Today's Must Read
Altria (MO) to Benefit From Strength in Smokeless Products
BD Medical Arm Drives Becton, Dickinson (BDX) Amid Rivalry
Wednesday, April 10, 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 Eli Lilly (LLY), Altria (MO) and Becton, Dickinson (BDX). 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 >>>
Buy ranked Eli Lily's shares have outperformed the Zacks Large Cap Pharmaceuticals industry year to date, gaining +10% vs. +1.9%. The Zacks analyst thinks Lilly’s revenue growth in 2019 will likely be driven by higher demand for its newer drugs including Trulicity, Jardiance, Taltz, Verzenio as well as new migraine drug, Emgality as some older drugs like Cialis face generic competition.
In 2018, Lilly made significant pipeline progress with several positive late-stage data readouts, multiple approvals and regulatory submissions. Emgality could emerge as a significant contributor to long-term growth. Lilly has also added promising new pipeline assets through business development deals.
However, generic competition for several drugs including Cialis, rising pricing pressure, currency headwinds and the impact of the failed Lartruvo study are expected to put pressure on the top line. Estimates have gone up ahead of Q1 results. Lilly has a positive record of earnings surprises in recent quarters.
Shares of Altria have underperformed the Zacks Tobacco industry over the past three months (+12.7% vs. +19.8%). The Zacks analyst thinks the company has been steadily gaining from the popularity of Smokeless products. To further bolster this category, the company recently invested in JUUL and Cronos. Altria has also applied for converting its non-voting interests in JUUL to voting securities.
Pricing also continues to drive the company’s revenues. It has also undertaken cost-reduction initiatives to counter interest burden. Altria plans to deliver annualized cost savings of nearly $575 million by the end of 2019. However, the company grapples with persistently declining cigarette shipment volumes. Stern FDA regulations combined with increased health consciousness are taking a toll on the cigarette category.
Going forward, management expects cigarette industry volume to decline in the range of 3.5-5%. Further, the company’s wine category has been sluggish, thanks to stiff competition.
Becton, Dickinson’s shares have outperformed the Zacks Dental Supplies industry over the past year, gaining +12.5% vs. +1.5%. The Zacks analyst likes the solid performance by the core BD Medical and Life Sciences units. Domestic and international revenues increased year over year in recent times.
Management is optimistic about the C.R. Bard buyout which has consistently proven to be accretive. Notably, a series of product launches and regulatory approvals in recent times continue to boost the stock. The company has kept its fiscal 2019 guidance intact.
On the flip side, contraction in gross and operating margins in recent times is worrisome. Customer ordering patterns are also expected to negatively impact fiscal second-quarter results. Management expects unfavorable foreign currency to remain headwinds in fiscal 2019. Stiff price competition in the MedTech space adds to its woes.
Other noteworthy reports we are featuring today include T-Mobile (TMUS), EOG Resources (EOG) and General Motors (GM).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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>>>