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Research Daily

Sheraz Mian

Early Q4 Earnings Results and Analyst Reports for Merck, Bristol-Myers & Deere


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Friday, December 9, 2022
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features an update on the Q4 earnings season which got underway this week. We are also featuring the updated December Economic Outlook report, in addition to new research reports on 16 major stocks, including Merck & Co., Inc. (MRK), Bristol-Myers Squibb Company (BMY) and Deere & Company (DE).

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 >>>

Zacks Economic Outlook for December 2022 ----> Christmastime U.S. Retail Sales Update

Q4 Earnings Season Gets Underway

This week's quarterly reports from AutoZon (AZO) and Costco (COST) for their fiscal quarters ending in November that we count as part of the 2022 Q4 earnings tally. Next week's reports from the likes of Adobe, Orable, Accenture, Lennar and others will similarly count as part of the 2022 Q4 tally.

Aggregate Q4 earnings for Costco and AutoZone are up +2.2% from the same period last year on +8.1% higher revenues, with only one of the two (AutoZone) beating EPS and revenue estimates.

Looking at Q4 as a whole, total S&P 500 earnings are expected to be down -5.9% from the same period last year on +4.3% higher revenues.

Excluding contribution from the Energy sector whose earnings are expected to be up +56.9%, Q4 earnings for the rest of the index are expected to be down -10.3% from the same period last year. Estimates have been steadily coming down, with the current -5.9% decline down from +1.7% on October 5th.

Today's Featured Analyst Reports

Shares of Merck & Co have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+52.7% vs. +19.3%) on the back of strong sales momentum from drugs like Keytruda and the Gardasil vaccine. 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 has become a key top-line driver in 2022. Merck boasts a strong cancer pipeline, including Keytruda, which should help 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.

(You can read the full research report on Merck & Co here >>>)

Shares of Bristol-Myers Squibb have outperformed the Zacks Medical - Biomedical and Genetics industry over the past year (+41.7% vs. -17.8%). Solid demand for the company’s blood thinner drug Eliquis and the label expansion of Opdivo are maintaining momentum for Bristol-Myers. Eliquis is the leading oral anticoagulant drug and continues to experience growth in its market share.

The label expansion of Opdivo into indications for lung cancer, renal cancer and gastric cancer boosted sales. The recent approval of drugs like Opdualag, Breyanzi and Sotyktu will add a new stream of revenues. Our estimates for BMY’s top line suggest a CAGR of around 1% over the next three years, driven by solid demand for legacy drugs and the approval of new drugs.

However, Revlimid, one of the top revenue generators, is facing generic competition and sales are being adversely impacted.

(You can read the full research report on Bristol-Myers Squibb here >>>)

Deere & Company shares have outperformed the Zacks Manufacturing - Farm Equipment industry over the past year (+23.6% vs. +21.7%). The company is poised well to gain on improving commodity prices, which will encourage farmers to spend more on farm equipment. Strong replacement demand will also continue to boost its top line.

Demand for Construction equipment will likely benefit from anticipated growth in infrastructure investments. Higher material and labor costs will likely dent margins. However, we expect Deere’s adjusted earnings per share to grow 16% in fiscal 2023, led by strong demand and pricing. Product launches equipped with the latest technology to make farming automated will continue to provide it with an edge over its competitors.

It will benefit in the long run from rapid growth in global population as well as the rising worldwide infrastructure needs. Our estimates for Deere’s bottom line suggest a CAGR of around 2% over the 2022-2025 forecast period.

(You can read the full research report on Deere & Company here >>>)

Other noteworthy reports we are featuring today include Anheuser-Busch InBev SA/NV (BUD), Marsh & McLennan Companies, Inc. (MMC), and América Móvil, S.A.B. de C.V. (AMX).

Sheraz Mian

Director of Research

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>>>

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