Today's Must Read
Prime Momentum & Growing AWS Adoption Benefit Amazon (AMZN)
J&J's (JNJ) Pharma Unit Shines Amid Generic/Litigation Woes
Monday, November 18, 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 Alphabet (GOOGL), Amazon (AMZN) and Johnson & Johnson (JNJ). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Alphabet’s shares have outperformed the Zacks Internet Services industry year to date (+27.6% vs. 9.5%). The Zacks analyst believes that the company’s strong focus on innovation of AI techniques and the home automation space should aid business growth in the long term. Also, its strong focus on bolstering presence in the cloud market is encouraging.
Alphabet reported weak third-quarter earnings due to heavy investment in cloud computing and hardware businesses. However, Google’s robust mobile search is a positive. Notably, it has agreed to acquire Fitbit for roughly $2.1 billion.
This deal will likely help the company to accelerate innovation in the wearables category. However, the company’s growing litigation issues and competition might hurt profitability.
Shares of Amazon have lost 6.4% in the past six months against S&P 500’s rise of 9.6%. The Zacks analyst believes that the company benefited from solid Prime momentum owing to robust grocery services and strong content portfolio.
Moreover, Prime Free One Day service helped Amazon in gaining traction across customers. Further, strengthening AWS services and its growing adoption rate contributed well to the third-quarter results. Improving Alexa skills and features remains a major positive. Expanding smart home products offerings are tailwinds.
However, rising transportation cost related to its free one-day shipping service remains an overhang and is likely to escalate further. Amazon also expects foreign exchange headwinds to continue impacting the top line.
Johnson & Johnson’s shares have gained 2% over the past three months against the Zacks Large Cap Pharmaceuticals industry's rise of 6.3%. The Zacks analyst believes that J&J is witnessing significant generic/biosimilar headwinds in the Pharma unit in 2019.
However, the unit is performing above-market levels supported by contribution from new drugs like Tremfya and successful label expansion of cancer drugs like Imbruvica and Darzalex and immunology drug, Stelara. J&J is also making rapid progress with its pipeline/line extensions. It has already gained FDA approval for two new drugs in 2019, Balversa and Spravato.
Share buybacks and restructuring initiatives should provide bottom-line support. However, headwinds like biosimilar/generic competition and pricing pressure remain. Moreover, J&J faces numerous lawsuits, which allege personal injuries to patients caused by the use of its products.
Other noteworthy reports we are featuring today include UnitedHealth (UNH), Boeing (BA) and PetroChina (PTR).
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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>>>