Today's Must Read
Adobe (ADBE) Counts on Creative Strength, Expenses A Concern
Broadcom (AVGO) Rides on Portfolio Strength & Acquisitions
Monday, March 18, 2019
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 (MRK), Adobe (ADBE) and Broadcom (AVGO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Merck’s shares have gained +6.7% year to date, significantly outperforming the Zacks Large Cap Pharmaceuticals industry, which has increased +3.7% over the same period. Merck’s new products like Keytruda, Lynparza, and Bridion are contributing meaningfully to the top line. Keytruda sales are gaining momentum with approval for additional indications, especially in the first-line lung cancer setting.
The Zacks analyst thinks Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide. Animal health and vaccine products are also performing strongly and remain core growth drivers for Merck.
The company will continue to focus on cost-cutting initiatives to drive the bottom line. However, generic competition for several drugs and pricing pressure will continue to be overhangs on the top line. Rising competitive pressure on the diabetes franchise and products like Isentress (HIV), Zepatier (HCV) and Zostavax (vaccine) remains a concern.
Shares of Adobe have gained +15.7% over the past year, underperforming the Zacks Software industry which has increased +19.7% over the same period. Adobe reported strong fiscal first-quarter results. The results were helped by acquisitions, strong demand for its creative products and solid efforts for product innovation. It has been making great efforts toward establishing its presence in cloud-related software areas such as documents and marketing.
The Zacks analyst remains optimistic about Adobe’s market position, compelling product lines, continued innovation, solid adoption of Creative Cloud and Adobe marketing cloud. However, lower end-market demand and exposure to Europe remain overhangs. Also, higher expenses incurred on acquisitions will likely impact its bottom line.
Broadcom’s shares have outperformed the Zacks Electronics - Semiconductors industry over the past year, gaining +18.6% vs. a +10.8% increase. Broadcom reported mixed first-quarter fiscal 2019 results. The bottom line surpassed expectations but the top line missed the same.
The Zacks analyst thinks the company is benefiting from strong demand for its wireless solutions and expanding product portfolio, which makes it well-positioned to address the needs of rapidly growing technologies like IoT and 5G. Strong ties with leading OEMs across multiple target markets will help the company to gain key insights into the requirements of customers.
Further, Broadcom is a leading player in the semiconductor market based on its multiple target markets, accretive acquisitions and strong cash flow. Nonetheless, the company faces intensifying competition and integration risks due to frequent acquisitions. The company’s leveraged balance sheet and customer concentration continue to be headwinds.
Other noteworthy reports we are featuring today include Intuitive AstraZeneca (AZN), Public Storage (PSA) and Ross Stores (ROST).
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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>>>