Today's Must Read
Supply Chain Troubles & Escalating R&D Costs Ail Toyota (TM)
Digital Transformation and Acquisitions Aid Salesforce (CRM)
Thursday, June 9, 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 Novo Nordisk A/S (NVO), Toyota Motor Corporation (TM), and Salesforce, Inc. (CRM). 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 >>>
Novo Nordisk shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+36.9% vs. +19.3%) on the back of the company’s promising diabetes drug, Ozempic, which is off to a solid start since its launch. The launch of Rybelsus also looks impressive. Novo Nordisk has one of the broadest diabetes portfolios in the industry. Ozempic, Rybelsus, Xultophy and Saxenda have been helping the company maintain momentum. Label expansion of these existing drugs is expected to boost sales.
However, lower realized prices in the United States, loss of exclusivity for products and stiff competition affect sales. Also, sales are being negatively impacted by the COVID-19 pandemic. Also, the supply challenges for Wegovy have hurt the stock. The patent expiry on some of the products in Novo Nordisk’s portfolio is a concern.
Toyota shares have declined -7.0% over the past year against the Zacks Automotive - Foreign industry’s decline of -27.3%. The Zacks analyst believes that the company is also reeling under severe chip crunch compounded by the Russia-Ukraine war. The Japanese auto biggie has warned of unprecedented commodity inflation. It expects a sharp increase in material costs to adversely impact the fiscal 2023 income to the tune of ¥1.45 trillion. Supply-chain disruptions, tough labor market, logistical challenges and manufacturing inefficiencies will play spoilsports.
In the light of such headwinds, the company expects its operating income to decline around 20% on a year-over-year basis in fiscal 2023. High Capex and R&D expenses on advanced technologies are also likely to dent near-term margins and cash flows of the company. Further, Toyota's rising debt levels play a spoilsport. Consequently, the stock warrants a bearish stance now.
(You can read the full research report on Toyota here >>>)
Salesforce shares have declined -25.7% over the year-to-date basis against the Zacks Computer - Software industry’s decline of -21.1%. The Zacks analyst believes the stiff competition faced by the company is a concern. Besides, unfavorable currency fluctuations along with increasing investments in international expansions and data centers are an overhang on near-term profitability. Nevertheless, Salesforce is benefiting from a robust demand environment as customers are undergoing a major digital transformation.
The rapid adoption of its cloud-based solutions is driving demand for its products. Salesforce’s sustained focus on introducing more aligned products as per customer needs is driving its top-line. Continued deal wins in the international market is another growth driver. Furthermore, the recent acquisition of Slack would position the company to be a leader in the enterprise team collaboration solution space and better compete with Microsoft’s Teams product.
Other noteworthy reports we are featuring today include Abbott Laboratories (ABT), Raytheon Technologies Corporation (RTX), and Equinor ASA (EQNR).
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>>>