Today's Must Read
Lilly (LLY) Boosts Pipeline with Collaboration Deals
Focus on Pro Customers to Aid Home Depot's (HD) Top Line
Wednesday, June 29, 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 Meta Platforms, Inc. (META), Eli Lilly and Company (LLY), and The Home Depot, Inc. (HD). 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 >>>
Meta Platforms shares have held up better relative to the Zacsk Internet Services industry over the past year (down -53.8% vs. -64.0% for the industry), but it has lagged the broader market in a major way (down -53.8% vs. -11.6% for the S&P 500 index).
In addition to market wide sentiment shift about the Tech sector in general in the current rising interest rate environment, Meta is suffering from Apple’s iOS changes as well as engagement-related headwinds. Apple’s iOS changes have made ad targeting difficult, which, in turn, has increased the cost of driving outcomes. Measuring these outcomes has also become difficult. Meta expects these factors to hurt advertising revenue growth in throughout 2022. Meta’s second-quarter guidance reflects macroeconomic and forex concerns.
Cost inflation and supply chain disruptions are expected to impact advertiser budgets. However, Meta is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its products like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.
Eli Lilly shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+40.4% vs. +19.8%), reflecting the the company's solid portfolio of core drugs in diabetes, autoimmune diseases and cancer. The Zacks analyst believes that Lilly’s revenue growth is being driven by higher demand for drugs like Trulicity, Taltz, and others. It is regularly adding promising new pipeline assets through business development deals.
It has an exciting pipeline of potential new medicines including tirzepatide for type II diabetes and donanemab for early Alzheimer's disease. Both candidates have multibillion dollar sales potential. However, generic competition for several drugs, rising pricing pressure in the United States mainly on key drug, Trulicity, and price cuts in some international markets like China, Japan and Europe are some top-line headwinds.
Home Depot shares have declined -13.4% over the past year against Zacks Building Products - Retail industry’s decline of -11.2% and the S&P 500 index's -11.6% decline. The company reported soft gross margin in the fiscal first quarter driven by higher cost of goods sold. Supply chain headwinds also marred results to some extent. Nevertheless, Home Depot boasts a robust surprise trend, which continued in first-quarter fiscal 2022. Results gained from strong demand for home-improvement projects, robust housing market trends and ongoing investments.
The company also benefited from continued strength in both Pro and DIY categories as well as digital momentum. Its interconnected retail strategy and underlying technology infrastructure have helped consistently boost web traffic for the past few quarters, aiding digital sales.
(You can read the full research report on Hemo Depot here >>>)
Other noteworthy reports we are featuring today include Merck & Co., Inc. (MRK), The Boeing Company (BA), and Vale S.A. (VALE).
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>>>