Today's Must Read
Lilly's (LLY) New Drugs Drive Sales amid Rising Competition
Broadcom (AVGO) Drives on Wireless Products & Acquisitions
Friday, July 13, 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 PepsiCo (PEP), Eli Lilly (LLY) and Broadcom (AVGO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
PepsiCo’s shares have decreased 7% year to date, underperforming the Zacks Soft Beverages industry, which has declined -5.1% over the same period. However, PepsiCo has surpassed the industry in the past month driven by a solid earnings trend with beat recorded in the last 10 quarters, including second-quarter 2018.
Strong performances in its international division, backed by higher revenue growth in developing and emerging markets have been aiding results. Further, the company has reported positive sales surprise in six of the last eight quarters.
The Zacks analyst thinks the company is also gaining from significant strength in the snacks business, which has mostly offset the sluggishness in beverage category. The company’s product innovations to include healthier food assortments and non-carbonated drinks in its portfolio should boost sales. However, consumers’ awareness on health and wellness, alongside new taxes on sugar-sweetened beverages and growing regulatory pressures are affecting CSD sales.
Shares of Eli Lilly have outperformed the Zacks Large-Cap Pharmaceuticals industry year to date (+5.3% vs. -0.8%). The Zacks analyst thinks Lilly’s new products like Trulicity, Taltz, Basaglar, Cyramza, Jardiance and Lartruvo have been driving revenues and the trend is expected to continue in 2018. Lilly expects to launch 20 new products by 2023, including at least two new indications/line extensions on an average every year.
The decision to sell or spin-off the Animal Health segment, which has underperformed lately, is a prudent one, in our view. However, competitive pressure on Lilly’s drugs is expected to rise this year.
Challenges remain for the company in the form of upcoming loss of patent exclusivity for products like Cialis and the impact of generic competition for Strattera, Effient and Axiron. U.S. pricing access pressure will also remain a headwind in 2018. Estimates have remained stable ahead of the Q2 earnings release. Lilly has a positive record of earnings surprises in recent quarters.
Broadcom’s shares have underperformed the Zacks Electronics - Semiconductors industry over the past year, losing -16.1% vs. -8.3%. Broadcom is a premier designer, developer and global supplier of a broad range of semiconductor devices.
The Zacks analyst thinks the company is benefiting from strong demand of its wireless solutions and expanding product portfolio, which makes it well-positioned to address the needs of rapidly growing technologies like IoT and 5G. Strong ties with leading OEMs across multiple target markets will help the company to gain key insights into the requirements of customers.
The company faces intensifying competition and integration risks due to frequent acquisitions. Broadcom’s leveraged balance sheet and customer concentration continue to be headwinds.
Other noteworthy reports we are featuring today include Biogen (BIIB), 3M (MMM) and Marathon Petroleum (MPC).
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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>>>