Today's Must Read
Pricing Strategy to Continue Aiding Philip Morris (PM)
Strategic Pricing Likely to Keep Fueling Mondelez (MDLZ)
Thursday July 11, 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 Adobe (ADBE), Philip Morris (PM) and Mondelez (MDLZ). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Adobe’s shares have gained +20.3% in the past year, underperforming the Zacks Software industry, which has increased +26.3% during the same time period. The Zacks analyst thinks strong demand for Adobe's creative products is driving its top-line growth.
Also, the company’s Adobe Document Cloud and Adobe Experience Cloud products, along with growing subscription for cloud application are positives. It has been making great efforts toward establishing its presence in cloud-related software areas such as documents and marketing.
Adobe’s market position, compelling product lines, continued innovation, solid adoption of Creative Cloud and Adobe marketing cloud are major positives. However, lower end-market demand and exposure to Europe remain overhangs. High acquisition expenses do not bode well for margin expansion.
Shares of Philip Morris have gained +15.3% in the past six months, outperforming the Zacks Tobacco industry, which has increased +10.5% over the same period. The Zacks analyst thinks sturdy bottom-line trend along with efficient pricing and gains from growth in RRPs arena has been boosting the stock.
These upsides made a positive impact on first-quarter results, wherein earnings and revenues beat expectations. Also, earnings improved year on year. Going forward, the company expects price hikes to remain a key growth catalyst. The company is also on track with exploring prospects in RRPs and expanding them to newer regions.
However, the cigarette category remained soft in the first quarter, thanks to lower revenues and flat volumes. Cigarette shipment volumes are expected to continue declining in 2019. The unit is also being weighed down by stringent policies and fading consumer interest. Moreover, unfavorable currency movements are a threat.
Mondelez’s shares have outperformed the Zacks Food Preparation industry over the past three months, gaining +11.1% vs. +4.2%.The Zacks analyst thinks the company is steadily gaining from strategic pricing endeavors. In fact, during the first quarter of 2019, balanced pricing and volume/mix helped organic revenues rise nearly 3.7%. Also, smart pricing led to adjusted gross margin improvement.
Going forward, management plans to continue striking a balance between volumes and pricing. Additionally, it is progressing well with savings initiatives. Mondelez also focuses on brand building through innovation. It is also bolstering presence in emerging regions.
However, the company grapples with adverse currency movements, which dented top-line performance during the first quarter. Management expects currency fluctuation to be a drag in 2019. Higher raw material costs and rising SG&A expenses are other concerns.
Other noteworthy reports we are featuring today include ConocoPhillips (COP), Southern Company (SO) and Tesla (TSLA).
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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>>>