Today's Must Read
Revenue Growth, Solid Balance Sheet Aid Mastercard (MA)
Salesforce (CRM) Rides on Strong Product Portfolio, Buyouts
Thursday, November 29, 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 Merck (MRK), Mastercard (MA) and Salesforce (CRM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked Merck’s shares have gained +37.2% year to date, significantly outperforming the Zacks Large Cap Pharmaceuticals industry, which has gained +9.3% over the same period. The Zacks analyst emphasizes that Merck’s new products like Keytruda, Lynparza, and Bridion are contributing meaningfully to the top line.
Keytruda sales are gaining momentum with approval for additional indications, especially in the first-line lung cancer setting as it is the only anti-PD-1 approved in this setting. Animal health and vaccine products are also performing strongly and remain core growth drivers for Merck.
Meanwhile, Merck will continue to focus on cost-cutting initiatives to drive the bottom line. However, generic competition for several drugs and pricing pressure continue to be overhangs on the top line. Rising competitive pressure on the diabetes franchise and on products like Isentress (HIV), Zepatier (HCV) and Zostavax (vaccine) remains.
Shares of Buy-ranked Mastercard have increased +34.4% over the past year, significantly outperforming the Zacks Financial Transaction Services industry’s rally of +18.8%. The Zacks analyst thinks the company is poised for growth, given its solid market position, ongoing expansion and digital initiatives plus significant opportunities from the secular shift toward electronic payments. Its numerous acquisitions have aided revenue growth.
The company is gaining from increase in switched transactions, cross-border volume and gross dollar volume from higher spending. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 3% upward over the last 30 days. However, escalating costs, higher incentives and rewards will put pressure on the company’s bottom line.
Salesforce’s shares have gained +37.6% year to date, outperforming the Zacks Computer Software industry, which has gained +22% over the same period. Salesforce’s fiscal third quarter results benefited from strong growth across its product portfolio.
On the back of stellar results, Salesforce raised its fiscal 2019 guidance and further stated that it is on track to achieve $21-$23 billion in annual revenues by fiscal 2022. The Zacks analyst thinks rapid adoption of its diverse cloud offerings given the growing demand for digital transformation remains a key catalyst. Strengthening relationships with cloud companies like Amazon, Google and IBM are a positive.
Additionally, strategic acquisitions like MuleSoft, Datorama and Cloudcraze is helping it deliver strong growth. Nonetheless, stiff competition from Oracle and Microsoft is a concern. Currency fluctuations remain a key headwind. Besides, increasing investments for international expansions and data centers is an overhang on near-term profitability.
Other noteworthy reports we are featuring today include Phillips 66 (PSX), Diageo (DEO) and State Street (STT).
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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>>>