Today's Must Read
AbbVie's (ABBV) Pipeline Solid, Skyrizi, Rinvoq Start Strong
Sinopec (SNP) Banks on Gas-Rich Sichuan, Refining Hurts
Monday, December 23, 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 SAP SE (SAP), AbbVie (ABBV) and Sinopec (SNP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
SAP’s shares have underperformed the Zacks Computer Software industry year to date (+35% vs. +44.2%). The Zacks analyst believes that SAP is benefiting from strong growth in cloud and software revenues, and expanding customer base.
Robust adoption of S/4HANA, C/4HANA, Fieldglass, Concur and SuccessFactors Employee Central solutions hold promise. Further, SAP's alliances with Microsoft, Accenture and Verizon favor business prospects. Moreover, synergies from Qualtrics acquisition are enabling SAP to bolster Customer Experience segment revenues.
Additionally, strong demand for the company’s Intelligent Spend offerings among enterprises holds promise. Nonetheless, integration risks related to acquisitions are likely to limit margin expansion. Moreover, increasing investments to enhance cloud-based offerings are anticipated to weigh on bottom-line growth at least in the near term.
Shares of AbbVie have gained +22.4% in the past three months against the Zacks Large-Cap Pharmaceuticals industry’s rise of +12%. The Zacks analyst believes that AbbVie’s Humira is performing well driven by strong demand trends amid new competition. Imbruvica has multibillion-dollar potential.
AbbVie has been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta. It also 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. Also, the decline in HCV sales is a concern.
Sinopec's shares have lost -13% over the past six months against the Zacks Integrated Oil industry's decline of -5%. The Zacks analyst believes that the company has made major progress in identifying economically-viable oil & gas reserves. A huge scale of prospective new reserves was discovered in a number of prolific oil and gas resources like Sichuan Basin and Jiyang Depression.
Sinopec is among the largest integrated energy players in China, with significant presence in upstream, midstream and downstream businesses. Notably, Sinopec’s natural gas business has immense potential for growth over the coming years as China intends to move from coal to natural gas.
However, China’s bleak economic outlook will continue to hurt the firm’s refining business. With declining demand for oil products, the firm’s massive refining operations are likely to make lower contributions to earnings.
Other noteworthy reports we are featuring today include Eli Lilly (LLY), Cigna (CI) and Intuitive Surgical (ISRG).
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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>>>