Today's Must Read
Allergan (AGN) Rides on Botox Sales, Generic Woes Remain
Honda's (HMC) Focus on Electric Cars to Aid Amid High Capex
Tuesday, November 12, 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 Booking Holdings (BKNG), Allergan (AGN) and Honda Motor Co. (HMC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Booking Holdings’ shares have underperformed the Zacks Internet Commerce industry year to date (10.1% vs. 20.4%). The Zacks analyst believes that a secular growth trend in the online travel booking market and growing mobile usage penetration are tailwinds.
Booking Holdings reported third-quarter results, wherein both earnings and revenues have grown year over year on the back of improving gross bookings. Moreover, solid growth in the booked room nights and strong momentum across global accommodation space contributed well. Also, strong efforts toward ramping up of merchant business drove the top-line growth further.
Moreover, the company’s strong position in international markets and growth opportunities in the domestic market are major positives. However, continued softness in agency business of the company remains a headwind. Further, macro headwinds and increasing advertising spend are concerns.
Shares of Allergan have gained 34.5% in the past six months against Zacks Generic Drugs industry’s rise of 4.7%. The Zacks analyst believes that Allergan’s key products like Botox and new products such as Viberzi and Vraylar support sales.
Allergan also continues to deliver on its R&D pipeline with some major product launches expected over the next couple of years. Biosimilars also represent significant opportunity. The acquisition by AbbVie could prove to be rewarding for Allergan’s shareholders. Allergan’s stock has outperformed the industry this year so far.
However, in 2019, sales are being hurt by loss of exclusivity of key drugs, product recalls, pricing pressure and currency headwinds. Its blockbuster eye drug, Restasis, is also expected to face generic competition this year. Meanwhile, new competition for key growth drivers, Botox, Restasis and Linzess, is a concern.
Honda Motor’s shares have gained 23.1% over the past three months against the Zacks Foreign Automotive industry’s rise of 15.3%. The Zacks analyst believes that focus on the development of EVs and self-driving cars bodes well for the company, given the changing circumstances in the automobile industry.
The firm’s frequent collaborations with companies like General Motors and Hitachi, among others, are expected to expand business and bolster prospects. Its healthy balance sheet, improving cash flows and investor-friendly moves are other positives.
However, in anticipation of a slowdown in India and North America, along with a stronger yen, the company has narrowed sales and profit forecast for fiscal 2020. Further, high capex to develop advanced technologies may also limit its cash flows. Frequent recalls also remain a concern. As such, investors are recommended to wait for a better entry point.
Other noteworthy reports we are featuring today include BCE Inc. (BCE), Infosys (INFY) and Activision Blizzard (ATVI).
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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>>>