Today's Must Read
Loan Growth Supports Wells Fargo (WFC), High Expenses A Woe
SAP Rides on Cloud Initiatives & Growth in S/4HANA Platform
Wednesday, January 22, 2020
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 Pfizer (PFE), Wells Fargo (WFC) and SAP SE (SAP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Pfizer’s shares have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-4.3% vs. +14.7%). The Zacks analyst believes that the Consumer Healthcare joint venture with Glaxo, the Array acquisition and the pending merger of Upjohn unit with Mylan, if successful, will make Pfizer a smaller company with a diversified portfolio of innovative drugs and vaccines.
The smaller Pfizer should see better revenue growth as the Lyrica LOE cliff will go away. The company expects continued strong growth of key brands like Ibrance, Xeljanz and Eliquis to drive sales in the coming quarters. Pfizer is also strengthening its pipeline and hopes to launch new innovative medicines in the next five years.
However, Lyrica generic erosion, currency headwinds and pricing pressure are key near-term, headwinds. Estimates have gone up ahead of Q4 earnings release. Pfizer has a positive record of earnings surprises in the recent quarters.
Shares of Wells Fargo have gained 3.7% in the past six months against the Zacks Major Regional Banks industry's rise of +11%. The Zacks analyst believes that Strategic acquisitions, along with rising loans and deposit balances, are impressive which is likely to aid NIM.
Though the company's investment in the businesses to enhance compliance and risk-management capability seems encouraging, Wells Fargo has been slapped with several sanctions, which continues on the CFPB's dissatisfaction with the bank’s progress on fixing risk-management issues. Also, rising costs curb bottom-line expansion.
Further, the company's earnings surprise history remains unimpressive, having surpassed the Zacks Consensus Estimate in only two of the trailing four quarters. The company’s fourth-quarter 2019 earnings reflected lower net interest income and rise in expenses.
SAP’s shares have gained +6% over the past three months against the Zacks Computer Software industry's rise of +17.8%. 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.
Other noteworthy reports we are featuring today include salesforce.com (CRM), TOTAL (TOT) and Eli Lilly (LLY).
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Director of Research
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>>>