Today's Must Read
Bristol-Myers (BMY) Opdivo To Drive Growth Amid Competition
Higher Sports & Programming Costs to Hurt Time Warner (TWX)
Tuesday, May 1, 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 Amazon (AMZN), Bristol-Myers (BMY), and Time Warner (TWX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked Amazon’s shares have outperformed the broader market in the past year (the stock is up +65.4% vs. the +10.7% gain for the S&P 500 as a whole). The Zacks analyst thinks Amazon is benefiting from an expanding AWS enterprise customer base and increasing number of paid Prime members. In the first-quarter, AWS was selected by enterprise customers like GoDaddy, Cox Automotive, Shutterfly, NextGen Healthcare, Amway and LG Electronics. Moreover, collaboration with VMware is expected to boost AWS product offerings in the long haul.
Notably, AWS generates much higher margins than retail, positively impacting Amazon’s profitability. Additionally, Amazon’s expanding distribution footprint bodes well for Prime. The company recently increased Prime’s subscription fee, which is likely to hurt subscriber additions going forward. Moreover, increased operating expenses to support expansion of its business into new markets and territories, localize the availability of products and grow its content will keep margins under pressure.
Shares of Bristol-Myers have underperformed the Zacks Large Cap Pharmaceuticals industry in the last six months, losing -16.2% vs. -3.2%. Bristol-Myers beat both earnings and revenues expectations, primarily on robust sales of Opdivo and Eliquis in the quarter. Opdivo delivered strong performance, maintaining leading shares across approved indications in melanoma, RCC, lung, and head and neck.
The increase in 2018 guidance for adjusted earnings was also encouraging. The Zacks analyst likes Bristol-Myers’ efforts to develop its pipeline, especially Opdivo. Several label expansion applications for Opdivo are under review in the United States and Europe. Potential approval will further boost the prospects of this blockbuster drug.
Also, the superiority of Eliquis in real world data analysis is expected to further boost sales of the drug. However, pricing concerns, stiff competition in the immuno-oncology space are expected to remain an overhang
Time Warner’s shares have lost -4.6% over the last year, outperforming the Zacks Media Conglomerates industry’s -11.6% decline in that same time period. The Zacks analyst likes the company’s foray into new markets and digital efforts, and investments in video content and technology. Time Warner is now focusing on original programming, cost containment and increasing investments in key areas to enhance profitability.
Notably, the company has positive record of earnings surprises in recent times. However, management’s projection of decline in operating income across its segments in first-quarter 2018 raises concern. The company also expects HBO’s content and other revenues to decline considerably in the quarter. Moreover, its takeover by AT&T has hit a roadblock due to DOJ’s antitrust concerns, which can drag down share price in the near term.
Other noteworthy reports we are featuring today include Northrop Grumman (NOC), LyondellBasell (LYB) and Honda (HMC).
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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>>>