Today's Must Read
Portfolio Strength, Expanding Partner Base Aids VMware (VMW)
Dupixent Key to Sanofi's (SNY) Growth Amid Diabetes Woes
Wednesday, June 6, 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 Mastercard (MA), VMware (VMW) and Sanofi (SNY). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Strong-Buy ranked Mastercard’s shares have increased 59.3% over the last year, significantly outperforming the Zacks Financial Transaction Services industry’s gain of 36.3% during the same period. The Zacks analyst thinks the company is well placed for growth, given its solid market position, ongoing expansion and digital initiatives plus significant opportunities from the secular shift toward electronic payments.
The buyouts of VocaLink and NuData Security complement the company’s efforts to participate in new payment flows and enhance its safety and security offerings. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised upward over the last 60 days. However, escalating costs continue to bother. Also, higher incentives and rewards will put pressure on its bottom line.
Shares of Buy-ranked VMware have gained +17.7% year to date, outperforming the Zacks Software industry which is up +16.9% over the same period. VMware reported impressive first-quarter fiscal 2019 results. Both earnings and revenues increased on a year-over-year basis. Strong top-line growth was primarily driven by robust performance from NSX and vSAN product line. Management provided strong guidance for fiscal 2019.
The Zacks analyst likes the fact that VMware has been consistently taking initiatives to diversify its product portfolio to include most of the IT infrastructure. The company’s dominance in SDDC along with expanding customer base in cloud driven by partnerships with the likes of IBM and AWS is positive.
Moreover, continuing enterprise deal wins will drive growth in the long haul. However, heavy spending on R&D may weigh on its margins. Intensifying competition is also a concern.
Sanofi’s shares have underperformed the Zacks Large Cap Pharmaceuticals industry year to date, declining -10.6% vs. -4.5%. Sanofi has several new products in its portfolio and candidates in its pipeline that can contribute to long-term growth.
The Zacks analyst is particularly optimistic about sales prospects of Dupixent, which could prove to be an important growth driver. The acquisitions of Ablynx and Bioverativ have strengthened Sanofi’s position in the rare blood disorders market. However, Sanofi’s Diabetes franchise is under significant pressure with key product, Lantus facing increasing competitive pressure at the payor level and the presence of biosimilar competition in several European markets and Japan.
Other headwinds include generic competition for many drugs and slower-than-expected uptake of new products like Praluent. Meanwhile, the performance of the Vaccines and Consumer Healthcare franchises has been soft lately. Nonetheless, Sanofi expects to return to growth in the second half of 2018.
Other noteworthy reports we are featuring today include Twitter (TWTR), Workday (WDAY) and State Street (STT).
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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>>>