Today's Must Read
Broadcom (AVGO) Banks on Wireless Products & Acquisitions
Sanofi (SNY) Diabetes Sales Weak, Specialty Care Unit Strong
Monday, January 27, 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 Merck (MRK), Broadcom (AVGO) and Sanofi (SNY). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Merck’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+17.9% vs. +16.1%). The Zacks analyst believes that Merck’s products like Keytruda, Lynparza and Bridion are driving sales.
Keytruda sales are gaining from continued uptake in lung cancer and increased usage in other cancer indications. Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide. Animal health and vaccine products are also doing well and remain core growth drivers.
However, generic competition for several drugs and pricing pressure will continue to be overhangs on the top line. Rising competitive pressure on the diabetes franchise and on products like Isentress and Zepatier remains a concern. Estimates have gone up slightly ahead of Q4 results. Merck has a positive record of earnings surprises in recent quarters.
Shares of Broadcom have gained +7.4% in the past six months against the Zacks Electronics - Semiconductors industry's rise of +20.2%. The Zacks analyst believes that Broadcom is benefiting from strong demand of its wireless solutions and expanding product portfolio, which makes it well-positioned to address the needs of rapidly growing technologies like IoT and 5G.
Further, strong ties with leading OEMs across multiple target markets are expected to help the company to gain key insights into the requirements of customers. Recent multi-year agreements with Apple estimated to be worth $15 billion, hold promise. Moreover, the company intends to strengthen presence in the infrastructure software vertical particularly.
In this regard, acquisition of CA remains extremely significant. Nonetheless, the company faces intensifying competition and integration risks due to frequent acquisitions. Further, the company’s leveraged balance sheet remains a major concern.
Sanofi’s shares have gained +5% over the past three months against the Zacks Large Cap Pharmaceuticals industry's rise of +9.6%. The Zacks analyst believes that Sanofi’s Specialty Care segment is on a strong footing, particularly with regular label expansion of Dupixent. Dupixent is now annualizing at around €2 billion in sales and could prove to be key long-term driver.
The performance of the Vaccines and Consumer Healthcare franchises also improved of late. Sanofi’s R&D pipeline is strong with several positive data read-outs and the achievement of regulatory milestones expected in 2020.
However, headwinds include weak performance of the Diabetes unit, generic competition for many drugs and slower-than-expected uptake of core products like Praluent. Estimates have gone down slightly, ahead of Q4 earnings release. Sanofi has a positive record of earnings surprise in the recent quarters.
Other noteworthy reports we are featuring today include Prologis (PLD), Equinix (EQIX) and American Electric Power (AEP).
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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>>>