Today's Must Read
Emphasis on Electric Cars to Aid Toyota (TM) Amid High Capex
Label Expansions of Opdivo, Eliquis Fuel Bristol-Myers (BMY)
Monday, February 10, 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 Alibaba Group (BABA), Toyota Motor (TM) and Bristol-Myers Squibb (BMY). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. We have also provided below a real-time scorecard of the ongoing Q4 earnings season that takes into account the reports that came out this morning.
Q4 Earnings Season Scorecard (as of February 10th, 2020)
Total earnings or aggregate net income for 325 S&P 500 members that have reported Q4 results already are up +0.7% from the same period last year on +4.1% higher revenues, with 72.6% beating EPS estimates and 68% beating revenue estimates
Other than the EPS beats percentage, which at 72.6% is tracking below what we had seen from this group of companies in other recent periods, the Q4 performance thus far represents a notable improvement over the recent past.
Estimates for the current period (2020 Q1) have started coming down in recent days, with the impact of the Coronavirus adding to the historical trend when current-period estimates fall as companies report results for the preceding period. For 2020 Q1, total earnings for the S&P 500 index are currenty expected to be up +1.5% from the same period last year on +5% higher revenues.
For more details about the Q4 earnings season, please check out our weekly report >>> 3 Things to Know About the Q4 Earnings Season
Alibaba’s shares have outperformed the Zacks Internet Commerce industry in the past six months (+35.9% vs. +20.5%). The Zacks analyst believes that Alibaba is benefiting from steady improvement in core commerce along with strong growth in metrics.
Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance. Its New Retail strategy is also gaining significant momentum in the market. This is aiding growth in its Tmall Import, Hema fresh food grocery business and Intime Department Stores.
Additionally, the consolidation of Ele.me and Cainiao Network is acting as a tailwind. However, the company’s increasing investments, uncertain economy and macro headwinds in China are major concerns. Also, rising competition poses a risk.
Shares of Toyota Motor have gained +21.5% over the past year against the Zacks Foreign Automotive industry's rise of +8.6%. The Zacks analyst believes that expanding portfolio of product lines is driving the firm’s prospects. In order to capitalize on the accelerated global shift to electric cars, the auto giant of Japan is deepening focus on developing electric and autonomous vehicles, which will bolster the company’s product competitiveness.
Its healthy balance sheet, improving cash flows and investor-friendly moves are other positives. However, anticipating a slowdown in India, China, Indonesia and Thailand, the company narrowed its annual vehicle sales target for fiscal 2020.
High research and development expenses on advanced technologies for the development of EVs and driverless cars are also likely to dent near-term margins. As such, investors are recommended to wait for a better entry point.
Bristol-Myers Squibb’s shares have gained +13.9% over the past three months against the Zacks Large Cap Pharmaceuticals industry's rise of +9.4%. The Zacks analyst believes that label expansion of Opdivo into additional indications should further boost the top line. Empliciti and Sprycel are also performing well on label expansions.
Bristol-Myers’ performance in the fourth quarter was encouraging. Earnings and sales beat estimates primarily on addition of Celgene’s drugs to its portfolio. The outlook for 2020 was encouraging as well. Blood thinner drug, Eliquis, is expected to drive growth, propelled by increased share in the NOAC market.
Meanwhile, the acquisition of Celgene has strengthened the company’s oncology portfolio. However, concerns will rise once Revlimid loses patent protection. Moreover, the company is facing headwinds like stiff competition from other immuno-oncology drugs and pipeline setbacks.
Other noteworthy reports we are featuring today include Chubb (CB), S&P Global (SPGI) and Uber Technologies (UBER).
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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>>>