Wednesday, August 23, 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 Merck & Co., Inc. (MRK), Philip Morris International Inc. (PM) and QUALCOMM Incorporated (QCOM). 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 Merck have gained +22.5% over the past year against the Zacks Large Cap Pharmaceuticals industry’s gain of +24.1%. The company beat Q2 estimates for earnings and sales. Products like Keytruda and Gardasil have been driving sales. With continued label expansion into new indications, particularly earlier-line launches, Keytruda is expected to remain a key top-line driver.

Animal health and vaccine products are core growth drivers. Merck boasts a strong cancer pipeline, including Keytruda, which should drive long-term growth. Merck is investing in M&A activity to strengthen its pipeline.

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 here >>>)

Philip Morris shares have outperformed the Zacks Tobacco industry over the past year (+1.6% vs. -1.2%). The company have been benefiting from its solid pricing power. Higher pricing variance was an upside to the company’s performance in the second quarter of 2023 and is likely to remain a driver.

A focus on reduced-risk products, especially IQOS, has been working well for the company, which is witnessing a continued product mix shift from cigarettes to smoke-free products. These upsides are likely to boost organic revenues in the full-year 2023.

However, Philip Morris has been battling cost-related headwinds. The company expects to make additional growth-oriented investments in 2023, which may impact margins. Also, soft cigarette shipment volumes and volatile currency movements have been concerns. In full-year 2023, cigarette shipment volumes are expected to decline by 1.5-2.5%.

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

Shares of QUALCOMM have outperformed the Zacks Wireless Equipment industry over the year-to-date period (+0.9% vs. -5.3%). The company is focusing on a seamless transition from a wireless communications firm for the mobile industry to a connected processor firm for the intelligent edge. Strength in the snapdragon portfolio is an additional tailwind.

QUALCOMM is well-positioned to benefit from solid 5G traction, greater visibility and a diversified revenue stream. Qualcomm is also witnessing solid momentum in IoT across consumer, edge networking and industrial sectors.

However, owing to a challenging macroeconomic environment, inflationary pressures and soft recovery in China, resulting in lower-than-expected demand and elevated inventory levels. Weakness in the smartphone industry and cautious client approach are weighing on margins. Rising geopolitical volatility and high debt burden remain headwinds.

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

Other noteworthy reports we are featuring today include Gilead Sciences, Inc. (GILD), CVS Health Corporation (CVS) and Chubb Limited (CB).

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>>>