Today's Must Read
AstraZeneca (AZN) Rides on Solid Pipeline, Drug Launches
Broadcom (AVGO) Banks on Portfolio Strength & Acquisitions
Monday, October 21, 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 Walmart (WMT), AstraZeneca (AZN) and Broadcom (AVGO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Walmart’s shares have outperformed the Zacks Supermarkets industry year to date (27.9% vs. 23.6%). The Zacks analyst believes that factors such as the company’s focus on strengthening e-commerce and store operations aided the company to retain a sturdy comps trend in first-quarter fiscal 2019, wherein earnings marked its fifth straight beat.
Further, U.S. comps rose for the 19th straight time. Also, e-commerce sales surged on robust Walmart.com and online grocery performances. Encouragingly, e-commerce sales are expected to rise nearly 35% in fiscal 2020. The company is also making efforts to improve its International unit by shifting focus to profitable countries.
However, the addition of Flipkart was a drag on Walmart’s operating income. Moreover, transportation costs, a compelling pricing strategy and tariff-related worries are threats to margins. Nonetheless, the Flipkart deal bodes well for the long term.
Shares of AstraZeneca have gained 13.2% in the past six months against the Zacks Large Cap Pharmaceuticals industry’s rise of 3.5%. The Zacks analyst believes that AstraZeneca’s core products like Nexium, Crestor and Seroquel are facing generic competition, which is hurting sales.
The diabetes franchise is also facing stiff competition while pricing pressure is hurting sales in the respiratory unit. Nonetheless, AstraZeneca has returned to product sales growth mainly on the back of its cancer medicines, Lynparza, Tagrisso and Imfinzi, which should keep driving revenues. Several launches are underway across each of the therapeutic areas, Oncology, CV metabolism and Respiratory.
Cost-cutting efforts should drive earnings. AstraZeneca also has a promising late-stage pipeline. Its shares have outperformed the industry so far this year. The company has a positive record of earnings surprises in the recent quarters. Estimates have gone down slightly ahead of the Q3 earnings release.
Broadcom’s shares have lost 3.1% over the past three months against the Zacks Electronics - Semiconductors industry’s decline of 0.3%. The Zacks analyst believes that Broadcom is benefiting from strong demand of its wireless solutions and expanding product portfolio, which makes it well positioned to address the needs of rapidly growing technologies like IoT and 5G.
Further, strong ties with leading OEMs across multiple target markets are expected to help the company gain key insights into the requirements of customers. Moreover, 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. Nonetheless, the company faces intensifying competition and integration risks due to frequent acquisitions. The company’s leveraged balance sheet and customer concentration are concerns.
Other noteworthy reports we are featuring today include GlaxoSmithKline (GSK), Intuitive Surgical (ISRG) and Anthem (ANTM).
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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>>>