Today's Must Read
Strong Service and Benefit Business Aids UnitedHealth (UNH)
Newer Drugs Drive Merck's (MRK) Sales as Competition Soars
Friday, November 8, 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 Mastercard (MA), UnitedHealth Group (UNH) and Merck (MRK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Mastercard’s shares have outperformed the Zacks Financial Transaction Services industry year to date (44.2% vs. 38.2%). The Zacks analyst believes that the company's revenues are gaining from higher switched transactions, increase in cross-border volume and gross dollar volume.
Numerous acquisitions made over the years have fueled its inorganic growth. Its solid capital position enables investment in business. However, escalating costs might put pressure on margins. In order to gain customers and new business, Mastercard has been incurring high levels of costs under rebates and incentives, which remains a concern.
Shares of UnitedHealth have gained 7% in the past six months against Zacks Medical Insurance industry’s rise of 8.3%. The Zacks analyst believes that company 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 led to inorganic growth. Its solid balance sheet and consistent cash flow generation enable investment in business. Also, capital management by dividend payout and share buyback is another positive. Strong earnings guidance by the company instills investors' confidence.
The company's third-quarter earnings surpassed the Zacks Consensus Estimate by 3.5% and grew 13.8% year over year, on the back of higher revenues, and strength in both segments, UnitedHealthcare and Optum. However, slowdown of growth in international operations and underperformance in Medicaid business are some concerns.
Merck’s shares have declined 1.9% over the past three months against the Zacks Large Cap Pharmaceuticals industry’s rise of 3.8%. The Zacks analyst believes that products like Keytruda, Lynparza and Bridion are driving sales. Keytruda sales are gaining from continued uptake in lung cancer and increasing usage in other cancer indications.
Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide. Animal health and vaccine products are also performing strongly and remain core growth drivers for Merck.
However, generic competition for several drugs and pricing pressure will continue to be overhangs on the top line. Rising competitive pressure on the diabetes franchise and on products like Isentress and Zepatier remains a concern.
Other noteworthy reports we are featuring today include Qualcomm (QCOM), Danaher (DHR) and CVS Health (CVS).
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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>>>