Today's Must Read
Robust Content to Aid Netflix (NFLX) Amid Stiff Competition
AbbVie's (ABBV) Pipeline Solid, Skyrizi, Rinvoq Start Strong
Monday, November 11, 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 Toyota Motor (TM), Netflix (NFLX) and AbbVie (ABBV). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Toyota’s shares have outperformed the Zacks Foreign Automotive industry year to date (24.4% vs. 15.2%). The Zacks analyst believes that Expanding portfolio of product lines is driving the firm’s sales.
In order to capitalize on the accelerated global shift to electric cars, the auto giant of Japan is deepening focus on developing electric and autonomous vehicles, which will bolster the company’s product competitiveness. Its healthy balance sheet, improving cash flows and investor-friendly moves are other positives.
However, anticipating a slowdown in India, Indonesia and Thailand, the company narrowed its annual vehicle sales target for fiscal 2020. High research and development expenses on advanced technologies for the development of EVs and driverless cars are likely to dent near-term margins. As such, investors are recommended to wait for a better entry point.
Shares of Netflix have lost 15.6% in the past six months against Zacks Broadcast Radio and Television industry’s fall of 5.1%. The Zacks analyst believes that Netflix’s third-quarter 2019 subscriber addition rate faltered primarily due to a price hike in the United States, which, however aided ARPU growth on a year-over-year basis.
Management now expects net additions in the paid subscriber base to decline in 2019 due to higher churn rate and increased competition. Notably, upcoming streaming services from Disney, Apple, Comcast and AT&T pose a significant threat to Netflix’s streaming dominance. Shares have underperformed the industry on a year-to-date basis.
Moreover, high streaming content obligation and increased spending are expected to hurt free cash flow generation. Nevertheless, a solid content portfolio and expanding bundle-offerings through partnerships with Telefonica, KDDI, AT&T, Comcast, DISH, Verizon, Charter, Altice, T-Mobile and Sky bode well for the streaming platform.
AbbVie’s shares have gained 32% over the past three months against the Zacks Large Cap Pharmaceuticals industry’s rise of 5.6%. The Zacks analyst believes that AbbVie’s key drug, Humira is performing well based on strong demand trends despite new competition. Imbruvica has multibillion-dollar potential.
AbbVie has been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta. Moreover, it has an impressive late-stage pipeline. It gained approvals for two new drugs with significant potential, Skyrizi (risankizumab) and Rinvoq, this year. Both are off to a strong start.
The acquisition of Allergan, if successful, should diversify AbbVie’s revenue base and accelerate its non-Humira business. However, AbbVie’s shares have underperformed the industry this year so far. Sales erosion due to direct biosimilar competition to Humira in international markets is a big headwind.
Other noteworthy reports we are featuring today include Gilead Sciences (GILD), Morgan Stanley (MS) and Fiserv (FISV).
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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>>>