Today's Must Read
Strong Aerospace Segment Drives Honeywell's (HON) Revenues
Wealth Management Focus, Trading Aid Morgan Stanley (MS)
Tuesday, April 24, 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 Johnson & Johnson (JNJ), Honeywell (HON) and Morgan Stanley (MS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Johnson & Johnson’s shares have lost -12.1% in the last three months, underperforming the -9.6% decline of the Zacks Large Cap Pharmaceuticals industry. J&J beat estimates for both earnings and sales in the first quarter and upped its previously issued sales outlook for 2018.
Though quite a few key products in J&J’s portfolio like Remicade and Concerta are facing generic competition, the Zacks analyst thinks new products in all segments, successful label expansion of cancer drugs like Imbruvica and Darzalex and contribution from recent acquisitions will continue to drive top-line growth.
J&J is also making rapid progress with its pipeline and line extensions. Share buybacks and restructuring initiatives should provide bottom-line support. Headwinds like generics, pricing pressure, sluggish growth in the Medical Device segment and soft global market conditions remain.
Shares of Buy-ranked Honeywell have outperformed the Zacks Diversified Operations industry in the last one year, increasing +14.9% vs. a -12.8% decline. Honeywell’s first-quarter 2018 earnings trumped expectations and rose 17.5% year over year.
The impressive performance can primarily be attributed to solid performances from each of the four segments of the company. The Zacks analyst likes the company’s diligent focus on working capital management, free cash flow generation and a conservative balance sheet amid a challenging macroeconomic environment.
With a flexible yet disciplined focus on cost and productivity, Honeywell remains focused on increasing its presence in high-growth regions. Also, the company’s balanced mix of long- and short-cycle businesses along with a decent organic growth in new products and expansion in high-growth regions auger well on a long-term perspective. However, the company is susceptible to material price inflation, which might hurt its profitability.
Buy-ranked Morgan Stanley’s shares have underperformed the Zacks Investment Banking industry over the last six months (+6.2% vs. +12.4%). Yet, the company possesses an impressive earnings surprise history, beating expectations in each of the trailing four quarters. Its first-quarter 2018 results reflect a rebound in trading activities and improvement in advisory fees.
The company’s efforts to lower balance sheet risk and strengthen wealth management operations along with cost saving initiatives will continue to support growth. While higher interest expenses and muted investment banking performance are expected to hurt the company’s top-line growth, lower tax rates will aid profitability in the quarters ahead. Also, it will continue enhancing shareholder value through robust capital deployment activities.
Other noteworthy reports we are featuring today include BNY Mellon (BK), Novartis (NVS) and eBay (EBAY).
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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>>>