Today's Must Read
User Addition Rate Decline Hurts Netflix's (NFLX) Prospects
Reduced Risk Products to Keep Driving Philip Morris (PM)
Friday, July 19, 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 Abbott (ABT), Netflix (NFLX) and Philip Morris (PM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Outperform-rated Abbott’s shares have gained +38.6% over the past year, significantly outperforming the Zacks Medical Products industry, which has increased +6.4% over the same period. Abbott exited second quarter 2019 with better-than-expected earnings. However, revenues lagged the estimates.
The Zacks analyst likes the strong and consistent EPD and Medical Devices performance. The company has been stealing the limelight within Diabetic Care on growth with FreeStyle Libre. This apart, synergies from Alere consolidation in the form of Rapid Diagnostics have been driving growth. Within Structural Heart, worldwide uptake of MitraClip therapy improves further.
Meanwhile, the company’s emerging market performance has been promising. Consequently, Abbott has raised its full-year guidance. On the flip side, sluggish Rhythm Management arm in the United States continues to dent growth. Increasing currency headwinds is another downside.
Shares of Netflix have gained +21.5% year to date, underperforming the Zacks Broadcast Radio and Television industry’s rally of +22.8% during the same period. Netflix’s second-quarter 2019 subscriber additions rate faltered primarily due to price hike in a number of regions and a weak content slate.
The company also blamed the record addition (9 million) of subscribers in the first quarter which resulted in a pull-forward effect for the decline. Although Netflix provided an optimistic third-quarter view, The Zacks analyst thinks the streaming giant will face hard times due to increasing competition in the video streaming space.
However, Netflix believes that lost shows will free-up its budget that it can then spend on original content. Moreover, partnerships with Telefonica, KDDI, AT&T, Comcast, DISH, Verizon, Charter, Altice, T-Mobile and Sky bode well for the streaming platform.
Philip Morris’ shares have gained +4.1% in the past three months, outperforming the Zacks Tobacco industry, which has declined -1.1% over the same period. The Zacks analyst thinks sturdy bottom-line trend along with efficient pricing and gains from growth of IQOS in the RRPs arena has been boosting the stock.
These upsides made a positive impact on second-quarter results, wherein earnings and revenues beat expectations. Also, earnings improved year on year. Further, management raised its view for 2019. The company is on track to bolster the RRPs space and plans to invest nearly $400 million in this arena in 2019.
However, persistent softness in the cigarette unit is weighing on Philip Morris’ top-line performance. Cigarette shipment volumes are expected to continue declining in 2019. Conventional cigarettes are being weighed down by stringent policies and fading consumer interests. Moreover, unfavorable currency movements are a threat.
Other noteworthy reports we are featuring today include Bristol-Myers (BMY), United Technologies (UTX) and Novartis (NVS).
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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>>>