Today's Must Read
AbbVie's (ABBV) Pipeline Solid, Key Launches in Near Term
Pricing & Smokeless Unit Aids Altria (MO), Cigarette Volumes a Worry
Monday, December 17, 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 McDonald’s (MCD), AbbVie (ABBV) and Altria (MO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked McDonald's shares have gained +10.2% in the past six months, outperforming the Zacks Restaurants industry which has gained +4.3% over the same period. The Zacks analyst likes McDonald’s impressive earnings surprise history, various sales and digital initiatives as well as positive comparable sales.
Also, the consensus earnings estimate for current quarter has increased over the past month. Increased focus on delivery and accelerated deployment of Experience of the Future restaurants in the United States should boost its performance.
These apart, the company’s efforts to drive growth in International Lead & High Growth Markets bode well. In fact, global comps at McDonald’s have been positive over the trailing 13 quarters.
Yet high labor costs and currency headwinds remain major concerns. Revenues have been under pressure for quite some time due to strategic refranchising initiatives. Even its heightened focus on refranchising should cut the capital requirements and facilitate EPS growth.
Shares of AbbVie have lost 11.5% year to date, underperforming the Zacks Large-Cap Pharmaceuticals industry's rally of +5%. The Zacks analyst likes the fact that AbbVie’s key drug, Humira, has been performing well based on strong demand trends despite new competition. Moreover, Imbruvica has multibillion dollar potential and AbbVie is exploring the possibility of label expansion into solid tumors and autoimmune diseases. Mavyret’s launch has also been stronger than expected.
AbbVie has also been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta. The company has an impressive late-stage pipeline comprising several products with multibillion-dollar potential expected to be launched in the near term.
AbbVie expects to launch more than 20 new products or line extensions of marketed drugs before Humira biosimilar competition begins in the United States in 2023. Direct biosimilar competition to Humira in Europe from October can erode revenues.
Altria’s shares have underperformed the Zacks Tobacco industry over the past three months (-15.1% vs. -13.2%). Altria has been delivering year-over-year bottom-line growth for quite some time, which continued in third-quarter 2018. The Zacks analyst thinks earnings during the quarter was mainly backed by lower outstanding shares and reduced income tax.
Consistent solid performance propelled management to raise 2018 view. Additionally, Altria has been gaining from the rising popularity of Smokeless products. Pricing also continues to drive the company’s revenues in the smokeable and smokeless segments.
On the flip side, stern FDA regulations combined with increased health consciousness has been taking a toll on the cigarette category. Notably, cigarette shipment volumes fell 3.5% year over year during the third quarter, thanks to lower retail share and adverse trade inventory movements. The company’s wine category has also been sluggish, due to stiff competition.
Other noteworthy reports we are featuring today include Royal Dutch Shell (RDS.A), Wells Fargo (WFC) and Disney (DIS).
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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>>>