Today's Must Read
New Drugs to Drive Lilly's (LLY) Sales Amid Generic Pressure
CVS Health's (CVS) Aetna Prospect Bright, PBM Challenges Remain
Tuesday, May 14, 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 Alphabet (GOOGL), Eli Lilly (LLY) and CVS Health (CVS). 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 >>>
Alphabet’s shares have gained +4.8% in the past one year, outperforming the Zacks Internet Services industry's decline of -7.9%. Alphabet reported weak revenues in the first quarter due to increasing competition in the advertising business, currency fluctuations and a few changes in YouTube ads.
However, the Zacks analyst thinks strong initiatives toward elimination of bad ads and introducing useful major search updates are acting as tailwinds. Further, Google’s robust mobile search is also a major positive.
Additionally, its strong focus toward bolstering presence in the cloud market on the back of expanding data centers and robust cloud offerings continues to aid growth. Google’s strong focus on the innovation of its AI techniques and home automation space is aiding its business growth. However, the company’s growing litigation issues and increased spending on YouTube and consumer gadgets might hurt its profitability.
Shares of Eli Lilly have gained +39.1% in the past year, significantly outperforming the Zacks Large Cap Pharmaceuticals industry, which has gained +6% over the same period. Lilly beat estimates for earnings in the first quarter. However, Lilly lowered its sales guidance for 2019.
The Zacks analyst thinks revenue growth in 2019 will likely be driven by higher demand for its newer drugs including Trulicity, Jardiance, Taltz, Verzenio and new migraine drug, Emgality as some older drugs like Cialis face generic competition. Lilly has made significant pipeline progress in the past year with several positive late-stage data readouts, multiple approvals and regulatory submissions. Lilly also added promising new pipeline assets through business development deals.
However, competitive pressure on Lilly’s drugs is expected to rise in 2019. 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.
CVS Health’s shares have outperformed the Zacks Retail Pharmacies and Drug Stores industry in the past three months, losing -22.6% versus -24.6%. CVS Health ended first quarter 2019 on a promising note with both earnings and revenues trumping expectations.
Year-over-year growth in the top line was driven by a strong Pharmacy Services segment, benefiting from the upside in the specialty services. The Zacks analyst thinks that although the company is witnessing certain challenges related to 2020 PBM selling season, the long-term prospects look bright. This apart, Aetna integration synergy looks promising.
Following this, CVS Health introduced a new segment-Health Care Benefits which holds immense promise. On the flip side, during the first quarter, persistent reimbursement pressure and the impact of recent generic introductions dented the company’s retail LTC business growth. Also, Omnicare business performance should continue to remain soft through 2019 impacting CVS' pharmacy services arm.
Other noteworthy reports we are featuring today include Intercontinental Exchange (ICE), Marriott (MAR) and TELUS (TU).
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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>>>