Today's Must Read
End-Market Strength & Buyouts to Benefit Honeywell (HON)
A Strong Product Portfolio, Regulatory Approvals Aid BD (BDX)
Tuesday, March 22, 2022
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 Berkshire Hathaway Inc. (BRK.B), Honeywell International Inc. (HON) and Becton, Dickinson and Company (BDX). 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 >>>
Shares of Berkshire Hathaway have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+40.9% vs. +24.1%). The Zacks analyst believes that the company is one of the largest property and casualty insurance companies measured by premium volume. Berkshire's inorganic growth story remains impressive with strategic acquisitions, as the just announced Alleghany transaction shows. A strong cash position supports earnings-accretive bolt-on buyouts and indicates the company's financial flexibility. Continued insurance business growth fuels increase in float, drive earnings and generates maximum return on equity.
The non-insurance businesses are delivering improved results with increased revenues over the past few years. A sturdy capital level provides further impetus. However, exposure to catastrophe loss induces earnings volatility and also affects the property and casualty underwriting results of Berkshire. Huge capital expenditure remains a headwind for the company.
Honeywell International shares have declined -7.5% over the past year against the Zacks Diversified Operations industry’s decline of -4.0%. The Zacks analyst believes that weakness across the personal protective equipment business will adversely impact its near-term results. Honeywell has been dealing with high costs and expenses and supply-chain challenges, which might affect its margins and profitability. Also, high debt levels might raise its financial obligations and hurt profitability.
However, Honeywell is expected to benefit from strength in the warehouse and workflow solutions, UOP and advanced materials businesses. It is likely to gain from acquisitions made over time. Also, its ability to generate strong cash flows add to its strength. The company’s commercial and operational excellence initiatives are likely to be favorable.
Shares of Becton, Dickinson have outperformed the Zacks Medical - Dental Supplies industry over the past six-month period (+5.4% vs. -2.7%). The Zacks analyst believes that the company’s base revenue uptick and robust results by majority of its arms in first-quarter fiscal 2022 are impressive. Regulatory approvals and launches are encouraging. BD’s strategic deals augurs well. A raised outlook for full-fiscal year is also promising.
A strong solvency position is an added plus. BD’s fiscal first-quarter results were better than expected. Yet, year-over-year falls in both top and bottom lines are disappointing. Fall in BD Life Science arm and both geographical areas are worrying. Lower COVID-only testing revenues are discouraging. Contraction of both margins does not bode well. BD’s operation in a highly consolidated medical technology industry is worrying.
Other noteworthy reports we are featuring today include NXP Semiconductors N.V. (NXPI), Fortinet, Inc. (FTNT) and Ecolab Inc. (ECL).
Director of Research
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>>>