Today's Must Read
AbbVie's (ABBV) Pipeline Solid amid Humira Competition Woes
Traction in Cloud & Blockchain Initiatives Benefits IBM
Friday June 22, 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 Procter & Gamble (PG), AbbVie (ABBV) and IBM (IBM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Procter & Gamble's shares have underperformed the Zacks Soap and Cleaning Materials industry year to date (-16.8% vs. -11.5%). The Zacks analyst thinks Procter & Gamble has been benefiting from higher demand for skincare products, along with fabric and home care products.
Further, the company boasts an impressive earnings surprise history, which continued in third-quarter fiscal 2018. Also, results improved year over year. While bottom-line results were aided by productivity cost savings, top line was driven by organic sales growth and higher volumes.
Management remains focused on product improvement, packaging and marketing initiatives, and productivity cost-savings plan. The company is witnessing strained margins owing to increased commodity costs, adverse geographic and product mix as well as unfavorable pricing impacts and product reinvestments. Also, slower global market growth along with softness across Baby, Feminine and Family Care segment remains concerns.
Shares of AbbVie have lost -1.2% year to date, outperforming the Zacks Large Cap Pharmaceuticals industry, which has declined -5.1% over the same period. AbbVie’s key drug, Humira is performing well based on strong demand trends despite new competition.
Moreover, Imbruvica has multibillion-dollar potential and AbbVie is exploring the possibility of label expansion into solid tumors and autoimmune diseases. Mavyret’s launch has been stronger than expected. Mavyret has become a major growth driver for AbbVie in a short time on the market.
AbbVie has an impressive late-stage pipeline with label expansions for both new and existing products expected over the next few years. Several pivotal data readouts and regulatory milestones are expected in 2018.
Promising data from several pivotal studies and settlement of its second Humira patent dispute with Biogen are other tailwinds. However, Viekira’s sales continue to be hurt by intensifying competition. Also, potential long-term competition to Humira is a concern.
IBM’s shares have underperformed the broader market on a year-to-date basis, losing -8% vs. the S&P 500’s +3% gain. The Zacks analyst likes IBM’s improving position in the cloud, security and analytics. Moreover, accretive acquisitions have expanded IBM’s product portfolio into higher-growth segments, such as Cloud computing and Big Data.
Further, expanding footprint in the rapidly growing blockchain market is positive. The expanded partnership with Red Hat bodes well for the company in the long haul. Oniqua buyout will add asset optimization capabilities IoT based capabilities to aid IBM’s Maximo. IBM has positive record of earnings surprises in recent quarters.
However, the strategic imperatives will take some more time to report meaningful growth and offset weakness in the traditional business. IBM’s ongoing heavily time-consuming business model transition to cloud continues to hurt the stock. Additionally, intensifying competition is a major concern. Estimates have been stable lately ahead of the company’s Q2 earnings release.
Other noteworthy reports we are featuring today include PepsiCo (PEP), McDonald's (MCD) and General Electric (GE).
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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>>>