Today's Must Read
Solid Balance Sheet, Revenue Growth Aid UnitedHealth (UNH)
International Humira Sales Erosion Weighs on AbbVie (ABBV)
Friday, July 5, 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), UnitedHealth (UNH) and AbbVie (ABBV). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Amazon’s shares have outperformed the broader market in the past year (the stock is up +10.8% vs. the +7.4% increase for the S&P 500 as a whole). The Zacks analyst thinks Amazon continues to ride on its aggressive retail strategies, distribution strength and robust Prime program. Moreover, rapid adoption of Prime driven by customer benefits and strengthening grocery services is aiding its top line. Expanding content portfolio of Prime remains a tailwind.
Further, strengthening AWS services portfolio, rising number of availability zones and growing adoption are aiding Amazon’s dominance in the cloud space. Improving Alexa skills and growing advertisement business remain major positives.
However, intensifying competition in the cloud computing market from the likes of Microsoft Azure and Google cloud is a significant headwind. Heavy investment in fulfillment centers remains a concern.
Shares of UnitedHealth have lost -2.8% in the past year, underperforming the Zacks Medical Insurance industry, which has declined -1.4% over the same period. The Zacks analyst likes its strong operating performance, favorable business profile and disciplined enterprise risk management. It stands apart in the industry by virtue of healthcare services, technology and innovations offered by its unit, Optum.
Numerous acquisitions made by the company have broadened its business profile and provide benefits of diversification. Its solid balance sheet and consistent cash flow generation has enabled higher investment in business which will drive long term growth.
Capital management by dividend payment and share buyback is another positive. However, slowdown of growth in international operations and underperformance in Medicaid business are concerns. An increase in leverage and interest burden raises financial risk.
AbbVie’s shares have declined -21.3% year to date, underperforming the Zacks Large-Cap Pharmaceuticals industry's increase of +4.7%. The Zacks analyst thinks AbbVie’s key drug, Humira is performing well based on strong demand trends despite new competition. Imbruvica has multibillion dollar potential.
AbbVie has been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta. Moreover, AbbVie has an impressive late-stage pipeline comprising several products with multibillion-dollar potential expected to be launched in the near term. The acquisition of Allergan, if successful, will add the former’s blockbuster Botox to AbbVie’s portfolio.
Sales erosion due to direct biosimilar competition to Humira in international markets will be a major headwind in 2019. Estimates have gone down ahead of Q2 earnings. However, AbbVie has a positive record of earnings surprises in the recent quarters.
Other noteworthy reports we are featuring today include Sherwin-Williams (SHW), Simon Property Group (SPG) and Autodesk (ADSK).
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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>>>