Today's Must Read
New Drugs to Drive Lilly's (LLY) Sales Amid Generic Pressure
ADP Rides on Strategic Buyouts Amid Technological Challenges
Thursday, August 8, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including The Walt Disney (DIS), Eli Lilly (LLY) and Automatic Data Processing (ADP). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
Disney’s shares have gained +23% year to date, underperforming the Zacks Media Conglomerates industry’s gain of +29.8%. Disney’s third-quarter fiscal 2019 results were hurt by investments in ESPN+ and Disney+, and consolidation actions related to 21st Century Fox (21CF) and Hulu. The Zacks analyst thinks the phenomenal success of Avengers: Endgame and robust collections by Aladdin, Captain Marvel and Toy Story 4 negated lackluster performance of Dark Phoenix. Moreover, higher guest spending and growth in consumer products business drove the top line. Nevertheless, the company anticipates higher operating losses in the Direct-to-consumer & International segment due to ongoing investments. Media Networks’ operating income is also expected to decline due to weakness in 21CF’s television businesses and higher programming expenses at ESPN.
Shares of Eli Lilly have lost -4% year to date, underperforming the Zacks Large Cap Pharmaceuticals industry, which has declined -2.6% over the same period. Lilly beat estimates for earnings in the second quarter but missed the same for sales. Revenue growth in the second half is expected to be driven by higher demand for its newer drugs like Trulicity, Jardiance, Taltz, Verzenio and Emgality, as some older drugs like Cialis face generic competition. The Zacks analyst thinks Lilly has made significant pipeline progress in the past year with several positive late-stage data readouts, multiple approvals and regulatory submissions. Lilly also added promising new pipeline assets through business development deals. However, rising competitive pressure on Lilly’s drugs, generic competition for several drugs including Cialis, rising pricing pressure, currency headwinds and the impact of the failed Lartruvo study are expected to keep the top line under pressure.
ADP’s shares have gained +18.9% over the past year, outperforming the Zacks Outsourcing industry's +10.2% increase. ADP’s fourth-quarter fiscal 2019 earnings beat expectations but revenues missed the same. The Zacks analyst thinks the company continues to enjoy a dominant position in the human capital management market through strategic acquisitions. It has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. A solid balance sheet enables it to continue with its shareholder-friendly activities alongside strategic buyouts and investments in product development. However, ADP faces significant competition in each of its product lines. Failure to remain technologically updated might reduce the demand for its solutions and services. The company is seeing increase in expenses as it continues to acquire companies and invest in transformation efforts.
Other noteworthy reports we featured today include American International Group (AIG), Equinix (EQIX) and Welltower (WELL).
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Note: Our Director of Research 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>>>