Today's Must Read
Walmart (WMT) Sales Likely to Gain on Coronavirus-Led Demand
Amgen (AMGN) Counts on Growth Drugs Amid Biosimilar Woes
Wednesday, April 15, 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 Microsoft (MSFT), Walmart (WMT) and Amgen (AMGN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Microsoft’s shares have outperformed the S&P 500 over the past six months (+23.7% vs. -4.9%). The Zacks analyst believes that Microsoft is benefiting from growing user base of its different applications like Office 365 commercial, Dynamics, Outlook mobile and Teams.
Moreover, Azure’s expanding customer base is a key catalyst. Markedly, the ongoing expansion in Microsoft Teams’ subscriber base is strengthening the company’s competitive position in the enterprise communication market against Slack and Zoom. Furthermore, the company is well poised to widen the total addressable market through acquisitions of GitHub and PlayFab.
However, management doesn’t expect to meet its previous third-quarter fiscal 2020 projection for More Personal Computing segment revenues due to the coronavirus outbreak in China. This, in turn, raises investors’ concerns, at least in the near term.
Shares of Walmart have gained 25.3% over the past year against the Zacks Supermarkets industry’s rise of 23.1%. The Zacks analyst believes that the stock has been especially gaining from increased traffic stemming from rising demand for essential items amid coronavirus.
COVID-19 and the resultant social distancing has spiked up the demand for toilet paper, masks, gloves, packaged water, groceries and related staples. This has led to increased store traffic, to handle which the company also announced additional hiring. Walmart is also taking actions to support employees’ well-being and safety.
To this end, it announced special cash bonuses, and has altered shopping methods to aid social distancing. The company has also been gaining from its e-commerce business, especially grocery delivery. However, the company’s gross margin has been strained for a while due to compelling pricing and growing e-commerce mix.
Amgen’s shares have lost 8% over the past three months against the Zacks Biomedical and Genetics industry’s fall of 4.2%. The Zacks analyst believes that while Amgen’s growth products like Prolia, Evenity, Repatha, Aimovig, Otezla and biosimilars will drive sales in 2020, increasing competition for its legacy products will continue to hurt the same.
Amgen boasts a strong biosimilars portfolio. It is also progressing with its pipeline while regularly pursuing “external opportunities” such as the acquisition of Otezla and the recently acquired stake in China's BeiGene. Amgen also expects several important clinical data readouts from its innovative pipeline in 2020.
However, pricing and competitive pressure are concerns. Estimates have gone down ahead of Q1 results due to uncertainty about the impact of the coronavirus pandemic on results. Amgen has a positive record of earnings surprise in recent quarters.
Other noteworthy reports we are featuring today include Adobe (ADBE), salesforce.com (CRM) and Mondelez International (MDLZ).
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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>>>