Today's Must Read
Opdivo Drives Bristol-Myers' (BMY) Amid Pipeline Setbacks
Rite Aid Store Additions, Microsoft Deal Aid Walgreens (WBA)
Friday, March 29, 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 Phillip Morris (PM), Bristol-Myers (BMY) and Walgreens Boots (WBA). 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 >>>
Phillip Morris' shares have gained +6.7% in the past six months, outperforming the Zacks Tobacco industry's decline of -2.4%. The Zacks analyst thinks the company is gaining from its strong pricing strategies. In fact, favorable pricing has played an important role in boosting revenues for a while.
Also, this drove the company’s performance in the fourth quarter of 2018, wherein it delivered the third and the fourth straight quarter of top- and bottom-line surprises, respectively. The company is also undertaking initiatives to strengthen RRPs, which are rapidly gaining market popularity. In fact, it has introduced new versions of IQOS to capture market share.
Additionally, the company provided a favorable view for 2019. However, Philip Morris is grappling with declines in total shipment volumes, stemming from weak cigarette sales. Stringent regulations on tobacco products have been marring cigarette industry volumes. Moreover, unfavorable currency movements are a viable threat.
Shares of Bristol-Myers have underperformed the Zacks Large Cap Pharmaceuticals industry in the past six months, losing -22.9% vs. +2.1%. Bristol-Myers' blockbuster immuno-oncology drug, Opdivo continues to perform well. The Zacks analyst thinks the approval of the drug for first-line RCC and adjuvant melanoma has boosted sales. Label expansion of other drugs like Sprycel and Empliciti should further drive the company’s performance.
In January, Bristol-Myers announced that it will acquire Celgene for an equity value of approximately $74 billion. While the acquisition will bolster the company’s portfolio, it is being opposed by a few shareholders, who believe that the deal is overpriced, significantly increasing shareholders’ risk.
Moreover, the company’s voluntary withdrawal of the sBLA seeking approval of Opdivo+Yervoy as a treatment for first-line NSCLC with tumor mutational burden greater or equal to 10 mutations/megabase was disappointing, given the market potential.
Walgreens Boots’ shares have outperformed the Zacks Drug Stores industry over the past six months, losing -13.7% vs. -24.4%. The Zacks analyst thinks that within the Retail Pharmacy USA division, the company has been making solid progress with respect to boosting prescription volume. Walgreens Boots is launching a phase of transformational cost management to reduce margin pressure.
The company has been gaining from strategic tie-ups as well. Walgreens Boots’ recent alliance with Microsoft to use the Azure platform is a welcome move. The company’s deal with Alphabet’s life sciences and healthcare segment, Verily is another positive. The company’s decision to launch next-day prescription delivery service with FedEx provides further cause for optimism.
On the flip side, tough market conditions, particularly in retail, have been leading to sluggishness in Walgreens Boots' Retail Pharmacy International division. The ongoing generic drug inflation is hurting pharmacy margins as well.
Other noteworthy reports we are featuring today include Paychex (PAYX), Sirius XM (SIRI) and Total System Services (TSS).
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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>>>