Today's Must Read
J&J's (JNJ) New Product Sales Offset Generic Competition
Home Depot's (HD) Integrated Retail Strategy to Boost Sales
Wednesday, December 26, 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 Amazon (AMZN), Johnson & Johnson (JNJ) and Home Depot (HD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked Amazon’s shares have outperformed the broader market year to date by a wide margin (the stock is up +14.9% vs. the -12% decline for the S&P 500 as a whole). The Zacks analyst thinks Amazon’s strengthening retail position, with the help of its growing global footprint and distribution strength, remains its key growth driver.
Moreover, robust Prime program and its benefits will continue to aid Amazon’s retail business. Also, the rapid expansion of grocery services via Prime is a major positive. Additionally, the company’s growing brick and mortar presence is a tailwind. Further, increasing AWS regions and its growing adoption will continue to aid Amazon’s cloud momentum. Also, a rising number of Alexa compatible devices is a major positive.
The company's growing initiatives are likely to aid its performance in the current holiday season. However, the management has lowered its sales outlook for this season due to changes in Indian holiday timing. Also, rising cloud battle and heavy investment in fulfillment centers are headwinds.
Shares of Johnson & Johnson have underperformed the Zacks Large Cap Pharmaceuticals in the past six months, gaining +1% vs. +5.3%. J&J’s Pharma segment is performing better than the market in 2018 despite the impact of biosimilars on Remicade sales. Also, the Medical Devices and Consumer units are seeing improving organic growth trends.
Though quite a few key products in J&J’s portfolio are facing generic competition, the Zacks analyst thinks new products in all segments, successful label expansion of cancer drugs like Imbruvica and Darzalex and contribution from recent acquisitions will continue to drive top-line growth. J&J enjoys a robust multi-year pipeline of new drugs and line extensions.
Headwinds like generics, pricing pressure and soft global market conditions remain. Allegations that its talc/baby powders contain asbestos which causes the users to develop ovarian cancer have been an overhang on the stock’s price lately.
Buy-ranked Home Depot’s shares have lost 18.9% in the past six months, marginally underperforming the Zacks Retail Building Products industry’s 17% decline. The company has a five-year long trend of beating earnings estimates, which continued in third-quarter fiscal 2018. Moreover, it has delivered positive sales surprise in eight out of the last nine quarters.
Results gained from strength in both professional and do-it-yourself categories. It also benefits from positive customer response for assortments as well as enhancements to drive integrated shopping experience. The company is witnessing strength across store operations as well as digital portals, which reflect strong customer demand in the home improvement markets.
Backed by solid year-to-date performance, the company raised its earnings and sales forecast for fiscal 2018. However, the company saw tough comps comparisons in the fiscal third quarter owing to impacts of hurricane-related sales gains in the prior year. Higher supply chain and transportation costs also continue to hurt margins.
Other noteworthy reports we are featuring today include Medtronic (MDT), TD Ameritrade (AMTD) and Paychex (PAYX).
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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>>>