Today's Must Read
Lilly's (LLY) Pipeline Progress Rapid Amid Generic Woes
Accenture (ACN) Rides on dgroup Buyout Amid High Competition
Tuesday, December 4, 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 Verizon (VZ), Eli Lilly (LLY) and Accenture (ACN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Verizon’s shares have gained 14.2% over the past year, outperforming the Zacks Wireless National industry’s increase of 1% during the same period. The Zacks analyst thinks Verizon remains poised to benefit from the upcoming 5G boom led by healthy traction in the wireless business.
Verizon is further seeking a first mover advantage in the 5G race as it plans to launch commercial 5G smartphones in the market in the first half of 2019 in collaboration with Samsung. Focus on online content delivery, mobile video and online advertising should also drive growth.
However, the company continues to struggle in a highly competitive and saturated wireless market, where spectrum crunch has become a major issue, reducing its profitability to some extent. Verizon continues to face softer wireline revenues and margins due to technology shifts and ongoing secular pressures from legacy technologies. In an effort to expand its customer base, Verizon is spending heavily on promotion and is also offering lucrative discounts, which is further weighing on margins.
Shares of Eli Lilly have outperformed the Zacks Large-Cap Pharmaceuticals industry year to date (+40.4% vs. +10.4%). The Zacks analyst thinks Lilly’s new products like Trulicity, Taltz, Basaglar, Cyramza, Jardiance, Lartruvo and Verzenio will drive revenues. Lilly expects to launch 20 new products by 2023, including at least two new indications/line extensions on average every year.
Lilly is also having a strong year in terms of its pipeline with several positive late-stage data readouts and regulatory nods. The newly launched CGRP antibody, Emgality could emerge as a significant contributor to long-term growth. It has also added promising new assets through business development deals.
However, competitive pressure on Lilly’s drugs is expected to rise this year. Challenges remain for the company in the form of generic competition for several drugs including Cialis and rising pricing pressure in the diabetes franchise.
Accenture’s shares have underperformed the Zacks Consulting industry in the past year, gaining +13% vs. +15.3%. Accenture has been steadily gaining traction in its outsourcing business. The Zacks analyst thinks acquisitions have been a key growth catalyst and will contribute significantly to the company's revenue stream.
Accenture has been strategically enhancing its cloud and digital marketing suite through acquisitions and partnerships. The company’s strong operating cash flow has helped it reward its shareholders in the form of dividends and share repurchases.
Despite such tailwinds, Accenture faces stiff competition from strong companies like Genpact Limited, Cognizant Technology Solutions and Infosys. This leads to increasing pricing pressure for the company. Buyout-related integration risks can impact the company’s organic growth. Global presence exposes Accenture to foreign currency exchange rate fluctuations.
Other noteworthy reports we are featuring today include VMware (VMW), Automatic Data Processing (ADP) and Schwab (SCHW).
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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>>>