Today's Must Read
Health Care Business to Drive 3M's (MMM) Revenues
Cosentyx, Entresto, Fuel Novartis (NVS) As Sandoz Faces Hurdles
Thursday, April 4, 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 Amazon (AMZN), 3M (MMM) and Novartis (NVS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked Amazon’s shares have outperformed the broader market in the past year (the stock is up +25.4% vs. the +8% increase for the S&P 500 as a whole). The Zacks analyst thinks Amazon continues to ride on its ecommerce dominance. Its aggressive retail strategies, distribution strength and robust Prime remain the key catalysts.
Moreover, rapid adoption of Prime owing to its customer benefits and strengthening grocery services is driving its top-line growth. Further, the company’s growing brick and mortar presence is a tailwind. Additionally, Amazon’s continued momentum in AWS remains a major positive. Increasing AWS regions and its growing adoption will continue to aid Amazon’s cloud dominance.
However, first-quarter 2019 revenue guidance remains disappointing. Further, rising cloud competition from the likes of Microsoft Azure and Google cloud is a significant headwind. Heavy investment in fulfillment centers is another concern.
Shares of 3M have increased +11.7% in the past three months, underperforming the Zacks Diversified Operations industry, which has gained +18.7% over the same period. The Zacks analyst thinks 3M stands to gain from efforts to innovate products, solid demand and portfolio restructuring moves. Its acquisition of the technology business of M*Modal is likely to strengthen the Health Information Systems business in the months ahead.
The company is also steadily improving its cash position. In addition to this, 3M is on track to boost its shareholder return over time. However, for 2019, the company lowered the earnings projection from $10.60-$11.05 to $10.45-$10.90 per share and net sales growth guidance from 2-4% to 1-4%.
Foreign currency translation is predicted to adversely influence sales by 1%. In addition, inflation in prices of major inputs and rising competitive pressures pose threats to near-term profitability. Also, the company looks overvalued compared with the industry.
(You can read the full research report on 3M here >>>).
Novartis’ shares have outperformed the Zacks Large-Cap Pharmaceuticals industry (+17.2% vs. +13%), in the past year. The Zacks analyst likes Novartis’ strong oncology portfolio which includes drugs like Afinitor, Exjade, Jakavi, Zykadia, Tasigna, Jadenu and an improved formulation of Exjade.
New drugs like Cosentyx and Entresto continue to boost performance, while legacy drugs face stiff competition. The biosimilars portfolio has also gained traction. For Novartis, 2018 was a challenging year, as it restructured its business to focus on becoming a core drug-focused company, powered by data and digital technologies.
However, the generic division, Sandoz, continues to face pricing pressure in the United States. The division also suffered a blow when the FDA issued a CRL to its generic, Advair Diskus. Meanwhile, the company plans to spin-off its eye-care unit, Alcon, into a new company. The uptake of Kymriah and Kisqali has been slow.
Other noteworthy reports we are featuring today include VMware (VMW), Schlumberger (SLB) and ICICI Bank (IBN).
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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>>>