Today's Must Read
Robust Snacking Category to Bolster PepsiCo's (PEP) Top Line
Amgen (AMGN) Counts on New Drugs Amid Rising Competition
Tuesday, August 14, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 12 major stocks, including UnitedHealth (UNH), PepsiCo (PEP) and Amgen (AMGN). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
Buy-rated UnitedHealth's shares have outperformed the Zacks Medical Insurance industry's rally over the past year (up +34.2% vs. +33.8%). UnitedHealth Group’s earnings surpassed expectations and increased year over year. Higher revenues, strength in both segments — UnitedHealthcare and Optum — plus membership growth led to this outperformance. The Zacks analyst thinks the company's robust Government business and continued strong performance at Optum are driving long-term growth. Its international business and strong capital position are the other positives. The company has been witnessing an increase in membership over the past many years. It once again raised its 2018 earnings guidance, buoying optimism among investors in the stock. However, the company is witnessing membership pressure in its commercial business. Increasing consolidation will also heat up competition in the industry.
Shares of PepsiCo have gained +16.8% in the past three months, outperforming the Zacks Soft Beverages industry's rally of +8.1%, driven by a solid earnings trend with beat recorded in the last 10 quarters. Strong performances in its international division, primarily higher revenue growth in developing and emerging markets, have been aiding results. 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. Moreover, 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.
Amgen’s shares have gained +12.5% year to date versus the Zacks Biomedical and Genetics industry's decline of -5.4%. Amgen beat expectations for both earnings and sales in second-quarter 2018 and also raised the full-year expectations. The Zacks analyst thinks the Amgen’s newer drugs – Prolia, Xgeva, Blincyto, Repatha, Kyprolis – are performing well. Amgen is also progressing with its pipeline and the recent approval of migraine candidate Aimovig was a huge boost. However, Amgen has some challenges in store, given the slowdown in sales of mature drugs like Enbrel, Aranesp and Neulasta, which are facing an array of branded and generic competitors. Volume growth of new drugs may not be enough to offset lost sales due to the decline in mature brands. While Neupogen is already facing U.S. biosimilar competition, Neulasta, Epogen and Sensipar could start facing the same this year. Meanwhile, uptake of key new drug, Repatha has been slow due to payer restrictions.
Other noteworthy reports we are featuring today include Mylan (MYL), Textron (TXT) and ABB Ltd (ABB).
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