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Research Daily

Sheraz Mian

Top Stock Reports for NIKE, Novartis & Wells Fargo


Trades from $3

Tuesday, January 17, 2023

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 NIKE, Inc. (NKE), Novartis AG (NVS) and Wells Fargo & Company (WFC). 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 >>>

Shares of NIKE have held up a lot better in lsat year's tough market; down -13.4% vs. down -26% for the Zacks Consumer Discretionary sector and the S&P 500 index's -15.7% decline. A steadily growing direct-to-consumer (DTC) business and the China reopening are some of the key positives in the Nike story.

These big-picture positives notwithstanding, the Zacks analyst flagged margin pressures due to higher costs and bigger markdowns. The company provided a bleak view for fiscal 2023 and second-quarter driven by expectations of higher markdowns during the holiday season and slowed demand for NIKE's brands, including Jordan and Converse, due to reduced discretionary spending.

The Zacks analyst believes that the gross margin headwinds and the weakness in Greater China to continue hurting NIKE results in the quarters ahead.

However, NKE’s robust surprise trend continued in fiscal first quarter with earnings and sales surpassing estimates for the ninth and fourth straight quarter, respectively.

(You can read the full research report on NIKE here >>>)

Shares of Novartis have gained +0.6% over the past year against the Zacks Large Cap Pharmaceuticals industry’s gain of +14.6%. Th company has a strong and diverse portfolio. Solid momentum in key brands like psoriasis drug Cosentyx, cardiovascular drug Entresto, gene therapy Zolgensma, the oncology portfolio, and the launch of Kesimpta continue to boost performance.

The launch of additional drugs like Pluvicto, Piqray, Leqvio and Mayzent, and the label expansion of key drugs should also boost performance further. The pipeline progress is also impressive and the company has some promising candidates. Management’s focus on cost savings should boost the bottom line as well.

Management recently decided to spin off its generics business Sandoz into a separate company to focus on its core pharma business. However, generic competition for key drugs and pipeline setbacks also remains a concern.

(You can read the full research report on Novartis here >>>)

Shares of Wells Fargo have underperformed the Zacks Banks - Major Regional industry over the past year (-23.8% vs. -20.8%). The company is facing dismal non-interest income, higher provisions and weakness in the mortgage business which were the major undermining factors. Also, the rise in non-interest expenses acted as a headwind.

Wells Fargo is focused on maintaining its financial position despite several legal tensions. Also, it is likely to face challenges in improving revenues due to macroeconomic and geopolitical concerns.

Nevertheless, the company is working on its strategic initiatives, which will likely help regain the confidence of its clients and shareholders. Improving loan demand, rise in interest rates and manageable expense levels are encouraging.

(You can read the full research report on Wells Fargo here >>>)

Other noteworthy reports we are featuring today include Broadcom Inc. (AVGO), United Parcel Service, Inc. (UPS) and Anheuser-Busch InBev SA/NV (BUD).

Director of Research

Sheraz Mian

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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