Today's Must Read
Pricing & Smokeless Unit Aids Altria (MO), Cigarettes a Woe
Booking Holdings (BKNG) Rides on Gross Bookings Amid Risks
Monday, May 13, 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 Amgen (AMGN), Altria (MO) and Booking Holdings (BKNG). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Amgen’s shares have lost -2.4% over the past year, outperforming the Zacks Biomedical and Genetics industry's decline of -16.5%. Amgen beat expectations for earnings while sales were in line with estimates in the first quarter.
The Zacks analyst thinks that while Amgen’s newer drugs — Prolia, Xgeva, Blincyto, Kyprolis — will drive sales, biosimilar and brand competition for its legacy products will create pressure on sales in 2019. Meanwhile, the uptake of key drug Repatha has been slow due to payer restrictions. However, recently launched products including Aimovig, biosimilars and international expansion provide incremental growth opportunities.
Amgen is also progressing with its pipeline and the approval of Evenity was a boost. In the past five years, Amgen has launched nine products, including two in new therapeutic areas. The company boasts a strong biosimilars pipeline, which could be an important long-term growth driver for the company. Amgen’s restructuring plan is making it leaner and more cost efficient.
Shares of Altria have gained +6.1% over the past three months, outperforming the Zacks Tobacco industry, which has increased +4.1% over the same period. The Zacks analyst thinks the company is steadily gaining from the popularity of Smokeless products. During first-quarter 2019, revenues in the category improved nearly 2.9%.
To further bolster this unit, the company has made investments in JUUL and Cronos. Pricing also continues to drive the company’s revenues. It has also undertaken cost-reduction initiatives. Altria plans to deliver annualized cost savings of nearly $575 million by the end of 2019. Management expects such savings to mitigate the interest burden, stemming from debt issued to fund investments.
Further, we note that Altria grapples with persistently declining cigarette shipment volumes. Stern FDA regulations, along with increased health consciousness, are taking a toll on cigarette sales. Going forward, management expects cigarette industry volume to decline in the range of 4-5%.
Booking Holdings’ shares have underperformed the Zacks Internet Commerce industry over the past year, losing -11.7% vs. -3.6%. Booking Holdings reported weak first quarter results wherein both earnings and revenues missed the estimates.
However, the company’s total bookings continued to accelerate during the reported quarter, thanks to its rapidly growing Merchant bookings. Robust portfolio of properties remained a major positive which drove growth in room nights booked number of the company. Also, its strong direct channel, rising mobile share and growing alternative accommodation business contributed well.
The Zacks analyst thinks its strong focus toward enhancing offerings of places to stay to customers will aid growth in the near term as well as the long haul. Moreover, its growing branding initiatives remain tailwinds. However, currency headwinds and increasing advertising spend remain overhangs. Sluggishness in the rental car days and airline tickets unit poses a risk.
Other noteworthy reports we are featuring today include Enterprise Products Partners (EPD), General Motors (GM) and Occidental Petroleum (OXY).
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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>>>