Today's Must Read
Strategic Mergers Aid Boeing (BA), Low 737 Deliveries Hurt
Broadcom (AVGO) Rides on Portfolio Strength & Acquisitions
Thursday, September 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 Johnson & Johnson (JNJ), Boeing (BA) and Broadcom (AVGO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Johnson & Johnson’s shares have outperformed the Zacks Large-Cap Pharmaceuticals industry in the year-to-date period (1% vs. -1.5%). The Zacks analyst thinks that J&J is witnessing significant generic/biosimilar headwinds in the Pharma unit in 2019.
However, J&J’s sales and earnings growth is expected to accelerate in 2020 supported by contribution from new drugs like Tremfya and successful label expansion of cancer drugs like Imbruvica and Darzalex and immunology drug, Stelara. J&J is also making rapid progress with its pipeline and line extensions. It has already gained FDA approval for two new drugs in 2019, Balversa and Spravato.
Meanwhile, share buybacks and restructuring initiatives should provide bottom-line support. J&J’s shares have outperformed the industry this year. Headwinds like biosimilar/generic competition and pricing pressure remain. The talc and opioid lawsuits are overhangs on the stock.
Shares of Boeing have gained 2.7% in the past six months, underperforming the Zacks Aerospace & Defense industry’s rise of 16.2%. The Zacks analyst believes that the company’s proposed joint venture with Embraer will strengthen Boeing’s commercial business significantly.
Boeing remains the largest aircraft manufacturer globally in terms of revenues, orders and deliveries, and one of the major aerospace and defense contractors. Boeing expects the commercial fleet to be fueled by sustained annual growth in commercial passenger traffic along with a big wave of retiring, old planes.
However, the commercial business has suffered a major setback lately due to lower 737 deliveries, following the 737 Max product line's grounding and subsequent costs associated with it. Consequently, its revenues, earnings and cash flow position were affected significantly. This must have caused the company’s share price to underperform its industry year to date.
Broadcom’s shares have gained 3.1% in the past three months, underperforming the Zacks Electronics - Semiconductors industry’s rise of 5.8% over the same period. The Zacks analyst believes that the company is benefiting from strong demand for its wireless solutions and expanding product portfolio, which makes it well-positioned to address the needs of rapidly growing technologies like IoT and 5G.
The company intends to strengthen presence in the infrastructure software vertical particularly. In this regard, acquisition of CA and Symantec’s Enterprise Security Business remain extremely significant. Notably, shares of Broadcom have outperformed the industry in the past year.
Nonetheless, the company provided a tepid fiscal 2019 revenue view. Further, the company faces intensifying competition and integration risks due to frequent acquisitions. The company’s leveraged balance sheet continues to be a headwind.
Other noteworthy reports we are featuring today include Anthem (ANTM), Northrop Grumman (NOC) and Allstate (ALL).
5 Stocks Set to Double
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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>>>