Today's Must Read
New Products, Acquisition Fuel Zoetis (ZTS) Amid Competition
Essentials Items Lift Target's (TGT) Sales, Cost a Concern
Wednesday, April 8, 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 Tesla (TSLA), Zoetis (ZTS) and Target (TGT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Tesla’s shares have outperformed the Zacks Domestic Automotive industry over the past six months (+123.1% vs. +9.6%). The Zacks analyst believes that rising Model 3 delivery, which forms bulk of the automaker’s overall deliveries, is aiding the company’s top-line growth.
With Model 3 sedan being its flagship vehicle, Tesla has established itself as a leader in the EV segment. Tesla’s upcoming product launches, including Model Y and Semi Truck, are expected to further boost prospects.
However, with China being an important market for Tesla, economic slowdown in the country is weighing on the firm. Tesla’s massive debt and high capex also play spoilsports. Waning demand for Model S/X is another concern. Thus, investors are advised to wait for a better entry point.
Shares of Zoetis have gained 24.3% over the past year against the Zacks Drugs industry’s fall of -23.6%. The Zacks analyst believes that key dermatology products, such as Apoquel and Cytopoint, continue to penetrate the market and generate additional revenues.
Zoetis maintains momentum on the back of growth in new parasiticide products, vaccines and a solid dermatology portfolio. Increased sales of parasiticides, including ProHeart 12 and Simparica, further boosted performance. The Abaxis acquisition has further strengthened its leading portfolio. Zoetis has been making other prudent acquisitions.
However, the cattle market is witnessing challenges for beef and dairy customers. Moreover, the swine market is being affected by the African swine fever in China. Competition is stiff as well.
Target’s shares have lost -20.5% over the past three months against the Zacks Retail- Discount & Variety industry’s fall of -12.3%. The Zacks analyst notes that Apparel & Accessories’ performance remained soft. Management remains wary of persistent decline in higher-margin discretionary items sales due to the coronavirus outbreak.
The stock came under pressure in spite of the company witnessing higher traffic and sales for Essentials and Food & Beverage categories in the month of March. Owing to the pandemic, Target has not only withdrawn its first-quarter and fiscal 2020 view but also shifted certain strategic projects.
Nonetheless, the company remains focused on enhancing omni-channel capabilities, expanding same-day delivery options and rationalizing supply chain. However, management sees additional $300 million cost rise for the first quarter putting pressure on margins.
Other noteworthy reports we are featuring today include Boston Scientific (BSX), Moody's (MCO) and Aon plc (AON).
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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>>>