Today's Must Read
Investment & Innovation Reflect Coca-Cola's (KO) Core Strength
Strong HIV Franchise, CAR-T, Stable HCV Boost Gilead (GILD)
Tuesday, May 21, 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 Disney (DIS), Coca-Cola (KO) and Gilead (GILD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Disney’s shares have gained +28.7% over the past year, outperforming the Zacks Media Conglomerates industry’s gain of +23% during the same period. The Zacks analyst thinks Disney’s second-quarter fiscal 2019 top-line growth was driven by strong performance of DTCI and Parks, Experiences & Consumer Products segments. Higher guest spending and attendance and increase in consumer products business aided Parks segment revenues.
Additionally, Disney’s most-awaited movie, Avengers: Endgame, which recorded phenomenal box-office success, is expected to aid fiscal 2019 top line. However, second-quarter fiscal 2019 operating income decreased due to lower theatrical and home entertainment results and higher costs.
Increasing investments in ESPN and Disney+ and losses from streaming technology services hurt DTCI segment operating income. Moreover, due to the ongoing investments, Disney anticipates DTCI operating loss to be higher in third-quarter fiscal 2019.
Shares of Coca-Cola have increased +15.6% in the past year, outperforming the Zacks Soft Drinks Beverages industry which has gained +7.2% over the same period. The Zacks analyst thinks this is largely attributable to the effective execution of strategies to evolve as a consumer-centric total beverage company. This bolstered the company’s quarterly performances as evident from a robust surprise trend.
First-quarter 2019 marked its seventh positive earnings surprise in the last eight quarters and seventh straight sales beat. Top and bottom lines benefited from ongoing productivity efforts and disciplined growth strategies along with robust performance across all segments.
Further, innovation and investment in core categories and brands have been the key focus area for Coca-Cola, which has led to the expansion of retail value share. Its transformative global re-franchising initiatives are expected to boost margins. However, the company expects adverse currency rates to significantly hurt comparable revenues and operating income in the second quarter and 2019.
Buy-ranked Gilead’s shares have outperformed the Zacks Biotech industry year to date, gaining +5.3% vs. an increase of +0.3%. Although the sales miss was disappointing, Gilead’s earnings beat the consensus mark in the first quarter. Soft HCV franchise sales stabilized as compared to the levels in prior quarters.
The Zacks analyst thinks Gilead’s HIV franchise maintains momentum on continued uptake of Genvoya and Odefsey, and the rapid adoption of Biktarvy. Meanwhile, it shifted focus to the HIV franchise, and newer avenues like CAR-T therapy and NASH. Gilead’s collaboration with Novo Nordisk for NASH treatments is a step in the right direction, given its recent debacles.
The company suffered a setback with the failure of a late-stage study on selonsertib in patients with compensated cirrhosis (F4) due to NASH. It is also developing a pipeline targeting inflammatory diseases. Data from phase III studies on filgotinib were also encouraging. A potential filing is planned by the end of this year.
Other noteworthy reports we are featuring today include CME Group (CME), Concho Resources (CXO) and Entergy (ETR).
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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>>>