Today's Must Read
Cisco (CSCO) Benefits From Strong Security Products Adoption
Buyouts Support Morgan Stanley (MS), Capital Markets A Woe
Wednesday, September 14, 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 Merck & Co., Inc. (MRK), Cisco Systems, Inc. (CSCO) and Morgan Stanley (MS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Merck shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+21.6% vs. +9.0%). Company products like Keytruda, Gardasil and Bridion have been driving sales. With continued label expansion into new indications & early-stage settings, Keytruda is expected to remain a key top-line driver.
Animal health and vaccine products are core growth drivers. Its new COVID oral antiviral pill, Lagevrio, is a key top-line driver in 2022. Merck also has a strong cancer pipeline, including Keytruda, which should drive long-term growth.
However, generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line. There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity later in the decade.
Cisco’s shares have gained +15.3% over the past two years against the Zacks Computer - Networking industry’s gain of +14.6%. The company’s results benefited from strength in its product portfolio, customer segments and momentum in product order growth. It is benefiting from a healthy uptake of identity and access, advanced threat and unified threat management security solutions amid high growth in Internet traffic.
The buyout of Acacia is key catalyst. Cisco is expanding its portfolio with the launch of Silicon One-based 8000 routers, Nexus Cloud, Calisti and Panoptica. Cisco also announced AppDynamics Cloud, a next-gen version of its observability platform for cloud native applications.
Cisco’s investments across its security business, focusing on cloud-based offerings, is expected to drive growth over the long haul. Cisco provided a strong outlook for first-quarter and fiscal 2023.
Morgan Stanley’s shares have declined -9.1% year-to-date against the Zacks Financial - Investment Bank industry’s decline of -11.9%. The company’s ambiguity about the performance of the capital markets remains a major concern and is expected to keep hampering investment banking (IB) and trading revenues. Elevated expenses due to investments and inflationary pressure will likely hurt profits to some extent in the near term.
However, Morgan Stanley is continuously undertaking measures, including the acquisitions of Eaton Vance and E*Trade Financial, to become less dependent on capital market-driven revenue sources.
These initiatives are bearing fruit. Increased focus on corporate lending will likely keep supporting financials in the quarters ahead. Further, higher interest rates will support net interest income.
Other noteworthy reports we are featuring today include Honeywell International Inc. (HON), CME Group Inc. (CME), and Canadian Natural Resources Ltd. (CNQ).
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>>>