’s robust Government business and continued strong growth at Optum, which are driving long-term growth. Its international business and strong capital position that allows for business investment are the other positives. It has been witnessing an increase in membership from past many years.
The company raised its 2018 earnings guidance led by tax reform upside. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised upward over the last 90 days. Nevertheless, membership loss in its fee based commercial business and Brazilian business will pull down the overall membership growth.
Buy-rated Pfizer’s shares have outperformed the peer group over the last three months (the stock is down -4.7% over this period vs. a -7.1% decline for the Zacks Large-Cap Pharmaceuticals industry). Pfizer continues to face headwinds in the form of genericization of key drugs, supply challenges in the legacy Hospira portfolio, pricing pressure and rising competition, which are hurting the top line.
However, the Zacks analyst thinks new products like Ibrance, contribution from acquisitions, cost cuts and share buybacks should help the company achieve its guidance. Pfizer also boasts a strong pipeline and expects approximately 25 to 30 drug approvals over the next five years, including around 15 products that have blockbuster potential.
Pfizer’s growing immuno-oncology portfolio offers a strong potential. Bavencio is being considered a key long-term growth driver for Pfizer. Pfizer has a positive record of earnings surprises in recent quarters. Estimates have gone up slightly ahead of its Q1 earnings release.
Other noteworthy reports we are featuring today include Marsh & McLennan (MMC), McDonald's (MCD) and MetLife (MET).
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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>>>