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Research Daily

Monday, August 20, 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 IBM (IBM), Texas Instruments (TXN) and Glaxo (GSK). 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 >>>

IBM’s shares have underperformed the broader market on a year-to-date basis, losing -4.8% vs. the S&P 500’s +6.8% gain. IBM provides advanced information technology solutions, including computer systems, software, storage systems and microelectronics.

The company benefits from strong demand for z14 Mainframe and Power products. Moreover, IBM’s improving position in the cloud, security and analytics bodes well. Also, accretive acquisitions have expanded IBM’s product portfolio into higher-growth segments, such as cloud computing, AI and Big Data.

However, the Zacks analyst thinks 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.

(You can read the full research report on IBM here >>>).

Shares of Buy-ranked Texas Instruments have gained +37.2% in the past year, underperforming the Zacks General Semiconductor industry which has gained +40.1% over the same period. Texas Instruments reported robust second-quarter results on the back of strength in auto and industrial markets.

The company continues to prudently invest its R&D dollars in several high margin, high-growth areas of the analog and embedded processing markets. The Zacks analyst thinks this is gradually increasing its exposure to industrial and automotive markets and dollar content at customers, while reducing exposure to volatile consumer/computing markets.

Margins continue to expand on secular strength in the auto and industrial markets and manufacturing efficiencies that include growing 300-millimeter Analog output. Continuous dividend hike is a big positive. However, increasing competition, unfavorable currency effect and a high debt load remain concerns.

(You can read the full research report on Texas Instruments here >>>).

Glaxo’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry year to date, gaining +16.3% versus the industry’s +4.8% increase. Glaxo beat estimates for earnings and sales in Q2 and raised its earnings growth expectations for the year. The Zacks analyst thinks the performance of Glaxo’s new products has been encouraging.

Meanwhile, a strong start to its three newest products — Trelegy Ellipta, Shingrix and Juluca — and buy in of Novartis’ stake in the Consumer Healthcare JV have strengthened Glaxo’s competitive position. However, persistent challenges like stiff competition, genericization and pricing pressure are hurting sales. Particularly, pricing pressure and competitive dynamics are hurting sales of Glaxo’s inhaled respiratory products, particularly the older ones.

Its top-selling product, Advair, is also expected to face generic competition in the United States this year, which will further hurt sales. The slowdown in sales of the Consumer Healthcare segment is also a concern.

(You can read the full research report on Glaxo here >>>).

Other noteworthy reports we are featuring today include Simon Property Group (SPG), BB&T Corp (BBT) and State Street (STT).

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Mark Vickery

Senior Editor

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>>>

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