Today's Must Read
P&G's (PG) Productivity & Cost Savings Plan to Aid Margins
Pfizer's (PFE) Business Reorganization Can Aid Sales Growth
Monday, February 03, 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 Amazon.com, Inc. (AMZN), The Procter & Gamble Company (PG) and Pfizer Inc. (PFE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. We have also included a real-time update on the ongoing Q4 earnings season.
Q4 Earnings Season Scorecard
We now have Q4 results from 228 S&P 500 members. Total earnings for these companies are down -0.5% from the same period last year on +2.3% higher revenues, with 71.4% beating EPS estimates and 67% beating revenue estimates. This is a better showing than we saw from the same group of 228 index members in the first three quarters of 2019.
Looking at Q4 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total earnings are expected to be down -0.6% from the same period last year on +4% higher revenues.
You can find more details about the ongoing earnings season in our weekly Earnings Preview report >>>>Impressive Tech Sector Earnings
Amazon’s shares have outperformed the Zacks Internet - Commerce industry over the past one-year period (+22.9% vs. +16.8%) and the Zacks analyst expects the momentum continuing on the back of the company's aggressive retail strategies and distribution strength. Rapid adoption of Prime driven by customer benefits and strengthening grocery services is aiding its top line. Further, Prime is driving its holiday sales growth. Also, expanding content portfolio is encouraging Prime membership. Furthermore, strengthening AWS services and its growing adoption rate are aiding Amazon’s dominance in the cloud space.
However, rising transportation cost related to its free one-day shipping service remains an overhang and is likely to increase further. Also, Amazon expects foreign exchange headwinds to continue impacting its top line.
Shares of Procter & Gamble have gained 27.1% in the past one-year period against the Zacks Soap and Cleaning Materials industry’s rise of 17.8%. The Zacks analyst believes that the company’s solid second-quarter fiscal 2020 earnings mark the continuation of its positive surprise trend. Further, earnings and sales improved year over year in the reported quarter on gains from productivity efforts, robust volume, favorable mix and pricing. Total productivity cost savings aided core currency-neutral gross and operating margin by 120 bps and 220 bps, respectively.
However, currency fluctuations remain concerning. Nevertheless, gains from acquisitions and divestitures are likely to partly offset the currency headwinds.
Pfizer’s shares have underperformed the Zacks Large Cap Pharmaceuticals over the past two-year period (+7.4% vs. +17.9%). But the Zacks analyst believes that the company’s 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.
Pfizer expects continued strong growth of key brands like Ibrance, Xeljanz and Eliquis to drive sales in 2020. Pfizer also has a strong portfolio of new drugs, which will accelerate growth in 2020 and beyond.
However, Lyrica generic erosion, currency headwinds and pricing pressure are the key near-term top-line headwinds.
Other noteworthy reports we are featuring today include NIKE, Inc. (NKE), Southwest Airlines Co. (LUV) and Humana Inc. (HUM).
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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>>>