Today's Must Read
Biogen (BIIB) Rides on Spinraza and In-Licensing Agreements
Trading Focus, Higher Rates Aid Schwab (SCHW), Costs a Woe
Friday, January 18, 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 Pfizer (PFE), Biogen (BIIB) and Schwab (SCHW). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Pfizer’s shares have outperformed its peer group in the past one year. (the stock is up +14.8% over this period vs. a -0.5% decline for the Zacks Large-Cap Pharmaceuticals industry). Pfizer is facing top-line headwinds like genericization of key drugs, supply challenges in the legacy Hospira portfolio, pricing pressure and rising competition.
However, the Zacks analyst thinks products like Ibrance, cost-cutting efforts, a lower tax rate and share buybacks can support bottom-line growth. Pfizer also boasts a strong pipeline and looks well positioned to deliver several potential new breakthrough innovative medicines in the next five years, which can drive long-term growth. Bavencio, though approved for two small indications currently, is being considered a key long-term growth driver for Pfizer if it can gain label expansion approvals.
Pfizer gained FDA approval for four new cancer drugs in 2018, which can boost oncology sales. Estimates have gone down slightly ahead of Q4 earnings release. Pfizer has a positive record of earnings surprises in recent quarters.
Shares of Biogen have outperformed the Zacks Biomedical and Genetics industry in the past one year (-1.8% vs. -19.8%). Biogen has a strong position in the MS market with a wide range of products.
The Zacks analyst likes its efforts to diversify beyond MS to other areas like Alzheimer’s, Parkinson's and stroke. Spinraza is performing strongly and has multi-billion dollar potential. Biogen’s efforts to regularly in-license assets to build its pipeline are encouraging since several of them have transformative potential. Multiple data readouts are expected in 2019.
However, the launch of Ocrevus by Roche is having a negative impact on MS franchise sales in the United States. Also, potential competition to Spinraza from competitors’ gene therapy programs for SMA is a concern.
Though Biogen’s CNS pipeline is attractive, it is a high-risk area. However, estimates have gone up slightly ahead of Q4 earnings results. The company has a positive record of earnings surprises in recent quarters.
Schwab’s shares have outperformed the Zacks Investment Brokers industry over the past three months, gaining +0.1% vs -6.2%. The Zacks analyst emphasizes that the company has an impressive earnings surprise history, having surpassed expectations in each of the trailing four quarters. Its fourth-quarter 2018 results were driven by a rise in interest income and trading revenues.
The company remains well positioned to gain from the rising rate environment and its initiatives to strengthen trading income. Further, its steady capital deployment actions reflect a strong balance sheet position. However, continuously rising operating expenses remain a major concern and hurt bottom-line growth to some extent. Also, the company's significant dependence on fee-based revenue streams is cause for apprehension.
Other noteworthy reports we are featuring today include CSX Corporation (CSX), Sysco (SYY) and Philips (PHG).
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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>>>