Today's Must Read
Robust Pharmacy Sales Aid CVS Health (CVS) Amid Rising Costs
Target's (TGT) Omnichannel Efforts, Digitization to Aid Sales
Friday, August 12, 2022
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Eli Lilly and Co. (LLY), CVS Health Corp. (CVS) and Target Corp. (TGT). 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 >>>
Eli Lilly shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+15.5% vs. +6.5%). The company boasts a solid portfolio of core drugs in diabetes, autoimmune diseases and cancer. Its revenue growth is being driven by higher demand for drugs like Trulicity, Taltz, and others.
Eli Lilly is regularly adding promising new pipeline assets through business development deals. Lilly expects to launch five new medicines by 2023 end including Mounjaro for type II diabetes (already launched) and donanemab for early Alzheimer's disease. Both drugs 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.
CVS Health’s shares have outperformed the Zacks Retail - Pharmacies and Drug Stores industry over the past year (+26.6% vs. +11.9%). The company’s robust sales growth across all three operating segments drove the top-line results. The extended cough, cold and flu season boosted sales in the Retail and Pharmacy businesses.
Within the Health Care Benefits arm, the continued growth across the entire range of insured and self-insured medical, pharmacy, dental and behavioral health products and services instills optimism. The raised EPS guidance for 2022 is indicative of this growth momentum continuing.
However, the contraction of margins does not bode well. The decline in COVID-19 vaccinations and testing sales is a downside. Persistent pharmacy reimbursement headwinds also continued to impact business results.
Target’s shares have declined -25.2% over the year-to-date basis against the Zacks Retail - Discount Stores industry’s decline of -10.3%. The company’s operating margin rate is in a range of around 6% and it anticipates a low-to-mid-single digit revenue growth forecast for fiscal 2022.
However, deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers a seamless shopping experience. The company has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail landscape. These have been contributing to the company’s sales performance.
Also, its recent attempt to right-size inventory is a step in the right direction, as the demand skewed toward consumer staples and away from discretionary categories. This may hurt margins for now but will help better the position for the company to gain market share.
Other noteworthy reports we are featuring today include Equinix, Inc. (EQIX), Chipotle Mexican Grill, Inc. (CMG), and FirstEnergy Corp. (FE).
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>>>