Today's Must Read
New Drugs and Acquisitions Boost Roche's (RHHBY) Prospects
Goldman (GS) Exhibits Cost Control, Legal Issues Linger
Wednesday, September 12, 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 Oracle (ORCL), Roche (RHHBY) and Goldman Sachs (GS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Oracle’s shares have underperformed the Zacks Computer Software industry so far this year, gaining +3.5% vs. +26%. However, Oracle is one of the largest enterprise-grade database, middleware and application software providers. The company is benefiting from strong adoption of its cloud-based solutions.
The Zacks analyst thinks the company’s growing cloud market share will continue to drive top-line growth in the long haul. Partnerships with the likes of Accenture are helping the company rapidly expand its cloud-base clientele. Also, anticipated strong demand for the next-generation autonomous database supported by machine learning will boost competitive position against AWS.
Nevertheless, stiff competition in the cloud is expected to hurt margins and will make revenue growth difficult. Notably, Oracle has undergone structural changes. It no longer intends to break out its cloud revenues and does not provide any guidance on SaaS, Cloud PaaS and IaaS. This move is likely to enhance investor concerns about the company's outlook.
Shares of Strong Buy-rated Roche have outperformed the Zacks Large Cap Pharmaceuticals industry in the past three months, gaining +15% vs. an increase of +9.8%. The Zacks analyst thinks Roche’s performance is being buoyed by strong sales of Ocrevus, Perjeta, Tecentriq and Alecensa which more than offset the decline from legacy drugs Rituxan, Avastin and Tarceva.
In particular, MS drug Ocrevus continues to witness strong growth, driven by increased demand. Meanwhile, the company continues to progress with its pipeline as it looks to restructure its portfolio beyond oncology into MS and hemophilia among others. The recent Ignyta acquisition will further strengthen pipeline.
Approval of new drugs and a potential label expansion of existing drugs bode well for Roche, as its legacy drugs like Herceptin and MabThera are facing competition from biosimilars. Avastin and Tarceva are also facing competition. Roche is also looking to restructure its operations for better efficiency.
Goldman Sachs’ shares have lost -9.7% year to date, underperforming the -5.1% decline of the Zacks Investment Banking industry. However, the company boasts an impressive earnings surprise history. It surpassed expectations for earnings in all the trailing four quarters.
The Zacks analyst thinks the company’s well-diversified business and focus to capitalize on growth opportunities through strategic moves will continue to strengthen the overall business. Further, its cost-control measures are commendable.
Additionally, the company’s steady capital-deployment activities have boosted investors' confidence, along with the Fed's approval to 2018 Capital Plan. However, litigation issues yet to be resolved remain a key concern. Also, declining revenues from Institutional Client Services division impact the company's topline.
Other noteworthy reports we are featuring today include Capital One (COF), Prologis (PLD) and Intercontinental Exchange (ICE).
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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>>>