Today's Must Read
Loan Growth & Easing Margin Pressure Aids U.S. Bancorp (USB)
Biogen (BIIB) Rides on Spinraza, Diversifies Drug Portfolio
Wednesday, October 10, 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 Altria (MO), U.S. Bancorp (USB) and Biogen (BIIB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Altria’s shares have outperformed the Zacks Tobacco industry over the past three months (+7.5% vs. -1.2%). The company has been delivering year-over-year bottom-line growth for quite some time and maintained the upside in second-quarter 2018.
The Zacks analyst thinks performance during the quarter was mainly backed by lower outstanding shares and reduced adjusted tax rate. In fact, solid performance in the first half of 2018 propelled management to raise 2018 view. Additionally, Altria has been progressing well with reduced risk products. Pricing also continues to drive the company’s top line.
On the flip side, stern FDA regulations combined with increased health consciousness has been taking a toll on cigarette sales. Notably, cigarette shipment volumes fell 10.8% year over year during second quarter, wherein total cigarette retail share declined 50.2%. Sadly, volumes in this category are expected to remain soft in the forthcoming periods, owing industry-wide headwinds.
Shares of Buy-ranked U.S. Bancorp have outperformed the Zacks Major Banks industry over the past three months, gaining +5.2% vs +2.4%. The company possesses an impressive earnings surprise history, beating expectations in three out of the trailing four quarters.
The Zacks analyst thinks U.S. Bancorp's prospects will likely get support from its solid business model, core franchise, lower tax rate, rising interest rate and diverse revenue streams. Also, its organic growth remains solid and will likely benefit from the improving economic scenario.
However, escalating expenses due to its ongoing investments in technology remains a key concern. Also, involvement in legal hassles is likely to increase legal expenses and provisions in the near term. Nevertheless, U.S. Bancorp remains well poised to grow through acquisitions.
Biogen’s shares have outperformed the Zacks Biomedical and Genetics industry year to date (+8.1% vs. -11.5%). Biogen has a strong position in the MS market with a wide range of products including Avonex, Tysabri, Tecfidera and Plegridy. The Zacks analyst likes its efforts to diversify beyond MS to other areas like Alzheimer’s, Parkinson's and stroke, among others.
Meanwhile, its newest drug Spinraza has multi-billion dollar potential. Biogen’s efforts to regularly in-license assets to build its pipeline are a major positive. It has many assets in its pipeline, which have transformative potential. Multiple data readouts are expected this year.
However, the launch of Ocrevus by Roche is beginning to have a negative impact on MS franchise sales in the United States. Spinraza’s moderating trends in the U.S. is a concern. Meanwhile, estimates have gone down ahead of Q3 earnings results. The company has a mixed record of earnings surprises in recent quarters.
Other noteworthy reports we are featuring today include General Dynamics (GD), Ecolab (ECL) and HSBC Holdings (HSBC).
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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>>>