Today's Must Read
Solid Demand Aids AbbVie's (ABBV) Humira & Imbruvica Sales
Booking Holdings (BKNG) Rides on Gross Bookings Amid Risks
Tuesday, November 13, 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 Berkshire Hathaway (BRK.B), AbbVie (ABBV) and Booking Holdings (BKNG). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Strong Buy-ranked Berkshire Hathaway’s shares have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+17.5% vs. +12.7%). Berkshire Hathaway’s third-quarter earnings nearly doubled year over year on solid results across all segments.
The Zacks analyst thinks Berkshire Hathaway’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position allows it to make earnings-accretive bolt-on buyouts. Demand for utilities is expected to rise in the future and drive earnings growth.
Continued insurance business growth also fuels increase in float. A sturdy capital level provides further impetus. The insurance business generates maximum return on equity but its exposure to catastrophe loss remains a concern.
Huge capital expenses due to railroad operations pose concerns. Capital expenditure is estimated to be $9.8 billion in 2018.
Shares of AbbVie have lost -7.3% year to date, underperforming the Zacks Large Cap Pharmaceuticals industry's rally of +8%. AbbVie beat estimates for earnings while slightly missing the same for sales in the third quarter.
The Zacks analyst likes AbbVie’s key drug, Humira which has been performing well based on strong demand trends despite new competition. Moreover, Imbruvica has multibillion dollar potential. Mavyret’s launch has also been stronger than expected. AbbVie has also been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta.
Moreover, AbbVie has an impressive late-stage pipeline comprising several products with multibillion-dollar potential expected to be launched in the near term. AbbVie expects to launch more than 20 new products or line extensions of marketed drugs before Humira biosimilar competition begins in the United States in 2023. Direct biosimilar competition to Humira in Europe from October may erode revenues.
Booking Holdings’ shares have gained +9.7% year to date, outperforming the Zacks Internet Commerce industry, which has remained flat over the same period. Booking Holdings reported third quarter results wherein both earnings and revenues have grown year over year. Solid growth in the booked room nights and strong momentum in global accommodation space contributed well to the gross bookings growth.
Further, robust agency model continued to aid the company’s position in the international markets. Also, strong efforts toward ramping up of merchant business were positive. The Zacks analyst thinks secular growth trend in the online travel booking market, growing mobile usage penetration and improving ADRs are tailwinds.
Moreover, the company’s strong position in international markets, growth opportunities in the domestic market and good execution of marketing strategies are major positives. However, sluggishness in the rental car days poses risk. Also, rising advertising spend and occupancy tax litigation are concerns.
Other noteworthy reports we are featuring today include Becton, Dickinson (BDX), HCA Healthcare (HCA) and Kimberly-Clark (KMB).
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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>>>