Today's Must Read
Strong Service and Benefit Business Aids UnitedHealth (UNH)
Glaxo's (GSK) Pipeline Growing Amid Generic Woes for Advair
Tuesday, September 24, 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 Facebook (FB), UnitedHealth Group (UNH) and GlaxoSmithKline (GSK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Facebook’s shares have outperformed the S&P 500 in the past six months (12.4% vs. 6.9%). The Zacks analyst thinks that solid mobile ad revenues, driven by impressive growth in Instagram Stories and Feed, and Facebook News Feed are expected to drive the top line.
Facebook’s initiatives to improve privacy, transparency and authenticity of ads, and remove fake accounts are likely to boost user trust and engagement. Further, the partnership with ESPN for sports streaming on Facebook Watch is positive. The acquisition of CTRL-Lab is a major growth driver for the long haul.
However, the company’s rising regulatory headwinds, including the antitrust investigation and the EU’s investigation of Libra, are concerns. The unfriendly regulatory environment is expected to delay Libra’s launch, which Facebook has targeted for the first half of 2020.
Shares of UnitedHealth have lost 7.6% in the past three months, outperforming the Zacks Medical Insurance industry’s fall of 7.8%. The Zacks analyst believes that UnitedHealth Group stands apart in the industry by virtue of healthcare services, technology and innovations offered by its unit, Optum.
Numerous acquisitions, made by the company, have broadened its business profile and provide benefits of diversification. Its solid balance sheet and consistent cash flow generation have enabled investment in business, which will drive long-term growth. Also, capital management by dividend payment and share buyback is another positive.
However, slowdown of growth in international operations and underperformance in Medicaid business are some concerns. An increase in leverage and interest burden raises financial risk.
GlaxoSmithKline’s shares have gained 3.8% over the past year, outperforming the Zacks Large Cap Pharmaceuticals industry’s fall of 1.8% over the same period. The Zacks analyst believes that Glaxo’s three newest products — Trelegy Ellipta, Shingrix and Juluca — are doing well, particularly Shingrix.
These products coupled with restructuring in the Consumer Health unit have strengthened Glaxo’s competitive position. We are encouraged by the company’s initiatives to focus on its oncology pipeline. However, stiff competition, genericization and pricing pressure on key drugs in the Pharma segment are hurting sales.
Particularly, pricing pressure and competitive dynamics are hampering sales of Glaxo’s respiratory products. Importantly, a generic version of its top-selling drug Advair has been launched, which is significantly eroding the drug’s sales. Also, competitive pressure on HIV drugs is rising in 2019.
Other noteworthy reports we are featuring today include Adobe (ADBE), Duke Energy (DUK) and BlackRock (BLK).
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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>>>