Today's Must Read
Pfizer (PFE) to Launch New Drugs Amid Generic Headwinds
Life Sciences Business Drives Danaher (DHR), High Costs Hurt
Tuesday, July 16, 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 Berkshire Hathaway (BRK.B), Pfizer (PFE) and Danaher (DHR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Berkshire Hathaway’s shares have outperformed the Zacks Insurance - Property and Casualty industry in the past year (+11.2% vs. +10.4%). The Zacks analyst thinks it is poised for growth over the long term on the back of its sturdy insurance business. The company’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position supports earnings-accretive bolt-on buyouts. Demand for utilities is expected to rise in the future and drive earnings growth.
Continued insurance business growth also fuels its increase in float. The company’s non-insurance businesses are delivering improved results, supporting overall performance. A sturdy capital level provides further impetus.
However, Berkshire Hathaway’s exposure to catastrophe loss remains a concern as its property and casualty insurance business generates maximum return on equity. Also, huge capital expenses due to railroad operations pose a major concern.
Shares of Pfizer have underperformed the Zacks Large-Cap Pharmaceuticals industry year to date (-0.9% vs. -2.1%). Pfizer expects continued strong growth of key product franchises, including Ibrance, Eliquis and Xeljanz in 2019. However, the Zacks analyst thinks loss of exclusivity on key drugs in the United States, mainly Lyrica, and currency headwinds will significantly hurt 2019 sales.
Other top-line headwinds are weak sales in the sterile injectables portfolio, pricing pressure and rising competition. To offset the threat of generic competition, Pfizer is strengthening its pipeline. It is well positioned to deliver several potentially innovative drugs in the next five years which can drive long-term growth.
Biosimilars are also expected to contribute to growth in 2019. Estimates have gone down slightly ahead of Q2 earnings release. Pfizer has a positive record of earnings surprises in recent quarters.
Danaher’s shares have gained +13% over the past three months, outperforming the Zacks Diversified Operations industry, which has increased +0.2% over the same period. The Zacks analyst thinks sturdier demand for products, Danaher Business System ("DBS") implementation and shareholder-friendly policies will likely bolster profitability going forward.
Also, the acquisition of General Electric's BioPharma business will boost its biologics workflow solutions business. The divestiture of the dental business will improve competency.
However, rising cost of sales and unfavorable movements in foreign currencies might continue to restrict Danaher's growth. For 2019, the company lowered adjusted earnings per share guidance from $4.75-$4.85 to $4.72-$4.80, primarily reflecting dilutive impact of funds raised for the BioPharma buyout. Earnings estimates for 2019 have remained stable in the past 60 days.
Other noteworthy reports we are featuring today include Tesla (TSLA), Welltower (WELL) and Cintas (CTAS).
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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>>>